BSN looking for Islamic banking director

BSN is looking for a an Islamic Banking Director to oversee its Islamic banking. The candidate, with a minumum 15-year experience, will lead plan, lead and manage BSN's Islamic business directions and operational activities. The candidate is also required to posses seven years managerial experience and exposure to Islamic products.

Dateline: 14 June 2008

Bank Simpanan Nasional (BSN) is also into takaful via Prudential BSN Takaful Berhad (PruBSN), a partnership with Prudential Holdings which received regulatory approvals in 2006.

On BSN website, it has listed a vacancy for 'Head for Islamic Banking'.

Bahrain sees rapid growth of Islamic financial institutions

By Habhajan Singh
Bahrain, a global leader in Shariah compliant finance, is host to the largest concentration of Shariah compliant financial institutions in the Middle East, according to a recent research note.
Presently, there are 29 Shariah compliant banks and 15 takaful operators in the kingdom, says research house Securities & Investment Company BSC (Sico).
The island has close to 150 banking institutions, both locally and globally incorporated, with combined assets of US$245.8 billion (RM768.86 billion) in 2007.
Among the banking institutions, it includes 29 retail banks, 85 wholesale banks and 35 representative offices.
The report said Bahrain is at the forefront in the market for Shariah compliant securities (sukuk), including shortterm government sukuk as well as leasing securities.
It noted that Shariah compliant banking has grown at a robust pace and has been gaining popularity during the last few years with total assets of Shariah compliant banking at US$16.4 billion in 2007, compared with US$4.2 billion in 2003.
In the Islamic banking space, it said Shamil Bank, Bahrain Islamic Bank BSC (BISB) and Al Salam Bank (Salam) are the leading players with about 12.4%, 10.7% and 6.4% market share in terms of total Islamic banking assets at the end of 2007. The report said growth in Shariah compliant banking has exceeded the growth witnessed in the entire banking system of Bahrain, noting that the market share of Shariah compliant banks correspondingly increased from 1.8% of total banking assets in FY00 to 6.7% in FY07.
"The strong growth of Shariah compliant banking and their impact on financial markets has prompted a number of traditional local and international banks to seek stronger relationships and joint project financing arrangements with their Shariah compliant counterparts.
"The Shariah compliant banking industry is becoming highly competitive and more multinational banks are entering the Shariah compliant banking arena, thus changing the competitive dynamics of Bahrain's commercial banking," it said.
The report added that although regional liquidity and a booming economy have stimulated growth for both Shariah compliant and conventional banking in Bahrain, Shariah compliant banking has grown at a much faster pace over the last few years.
"There has been a growing desire amongst customers particularly business, corporate and government customers to transact their financial requirements in accordance with the Islamic Shariah principles," it said.
The report said the backing of governments coupled with a strong religious revival is acting as a catalyst for growth in Shariah compliant banking.
It expects Gulf Cooperation Council (GCC) Shariah compliant banks to increase their market share and account for about 18% share of the banking sector's assets by 2012 from 13% in 2007. (The Malaysian Reserve, May 26, 2008)

IB Asia commits US$200m of deals in 1Q08

The Islamic Bank of Asia (IB Asia), a unit of Singapore's DBS Bank, announced the signing of over 20 significant cross-border capital transactions worth more than US$500 billion (RM1.62 trillion) in its first year of business.
IB Asia has committed US$200 million (RM649.1 million) of deals in the first quarter (1Q) of 2008, DBS Group Holdings Ltd said in a statement released yesterday.
The unit of Southeast Asia's biggest bank has been an aggresive player on the Islamic finance front in this region since it was established in May 2007.
Among the deals it had committed in 1Q08 is as the mandated lead-arranger in a US$250 million syndicated Mudaraba financing facility for Tamweel PJSC, a UAE-based Islamic mortgage company.
It was also appointed the mandated lead-arranger in a US$400 million syndicated dual currency ijarah financing facility for Al Jaber Transport & General Contracting LLC, a UAE-based company with interests from manufacturing to real estate.
In conjunction with its first anniversary this month, the statement said IB Asia has also opened its first representative office in Bahrain at the Bahrain Financial Harbour to provide the Islamic bank easier access to shareholders and customers in the Gulf.
Headquartered in Singapore, IB Asia is a joint venture between DBS Bank and 34 investors from families and industrial groups based in the Gulf Cooperation Council (GCC) countries.
The bank's Shariah board consist of renowned Islamic scholars like Sheikh Dr Mohamed Ali Elgari, Dr Abdul Sattar Abu Ghuddah, Dr Mohd Daud Bakar and chaired by Bahrain-based Sheikh Nizam Yaqouby.
"IB Asia's rapid progress is particularly encouraging because it underscores our progression from a newcomer to an innovative financial services provider that became profitable within the first 12 months," said IB Asia chairman Abdulla Hasan Saif, who is also the economics affairs advisor to the Prime Minister of Bahrain.In its first year of operation, the statement said IB Asia has focused on establishing itself in the wholesale financing markets and developed a platform of financing structures including trade finance and large-scale syndications.It also built a range of treasury services from the provision of foreign exchange to money market activities.
IB Asia's CEO Vince Cook said the next phase is to launch more complex treasury products, including a proprietary and efficient profit rate swap structure, FX forwards, cross currency ideas and structured products.
"These structured products will position IB Asia as one of the few standalone Islamic banks able to provide the type of investment solutions coming from international investment banks.
"We will be able to offer investors greater exposure to underlying assets such as commodities, equities and FX and where required, provide capital protection," he said.
(THE MALAYSIAN RESERVE, MAY 21, 2008)

IFES: Streamline Shariah studies to improve sector

One of the most conspicuous anomalies of Islamic finance is that many of the members of Shariah boards do not have a PhD in Shariah, an Islamic finance expert from the Middle East told an Islamic finance education symposium recently.

Some of them have not had any academic training in Shariah at all, says Emirates Islamic Bank's head of training and financial expert at its Shariah department, Dr Mabid Ali Al-Jarhi.

"As an example, many of the Shariah boards of Islamic banks and financial institutions are dominated by two economists: one with a PhD in economics and the other with only a BA.

"This may be an evidence of Shariah arbitrage on the side of shareholders," he told the twoday International Islamic Finance Symposium (IFES 2008) held at the International Islamic University Malaysia (IIUM) in Kuala Lumpur.

The event, held on April 28 and 29, was organised jointly by the IIUM Institute of Islamic Banking and Finance (IIiBF) together with the Islamic Research & Training Institute (IRTI) and its parent body, the Islamic Development Bank (IDB).

Dr Mabid, who is also president of the International Association for Islamic Economics, presented a paper in a panel session that explored human resources needs for the Islamic financial services industry over the next 10 years. He also expressed concern with some training companies involved in the field of Islamic finance.

"I am horrified to see some the notes of the training companies. But they charge very high," he said.

He added that Shariah scholars are supposed to have the capability of 'Ijtihad', which means to derive and deduce religious opinion about certain matters not mentioned in the sources of Islam, while keeping in view the spirit and overall framework of Islam.

"They have PhD's in Shariah with extensive studies in Fiqh. Shariah specialists may have only an MA in Shariah, and can assist in Shariah research as well as Shariah auditing. "Naturally, Shariah auditors must acquire sufficient knowledge in accounting," he said. Fiqh is Islamic jurisprudence or Islamic law, an important part of Shariah.

Touching on deficiencies in the curriculum, he said despite the fact that religious schools are still the best source of Shariah scholars, their curricula requires some modifications.

Among others, he said, it should account for sufficient studies in business and commercial law, English language, and banking and finance.

"Some religious schools have introduced one or more of the above elements. However, this has not been reflected on the current supply of scholars.

"It is necessary that religious universities must get together and discuss their curriculum with a view to add the above topics without reducing the Shariah and Fiqh content," he said.

(By Habhajan Singh, The Malaysian Reserve, May 5, 2008)

Azmi, Illiayas merger primed for growing Islamic finance

TAPPING the growing Islamic finance sector is a major impetus in the recent merger of local law firms, Azmi & Associates and Illiayas. Besides flexing their muscle with numbers, it is understood that grabbing a bigger slice of Islamic finance work was a key consideration in the merger that was officially announced on April 24 in Kuala Lumpur.

Islamic finance industry officials say that Illiayas has been "pretty successful" in cornering Islamic finance work, including from large corporations and financial institutions, though the firm is moderately small.

Illiayas was established on April 1, 1996 and at its peak had three partners and six support staff specialising in banking, Islamic banking, litigation, insurance and conveyancing, according to a joint press release.

The firm is anchored by Mohamad Illiayas Seyed Ibrahim, a graduate of the National University of Singapore and a lawyer of 20 years standing, specialising in banking, Islamic banking and finance.

His partner, Gurmel Singh, is a litigation lawyer of 15 years standing whose clients include Government-linked corporations (GLCs) and banks.

Azmi & Associates, established on Sept 1, 2000 with 12 lawyers, now has 31 lawyers comprising seven partners, 24 lawyers and 15 trainee solicitors. It provides legal services for the capital & debt market, energy and utility sector and advises on intellectual property, mergers & acquisitions, projects, real estate, venture capital, litigation and dispute resolution.

Their combined strength was seen when both law firms invited their clients to a cocktail party at the Malaysian Petroleum Club at the Kuala Lumpur City Centre last Thursday.

With the merger, Azmi Mohd Ali said he aims to turn the new entity, operating under the name of "Azmi & Associates", into one of the top ten local legal firms and a regional player. Prior to this merger, was the high-profile successful merger between legal firms Lee Hishamuddin and Allen & Gledhill two years ago.

The merged entity of Lee Hishamuddin Allen & Gledhill is now one of the top and preferred law firms in Malaysia. Besides immediately increasing the standing of the combined firm to Tier 2, which makes it amongst the top 10 law firms in Malaysia, the merger is also intended to "make the combined firm renowned in the areas of Islamic banking and finance in the Middle Eastern market".

Increasingly, the firm noted that general counsel are looking for breadth, depth and experience when making hiring decisions.

"This can put small and mid-size firms at a disadvantage in competing for higher level work. This merger is envisioned to provide considerable benefit for Azmi & Associates and Illiayas in striving to advance our position as a top tier-practice," the statement said.

(By Habhajan Singh, The Malaysian Reserve, April 28, 2008)

We are not a threat, says UK regulator

THE Financial Services Authority (FSA), United Kingdom's single financial regulator, does not view its emergence in the area of Islamic finance as a threat to Malaysia's own ambition to become an international hub for the sector.

Each financial centre has its role to play, especially in these formative years of the Islamic finance industry, said Michael Ainley, FSA's head of wholesale and investment firms.

"This is an emerging industry and the growth of Islamic finance across different regions around the world will only help strengthen the industry and enhance its credibility," he told The Malaysian Reserve in an email interview. Ainley, one of the authors of an FSA document entitled Islamic Finance in the UK: Regulation and Challenges, was asked to comment on the view of some quarters that the UK's entry into the sphere of Islamic finance was a threat to Malaysia's aims to become an international hub for Islamic finance On this score, he said.

Malaysia has established expertise in the field and other centres around the world have much to learn from the experiences, noting that the dynamics in each centre is unique and each has something different to offer.

London took a step further in its push to become the leading western financial centre for Islamic banking with the launch last Tuesday of the fifth Islamic bank with a UK licence, reported the Financial Times on April 22.

The report added that Britain is the only European Union country to have licensed Islamic banks. It also sees the development of Islamic finance as a way of building bridges with the two million Muslims who live in the UK.

The UK is also poised to be the first western government to consider floating a sukuk to enable it to attract wealthy Middle Eastern businesses. Last November, the UK Treasury released a consultation document "to seek views on the potential for the government to become an issuer of sterling Islamic financial instruments."

The document noted that in April 2007, the then Economic Secretary to the Treasury announced that the Treasury and the Debt Management Office would carry out the study.

It said the objectives of potential issuance were set out by the then Economic Secretary, when he said: "We are determined to do everything we can to deliver greater opportunities for British Muslims — and also to entrench London as a leading centre for Islamic finance in the world."

Meanwhile, Malaysia is already at the forefront as the world's largest sukuk market with RM213 billion (68.9%) of the global oustanding sukuk as at end-2007 originating from the country.

In its 2007 annual report, Bank Negara Malaysia said total issuances of corporate sukuk in Malaysia amounted to more than RM30 billion last year.

(By Habhajan Singh, The Malaysian Reserve, April 28, 2008)

International Islamic Finance Symposium

The International Islamic University Malaysia (IIUM) will host the two-day International Islamic Finance Symposium (IFES 2008) beginning Apr 28. The event is organised by the IIUM Institute of Islamic Banking and Finance (IIiBF) together with the Islamic Research & Training Institute (IRTI). IIiBF, which officially established in September 2004, is led by director is Associate Professor Dr Ahamed Kameel Mydin Meera.