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ABN Amro plans retail Islamic services

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Points of Essence:

  • ABN Amro Bank plans to launch retail Islamic banking services in the Middle East by the 2nd Q of 2009
  • It has issued issued 32 Shariah-compliant products and sold $2 billions (Dh7.3bn) in Shariah-compliant funds since the beginning of 2007
  • It plans to introduce between 5-10 new products every month and expects to launch at least 30 new Islamic products during the 2nd Q of 2008
  • It has structured products which have different themes such as the water, real estate, shipping, renewable energy, climate changes and commodities that suit different investment trends and risk appetite among high net worth individuals in the region

23 June 2008
ABN Amro Bank is planning to launch retail Islamic banking services in the Middle East region by the second quarter of 2009 to meet the increasing demand for Islamic products in the region, according to a senior executive.

Sudhanshu Garg, director of equity derivatives at the bank, said that ABN Amro would launch retail Islamic products within nine to 12 months after finalising preparations for Islamic services in the region.

He added that the bank achieved great progress in its Islamic structured solutions during the past 18 months as it issued 32 Shariah-compliant products.

“We sold $2 billions (Dh7.3bn) in Shariah-compliant funds since starting Islamic banking facilities from the beginning of 2007. This progress put ABN Amro among the top four banks in the Middle East region offering Shariah-compliant equity derivatives and structured solutions,” he said.

Garg told Emirates Business that GCC investors bought around 80 per cent of the total sales in the Middle East. He added that the bank plans to accelerate the introduction of Islamic products during the next stage due to the increasing demand.
“We plan to introduce between five and 10 new products every month. We expect to launch at least 30 new Islamic products during the second half of 2008. We work similar to wholesale style as we carry out research studies about the need in the Middle East markets and then we create structured products that suit different investment trends and risk appetite among high net worth individuals in the region. We sell these Islamic products through Islamic banks, investment companies and fund managers in the region. Our products succeeded because they are based on the needs of the market,” he said.

These products have different themes such as the water, real estate, shipping, renewable energy, climate changes and commodities. Also the products depend on sub-sectors in global equity markets, based on macro-economic analyses. For example, the water theme depends on the supply and demand of water around the globe and prospects of growth in this area.

“We invest in water supply companies in several markets which give growth for our investments even during the decline stages in the markets,” he said.

Garg said that the structured products also depended on geographies such as Asian and Central African markets, where Middle Eastern investors cannot access these markets.
“We offer them the ability to invest in such markets. Our Central African fund achieved 40 per cent growth during the first nine months of 2007. With this deep research in the market, we can offer varied products to our clients. Also the Dubai International Financial Centre is becoming essential for the growth in our business because we see companies in the DIFC as potential clients and distributors for our Islamic products. Also we have relations with international banks who are opening up offices in the centre and this will ease cooperation with them as we will be working from the same region.”

He added that the increasing Islamic deposits and the wealth generated in the Middle East region showed great potential growth for Islamic banking services.

“Expectations are high that the Islamic banking sectors will grow by 30 per cent annually and ABN Amro expects its Shariah-complaint products to grow at least at the same pace,” he said.

By Mohamad Al Kady

Source: http://www.zawya.com/story.cfm/sidZAWYA20080623040957

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Written by Suapi Shaffaii

June 24, 2008 at 7:10 am

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