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Archive for August 2008

Bank Asya keeps a finger on pulse of economy

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Points of Essence:

  • Bank Asya an Islamic bank known as a participation bank in Turkey, has emerged leader of the Islamic financial services sector in Turkey. It operates on Islamic principles and provides financing to merchants and leases machinery and other business capital for business start-ups. It however, does not trade government bonds and securities.
  • The industry looks set for a bright future with the establishment of four participation banks from among a total of 50 banks in Turkey. Over the last few years, it has seen the strong growth of the sector, which has outperformed its conventional counterpart.
  • Bank Asya is an Observer member of the Islamic Financial Services Board.

Parallel to the growth in the Islamic finance industry worldwide, Turkish participation banks, formerly called special finance houses, have also been expanding and attracting new customers, with Bank Asya having emerged as a leader in the sector.

“We take the pulse of the economy every second,” said Ünal Kabaca, general manager of Bank Asya, the largest participation bank in Turkey. Speaking to Today’s Business in an exclusive interview, Kabaca explained the risks and advantages associated with the industry. “Since we are on the frontline when the tides of the economic change, we have to be able to monitor the real market very closely,” he pointed out. Bank Asya, like other participation banks in Turkey, operates on Islamic principles and does not trade government bonds and securities. It extends loans to merchants and leases machinery and other business capital needed to start or expand businesses. “This pushes us to be very vigilant and to be able to sense what is going to happen in the market before it happens,” he explained.

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Written by Suapi Shaffaii

August 30, 2008 at 5:21 am

The Islamic Credit Card Controversy!

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Points of Essence:

  • The author stated that there had been allegations of impropriety regarding Islamic credit cards where customers complained about the excessive fees and charges.
  • Some scholars had doubts about the business modules of the Islamic credit cards which might be tainted with usury elements.

In recent years, the competition between Islamic banks has increased over offering Shariah-complaint credit cards – once a controversial subject among Islamic jurists. However, the prevalence and popularity of Islamic credit cards is also accompanied by customer complaints about the expensive costs charged by some Islamic banks that offer them. In fact; such credit cards have become even more expensive than the ones offered by conventional banks.

Customers have reported that they were surprised to learn about the charge fees required to obtain the credit cards offered by some banks as ‘Shariah-compliant’ and which have been approved by the Shariah committees of the banks in question. Many of the complaints revolve around the fact that despite the cards being Shariah-compliant, they end up deceiving and exploiting customers in Saudi Arabian banks and those who prefer to undertake usury-free transactions.

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Written by Suapi Shaffaii

August 28, 2008 at 3:39 am

HSBC Amanah Malaysia now open for business

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Points of Essence:

  • The Islamic banking outfit of HSBC Bank Malaysia has commenced its business. Set up under the HSBC Amanah brand and licensed by BNM, the subsidiary will the full range of activities for Islamic banking business. This complements the existing banking solutions offered by HSBC Bank by offering retail and corporate customers a full suite of Islamic products and services.
  • HSBC has been offering Islamic financial services in Malaysia since 1994. Globally, the HSBC Amanah brand was established in 1998 with the aim of making HSBC the leading provider of Shariah-compliant banking services worldwide.
  • The new institution is expected to strengthen Malaysia’s bid to become an international Islamic financial centre.

HSBC Amanah Malaysia Berhad (HSBC Amanah Malaysia) is now open for business. The new fully fledged Islamic Bank, a wholly owned subsidiary of HSBC Bank Malaysia Berhad (HSBC Bank) and licenced under the Islamic Banking Act 1983, commenced its operations on 24 August 2008.”This licence allows HSBC Amanah Malaysia to undertake the full range of activities for Islamic banking business, and we will open our first standalone branch later this year with more to follow in the coming years,” said Ms Irene M Dorner, Chairman of HSBC Amanah Malaysia and Deputy Chairman and CEO of HSBC Bank.

Prior to the opening of the Islamic Bank’s first branch, customers of HSBC Amanah Malaysia can continue to conduct banking transactions in HSBC Bank’s 40 branches nationwide and enjoy the use of and access to the existing Internet banking and Call Centre.

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Written by Suapi Shaffaii

August 27, 2008 at 3:15 am

Posted in General Issue

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Pakistan: The causeway for Islamic Finance

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Points of Essence:

  • President Musharraf’s resignation has turned a new leaf in Pakistan’s economy with it poised to be an emerging market alongside Vietnam, Egypt etc.
  • With its total population of 170 million people and a GDP per capita of around $2,900, growing about 7% annually since 2004, Pakistan is keen to reevaluate the role of Islamic finance as its main engine of growth. Currently, there are only 5 Islamic banks and 21 conventional banks with Islamic windows in Pakistan apart from foreign Islamic banks. Obviously, this has to change.
  • Dow Jones Index regarded Pakistan as an Islamic finance causeway between the Gulf Cooperation Council (GCC) and the Far East. However, it remains to be seen as to what other institutions may think of Pakistan.

With General Pervez Musharraf having stepped down as president of Pakistan, analysts are waiting to see what effect this has on the country’s economy. Pakistan could play a key role in the Islamic Finance sector.

New hopes came up regarding the future of the Islamic Republic of Pakistan when President Pervez Musharraf stepped down.

As former US-president Richard Nixon did in 1974, Musharraf avoided being taken out by parliament through impeachment with his preemptive move.

But although Pakistan is mainly seen by outsiders as a country shattered by social unrest and fighting on its border with Afghanistan, its economy has been booming in recent years.

Pakistan, with a total population of 170 million people and a GDP per capita of around $2,900, has been growing about 7% annually since 2004.

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Written by Suapi Shaffaii

August 27, 2008 at 2:52 am

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Malaysian mortgage firm eyes Gulf Islamic market

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Points of Essence:

  • As competition has become more intense at the home ground, Cagamas has joined the fray in venturing out overseas for possible business expansion. The oil money factor and growing appetite for Islamic bonds in the Middle East were simply irresistible.
  • The mortgage outfit will explore ways to create Islamic products that are acceptable to Middle East investors. It was among the world’s 10 largest issuers of Islamic bonds last year.

Malaysian mortgage firm Cagamas Bhd may help set up secondary Islamic mortgage companies in the Middle East and securitise loans from Gulf banks to tap rising demand for Islamic products in the region, its chief executive said on Tuesday.

Islamic banking players in mostly Muslim Malaysia are seeking overseas markets as a growing number of institutions compete for a modest market of 27 million people at home.

Malaysian firms are especially eager to court an estimated $300 billion of petrodollars from the Middle East, but some Gulf investors have shunned Malaysian Islamic products, saying they do not fully meet sharia, or Islamic law, standards.

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Written by Suapi Shaffaii

August 26, 2008 at 3:08 pm

Qatar launches first dedicated investment bank

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Points of essence:

  • Qatar’s very own investment bank looks set to bring investment opportunities to Qatar and to invest in lucrative projects internationally. Licensed in 2007, the bank specializes in local and international Sharia’a compliant investment banking opportunities.
  • With Qatar Islamic Bank as the largest single shareholder, the bank aims to tap the market potentials in the UK, France, the GCC, Asia and Southeast Asia, MENASA including exploring for opportunities in the booming China.

QInvest, the largest financial establishment to start operations in the Qatar Financial Centre (QFC), was licensed in April 2007 with a capital of US$1 billion.

The bank specializes in local and international Sharia’a compliant investment banking opportunities, and is 25% owned by Qatar Islamic Bank (QIB), 15% by Gulf Finance House (GFH), and the remaining 60% of equity is held by other strategic, institutional and private investors from Qatar and other GCC countries.

According to Chief Investment Officer Philippe Jouard, “By 2012, there will be 5 trillion dollars looking for a home from the GCC countries. China is a natural absorber of this liquidity surplus. China should see QInvest as a unique way to attract the wealth of the Gulf.”

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Written by Suapi Shaffaii

August 26, 2008 at 3:40 am

Islamic Banking in Egypt

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Points of Essence:

  • The author opined that a lack of interest from the policymakers may have cost Egypt its pioneer status for Islamic finance.
  • He pointed out that Egypt had Islamic banking started in 1963 with the establishment of Mit Ghamr Saving Bank with 53 branches at one time, which paved the way for the setting up of other Islamic financial outfits. Now, the numbers have been on the decline with only two institutions, Faisal Islamic Bank of Egypt and the Egyptian Saudi Finance Bank as well as the Islamic window of conventional institutions.

25/08/2008

By Lahem al Nasser

Egypt, the land of the Kinana Tribe, is the country that paved the way for Islamic banking through Dr. Ahmed El Najjar (may God rest his soul). It is the country in which this idea first practically came into existence in the form of Mit Ghamr Savings Bank in 1963, which at one point had 53 branches.

The Islamic banking experience then shifted from Egypt to other parts of the Islamic world by the early founding fathers such as Dr. Ahmed El Najjar and Dr. Isa Abdu whose efforts were combined with those of businessmen interested in Islamic values.

Private Islamic banks such as the Dubai Islamic Bank (DIB) in 1975, the Kuwait Finance House [KFH] in 1977 and the Faisal Islamic Bank of Egypt in 1979 were established. Today, the number of Islamic financial institutions is estimated at approximately 396 throughout 53 countries with a growth rate that ranges between ten and 15 per cent.

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Written by Suapi Shaffaii

August 26, 2008 at 3:26 am

Posted in Financial Centres, General Issue

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