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Archive for November 2008

Moody’s sees slower Islamic banking growth

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Points of Essence:

  • Moody’s predicted a slower growth for Islamic banks despite them showing some resistance to the global financial crisis. The available data on the financial performance and liquidity in the 4th Q suggested a slow down next year. The fact that Islamic banking does not work in isolation from the crisis prone financial system, whatever issues boggling the financial system, the Islamic banking may be as well implicated. Zawya has the report.

Saturday, Nov 29, 2008

Gulf News

Dubai: Gulf-based Islamic banks, which have displayed resilience amid the current global financial turmoil, will see a slowdown in asset growth next year, ratings agency Moody’s said in a report.

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Written by Suapi Shaffaii

November 29, 2008 at 10:00 pm

CIMB Islamic launches 1st Syariah-compliant product in Hong Kong

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Points of Essence:

  • CIMB Islamic recently launched its Commodity Murabahah Deposit via its Islamic window in Hong Kong. Using commodity products as underlying assets, the Islamic money market instruments will tap into the potential market of Hong Kong as a vibrant Islamic financial hub as well as providing a window for the mainland market.

HONG KONG: CIMB Islamic, the Islamic banking arm of Malaysia’s second largest bank CIMB Group, on Tuesday launched its first Syariah-compliant product in Hong Kong and signed the first transaction with Hong Leong Bank for its Commodity Murabahah Deposit.

The product will utilise commodities like crude palm oil, metal or any tradeable commodities as its underlying asset.

CIMB Islamic chief executive officer Badlisyah Abdul Ghani said the Hong Kong Monetary Authority (HKMA) gave its clearance last week for the launch of the interbank money product.

“It is important for CIMB Islamic to be here because Hong Kong has great potential as an Islamic financial market,” he said.

HKMA deputy chief Eddie Yue witnessed the the memorandum of understanding signed between the Hong Kong branches of CIMB and Hong Leong, the first institutions based here to offer Islamic banking.

Hong Kong is charging ahead into developing an Islamic banking centre to tap the huge global Islamic assets that are estimated to reach US$1 trillion by 2010.

Badlisyah said the launch marked the opening of CIMB’s Islamic banking window not only in Hong Kong but also to mainland China where the group had acquired a 20 percent state in the Bank of Ying Kou in north-eastern Liaoning province earlier this year.

CIMB Islamic plans to expand from wholesale Islamic banking business in Hong Kong to other activities, namely asset management, and if viable, consumer banking.

“But in the long term, the biggest opportunity and probability is to do wholesale business and asset management. We are looking at a timeline of three to five years. Consumer banking is still quite remote,” he told Bernama.

The Commodity Murabahah Deposit based on the Islamic principle of Murabahah gives fixed returns to investors and is widely used in the global Islamic market to facilitate deposit-taking. It works through the purchase and subsequent sale of a commodity at cost plus a specified profit.

CIMB obtained Bank Negara Malaysia’s approval last December to undertake Islamic banking operations in all its overseas branches.

Hong Kong is an important platform into mainland China to which all eyes are turned to remain a growth engine for the stuttering world economy in the wake of the global financial crisis.

“When the market is opened to us, through our Hong Kong branch as well as Bank of Ying Kou, we will see how to develop wholesale banking, asset management and consumer banking on the mainland,” Badlisyah said.

The viability of starting consumer banking would have to be closely evaluated because the Muslim population was distributed widely across China, raising the question of how to service the market, he said.

“What we are going to concentrate on is the easy part, bringing what we have from Malaysia into this market. I think as for the mainland, the proper timeline is one to two years rather than immediate,” he added.

CIMB Islamic is a global player in the industry and is the world’s largest sukuk or Islamic bond issue with a 20 percent share worldwide.-Bernama

Written by Suapi Shaffaii

November 29, 2008 at 12:09 am

Lessons Islamic finance can learn from current crisis

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Points of Essence:

  • Central Bank of Bahrain has urged the Islamic finance stakeholders to learn from the current financial crisis despite Islamic finance being sheltered from the impact. The in-built crisis resilient elements i.e risk diversification, effective liquidity management and sound corporate governance will need to be installed to ensure a stable Islamic financial system.

By Habib Toumi, Bureau Chief
Published: November 25, 2008, 23:15

Manama: The Islamic financial industry must remember the importance of risk diversification, good liquidity management, and sound corporate governance if it is to continue to enjoy a framework for stability against the background of global financial turmoil, the governor of Bahrain Central Bank has warned.

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Written by Suapi Shaffaii

November 29, 2008 at 12:03 am

Islamic Development Bank Plans to Issue Sukuk

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Points of Essence:

  • IDB will issue sukuk to source aid funds for crisis affected member countries. For this purpose, a team has been set up to address the impact of the global financial crisis and identify investment projects in Muslim countries. Another team was was also established led by the Malaysian former premier, Tun Dr Mahathir Muhammad to set the new vision for the IDB to better assist Muslim countries and coordinate the cooperation among them for their mutual benefits. Zawya has the report.

JEDDAH – The Islamic Development Bank (IDB) will issue Sukuk (Islamic bonds) in order to collect funds from the international market place so as to support member countries affected by the global financial crisis.

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Written by Suapi Shaffaii

November 28, 2008 at 11:43 pm

Posted in General Issue

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Dr. Zeti: Sustaining Malaysia as a Platform for International Islamic Finance

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Points of Essence:

  • The Islamic banking in Malaysia continued to record growth with assets size stood at RM234.9 billion, a jump of 23 % from the previous year. The industry accounted for 16.7% of total assets in the industry.  With a total deposit of RM180.4 billion (27.7%  increase from last year) and a hike of 24.5%  in total financing to RM143.4 billion together with 93 new full-fledged Islamic banking branches opened this year, Malaysia is expected to maintain its lead in Islamic finance.
  • On the capital market side, the Malaysian sukuk market had a comfortable average annual growth of 22 % since 2001. Building up its niche in structuring innovative Islamic financial instruments, a slump in the sukuk issuance had no effects on Malaysia as the demands for more innovative products like Sukuk Musharakah had increased to 84% surpassing 58% mark of the total sukuk issuance in 2007. More new products have been churned out including residential mortgage backed securities, Commodity Murabahah deposit products, commodity based financing, credit card based on ujrah, as well as, structured products based on Musharakah, Mudarabah and Ijarah.
  • A conducive environment for innovative advancement that is supported by a regulatory framework will always be the hallmark of lslamic finance in Malaysia. as that ensures not only the stability of the system but also promotes the active and vibrant functioning of the system. The liberalization of the Islamic finance industry with the setting up of foreign Islamic subsidiaries in its Islamic financial system will enhance the outreach of Islamic finance and strengthen Malaysia’s international linkages. With all the framework put in the right places, Malaysia is set to sustain its status as an Islamic finance leader. Read the full speech by the Malaysian central bank’s governor when opening HSBC Amanah Malaysia in Kuala Lumpur recently.

Governor’s Address at the Launching of HSBC Amanah Malaysia Berhad: “Sustaining Malaysia as a Platform for International Islamic Finance”

Speaker : Governor Tan Sri Dato’ Sri Dr. Zeti Akhtar Aziz
Venue : Kuala Lumpur, Malaysia
Date : 25 November 2008
Language : English

It is my pleasure to be here today at this official launch of “HSBC Amanah Malaysia Berhad” (HSBC Amanah). This launch is significant in a number of respects. It reflects the continued expansion of Islamic finance in Malaysia , taking place at a time of great uncertainty in the global financial system. The launch of HSBC Amanah, as an Islamic subsidiary of an international financial group, is also significant as it will contribute towards enhancing further the international dimension of Islamic finance in Malaysia , thus strengthening our international financial and economic linkages with other parts of the world.

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Written by Suapi Shaffaii

November 28, 2008 at 4:35 pm

Brunei approves Islamic Banking Order 2008

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Points of Essence:

  • Brunei has undertaken a massive revamp of its Islamic finance regulation and supervision. Islamic Banking Order 2008 and Takaful Order 2008 were introduced as part of the legislative reforms. This set of legislation aims at better regulating and supervising of Islamic finance. It is uncertain whether Brunei will also come up with a legislation on Islamic investment and capital market.  Apart from providing condusive environment for enhancing the growth of Islamic finance business in Brunei, the two Orders will encourage competition among Islamic finance players. Brunei Times has the report.

Order to expand and strengthen Islamic banking and takaful

Minister of Finance 2, Pehin Orang Kaya Laila Setia Dato Seri Setia Awang Haji Abd Rahman Hjai Ibrahim

BRUNEI MUARA
Tuesday, November 25, 2008
Focus will be on captive insurance, re-insurance centre takaful & re-takaful

BY THE consent of His Majesty the Sultan and Yang Di-Pertuan of Brunei Darussalam, the Ministry of Finance recently introduced the Islamic Banking Order 2008, aimed at expanding the Islamic banking sector in Brunei at the same time increasing the competitiveness among players by creating a level playing field as well as strengthening the supervision and regulation of Islamic banking activities.

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Written by Suapi Shaffaii

November 28, 2008 at 11:24 am

Islamic banking: Sharia-compliant institutions buck trend

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Points of Essence:

  • Islamic banks in the UK continues to record growth while their conventional counterparts are in shambles in the aftermath of the credit crisis. Financial Times has the report.

By David Oakley, Capital Markets Correspondent

The banking community in the City of London has been hit hard by the economic crisis. But one area of the UK’s financial sector has emerged relatively unscathed from the credit crunch – the new Islamic banks.

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Written by Suapi Shaffaii

November 25, 2008 at 1:23 am

Posted in General Issue

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