Blake Goud: When will ESC Lille begin to offer Islamic finance education in Paris and the Gulf?
Dr. Christophe Bredillet: “We will offer our first session in August during our International Project & Programme Management Workshop (August 20 to 24). Then this will become a regular joint seminar between our MSc in Project & Programme Management and our MBA the coming academic year 2007-2008.”
Blake Goud: Where will the professors in the Islamic finance program be recruited? Will they be academics, Islamic finance professionals or scholars and what types of courses will be offered?
Dr. Christophe Bredillet: “They will be professionals and experts. We will make the most of our existing network and will further reinforce it through new local/regional (Gulf countries) and international links, inviting experts who are working for these institutions in France as well.”
Blake Goud: Will the Islamic finance education program in Paris be focused on training professionals to expand the provision of Islamic financial services within France (or Europe) or do you expect the professionals to finish the course and then work for Islamic financial institutions outside of France (or Europe)?
Dr. Christophe Bredillet: “I would say both. As it is a starting initiative, I would say we will adapt the first courses to the demand (it is an heuristic process). The assumption is that Islamic finance will have a greater impact in Europe and other “Westernized countries as well in the near future, due to the investment flows and market demand. This seminar will be offered to our students and we don’t expect at this stage to run short courses open courses.”
Blake Goud: Tensions between Muslims and non-Muslims within Europe are a frequent subject in the media. Do you believe that providing Islamic finance education and making Islamic finance more prevalent within Europe will help ease these tensions or will it contribute to more separation between Muslims and non-Muslims?
Dr. Christophe Bredillet: “As far as ESC Lille is concerned we are training global professionals and experts. The bottom line is that these professionals must have an open mind, and global doesn’t mean “Western”, but it is much more about understanding various traditions and cultures and accepting them, instead of trying to promote a unique “truth” or “ethic” or “moral”… We have been working with “Islamic” countries for more than 15 years, and we have, I think, a good capacity in adapting what we are doing to meet different traditions (this is the same for other regions like India, China, Africa, South America…). In the Middle Ages, Christians and Muslims were at war (Crusades) but in the meantime it was a very rich time for exchanges between them at Artistic and Scientific levels. Our view is to help and facilitate - very humbly - at our level, this mutual enrichment through proper education process.”
Blake Goud: The Financial Times reported that graduates from conventional economics, business and MBA programs have experienced difficulties becoming successful in Islamic banks because of the requirement of learning about the Shari'ah. What challenges do you see to integrating Islamic finance into a conventional MBA program and how will ESC attempt to deal with this? In particular, will there be courses on Islamic economic and financial jurisprudence?
Dr. Christophe Bredillet: “We do think that we will need to support this with seminars. It is very difficult to run business courses addressing Japan without any knowledge of Japanese tradition for instance. Tradition is the underlying support to culture, life style, behaviours, ethical issues and so on… It is not just about training people on “techniques” - we hope to contribute to the development of a good level of understanding of the fundamental roots of these aspects, in order to move beyond the classical multicultural seminars where people learn “artificial” and “simplistic” tricks and staying at a very superficial level (e.g. dos and don’ts).”
Monday, April 30, 2007
ESC Lille to open Gulf Campus & offer Islamic finance courses program in GCC and France
After ESC Lille announced they would offer Islamic finance courses in Paris and the Gulf, Dr. Christophe Bredillet took the time to answer a few of my follow-up questions.
Sukuk issues appeal to non-Muslims; KFH interested in RHB
Sukuk issues appeal to non-muslim investors
The Financial Times provides a good overview of the market for sukuk their appeal to non-Muslim investors, as well as the risks which need to be addressed. The article provides short descriptions of a few specific sukuk including Nakheel Group's $3.52 billion issue and an issue by Boyner Holding (a Turkish retailer)
KFH still interested in RHB
Kuwait Finance House, the Kuwaiti-based Islamic bank which operates in Malaysia, is reported to be in talks to acquire a 49% stake in RHB, for which it launched a failed bid earlier this year.
Other News
The Islamic Development Bank (IDB) will launch the International Islamic Trade Finance Corporation (ITFC).
Qatar Islamic Bank plans to explore opening a $1 billion mega Islamic bank in Sudan.
Barclay's Capital has a 23% market share in Islamic bond underwriting.
Malaysian-based International Centre for Education in Islamic Finance (INCEIF) plans to expand into Europe and the Middle East.
The Financial Times provides a good overview of the market for sukuk their appeal to non-Muslim investors, as well as the risks which need to be addressed. The article provides short descriptions of a few specific sukuk including Nakheel Group's $3.52 billion issue and an issue by Boyner Holding (a Turkish retailer)
KFH still interested in RHB
Kuwait Finance House, the Kuwaiti-based Islamic bank which operates in Malaysia, is reported to be in talks to acquire a 49% stake in RHB, for which it launched a failed bid earlier this year.
Other News
The Islamic Development Bank (IDB) will launch the International Islamic Trade Finance Corporation (ITFC).
Qatar Islamic Bank plans to explore opening a $1 billion mega Islamic bank in Sudan.
Barclay's Capital has a 23% market share in Islamic bond underwriting.
Malaysian-based International Centre for Education in Islamic Finance (INCEIF) plans to expand into Europe and the Middle East.
Friday, April 27, 2007
U.K. may launch sukuk as early as this year
U.K. may launch sukuk as early as this year
The Financial Times reported this morning that the U.K. Shari'ah-compliant government bonds could be issued as early as this year. The article goes on to suggest that the appeal of sukuk for non-Muslims could be that they are an alternative source of funds to tap. Along these lines, "[John] Sandwick [manager of Sanad] predicts that big corporations such as Ford, the US carmaker, will one day look to sukuk for financing. 'If you're the treasurer of Ford Motor, you want diversified funding sources. You want to absorb the liquidity to finance your liabilities. You don't want to rely on the New York bond market,' he says."
Other news
The UAE Central Bank announced it will not issue more banking licenses at this time. This hurts the prospects for Amlak Finance which was rumored to be continuing to seek a banking license despite being denied several months ago.
The head of the Dubai International Financial Centre (DIFC) Omar bin Suleiman said that the growth of Islamic finance in Asia will complement the developments in the Middle East. The growth of the industry, both within the GCC region and without increases demand for Islamic finance and the competition forces cities & banks to become more efficient and value creating.
The Malaysian central bank, Bank Negara Malaysia may allow foreign banks to set up independent Islamic banks. Currently, foreign banks like HSBC operate their Islamic banking services from a window within the conventional bank.
The Financial Times reported this morning that the U.K. Shari'ah-compliant government bonds could be issued as early as this year. The article goes on to suggest that the appeal of sukuk for non-Muslims could be that they are an alternative source of funds to tap. Along these lines, "[John] Sandwick [manager of Sanad] predicts that big corporations such as Ford, the US carmaker, will one day look to sukuk for financing. 'If you're the treasurer of Ford Motor, you want diversified funding sources. You want to absorb the liquidity to finance your liabilities. You don't want to rely on the New York bond market,' he says."
Other news
The UAE Central Bank announced it will not issue more banking licenses at this time. This hurts the prospects for Amlak Finance which was rumored to be continuing to seek a banking license despite being denied several months ago.
The head of the Dubai International Financial Centre (DIFC) Omar bin Suleiman said that the growth of Islamic finance in Asia will complement the developments in the Middle East. The growth of the industry, both within the GCC region and without increases demand for Islamic finance and the competition forces cities & banks to become more efficient and value creating.
The Malaysian central bank, Bank Negara Malaysia may allow foreign banks to set up independent Islamic banks. Currently, foreign banks like HSBC operate their Islamic banking services from a window within the conventional bank.
Thursday, April 26, 2007
Sri Lanka Islamic microfinance & Opposition to UK Islamic gilts
Sri Lankan Islamic microfinance
Islamic financier Amana Investments introduced an Islamic microfinance program on a limited scale (20 entrepreneurs will be selected out of 1,000 applicants). The initial capital for the program will be Rs. 1.5 million (US$13,639). The bank will work with Muslim Aid, an aid organization with significant capacity building in Islamic microfinance, and initially offer murabaha (cost-plus asset sale) but as the program develops they plan on offering mudabara (investment with a profit-sharing agreement with the entrepreneur). The program will not limit the program by religion or ethnicity and will begin in Slave Island, a suburb of Colombo, Sri Lanka.
Plans for U.K. Islamic gilts encounter first resistance
In an editorial in the Financial Times, Andrea Minichiello Williams of the Lawyers' Christian Fellowship, an evangelical Christian organization whose self-stated mission is to "is to influence lawyers and the law for Christ" complains about the proposed U.K. Islamic government bond. She argues that issuing sukuk would hamper the ability of the British government to use the funds received and, while it would, Ms. Williams goes to great length to make the requirements made by Shari'ah scholars seem unreasonable by adding to the commonly used ethical guidelines and suggesting that sukuk funds could not be used for "animal welfare (which promotes the welfare of non-halal animals)[, the] furtherance of many individual freedoms, or in the promotion of any idealistic or political worldview other than Islam (including secular democracy)." While the complaints are unlikely to influence the government's decision on their own, they demonstrate some of the potential hurdles Islamic finance needs to overcome in the West in spreading knowledge about how Islamic finance works, the role of Shari'ah scholars and the ethical screens used to decide Shari'ah-compliance.
Other News
Dubai Islamic Bank will offer a new product to high net worth individuals incorporating the principles of Socially Responsible Investing with the ethical screens of Islamic investing. The product, a Shari'ah-compliant four-year principal protected note with a 'minimum guaranteed annual return' of 2% and a 'maximum potential annual return' of 11%, would be based on a basket of 10 stocks involved in purification, desalinization and waste management.
Another discussion of the new S&P and MSCI Shari'ah indices.
Hong Kong-based Bank of East Asia will raise its stake in Malaysian bank, Affin Bank, in part to avail itself of the Bank's participation in the thriving Malaysian Islamic banking market.
Plans for Dubai Islamic Bank to issue sukuk to fund a Jakarta monorail project have been disrupted by the lack of a proper regulatory environment. Two bills on Islamic banking are under consideration by the Indonesian House of Representatives; one would set the regulatory environment for Islamic banking and one would do the same for sukuk.
The agreement between al Rajhi Bank and e-Kencana Sdn Bhd (a company involved in the MEPS Cash system in Malaysia) was signed which will create a Shari'ah-compliant fund transfer system between Saudi Arabia and Malaysia with future plans to expand to other countries.
Islamic financier Amana Investments introduced an Islamic microfinance program on a limited scale (20 entrepreneurs will be selected out of 1,000 applicants). The initial capital for the program will be Rs. 1.5 million (US$13,639). The bank will work with Muslim Aid, an aid organization with significant capacity building in Islamic microfinance, and initially offer murabaha (cost-plus asset sale) but as the program develops they plan on offering mudabara (investment with a profit-sharing agreement with the entrepreneur). The program will not limit the program by religion or ethnicity and will begin in Slave Island, a suburb of Colombo, Sri Lanka.
Plans for U.K. Islamic gilts encounter first resistance
In an editorial in the Financial Times, Andrea Minichiello Williams of the Lawyers' Christian Fellowship, an evangelical Christian organization whose self-stated mission is to "is to influence lawyers and the law for Christ" complains about the proposed U.K. Islamic government bond. She argues that issuing sukuk would hamper the ability of the British government to use the funds received and, while it would, Ms. Williams goes to great length to make the requirements made by Shari'ah scholars seem unreasonable by adding to the commonly used ethical guidelines and suggesting that sukuk funds could not be used for "animal welfare (which promotes the welfare of non-halal animals)[, the] furtherance of many individual freedoms, or in the promotion of any idealistic or political worldview other than Islam (including secular democracy)." While the complaints are unlikely to influence the government's decision on their own, they demonstrate some of the potential hurdles Islamic finance needs to overcome in the West in spreading knowledge about how Islamic finance works, the role of Shari'ah scholars and the ethical screens used to decide Shari'ah-compliance.
Other News
Dubai Islamic Bank will offer a new product to high net worth individuals incorporating the principles of Socially Responsible Investing with the ethical screens of Islamic investing. The product, a Shari'ah-compliant four-year principal protected note with a 'minimum guaranteed annual return' of 2% and a 'maximum potential annual return' of 11%, would be based on a basket of 10 stocks involved in purification, desalinization and waste management.
Another discussion of the new S&P and MSCI Shari'ah indices.
Hong Kong-based Bank of East Asia will raise its stake in Malaysian bank, Affin Bank, in part to avail itself of the Bank's participation in the thriving Malaysian Islamic banking market.
Plans for Dubai Islamic Bank to issue sukuk to fund a Jakarta monorail project have been disrupted by the lack of a proper regulatory environment. Two bills on Islamic banking are under consideration by the Indonesian House of Representatives; one would set the regulatory environment for Islamic banking and one would do the same for sukuk.
The agreement between al Rajhi Bank and e-Kencana Sdn Bhd (a company involved in the MEPS Cash system in Malaysia) was signed which will create a Shari'ah-compliant fund transfer system between Saudi Arabia and Malaysia with future plans to expand to other countries.
Wednesday, April 25, 2007
Islamic finance & sukuk growing rapidy, new S&P Shari'ah indexes launched
Sukuk issues growing rapidly
With $70 billion of sukuk currently issued globally, the Standard & Poor's Rating Service expects this number to exceed $100 billion by 2010. Sukuk issuance in 2006 of $16.8 billion was more than double the $7.6 billion issued in 2005.
A Standard & Poor's managing director, Torstens Hinrichs, believes demand for Islamic finance, currently around $400 billion, will increase to $4 trillion within the next 3 to 5 years.
Global Risk regulator has an article on how to regulate the growing Islamic finance industry.
New Shari'ah-compliant index
Standard & Poor's announced the launch of the GCC Shari'ah Indexes. The new indexes are:
With $70 billion of sukuk currently issued globally, the Standard & Poor's Rating Service expects this number to exceed $100 billion by 2010. Sukuk issuance in 2006 of $16.8 billion was more than double the $7.6 billion issued in 2005.
A Standard & Poor's managing director, Torstens Hinrichs, believes demand for Islamic finance, currently around $400 billion, will increase to $4 trillion within the next 3 to 5 years.
Global Risk regulator has an article on how to regulate the growing Islamic finance industry.
New Shari'ah-compliant index
Standard & Poor's announced the launch of the GCC Shari'ah Indexes. The new indexes are:
• S&P Saudi Shari'ah
• S&P Bahrain Shari'ah
• S&P Kuwait Shari'ah
• S&P Oman Shari'ah
• S&P Qatar Shari'ah
• S&P United Arab Emirates Shari'ah
• S&P GCC Investable Shari'ah
• S&P GCC Composite Shari'ah Index
Tuesday, April 24, 2007
MSCI Islamic Index and commentary on Islamic finance & banking
MSCI begins issuing an Islamic index
Morgan Stanley Capital International (MSCI) Barra announced today that it will begin issuing a Shari'ah-compliant index. According to the methodology on their website, the 'sin' screens will be similar to the Dow Jones Islamic Market Index (DJIMI)excluding companies making more than 5 percent of their income from the following business activities:
The financial screens are calculated differently from the DJIMI:
One area where there is a significant difference is that the MSCI index adjusts the dividend payouts to 'purify' them by subtracting out a portion representing the share of interest income. The methodology is available on the MSCI Barra website.
Islamic finance commentary
Douglas Clark Johnson, the CEO of New York-based Calyx Financial compares Islamic finance to Eurobonds in their growth potential in the Asian Investor.
The Brunei Times has an opinion piece on the role of intention in Islamic banking to confront skeptics.
An opinion piece suggesting that introducing more Islamic finance in the U.K. will help to create a fairer society
Other news
Standard & Poor's (S&P) believes that Islamic finance has changed from being a niche product and is ready to expand significantly across regions and business products.
Morgan Stanley Capital International (MSCI) Barra announced today that it will begin issuing a Shari'ah-compliant index. According to the methodology on their website, the 'sin' screens will be similar to the Dow Jones Islamic Market Index (DJIMI)excluding companies making more than 5 percent of their income from the following business activities:
• Alcohol
• Tobacco
• Pork-related products
• Financial services
• Weapons and defense-related products
• Gambling
• Music
• Hotels
• Cinema
• Adult Entertainment
The financial screens are calculated differently from the DJIMI:
MSCI Barre
• Total debt divided by total assets less than 33.33%
• Cash plus interest bearing securities divided by total assets less than 33.33%
• Accounts receivable divided by total assets less than 70%
DJIMI
• Total debt divided by trailing 12-month average market capitalization less than 33%
• Cash plus interest bearing securities divided by trailing 12-month average market capitalization less than 33%
• Accounts receivable divided by trailing 12-month average market capitalization less than 33%
One area where there is a significant difference is that the MSCI index adjusts the dividend payouts to 'purify' them by subtracting out a portion representing the share of interest income. The methodology is available on the MSCI Barra website.
Islamic finance commentary
Douglas Clark Johnson, the CEO of New York-based Calyx Financial compares Islamic finance to Eurobonds in their growth potential in the Asian Investor.
The Brunei Times has an opinion piece on the role of intention in Islamic banking to confront skeptics.
An opinion piece suggesting that introducing more Islamic finance in the U.K. will help to create a fairer society
Other news
Standard & Poor's (S&P) believes that Islamic finance has changed from being a niche product and is ready to expand significantly across regions and business products.
Monday, April 23, 2007
U.K. Islamic gilts, Islamic finance in the U.S. & U.K. and Careers in Islamic banking
U.K. becomes first Western country to announce Shari'ah-compliant government bonds
Ed Balls, Economic Secretary in HM Treasury, announced today that the U.K. government will carry out a feasibility study regarding the issuance of Shari'ah-compliant gilts. He was speaking at the FSA confence on Principles-based Regulation.
Global Impact of Islamic Finance
The Harvard Business School student weekly Harbus has an article about the recent event on Islamic finance held at the school on April 13th, 2007.
Islamic home financing & sukuk
A Chicago-based newspaper, the Daily Herald, describes how Islamic home financing works and provides a summary of some of the U.S. Islamic finance companies. The Financial Times provides another general overview of Islamic finance and sukuk.
Careers in Islamic banking - Challenges
The Financial Times describes the challenges facing those who seek careers in Islamic banking with a conventional financial background and education. Because Islamic finance and banking requires an understanding of what is Shari'ah-compliance, as well as how to work with Shari'ah scholars to ensure that all products offered are compliant, those with backgrounds in conventional finance may not be able to succeed in the field. Several business schools including the Cass Business School and ESC-Lille offer MBA programs in Islamic finance.
Other News
Pakistan's sixth Islamic bank, First Dawood Islamic Bank, will expand its branch network.
Ed Balls, Economic Secretary in HM Treasury, announced today that the U.K. government will carry out a feasibility study regarding the issuance of Shari'ah-compliant gilts. He was speaking at the FSA confence on Principles-based Regulation.
Global Impact of Islamic Finance
The Harvard Business School student weekly Harbus has an article about the recent event on Islamic finance held at the school on April 13th, 2007.
Islamic home financing & sukuk
A Chicago-based newspaper, the Daily Herald, describes how Islamic home financing works and provides a summary of some of the U.S. Islamic finance companies. The Financial Times provides another general overview of Islamic finance and sukuk.
Careers in Islamic banking - Challenges
The Financial Times describes the challenges facing those who seek careers in Islamic banking with a conventional financial background and education. Because Islamic finance and banking requires an understanding of what is Shari'ah-compliance, as well as how to work with Shari'ah scholars to ensure that all products offered are compliant, those with backgrounds in conventional finance may not be able to succeed in the field. Several business schools including the Cass Business School and ESC-Lille offer MBA programs in Islamic finance.
Other News
Pakistan's sixth Islamic bank, First Dawood Islamic Bank, will expand its branch network.
Thursday, April 19, 2007
Article added to the IHI website
I wrote an article (an earlier version of which was added to this blog) about the Harvard Islamic Finance Project's conference on Islamic microfinance called "Financing the Poor: Towards An Islamic Microfinance" which I attended last Saturday at the Harvard Law School. The article is in PDF format and is called "Islamic Microfinance: A New Approach to Fighting Poverty".
IIFF Europe to be held in Switzerland, new Islamic funds transfer system
IIFF Europe to be held in Switzerland
The International Islamic Finance Forum (IIFF) Europe will held in Switzerland from November 12-15, 2007. There are two cities, Geneva and Zurich, in one of which the IIFF will be held. The conference will focus on Shari'ah-compliant wealth management and private banking. The conference will be added to the IHI conference listings.
Funds transfer system begins between Saudi Arabia and Malaysia
Saudi-based Al Rajhi Bank which also operates in Malaysia has developed a funds transfer system between Malaysia and Saudi Arabia where a card would be purchased in Malaysia allowing withdrawals from Al Rajhi banks in Saudi Arabia. The system will be rolled out to other countries although Malaysia will remain as a hub.
Other news
Derivative technology is now being used with contracts like mudaraba and arboun to replicate swaps and options.
Maybank issues $300 million sukuk.
The International Islamic Finance Forum (IIFF) Europe will held in Switzerland from November 12-15, 2007. There are two cities, Geneva and Zurich, in one of which the IIFF will be held. The conference will focus on Shari'ah-compliant wealth management and private banking. The conference will be added to the IHI conference listings.
Funds transfer system begins between Saudi Arabia and Malaysia
Saudi-based Al Rajhi Bank which also operates in Malaysia has developed a funds transfer system between Malaysia and Saudi Arabia where a card would be purchased in Malaysia allowing withdrawals from Al Rajhi banks in Saudi Arabia. The system will be rolled out to other countries although Malaysia will remain as a hub.
Other news
Derivative technology is now being used with contracts like mudaraba and arboun to replicate swaps and options.
Maybank issues $300 million sukuk.
Wednesday, April 18, 2007
Equity mortgage investment, poverty alleviation and Islamic microfinance
Equity investment in mortgages
On his blog, Mahmoud El-Gamal points out a Business Week article describing parents' investing in their children's mortgages. The product, in which the investor provides some financing, often towards the down payment in exchange for a share of the equity appreciation of the house at some point in the future resembles a musharaka partnership where the profits and losses (in this case, appreciation of the house value) are shared. It provides an example of where conventional financial products overlap with Islamic products (see, for example, the ISNA Canada's Ansar Co-operative Housing Corporation Ltd.).
Islamic microfinance conference in Brunei
The recent conference in Brunei on micro-, small- and medium-sized businesses and Islamic finance turned its focus to poverty alleviation and particularly the important contribution Islamic financial institutions can and need to play.
Other News
Sukuk is growing rapidly in the GCC.
Arcapita Bank celebrates its recent five-year $1.1 billion syndicated murabaha. [Press Release (pdf) from Arcapita]
The Islamic finance industry in the U.K. continues to expand. Today, the former Finance Director of the Islamic Bank of Britain joins the Nottingham Building Society in the same position to focus on the development of Islamic financial products at the Society.
On his blog, Mahmoud El-Gamal points out a Business Week article describing parents' investing in their children's mortgages. The product, in which the investor provides some financing, often towards the down payment in exchange for a share of the equity appreciation of the house at some point in the future resembles a musharaka partnership where the profits and losses (in this case, appreciation of the house value) are shared. It provides an example of where conventional financial products overlap with Islamic products (see, for example, the ISNA Canada's Ansar Co-operative Housing Corporation Ltd.).
Islamic microfinance conference in Brunei
The recent conference in Brunei on micro-, small- and medium-sized businesses and Islamic finance turned its focus to poverty alleviation and particularly the important contribution Islamic financial institutions can and need to play.
Other News
Sukuk is growing rapidly in the GCC.
Arcapita Bank celebrates its recent five-year $1.1 billion syndicated murabaha. [Press Release (pdf) from Arcapita]
The Islamic finance industry in the U.K. continues to expand. Today, the former Finance Director of the Islamic Bank of Britain joins the Nottingham Building Society in the same position to focus on the development of Islamic financial products at the Society.
Tuesday, April 17, 2007
Towards an Islamic Microfinance
UPDATE: The text I included in the blog included an incorrect statement. Please use the following article in PDF format from the Institute of Halal Investing website instead.
News catch up, part three
I have continued to be busy since the conference at Harvard Islamic Finance Program as I travel to New York City to meet with a few journalists about the Institute. I will return to Portland this evening so the blog should return to normal over the next few days.
The Dubai International Financial Center (DIFC) will open the Executive MBA program with Cass Business School. The Financial Times provides some details about the program including a Shari'ah-compliant trading floor.
The Economic Secretary of HM Treasury Ed Balls hosted a "high-level meeting" about Islamic finance at No. 11 Downing Street. The meeting focused on describing the changes in laws made by the government to make Islamic mortgages and sukuk to make them tax-advantageous on par with conventional products.
The Dubai International Financial Center (DIFC) will open the Executive MBA program with Cass Business School. The Financial Times provides some details about the program including a Shari'ah-compliant trading floor.
The Economic Secretary of HM Treasury Ed Balls hosted a "high-level meeting" about Islamic finance at No. 11 Downing Street. The meeting focused on describing the changes in laws made by the government to make Islamic mortgages and sukuk to make them tax-advantageous on par with conventional products.
Thursday, April 12, 2007
News catch up, part two
The U.S. Department of State news service, USINFO, has an article describing the financial institutions in the U.S. which offer Shari'ah compliant products.
A new program in Minneapolis-St. Paul, Minnesota: business microfinancing organized by the city, an NGO, the African Development Center of Minnesota and private lenders which the ADC says is "Islamic-compliant" on their website, although no details are provided.
A new program in Minneapolis-St. Paul, Minnesota: business microfinancing organized by the city, an NGO, the African Development Center of Minnesota and private lenders which the ADC says is "Islamic-compliant" on their website, although no details are provided.
Tuesday, April 10, 2007
News catch up, part one
Malaysia's state-run pension fund Employees Provident Fund (EPF) which last month became the new owner of Rashid Hussain Bhd (RHB) could buy CIMB Bank, which runs an Islamic banking subsidiary CIMB Islamic.
A description of the takaful industry in the Gulf Cooperation Council (GCC) from Standard & Poor's including challenges and opportunities for the the industry.
A description of Islamic finance with specific reference to the market in the U.K. and an article on the U.K.'s lead in providing Shari'ah-compliant financial products.
Japan wants Asia to be the center of the global Islamic finance market and the Japan Bank for International Cooperation (JBIC) may issue sukuk in the future. [Previous posts about JBIC]
Kuwait's National Assembly votes to allow the government to open an Islamic bank, the Jaber Islamic Bank, which will be 24 percent government-owned.
A description of the takaful industry in the Gulf Cooperation Council (GCC) from Standard & Poor's including challenges and opportunities for the the industry.
A description of Islamic finance with specific reference to the market in the U.K. and an article on the U.K.'s lead in providing Shari'ah-compliant financial products.
Japan wants Asia to be the center of the global Islamic finance market and the Japan Bank for International Cooperation (JBIC) may issue sukuk in the future. [Previous posts about JBIC]
Kuwait's National Assembly votes to allow the government to open an Islamic bank, the Jaber Islamic Bank, which will be 24 percent government-owned.
Slipped through the cracks
I missed an article last Wednesday on FT.com about Islamic investing. The article is particularly interesting because it tackles headon the issue of whether Shari'ah-compliant products are viewed as Islamic by most Muslims. With the advent of Islamic credit cards and hedge funds, the differences between Islamic and conventional financial products becomes blurred. One revealing detail from the story is a comment from Rushdi Siddiqui, Global Director of the Dow Jones Islamic Market Indexes. Commenting on Shari'ah Capital's Shari'ah-compliant hedge fund for which Sheikh Yusuf DeLorenzo, a member of the Dow Jones Shari'ah Board, serves as Cheif Shari'ah Officer (CSO), he says, "“Islamic finance is about addressing inequality, inaccessibility, justice, preventing the ‘debt trap’ etc. I, and many others, do not see how an Islamic hedge fund addresses the plight of Muslim men and women on the street.” The challenge of all ethically-based investments is that the final call about permissability has to be made by the individual and thus one size will not fit all.
Friday, April 06, 2007
New firms in the DIFC and QFC and and profile of an American community bank with Islamic financing
Oasis Crescent Capital Partners, the DIFC-based subsidiary of the South African company Oasis Group Holdings, will launch Shari'ah-compliant funds. The funds on which they will focus are fixed income (investing in sukuk) and real estate funds.
Al Rayan Investment, a subsidiary of Masraf Al Rayan, received a license to operate at the Qatar Financial Centre (QFC). It is the first Islamic financial institution to receive a license for the QFC.
An article on community banking in the U.S. describes Islamic banking products available from Devon Bank in Chicago, Illinois.
Al Rayan Investment, a subsidiary of Masraf Al Rayan, received a license to operate at the Qatar Financial Centre (QFC). It is the first Islamic financial institution to receive a license for the QFC.
An article on community banking in the U.S. describes Islamic banking products available from Devon Bank in Chicago, Illinois.
Thursday, April 05, 2007
Describing Islamic finance, Islamic CDs, sukuk and Saba IB joins IFC
Good description of Islamic finance
Often, news sources use simplistic language to describe Islamic finance which leaves those unfamiliar with the field with an incorrect impression that Muslims are forbidden from making profit because the phrase "Islam forbids interest" is used without explanation. However, the article about TSB Lloyd's new Shari'ah-compliant business account describes Islamic finance in a much clearer way:
This description provides unfamiliar readers with a clearer explanation closer to the Quranic verse "They say 'Trading is only like riba,' whereas Allah has permitted trading and forbidden riba" [2:275]
Other news
The Central Bank of the UAE plans on creating an Islamic CD to manage short term liquidity. The issue of liquidity is one of the most challenging issues facing Islamic banks. Their deposits are short-term and most investment opportunities that are Shari'ah-compliant are long-term and very illiquid. Malaysia has created an Islamic interbank money market (IIMM), but many scholars in the Middle East do not consider it Shari'ah-compliant.
Islamic bonds (sukuk) could provide a significant future opportunity for London according to the director of Islamic finance advisory at KPMG, Darshan Bijur.
Saba Islamic Bank joins International Finance Corporation becoming the first bank in Yemen to do so
Often, news sources use simplistic language to describe Islamic finance which leaves those unfamiliar with the field with an incorrect impression that Muslims are forbidden from making profit because the phrase "Islam forbids interest" is used without explanation. However, the article about TSB Lloyd's new Shari'ah-compliant business account describes Islamic finance in a much clearer way:
"Muslims are thus also permitted to profit from financing businesses, but they must take equity risk in the manner of a stockholder, rather than have a guaranteed return, as is the case with bank accounts and traditional bonds."
This description provides unfamiliar readers with a clearer explanation closer to the Quranic verse "They say 'Trading is only like riba,' whereas Allah has permitted trading and forbidden riba" [2:275]
Other news
The Central Bank of the UAE plans on creating an Islamic CD to manage short term liquidity. The issue of liquidity is one of the most challenging issues facing Islamic banks. Their deposits are short-term and most investment opportunities that are Shari'ah-compliant are long-term and very illiquid. Malaysia has created an Islamic interbank money market (IIMM), but many scholars in the Middle East do not consider it Shari'ah-compliant.
Islamic bonds (sukuk) could provide a significant future opportunity for London according to the director of Islamic finance advisory at KPMG, Darshan Bijur.
Saba Islamic Bank joins International Finance Corporation becoming the first bank in Yemen to do so
Wednesday, April 04, 2007
Conference on MMEs & Conversation with Salman Younis
First International Conference on Inclusive Islamic Financial Sector Development
ENHANCING ISLAMIC FINANCIAL SERVICES FOR
MICRO AND MEDIUM SIZED ENTERPRISES (MMEs) (Program)
April 17-19, 2007 at the Universiti Brunei Darussalam
Sponsored by Islamic Research and Training Institute (IRTI) and the Centre on Islamic Banking Finance and Management (CIBFM)
This and other conferences are listed on the IHI Conference listing page.
The Asian Banker sits down with Salman Younis, Managing Director of Kuwait Finance House (Malaysia) Bhd who was recently awarded the Asian Banker Achievement Award for Islamic Finance.
ENHANCING ISLAMIC FINANCIAL SERVICES FOR
MICRO AND MEDIUM SIZED ENTERPRISES (MMEs) (Program)
April 17-19, 2007 at the Universiti Brunei Darussalam
Sponsored by Islamic Research and Training Institute (IRTI) and the Centre on Islamic Banking Finance and Management (CIBFM)
This and other conferences are listed on the IHI Conference listing page.
The Asian Banker sits down with Salman Younis, Managing Director of Kuwait Finance House (Malaysia) Bhd who was recently awarded the Asian Banker Achievement Award for Islamic Finance.
Tuesday, April 03, 2007
Economic goals in Islamic countries & other news
Economic goals in Islamic countries
Farooq Tirmizi, a student at the Georgetown University School of Foreign Service with a column in the student newspaper The Hoya, has a very interesting article about the role of Islamic finance in defining "in a uniquely Islamic manner, the economic goals that governments must pursue".
Other news
EPF purchase of stake in Rashid Hussain Bhd was not a bailout says the Malaysian government's Second Finance Minister Tan Sri Nor Mohamed Yakcop.
Lloyds TSB will offer Shari'ah-compliant business financing.
Shari'ah-compliant home financing will grow significantly in the U.K.
Farooq Tirmizi, a student at the Georgetown University School of Foreign Service with a column in the student newspaper The Hoya, has a very interesting article about the role of Islamic finance in defining "in a uniquely Islamic manner, the economic goals that governments must pursue".
Other news
EPF purchase of stake in Rashid Hussain Bhd was not a bailout says the Malaysian government's Second Finance Minister Tan Sri Nor Mohamed Yakcop.
Lloyds TSB will offer Shari'ah-compliant business financing.
Shari'ah-compliant home financing will grow significantly in the U.K.
Monday, April 02, 2007
Islamic banking to the poor, women in Islamic finance and Luxemborg vies to be a western hub for IF
Islamic banking underserves the poor
An article that came out this weekend addressed an interesting point. Do Islamic banks address only a few wealthy Muslims or can they do more to reach poorer Muslims. My personal belief is that the Islamic finance has not yet developed a model for serving poorer Muslims, but that the success of the Grameen Bank at reaching the poor has caught the attention of the industry and halal microfinance will develop over the next few years. Here at the IHI, we are working on a halal microfinance program and there is an Islamic microfinance conference occuring on April 14th at Harvard University's Islamic finance project to try and bridge the gap between the Islamic finance industry and the microfinancing industry. I think this is an area with significant potential which will be a valuable asset for the Islamic banking portfolio. One of the other areas in which Islamic banking should look to expand is providing additional services for middle class Muslims, particularly those in the West.
IIFF discusses role for women in Islamic finance
The International Islamic Finance Forum which opened today in Dubai addressed the role for women in Islamic finance. Addressing the forum was HE Sheikha Lubna Al-Qasimi the UAE Minister of Economy and Chief Executive of Tejari, a Middle Eastern business-to-business online marketplace. The article describes how "It is important for women to take their place in IF not only to broaden the appeal, but also to alleviate a potential bottleneck in the growth of IF due to a general shortage of suitable professionals." While there are cultural barriers to increasing the role of women in Islamic finance, the industry has a need for female professionals to continue growing rapidly and to provide service in banks like the Saudi women-only branches.
Luxembourg jumps into competition as western hub of Islamic finance
The Luxembourg Stock Exchange entered the competition to become the western hub for the Islamic finance industry by reducing the regulatory burden for issuing sukuk. The new regulations will treat sukuk in a similar way they are treated in the U.K. A lawyer working in the industry describes that "It's not exactly the same and it's still considered best to be asset-backed, but they will not apply the same disclosure rules to securities, so you won't have to provide the same detail on the underlying assets."
Other news
The Bahrain Chapter of the Institute of Chartered Accountants of India will hold a seminar on Islamic finance this week.
A forthcoming five year plan will reveal plans by Gulf Finance House to expand into Asia
Dow Jones will begin two new indexes as part of its Islamic Market Indexes tracking Shari'ah compliant stocks on the Dubai Financial Market. The indexes are the Dow Jones DFM Index and the Dow Jones DFM Titans 10 Index.
After reports that EPF wanted two English banks to be strategic partners, Rashid Hussain Bhd, the banking group for which the partners were sought denies knowing of the partners.
An article that came out this weekend addressed an interesting point. Do Islamic banks address only a few wealthy Muslims or can they do more to reach poorer Muslims. My personal belief is that the Islamic finance has not yet developed a model for serving poorer Muslims, but that the success of the Grameen Bank at reaching the poor has caught the attention of the industry and halal microfinance will develop over the next few years. Here at the IHI, we are working on a halal microfinance program and there is an Islamic microfinance conference occuring on April 14th at Harvard University's Islamic finance project to try and bridge the gap between the Islamic finance industry and the microfinancing industry. I think this is an area with significant potential which will be a valuable asset for the Islamic banking portfolio. One of the other areas in which Islamic banking should look to expand is providing additional services for middle class Muslims, particularly those in the West.
IIFF discusses role for women in Islamic finance
The International Islamic Finance Forum which opened today in Dubai addressed the role for women in Islamic finance. Addressing the forum was HE Sheikha Lubna Al-Qasimi the UAE Minister of Economy and Chief Executive of Tejari, a Middle Eastern business-to-business online marketplace. The article describes how "It is important for women to take their place in IF not only to broaden the appeal, but also to alleviate a potential bottleneck in the growth of IF due to a general shortage of suitable professionals." While there are cultural barriers to increasing the role of women in Islamic finance, the industry has a need for female professionals to continue growing rapidly and to provide service in banks like the Saudi women-only branches.
Luxembourg jumps into competition as western hub of Islamic finance
The Luxembourg Stock Exchange entered the competition to become the western hub for the Islamic finance industry by reducing the regulatory burden for issuing sukuk. The new regulations will treat sukuk in a similar way they are treated in the U.K. A lawyer working in the industry describes that "It's not exactly the same and it's still considered best to be asset-backed, but they will not apply the same disclosure rules to securities, so you won't have to provide the same detail on the underlying assets."
Other news
The Bahrain Chapter of the Institute of Chartered Accountants of India will hold a seminar on Islamic finance this week.
A forthcoming five year plan will reveal plans by Gulf Finance House to expand into Asia
Dow Jones will begin two new indexes as part of its Islamic Market Indexes tracking Shari'ah compliant stocks on the Dubai Financial Market. The indexes are the Dow Jones DFM Index and the Dow Jones DFM Titans 10 Index.
After reports that EPF wanted two English banks to be strategic partners, Rashid Hussain Bhd, the banking group for which the partners were sought denies knowing of the partners.
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