Islamic Banking

Lloyds TSB has launched a new bank account that enables Muslims to transfer money around the world without breaking the rules of Islam.

The group claimed its Islamic Nostro Account was the first of its kind to be offered by a mainstream Western bank. When individuals and businesses send money to other countries the funds are passed through a Nostro account.

The Lloyds TSB account is designed to comply with the principles of Shariah law, and it does not pay interest on any money held in the account and does not offer an overdraft facility.

It also guarantees that funds will not be invested in certain industries, such as those involved in alcohol or gambling, which are prohibited under Islam.

There are around two million Muslims in the UK and around 100,000 Muslim firms, many of which regularly make or receive international payments through the 250 Islamic banks worldwide.

Diana Brightmore-Armour, chief executive of corporate banking at Lloyds TSB, said: "Lloyds TSB has established itself as one of the leading providers of Islamic finance across the UK. But we are now seeing a rising demand, from Muslim businesses and personal customers, for Islamic banking across borders.

"We’ve designed this account to help the growing number of Islamic banks across the world, which deal with our customers’ transactions.

"We’re providing the missing link in the chain, so now any person or business receiving payments from abroad into their own Islamic account knows the money will be dealt with according to Islamic law, from start to finish."

The new account is the latest in a series of Shariah compliant products launched by Lloyds TSB in the past two years, including a current account, business and corporate account, a mortgage product and an investment fund.

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Tokyo - Japanese megabanks are trying to increase their presence in the Islamic finance industry, Japanese media reports said Tuesday.

Bank of Tokyo-Mitsubishi UFJ has invested in Malaysian investment bank CIMB with a 30-per-cent share in the global business of issuing Islamic bonds, or Sukuk.

Another Japanese financial giant Sumitomo Mitsui Banking Corp helped finance construction of oil refineries in Saudi Arabia in 2006 and Kuwait last year as part of its strategies to tap Islamic finance for investments in petrochemical plants and large-scale projects in the Middle East, Jiji Press said.

The banking institutions must break into the Islamic finance industry in order to expand their businesses in the Middle East, where large-scale projects are in progress thanks to rising oil prices, an analyst was quoted as saying.

With the continuing surge in oil prices, the Islamic finance industry is expected to double by 2010 to 1 trillion dollars.

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HONG KONG: Hong Kong aims to become a world centre for Islamic finance, luring Middle Eastern investors keen to grab a slice of the booming Chinese economy, the city’s financial secretary said Tuesday.

John Tsang said the southern Chinese city was ideally placed to help oil money from the Islamic world get access to infrastructure and other development projects in the mainland. “I believe Hong Kong can play an important role in generating new, reliable and potentially lucrative investment opportunities for this capital,” he told a conference on Islamic Finance here.

The huge demand for capital in the mainland, in particular infrastructure projects, could be funded by Islamic bonds, or Sukuk, which are suited to such large-scale investments, Tsang said.

“Hong Kong can be expected to play a significant role in structuring and financing Islamic investment products to meet the needs of mainland borrowers,” he said.

Tsang said the city’s financial institutions had already begun work on making sure the legal and taxation systems will allow products compatible with Muslim laws.

He added some banks had already started creating products to try and secure part of the worldwide market, which has swelled in recent years to between 700 billion and a trillion US dollars on the back of high oil prices.

Hong Kong’s Chief Executive Donald Tsang announced in his policy address last year that developing Islamic banking would be a priority for the territory. He will make a trip to Kuwait, Saudi Arabia and the United Arab Emirates next week to try and drum up business.

Malaysia is currently the leading global hub for Islamic finance, analysts say, with Indonesia, Pakistan, Thailand and Singapore competing along with Hong Kong. afp

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