Islamic Banking

Singapore’s first Islamic bank is looking for opportunities in Qatar, its chief executive officer has said.

The Islamic Bank of Asia, with a paid up capital of US$500mn was incorporated in May 2007, and its major shareholders include DBS, Singapore’s largest bank and some prominent businessmen based in the GCC region. Islamic Bank of Asia (IB Asia) chief executive officer, Vince Cook told Gulf Times here though the bank had not set any timeframe to expand to Qatar, IB Asia wanted to achieve it in the “medium term”.

“Qatar is a booming and very promising economy. We believe we will have significant opportunities there for growth. We have our eyes definitely set on Qatar,” Cook said without elaborating. (A general manager with QNB in charge of corporate banking and capital markets till last year, Cook had visited Qatar in early 2008 as part of a high-level Singaporean delegation led by the city state’s senior minister, Goh Chok Tong.

He said IB Asia focused on wholesale commercial banking, corporate finance, capital markets and private banking services.

“We are well-versed in typical Shariah-compliant structures that employ concepts such as Murabaha, Musharaka, Mudaraba, Ijarah and Istisna. We continually seek to create new and innovative solutions to our clients’ needs, especially in the Gulf region who are seeking new markets and innovative ways to protect and grow their wealth in line with Islamic principles,” he said.

Asked whether IB Asia would have adequate room for expansion given the neighbouring Malaysia’s head start in Islamic banking, Cook said: “We are not in competition with anyone. We are only trying to complement efforts in Islamic banking which is growing by leaps and bounds.” He said, “Although we are a dedicated and independent Islamic bank, we are fortunate to have promoters such as DBS, the Southeast Asia’s largest bank, and some prominent investors based in the GCC region. “Our goal is to create one of the largest, most profitable, innovative and truly Islamic universal banks in the world with significant positions across the GCC region and Asia.”

Cook said: “IB Asia is ideally positioned to facilitate access to Asian and Middle East investment opportunities and distribution capabilities.” He said IB Asia together with DBS was a mandated lead arranger (MLA) in many Islamic deals including the US$600mn Murabaha facility for Qatar’s Barwa in June 2007.

“We look forward to playing a key role in such syndications in future,” Cook said. The Singapore-headquartered IB Asia received a banking licence from the Central Bank of Bahrain to set up a representative office in the kingdom in October last year.

Besides being QNB general manager (corporate banking and capital markets) Cook was also the chairman of Qatar Capital Partners (when it was under formation), and a director of both QNB International Holdings and Ansbacher Group Holding. During this period he was responsible for the bank’s Islamic business before spinning it out into a new unit QNB Al Islami. Under his leadership, QNB launched the first corporate sukuk transaction in Qatar.

Source: Gulf Times

SINGAPORE : Some of the top bankers from the Gulf are in Singapore to encourage Asian countries to take advantage of the growth in Islamic banking.

Arab bankers want to tap into Asia’s experience. A special Arab Asia Financial Forum was held on the sidelines of the IMF/World Bank meetings.

Unlike conventional banking, Islamic law prevents the collection of interest payments or trading in financial risk, which is seen as gambling.

And it is big.

According to the Union of Arab Banks, there are some 470 Arab banks managing assets worth more than US$1 trillion, US$632 billion of which are deposit-based.

While growth in this sector is healthy in the Gulf states, banks there are looking to expand beyond the Arab world and Asia is one destination.

Dr Joseph Torbey, President of the Union of Arab Banks, said: "Also let me take the opportunity to express the Union of Arab Banks’ willingness to further cooperate in the future with international organisations to enhance the cooperation between Asian and other organisations, and contribute effectively and increasing the volume of economic exchanges between Asian countries and the Arab world."

Resource-rich states like Qatar are looking beyond just refining crude oil in Singapore.

Mr R. Seetharaman, Deputy Chief Executive of Doha Bank, said: "We need professional intermediaries, knowledge-based by collaboration. Also, billions of dollars have been going on capital expenditure for infrastructure creation as well as industry expansion from Qatar. Singapore banks can participate in the project financing opportunities."

But the synergies, knowledge transfer, and investments cannot flow if challenges are not tackled.

Islamic bankers say upgrading Islamic banking to international standards is one key factor in making the sector flourish.

Dr Torbey said: "Today some Arab markets specifically Bahrain, Qatar, Saudi Arabia, and UAE, are in the process of building comprehensive financial hubs to attract most Arab and international capital as well as international financial and banking institutions."

Mr Seetharaman added: "Singapore has been the third largest partner for Qatar. You look at its objective. Qatar is a huge reserve of oil and gas, and you have a refinery here. Singapore is in between Japan and Qatar, the largest trading partner for Qatar is Japan.

"As a financial centre, it can add value. We need Islamic finance, we need professional intermediaries knowledge-based by collaboration. Also billions of dollars have been going on capital expenditure for infrastructure creation, as well as industry expansion from Qatar. Singapore banks can participate in the project financing opportunities." - CNA/de

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The Qatar International Islamic Bank (QIIB) is keen to tap the vast expatriate population in the country, non-Muslims in particular. QIIB strategists hope to reach out to the expatriate communities by spreading general awareness about Islamic banking.

Islamic banking is not for Muslims alone. This is the first and foremost thing that needs to be made clear, says Abdul Basit Al Sheibi, general manager of QIIB. The basic difference between conventional and Islamic banking is that the latter’s focus is on making a society savings-oriented rather than encouraging people to spend.