Bank Islam To Set Up 25 New Branches Within Three Years

KUALA LUMPUR - Bank Islam Malaysia Bhd plans to set up 25 new branches within the next three years, said managing director Datuk Zukri Samat Wednesday.
"The bank, which currently has 90 branches, will allocate between RM500,000 and RM600,000 for each branch, depending on the location," he told reporters after the signing of a strategic partnership agreement with Amanah Raya Bhd here Wednesday.
Under the partnership, Amanah Raya will be the will writer, custodian and executor, while the Bank Islam will sell and distribute the services.

Zukri said the bank expected to generate a revenue of RM1.5 million from will writing service by year-end and attract 1.5 million customers.

Pakistan's Faysal Bank to Expand Outlets, Open Islamic Division

Faysal Bank Ltd. plans to expand its domestic branch network in Pakistan and start a new Islamic division to take advantage of rising demand for Shariah-compliant products and farm loans.

The bank will increase its number of outlets to 150 by December 2009, and will start the Islamic banking unit next week, Chief Executive Officer Naved A. Khan said in an interview at his Karachi head office yesterday. The bank, Pakistan's ninth-biggest, has 107 branches across the nation and plans to add 23 this year.

Khan is seeking to keep pace with bigger rivals including Bank Alfalah Ltd. in an economy forecast to grow 5.8 percent this fiscal year. Overseas banks such as ABN Amro Holding NV and Standard Chartered Plc are expanding in Shariah-compliant finance, a market Standard & Poor's estimates is worth $500 billion and growing 10 percent annually on booming oil revenue.

RHB expanding in Asean region

KUALA LUMPUR: RHB Bank Bhd intends to expand its presence within the Asean region to countries like Vietnam and Indonesia, said group managing director Michael Joseph Barrett.

International operations were expected to contribute 10% of earnings by 2010, from 4% in fiscal year 2007, he said after the RHB Capital Bhd AGM yesterday.

“Indonesia is a vibrant market with many Malaysian companies operating there. Furthermore, its economy is driven by natural resources,” he said, adding that the bank was looking for acquisition opportunities.

The bank, which already has a presence in Thailand and Brunei, intends to widen its footprint in those countries.

Amid concerns of a global economy slowdown, Barrett believes there are opportunities to be tapped, as prices of assets are likely to come down.

Barrett said RHB Bank was expected to reduce its non-performing loans ratio to below 3% and improve return on equity and return on assets to 15% and 1% respectively by year-end.

It also intends to open eight to 10 new conventional banking offices and six to eight Islamic banking branches throughout Malaysia this year.

Despite its growth Islamic finance faces obstacles

Islamic Finance, although still exotic to many bankers, is well-known to be one of the fastest growing segments in global finance.

The figures related to this sector have become commonly known over the last few years:

• The value of global transactions is estimated to be somewhere between $500bn to $1 trillion.

• Islamic finance grows at 15% to 20% annually, doubling at least every five years.

• The market for Islamic insurances, Takaful, grows at 25% annually, but from a relatively low basis of around $4bn currently.

• There are 470 Islamic financial institutions worldwide.

Less well-known are the obstacles faced by the infant industry. These hurdles have been discussed by the speakers of the forum at the first Middle East International Banking, Financial Technology & Services Exhibition (MEFX) in Dubai.

Sanjay Vig, Managing Director at DIFC-based Alpen-Capital, says that Western regulators such as the Swiss Banking Commission failed to develop clear rules for Islamic Banking: 'The lack of initiative kept the 'the world's safe' from entering Islamic finance as intensively as banks in the UK did.'

Islamic finance in need of more diversity

A lack of diversity in their investments could mean Islamic asset managers lose out to conventional firms, a report published last week said.

Accounting firm Ernst & Young said Muslim investors hold $1.6 trillion in assets of all kinds, a figure forecast to rise to $2.7 trillion by 2010.

Islamic funds, which invest in accordance with Islamic law, ignore important asset classes and in Saudi Arabia, one of the world's two biggest markets for Islamic asset management, fund subscriptions have fallen since 2005, the report said.

"As demand for diversification grows, Islamic institutions will face the risk of losing significant market share to conventional institutions that can provide more comprehensive coverage," Ernst & Young said in the report.

By the end of March there were more than 500 funds globally that comply with Islamic law, Ernst & Young said in its Islamic Funds and Investments report, launched at a two-day Islamic banking conference that ended last Monday.

Some 153 Islamic funds were launched last year, and the figure is projected to rise to 1,000 funds by 2010, Ernst & Young said.

Indonesia Prepares an Islamic Bonds Industry

The world’s biggest Muslim nation struggles to build its Islamic finance industry

In a bid to drive growth in the fledgling Islamic bonds industry, Indonesia’s central bank says it will relax the rules for investors who buy the bonds.

Despite being home to roughly 10 percent of the world’s estimated 1.3 billion Muslims, Indonesia has struggled to build up its Islamic finance industry, lagging well behind countries such as Malaysia, Singapore and even Pakistan.

However, the recent introduction of a new law that would allow the government to issue Sukuk, or Islamic bonds, is expected to trigger significant growth in the sector. The government announced this week it has already set aside US$2 billion in assets to back the bonds, which it expects to sell in two separate issues this August and October. Sukuk bondholders are paid income derived from assets such as rent from property because Islamic law bans lending for interest.

Mulya Siregar, Bank Indonesia’s head of Islamic finance, pledged this week that the central bank would change the rules surrounding Sukuk to boost investor interest in the securities.

As the rules stand, investors in Islamic bonds are required to hold them until maturity

AMU now offers Islamic banking and finance course

Aligarh Muslim University officials noted the presence of a number of banking enterprises working on Islamic banking principles. Looking at the employment potential, the University has decided to offer a PG diploma course in Islamic banking & finance..

THE ALIGARH Muslim University (AMU) will be offering a course on Islamic banking and finance from the next academic year onwards. Vice chancellor, professor PK Abdul Azis, recently had a detailed discussion with a team of experts consisting of Dr Mohammad Nejatullah Siddique, former AMU professor and a well known expert on Islamic banking and finance, Sayed Mohammad Beary and Dr Sariq Nasir of Bearys Amnah Investments Pvt Ltd, Bangalore, regarding the commencement of the course.

The meeting noted rapid changes taking place in the banking arena, both within India and abroad, moving towards principals that guide Islamic banking and finance management systems. The meeting noted the presence of a number of banking enterprises in India working on Islamic banking principles and the segment is poised for rapid growth. In the context of the emerging growth and employment potential, the University has decided to offer a post graduate (PG) diploma course in Islamic banking and finance from the next academic year onwards. Dr Azis said that University would also consider the possibility of establishing a new department dedicated for this branch in the Aligarh Muslim University.

The vice chancellor has constituted a high power committee consisting of Dr Mohammad Nejatullah Siddiqui (chairman), Dr Shariq Nisar (Bearys Amnah Investment Pvt Ltd, Bangalore) and Dr Javed Akhtar, chairman, department of business administration, AMU, to prepare a detailed proposal for commencing this programme. The committee is expected to submit its report within two months.

BBT gets new head of banking division

BBT has announced the appointment of Evan Grous as the new head of its banking, accountancy and finance division, operating out of the Dubai International Financial Centre (DIFC).

Grous, an Australian national, joins BBT from a search and recruitment company in Sydney, Australia, where he was business manager for Asia and the Middle East.

The banking, accountancy and finance division focuses on investment; local and international banking; Islamic banking; private equity; accounting into industry sectors; insurance; global resourcing and HR consultancy services.

The division opened in 2007 in response to the rapid growth in the sector within the region, with its epicentre in the DIFC, and the associated demand for world-class skills. BBT is working to attract specialists in areas such as Islamic banking and finance to Dubai, through its global network of resourcing offices.