June 2011

A few excerpts from the coverage of the 8th summit of Islamic Finance Services Board (IFSB) in gulfnews today:

Islamic banking and finance is becoming increasingly popular in the West since financial institutions in non-Islamic regions took a closer look at the sector after the global economic crisis. Instruments based on Islamic values seemed more stable and sustainable during the crisis than most vehicles used by the Western financial model.

The global Islamic finance industry is valued at $1.14 trillion (Dh4.3 trillion), as per the Global Islamic Finance Report 2011 published by BMB Islamic in March 2011. According to an estimate by ratings agency Moody's issued last June, the potential for Islamic banking could even reach up to $5 trillion by 2014. Worldwide, there are about 300 Sharia-compliant banks in operation.

The Islamic finance sector in the UK is the biggest in Europe, with London the most important centre for Sharia-compliant banking and financing outside the Muslim world. It accounts for up to $20 billion invested in Islamic assets.

Link: http://gulfnews.com/gn-focus/islamic-finance/islamic-banking-goes-west-1.825718

The newly received permission from Central Bank of Oman to allow Islamic banking in the country is expected to provide a major boost to what is already one of the fastest growing subsectors in banking globally. Global Shari’a-compliant assets are estimated to have crossed $1 trillion in 2010, growing at a sustainable 15-30 per cent per annum.

A successful roll-out of Islamic banking system could easily see the industry in Oman gaining up to US$6 billion in Islamic assets over next few years, according to estimates by Ernst & Young’s Islamic Financial Services Group (IFSG).Shari’a-compliant financial institutions, which are expected to commence operation in the country within a short period, are expected to capture a substantial share of Omani banking assets, estimated at $42 billion in 2010.

Link: http://www.ey.com/EM/en/Newsroom/News-releases/MENA-_June_Oman-to-add-US-6-billion-in-Islamic-assets--Ernst---Young

Very well-research article on how London and Luxembourg Stock Exchanges are vying for a piece of the sukuk listing pie, with London currently having the ‘upper hand’ as the more entrenched player.

In a short and simple announcement on June 1, the London Stock Exchange welcomed "the listing of another two sukuk bringing the total number of sukuk which have listed on the exchange to 33 and the total money raised to $19.4 billion." One of these, the Jeddah-based IDB Trust Services was pursued by Luxembourg authorities as well, but they found the Luxembourg authorities to be less aware of sukuk structures as London authorities.

But Luxembourg is developing rapidly as a close contender to London for foreign listings, with a total of 16 sukuks listed so far with a combined value of $7.3bn.

The article also argues that UK’s 5 Islamic banks have emerged through the financial crisis with very strong balance sheets and “have distinct business plans that complement rather than crowd the market”.

Link: http://www.zawya.com/story/ZAWYA20110606031302/Sukuk_Battle/