Regional Islamic banks urged to consolidate

The call came during the International Islamic Finance Forum (IIFF) Europe which concluded recently at the Swissotel in Zurich. Over 120 conventional and Islamic banks throughout the region, participated in the Deloitte survey and the key findings were announced to more than 200 international industry professionals, gathered in Zurich for the first time.

"Dubai has been chosen to host the next Islamic Finance Forum on 2-5 April 2007 at the Jumeirah Beach Hotel and a part of the agenda will be dedicated to what progress the industry has made in response to the recommendations in the survey,"

stated Christianna Tsiterou, International Islamic Finance Forum (IIFF), Director.

One issue identified was that although GCC financial institutions were currently performing strongly but did not excuse the lack of consideration for the long term merits of consolidation, indeed as general industry consolidation is a fast-paced, one-off plan, early movers often realised an advantage. Additionally Islamic banks still needed to develop a mature compelling customer proposition, for which consolidation may be an even more urgent consideration.

Presenting the findings of the survey, Vince Colvin, Strategy Consulting Partner, Deloitte, UK, commented, "Given the dynamic and potential of this market, I would not recommend under investment in the development of strategy."

In a complementary session, Hussein A. Hassan, Global Markets Equity, Deutsche Bank AG, UAE expanded on the current Islamic finance offering and stressed the need for innovation in the Islamic finance arena. The forum also covered broad ranging topics such as wealth management and private banking, asset management and investment banking, corporate finance and regulatory issues and Islamic retail finance.

During his keynote address on day one, Khalid Abdulla Janahi, Chairman of Faisal Private Bank (Switzerland) SA, was keen for finance professionals to agree and dispel certain 'industry myths' concerning two key issues. "Conventional banks are not providing human capital for Islamic banks, in truth Islamic banks are producing the talented industry professionals. Secondly, we do not simply take conventional products and turn them into Sharia'a compliant products, they are home-grown by Sharia'a Scholars," he said.

To address these issues Janahi recommended that Islamic banks invest in human capital, create innovative Sharia'a compliant products and install regulations to provide a safe haven for Islamic wealth.

The forum also discussed the virtues of Islamic bonds, the mortgage market, investment banking, wealth management and private banking, risk management, project financing and the fast developing Takaful funds. Other interesting facets debated were Islamic accounting, Islamic Life assurance and bancassurance.

In total, over 50 expert speakers addressed the forum, including Rushdi Siddiqui, Global Director, Dow Jones Islamic Indexes, USA; Alex Barkawi, Managing Director, SAM Indexes GmbH, Switzerland; Maurice Baudet, Director General Association Suisse des Gérants de Fortune (ASG), Switzerland; Fares Ahmed Mourad Director Asset Management Division, Global Head -Islamic Investments, Credit Suisse, Switzerland.