Islamic finance could have its limitations

Booker said this while addressing top notch financial industry professionals at MONEYworks’ Centennial Lunch held in Dubai on April 5.

He said that while Islamic finance has truly come of age, growing 15-40 per cent a year generating great deal of excitement, new entrants and international interest, there is a need to exercise caution, as some areas of finance may not meet the requirements of the Islamic principles.

“It may sound odd coming from a British banker, but we must not lose sight of the principles of Shari’ah. It is HSBC’s position that we will never market or sell a product as Islamic without a recognised fatwa. There is a possibility that some areas of finance will never achieve an acceptable fatwa. I do not see, for example, how a derivative product based on forward interest rates can ever be Shari’ah-compliant, and this caution should inform all providers,” he said.

But he also added that until a few years ago no-one would have predicted an Islamic card, and yet these are now commonplace.

Speaking on the “Changing dynamics of banking in the Middle East”, he also emphasised the need for growing and improving human capital in the region. He also spoke about the need for consolidation of the banking industry, credit and risk management.

Khuram Chaudhry, chief European quantitative strategist with Merrill Lynch, who also addressed the Centennial Lunch, talked about investment strategy themes for the coming months. He outlined rising global interest rates, contraction of liquidity growth, slower growth in profits and a global economic slowdown as the most important themes in the near future. He urged non-US investors to consider hedging their US dollar exposure and predicted that non-US Asian currencies, especially Korea, Singapore, Taiwan and China would do well.

The luncheon was also attended by Saud Al Amiri, chairman of Rasalmal Financial Publishing, the publishers of MONEYworks, who welcomed the guests at the event. Al Amiri said that the MONEYworks Group of publications is committed to providing regional research and credible and objective financial information to its readers.

He said: “We at the MONEYworks Group look forward to a strong future for the financial services industry in the region. With new international financial markets coming up along with sophistication matching global standards, we are excited about the prospects of financial publishing as well. We are very confident that we will match the requirements of the industry in the years to come in the region.”

The MONEYworks centennial lunch was augmented by event partners, including Tameer, National Bank of Dubai, BMW, Emirates Holidays, Palazzo Versace Hotels and Gold Coast Tourism.