European banks to debate Sharia'a compliance

The event will focus on the growing demand for Sharia'a compliant wealth management and private banking services. It is estimated that Arab investors have more than US$ 800 billion on deposit in overseas banks, much of which is secured in European banks, in particular Swiss banks.

Forum Director, Christianna Tsiterou, remarked, "With so much Arab capital deposited in Swiss banks and growing demand for Sharia'a compliance in wealth management and private banking, Zurich is the perfect location to launch IIFF Europe."

Significant steps have been taken to broaden the appeal of conventional banking products, such as Socially Responsible Investments (SRI) but with potentially more to lose than any other, Swiss banks are now answering the increasing number of calls for Sharia'a compliance, by making concerted efforts to adopt the fundamentals of Islamic finance as an alternative to their conventional financial services.

According to a Merrill Lynch World Wealth Report, it is estimated that there are more than 300,000 millionaires (US$) in the Middle East with a combined wealth of US$ 1.2 trillion. As such the region has been an attractive and profitable market for European private bankers. In turn Arab investors have traditionally been drawn to wealth management and private banking, attracted by the personal touch and strict confidentiality, as well as services such as wealth structuring, investment strategies and transfer of wealth especially to younger generations.

However, calls for Arab investors to repatriate their wealth due to anti-Western sentiment in the wake of 9/11, the recent Lebanese crisis, sluggish European stock markets and attractive Mid East property investment opportunities, have seen many hundreds of millions of dollars return to the Middle East.

Ironically, deposits have remained unaffected due to the massive budget surpluses recorded by Middle East Governments, created by the consistently high oil prices. Kuwait for example currently earns in the region of US$ 5 billion per annum from overseas investments, but future deposits remain a concern.

There has already been a 20 per cent reduction in the price of oil so far this year and according to certain analysts prices in excess of US$60 are not sustainable, despite recent cuts in production by Venezuela and Nigeria.

"European banks need to understand, embrace and implement the fundamentals of Sharia'a compliance if they are to increase Arab deposits in the long term," commented John Sandwick, Managing Director of Encore Management SA, Switzerland.

A keynote session on the IIFF programme features a panel of industry experts who will examine how Western banks can tap in the growing investor base, looking for Islamic wealth management. The session will aim to identify Europe's comparative advantage, namely its tradition for advising on tailor-made portfolios and how Islamic has been competing with conventional wealth management. Issues such as the role of Sharia'a boards and the future of Islamic wealth management as well as a comparison between Islamic and socially responsible investment, will also be discussed.

In total twenty in-depth sessions covering a wide range of topics, including a special 'Leaders In Islamic Finance' session that will examine 'Emerging Markets In The Islamic Finance Arena - with a Spotlight On Europe'. Another highly relevant presentation will be made on 'Meeting The Demands Of High Net Worth Individuals, For Sharia'a Compliant Products In Europe - Exploring Opportunities In The Swiss Private Banking Sector'.

Other key topics on the two-day IIFF conference agenda are asset management and investment banking, corporate finance and regulatory issues and Islamic retail finance. In addition three post-forum workshops will examine the principles and objectives of Islamic Finance, the legal and regulatory aspects of innovative structured Sukuks and Islamic real estate investment.

Over 50 expert speakers have been recruited 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 and Hussein A. Hassan, Global Markets Equity, Deutsche Bank AG, UAE.