FULL RESULTS OF ISLAMIC FINANCE NEWS AWARD - POLL 2008

The fourth annual Islamic Finance news Poll results are in after a record-breaking 2,491 unique votes were cast by the Islamic finance industry’s leading practitioners and participants.

In the financial sphere 2008 was deemed by many as an annus horribilis with the global markets plummeting due mainly to the US mortgage industry. The Islamic finance industry also succumbed to market forces but by and large fared better than its conventional counterparts.

What is clear, from the results of the 2008 Islamic Finance news Poll, is that the more focused and specialized Islamic financial institutions are favored to those of the larger global historically conventional institutions with Islamic operations.

With 2,491 votes cast, this is the industry’s most comprehensive and definitive survey.

In the Best Overall Islamic Bank category Kuwait Finance House again ran out easy favorite for the second year running. Malaysia’s CIMB Islamic climbed one place to second this year with Saudi Arabia’s Al Rajhi taking third spot. One notable absentee from this category is two-time winner and runner up in 2007, Dubai Islamic Bank.

As more of the world’s financial centers announce their interest in attracting Islamic finance to their shores one would assume the Best Central Bank in Promoting Islamic Finance category would be more competitive. Not so. For the fourth straight year Bank Negara Malaysia was voted number one with more than double the votes of its nearest rival, the State Bank of Pakistan, which itself leapfrogged the Central Bank of Bahrain into second place.

In new categories for the 2008 Poll, BMB Islamic won Best Islamic Shariah Advisory Firm and KFH Research was voted best Islamic Research Firm.

In a year when many banks collapsed or merged, the Islamic finance industry witnessed a number of new arrivals ensuring a hotly contested Best New Islamic Bank category, with the UK’s Gatehouse Bank scraping victory over Maybank Islamic, which was a close second.

In other categories Norton Rose climbed from second in 2007 to first in the Best Law Firm in Islamic Finance, Moody’s Investors Service was voted Best Islamic Rating Agency, Path Solutions won Best Islamic Technology Provider, Oasis Asset Management was named Best Islamic Fund Manager and Takaful Ikhlas the Best Takaful/reTakaful Provider for 2008.

In the Best Islamic Banks by Country category there were notable wins for MCCA (Australia), Faisal Islamic Bank (Egypt), Bank of London and The Middle East (UK) and Bank Muamalat Indonesia.

ISLAMIC FINANCE ASSETS TO GROW TO $1.6 TRILLION BY 2012

-Extracted from Reuters-

Assets of the global Islamic finance industry are estimated to grow to around $1.6 trillion by 2012, a report by consultancy Oliver Wyman said.

It said growth opportunities lie in underpenetrated markets with large Muslim populations awaiting better Islamic finance products in the Middle East, Pakistan and South East Asia.

Islamic finance has grown by over 20 percent annually over the past years and estimates of its current assets range from $700 billion to $1 trillion.

The report by Oliver Wyman said most institutions are far from taking full advantage of that growth as they lack both an understanding of the opportunities and the required operational capabilities.

It said Islamic wholesale banking, the industry's most important sector, needs to diversify from real estate loans and ordinary lending to include advanced treasury services, innovative asset management, balance sheet management and securitisation management.

"This will allow them to address the needs of underserved market segments such as Islamic financial institutions, corporates, sovereign wealth funds and private wealth clients," the report said.

Islamic finance is a nascent and diverse industry, in which many products well-established in conventional banking are still being developed.

It is based on shariah, or Islamic law, which is open to interpretation and caters to investors who want to avoid paying or earning interest, viewed as usury under Islamic law.

3-TIER SYSTEM FOR ISLAMIC BANKING

-Extracted from Bernama-

A three-tier system is needed in Islamic banking to further strengthen the industry, an economist suggested.

“The first tier is to be like the conventional bank, where people put their money in and where the bank gives money to meet their type of transactions,” said Professor Dr M. Kabir Hassan of New Orleans University.

He said the second tier was like a mudarabah type of institution or mudarabah company, where people put their money and combine it and try and develop different things.

“This model is very much applicable for SME financing, where a person has the idea but does not have the money and another person has the capital. They can combine using the Islamic principle,” he said.

Kabir said this after delivering a talk on Can Islamic Financial System Be A Cure To The Global Financial Crisis in Kuala Lumpur on 6 April 2009.

He added that the third tier was like venture capital or musyarakah, where big infrastructure project financing was involved.

For this, a regulation for Islamic finance could be created with the support of the Government and finance institutions, as the existing conventional banking regulations do not suit the needs of Islamic banking, Kabir said.

“We simply cannot copycat the regulations of conventional banking to help this industry. We need to have our own regulation that is more consistent with Islamic finance,” he said.

Kabir also said that it was time to correct any problems within the system.

In the past 30 years, about 80% of Islamic finance dealt with short-term murabahah while the remaining 20% was long-term partnerships or mudarabah musyarakah, he said.

However, in Islamic finance, mudarabah musyarakah-type of transactions should reach 80%, he said.

“To achieve this, there needs to be Government support and there have to be institutions, laws and regulations to help grow the industry,” he said.

According to Kabir, some big Islamic banking players were already practising the three-tier system