HSBC M'sia eyes Islamic trade
Friday, July 20, 2007
HSBC HOLDING'S Islamic Malaysia arm said it expects to get a licence to operate Islamic banking soon and is considering opening up to 15 more branches to capitalise on the growing market for alternatives to conventional finance.
"We've always said that part of that license would be hopefully to be able to open more branches, but not huge amounts. We're looking for no more than 15 over two years and five in the first year," HSBC Malaysia's Chief Executive Officer Irene Dorner told reporters yesterday.
Dorner says the bank will get its licence soon. Foreign banks have flocked to set up Islamic units in mainly Muslim Malaysia and in neighbouring Singapore, which are competing to become Asia's Islamic finance capital.
The global market for Islamic banking, which does not allow the use of interest in transactions, is estimated at some US$400 billion.
Dorner added that HSBC is not currently considering any plan to buy a bank in Malaysia.
"HSBC is huge and is approached on a regular basis all around the world with all sorts of opportunities, so I would never say never," she said.
HSBC Holdings Plc is the largest overseas bank offering Islamic services in Malaysia. Last May, HSBC Amanah, the Kuala Lumpur-based Islamic-banking arm, revealed that it has applied to the central bank for a license that will let it sell wealth management, mutual funds and retirement products to bigger Muslim countries such as Indonesia.
HSBC Amanah is growing its reach in Asia as rivals such as Standard Chartered Plc, ABN Amro Holding NV and Allianz AG, Europe's biggest insurer, expand their offerings that comply with Syariah or Islamic law. Global assets complying with Syaria are worth US$500 billion and growing by more than 10 per cent a year on rising oil wealth in the Middle East, Standard & Poor's estimates.
Opportunities to sell Islamic banking products abound in Asia, home to at least half of the world's Muslim population of 1.6 billion. Asia's emerging economies will expand 8.4 per cent this year compared with US growth of 2.2 per cent, the International Monetary Fund said in April.
The Islamic financial services industry worldwide, including banking assets, may grow to US$2.8 trillion by 2010 from as much as US$1 trillion now, Malaysia-based Islamic Financial Services Board and Saudi Arabia's Islamic Development Bank estimate.
Malaysia has giving tax breaks for such products to expand its market in Islamic finance. Last August, the central bank said it will allow local and overseas banks and insurers to conduct Islamic business transactions in foreign currencies at the Malaysian International Islamic Financial Center.
In an unrelated development, Malaysia's central bank announced yesterday that it will soon introduce a framework for new products by financial institutions to enter more quickly into the market.
Its governor Dr Zeti Akhtar Aziz said revisions would be made to the new product approval framework to provide a more facilitative process for product innovations.
Zeti said the changes were aimed at improving time to market for the introduction of new products while ensuring that financial institutions put in place a sound product management programme.
"The new framework will provide for more simplified regulatory processes and allow greater flexibility for well-managed banks and insurers to introduce new products more quickly in the market," she said. Reuters, Agencies
"We've always said that part of that license would be hopefully to be able to open more branches, but not huge amounts. We're looking for no more than 15 over two years and five in the first year," HSBC Malaysia's Chief Executive Officer Irene Dorner told reporters yesterday.
Dorner says the bank will get its licence soon. Foreign banks have flocked to set up Islamic units in mainly Muslim Malaysia and in neighbouring Singapore, which are competing to become Asia's Islamic finance capital.
The global market for Islamic banking, which does not allow the use of interest in transactions, is estimated at some US$400 billion.
Dorner added that HSBC is not currently considering any plan to buy a bank in Malaysia.
"HSBC is huge and is approached on a regular basis all around the world with all sorts of opportunities, so I would never say never," she said.
HSBC Holdings Plc is the largest overseas bank offering Islamic services in Malaysia. Last May, HSBC Amanah, the Kuala Lumpur-based Islamic-banking arm, revealed that it has applied to the central bank for a license that will let it sell wealth management, mutual funds and retirement products to bigger Muslim countries such as Indonesia.
HSBC Amanah is growing its reach in Asia as rivals such as Standard Chartered Plc, ABN Amro Holding NV and Allianz AG, Europe's biggest insurer, expand their offerings that comply with Syariah or Islamic law. Global assets complying with Syaria are worth US$500 billion and growing by more than 10 per cent a year on rising oil wealth in the Middle East, Standard & Poor's estimates.
Opportunities to sell Islamic banking products abound in Asia, home to at least half of the world's Muslim population of 1.6 billion. Asia's emerging economies will expand 8.4 per cent this year compared with US growth of 2.2 per cent, the International Monetary Fund said in April.
The Islamic financial services industry worldwide, including banking assets, may grow to US$2.8 trillion by 2010 from as much as US$1 trillion now, Malaysia-based Islamic Financial Services Board and Saudi Arabia's Islamic Development Bank estimate.
Malaysia has giving tax breaks for such products to expand its market in Islamic finance. Last August, the central bank said it will allow local and overseas banks and insurers to conduct Islamic business transactions in foreign currencies at the Malaysian International Islamic Financial Center.
In an unrelated development, Malaysia's central bank announced yesterday that it will soon introduce a framework for new products by financial institutions to enter more quickly into the market.
Its governor Dr Zeti Akhtar Aziz said revisions would be made to the new product approval framework to provide a more facilitative process for product innovations.
Zeti said the changes were aimed at improving time to market for the introduction of new products while ensuring that financial institutions put in place a sound product management programme.
"The new framework will provide for more simplified regulatory processes and allow greater flexibility for well-managed banks and insurers to introduce new products more quickly in the market," she said. Reuters, Agencies
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