Muslims Best Football Players

Assalamualaikum,

Dear all,

It has been quite sometimes that I do not add a new post in my thought column. Unlike the previous posts which were too academic, this time I just want to share some information on the Muslims best football players in the world. At least, in the coming world cup, we as a Muslim may have our own favourite Muslim football players. We do have a choice. You may visit to the following informative weblog at http://muslimsoccer.blogspot.com.

* Abel Xavier
* Eric Abidal
* Franck Ribery
* Frederic Kanoute
* Hasan Salihamidzic
* Hatem Ben Arfa
* Ibrahim Afellay
* Karim Benzema
* Khalid Boulahrouz
* Kolo Toure
* Lee Woon-Jae
* Mahamadou Diarra
* Nicolas Anelka
* Samir Nasri
* Seydou Keita
* Sulley Muntari
* Yaya Toure
* Zinedine Zidane

It is Islam that gives me strength on the field and outside” Frank Ribery of France and Bayern Munich

Best Regards
ZULKIFLI HASAN
DURHAM, UK

  • Frank Ribery in Mecca.

  • Samir Nasri of Arsenal and France.

  • Frederick Kanoute of Seville and Mali.

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    The Current Economic Crisis – Is Islamic Finance a Solution?

    The Current Economic Crisis – Is Islamic Finance a Solution?

    By Parvez Ahmed Available at: http://www.huffingtonpost.com/parvez-ahmed/the-current-economic-cris_b_516965.html

    Throughout the current economic and financial crisis one contrarian statistic has stood out. Financial assets offered by the Islamic Financial Services Industry (IFSI) and generally classified as “Shariah-compliant,” were less affected by the crisis. Economist Loretta Napoleoni during a lecture at the University of New Mexico proclaimed, “Islamic finance … [a] system [that] could help us to get out of the current crisis.” Writing in the influential Turkish daily Today’s Zaman, columnist Ibrahim Ozturk declared, “Islamic finance has entered a bright new stage of development, emerging after the global financial crisis as a more equitable and efficient alternative to the Western approach.” The widely read Arabic daily Asharq Al Awsat opined, “Islamic banks are untouched by the current crisis due to the nature of Islamic banking especially that it does not deal in debt trading and distances itself from market speculation that takes place in European and American banks.” How do such claims stack up against reality? Is Islamic finance different enough from conventional finance to avoid its pitfalls?

    The IFSI, which has marketed itself as being an alternative to the conventional financial system, has come a long way from its rather modest and relatively recent beginnings. The IFSI was recently estimated by Moody’s to be worth $700 billion and projected by the Islamic Development Bank to be $2.8 trillion by 2015. By 2015, majority of the IFSI will be geographically centered in the Gulf Cooperation Council (GCC) region while the South Asian region will provide about 15 to 25 percent of the total services. The IFSI encompasses almost all of the institutional and architectural features of the conventional finance industry. However, it should be noted that the size of IFSI relative to the Conventional Finance Industry (CFI) is very small (about 2 percent). In other words the IFSI has not been sufficiently stress tested to proclaim its efficacy when applied to a broader set of economic situations.

    One distinguishing feature of IFSI has been its insistence that in complying with Shariah (the jurisprudence of Islam) it considers dealing with interest as totally unacceptable. The avoidance of interest reflects verses in the Holy Quran (3:130; 2:175; 4:161) which forbid riba, most often and commonly translated as interest rates. The IFSI contends that it has replaced interest rates with rate of profit on equity, profit sharing finance and markup transactions.

    In practice, the contracts of the IFSI fall short of the “interest-free” claims it makes. IFSI contracts do allow for presence of interest rates, mostly indirectly but sometimes directly, albeit in small measures. Islamic mutual funds for example allow investment in stocks of companies that use interest based debt (current practices allow 33 percent debt-ratios). Sukuks, described as Islamic bonds, guarantee a fixed rate of return, which to most financial observers look like interest. In murabaha, Islamic jurists opine that home buyer (mortgagor) is involved in credit sales and not a loan contract (as in traditional mortgages). Yet murabaha loan documents use the conventional terms like “note,” “loan,” and “interest” to describe its features much like any home mortgage contract. Moreover, the mark-up used in murabaha is usually benchmarked to a conventional interest rate.

    This has given rise to what Rice University’s Mahmoud El-Gamal pejoratively calls Shariah-arbitrage, defined as the practice of extracting premium rents from participants in a captive-market for products labeled and perceived to be Shariah compliant. The paradox is not merely of academic interest. Among the producers and users of Islamic financial products there is pervasive skepticism. A unique insight about this perception is gathered from a recent research on the attitude of customers and bankers using IFSI. A significant majority (6 in 10) believe that the development of Islamic banking has more to do with being faithful to Islam than any other criterion (although the proponents of Islamic finance often cite the superiority of IFSI is due to its purported commitment to social justice and welfare). Nearly 7 in 10 believe that the “rate of profit” or “markup profit” charged by Islamic banks do not differ much from interest based transactions offered by the CFI. Potential patrons (7 in 10) are unwilling to transact with the IFSI because they do not find much difference between the IFSI and the CFI.

    In discussing how bankruptcy courts are likely to rule on foreclosures under IFSI contracts like ijarah (lease-based transactions), murabaha (cost plus markup sale) and musharaka (partnership contract), legal experts observe, “We would not anticipate that this type of foreclosure would differ materially from that of a conventional mortgage foreclosure. … The ‘borrower’ holds all the benefits and risks of ownership in a Musharaka transaction as well.” As such in bankruptcy and foreclosure proceedings, IFSI providers have the same legal protections as those afforded to CFI institutions in debt based transactions.

    The current state of IFSI is prohibition driven primarily centered on taking existing CFI contracts and pronouncing the Islamicity or lack thereof for those contracts. The IFSI then proceeds to institute contractual changes that alter the structure of the contract to make them contractually Shariah-compliant without addressing any of their possibly inherent fault lines. This process is enabled by Shariah-boards, which pronounce the Islamicity of such contracts. The Shariah-boards are beset with agency problems (conflict of interest) as they are not subjected to disclosure rules equivalent in scale and scope to those for corporate boards, which many argue are in urgent need for more reform and transparency themselves! According to a recent study the top 5 Shariah-scholars makeup 15 percent of the entire universe of Shariah board positions. Only 180 scholars are involved in nearly 1000 Shariah board positions. This stifles innovations and fosters unhealthy imitations.

    One thing is clear, if Islamic Finance is to remain restricted to Muslims then not only will Islamic Finance not save the day but it will also pervert the mission of Prophet Muhammad, described in the Quran (21:07) as a mercy to all humanity (creation, to be precise). The emphasis on the prohibition based aspects of Shariah have led to missed opportunities to promote the maqasid or objectives of Shariah whose aims are not prohibition-driven but rather, inclusive and egalitarian. The maqasid or objectives of Shariah, is to protect and preserve life, mind, faith, property and offspring, which according to the noted Andalusian Islamic scholar Abu Ishaq al-Shatibi is a set of objectives that are common to all religions and must be the transcendent framework to evaluate all Islamic law, social obligations and contracts (financial or otherwise). The attainment of these goals require the development of a positive and inclusive vision, which can truly address the many shortcomings that plagues the world of finance — from bad regulation, to un-transparent contracts, to plain old greed.

    Islamic finance has a role to play in the world of finance. But to do so, the IFSI will have to de-emphasize its innovations based on Shariah-arbitrage and engage in developing a more holistic vision that will resonate with all people of conscience, not just Muslims. Islamic mutual funds, for instance, will have to beyond the negative screens it primarily imposes in selecting stocks to developing positive screens that steer investments towards those opportunities that can lead to sustainable development strategies. Islamic finance must also promote the highest ethical standards and the most transparent disclosure rules, enabling a healthy dose of sunshine into the complex world of financial engineering (responsible for the now infamous credit default swaps that produced the toxic home loans). Islamic banks must also provide a positive vision of efficient and effective distribution of zakat wealth. Islamic financial institutions must develop innovative programs to produce equity based partnerships with small and medium enterprises, which are often the forgotten sector in the world of high finance. The Islamic financial service industry can truly differentiate itself by adopting a more socially conscious role that will enable them to not only fulfill the objectives of Shariah but also inject an alternative vision into the world of global finance allowing a necessary paradigm shift if only to avoid another global economic crisis.

    Prof. Parvez Ahmed is a Fulbright Scholar and Associate Professor of Finance at the University of North Florida. With Seth Anderson he co-authored, “Mutual Funds: Fifty Years of Research Findings.” He is also a frequent commentator on Islam and the American Muslim experience. His blog can be read at: http://drparvezahmed.blogspot.com/

    “The easiest period in a crisis situation is actually the battle itself. The most difficult is the period of indecision-whether to fight or run away. And the most dangerous period is the aftermath. It is then, with all his resources spent and his guard down, that an individual must watch out for dulled reactions and faulty judgment.” Richard M. Nixon

    Regards
    ZULKIFLI HASAN
    DURHAM, UK

  • The Bowes Museum, Durham.

    The BNM tightens Shari’ah governance rules for IFIs

    Malaysia c.bank tightens sharia rules for Islamic banks

    By Liau Y-Sing Available at: http://in.reuters.com/article/fundsNews/idINSGE62N02R20100324?sp=true

    KUALA LUMPUR, March 24 (Reuters) – Malaysia’s central bank announced on Wednesday rules to tighten sharia compliance at Islamic banks including raising sharia advisers’ accountability and independence, and requiring audits on banks. Disputes on the compliance of certain products such as a recent case involving Kuwait’s Investment Dar have put the spotlight on the role of sharia advisers in approving products and their relationship with bank management.

    Malaysia’s central bank, which oversees the world’s largest sukuk market, said Islamic banks must set up sharia review, audit and risk management control functions to reinforce compliance. “The framework aims essentially to strengthen the sharia governance process, decision-making, accountability and independence,” the central bank said in its 2009 annual report.

    “To reinforce the sharia compliance functions, internal sharia review and audit requirements will be introduced, supported by an appropriate risk management process and research capability.” The central bank, Bank Negara, said under the rules the board would be responsible for the overall sharia oversight of Islamic banks but must recognise the independence of sharia advisers. The role of sharia advisers is widened to include ensuring implementation of decisions involving Islamic law and must inform the bank where non-compliance with sharia issues have not been properly addressed.

    Islamic financial institutions in Malaysia, which include the units of HSBC, Kuwait Finance House, Maybank and CIMB, must have review functions that continuously monitor sharia compliance of their operations. They must also have annual sharia audits which would provide an independent assessment of compliance with established policies, Bank Negara said.

    “The senior management is also responsible for ensuring that all submissions to the sharia committee are adequately researched and supported by a thorough study on the sharia issues, product structuring and documentation,” it said. Lawyers have said some banks selectively disclose information to sharia advisers to speed up the approval process for products or push these experts for an endorsement within a short time after supplying them with complicated financial documents.

    A recent court case involving Kuwait’s Investment Dar and Lebanon’s Blom Bank has revolved around arguments on the sharia compliance of a certain product, which experts say could leave investors wary of Islamic finance. Dar has refused to pay Blom Bank $10.7 million, arguing that their original deal involving a wakala or agency arrangement — which was approved by its sharia board — fell foul of religious laws. Dar’s charter prohibits it from entering into non-Islamic transactions. Lawyers say the case has raised several issues including the the level of communication between the bank’s board and its sharia advisers. On its plan to introduce guidelines for a uniform application of popular Islamic financing structures, Bank Negara said it would finalise rules for the ijara, mudaraba, musharaka, istisna and wadiah contracts by end-2010. It had launched rules last year for a standard application of the murabaha structure.

    “It is better for a city to be governed by a good man than by good laws.” Aristotle.

    Best Regards
    ZULKIFLI HASAN
    DURHAM, UK

  • Milan, Italy

    Shari’ah Governance in Islamic Finance Industry

    Shariah governance in Islamic finance industry

    By MUSHTAK PARKER | ARAB NEWS Available at: http://arabnews.com/economy/islamicfinance/article33068.ece

    Prominent Saudi Shariah scholar and economist, Mohamed Ali Elgari, threw down the gauntlet to his fellow Shariah advisories warning that it is high time that Shariah governance in Islamic finance is addressed impartially, and in a transparent and positive way, and that the authority to issue fatwas should not be centralized or monopolized by one authority or body of Shariah scholars.

    Diversity of Fiqh (jurisprudence) and interpretations is a strength, which he stressed, should neither be ignored nor eliminated. Although, such diversity could be perceived by the general public as inconsistency and conflict amongst scholars. The aim should be to reach common and mutual understanding without superimposing one particular view on everything.

    Elgari is a leading proponent of developing and promoting a modern scientific methodology for the Shariah governance process, especially in the compilation, consultation and articulation of fatwas and resolutions relating to Islamic financial products and structures. Essentially, he wishes to demystify the Shariah governance process to all stakeholders in the global Islamic finance industry.

    Over the last three decades, as the contemporary Islamic finance industry started to establish itself, Shariah scholars acquired a sudden status which in some respects put a core minority of them on a pedestal, which was further reinforced by the lack of intellectual engagement by and the lack of basic Shariah education of both bankers, investors, shareholders and consumers.

    The globalization of Islamic finance over the last decade even further reinforced this mysticism surrounding the Shariah and the scholars, especially given the increasing involvement of non-Muslim bankers and jurisdictions in Islamic finance.

    Some Shariah advisories have strongly resisted any moves toward registration and regulation. The Securities Commission Malaysia (SC), the capital markets regulator, is the only regulator that requires Shariah advisories in Malaysia offering Shariah advice and services to be registered with the commission. In a further move, Shariah advisories are also restricted to advise one institution in a particular market segment to pre-empt conflict of interest issues and to widen the opportunities for newcomers in Shariah advisory.

    Elgari, in fact, was due to address a high-level closed-door roundtable in Kuala Lumpur a few days ago. The meeting had been organized by the SC and the Oxford Centre for Islamic Studies (OCIS). Due to some reasons, he could not physically attend, but his paper themed “Governance Standards and Protocols on the Shariah Decision Making Process” was read out on his behalf to the delegates and was the subject of vigorous debate.

    Shariah governance is “the set of procedures, institutions and organizational arrangements through which the Shariah position on contemporary issues is revealed and Shariah compliance ensured.” In this case it applies to Islamic financial institutions. Shariah compliance, in this context, is narrowly defined to only mean strict adherence to the guidance of their Shariah board as expressed in fatwas and resolutions.

    However, Elgari warned that it would not be possible to ignore the Shariah discourse at large, especially in the field of finance, because resolutions issued by Shariah bodies such as the Makkah-based Fiqh Academy of the OIC (Organization of Islamic Conference) and the Shariah Committee of the Bahrain-based AAOIFI (Accounting and Auditing Organization for Islamic Financial Institutions), do have an impact on Islamic financial institutions (IFIs). At the same time, the IFIs operate in societies that give weight to such fatwas and any new resolution from the above bodies forces IFIs to redefine their compliance standard.

    The reality from a Shariah point of view, stressed Elgari, is that “a fatwa is not obligatory or legally binding. Yet the public at large wants a resolution issued by such a body to be applicable to the IFI and ought to be followed.” He agrees that Shariah compliance is essential to the growth and integrity of Islamic finance, but warns that without consistency and predictability of fatwas the Islamic finance industry “will have no hope of meeting international standards and growing beyond its ‘niche’ status.”

    Elgari, who has a doctorate in economics from the prestigious University of California at Berkeley, dismissed the centralization of fatwa issuing authority stressing that it is against the egalitarian nature of the Islamic system. “Shariah scholars are just like the rest of us. There is no special power bestowed in them. Hence, their authority is derived from political and not Shariah sources. We all know that the centralization of power is the shortest route to tyranny,” he added.

    He believes that strong Shariah governance would lead to a lively Shariah discourse with the widest possible participation and the broadest acceptance. He suggested a road map of the components for strong Shariah governance. These include: i) Shariah decisions must always be supported by a body of evidence; ii) Shariah declarations must always be capable of being defended by those who issued them with the same vigor with which they were issued; iii) Shariah decisions must be feasible taking into consideration circumstances as they are. Hence to suggest Qard Hassan in place of Tawarruq as prescribed by the recent resolution of the OIC Fiqh Academy, “is asking Islamic banks to do something that is not doable”; iv) empowering the power of voting. Although consensus may be desired, most often in Shariah boards it is a compromise that is reached. Dissent is not welcomed which gives rise to a perception of a patriarchic relationship between Shariah board members; v) procedures for the reversal of fatwas because Shariah scholars are not infallible and they do mistakes which have to be retracted and corrected. This process has to be done very carefully and with consideration because a sudden reversal of a position could be a shock that may be damaging to a financial institution or to the Islamic banking industry at large and could also have retrospective implications; vi) ethics of disagreement where Shariah scholars must learn to tolerate and respect opposing views which are also valid under the Shariah; vii) greater consultation because Shariah discourse is not the exclusive preserve of the scholars; and viii) a fatwa must remain personal and the scholar’s whose signature appears on any document or fatwa must remain accountable for that fatwa.

    “If any religion had the chance of ruling over England, nay Europe within the next hundred years, it could be Islam” George Bernard Shaw

    Best Regards
    ZULKIFLI HASAN
    DURHAM, UK

  • Alnwick Castle, Northumberland, England

    Amanie Business Solutions plans expansion into Australia and Europe

    Amanie plans expansion into Australia, Europe

    By Habhajan Singh Available at: http://www.themalaysianreserve.com/SubPage.asp?pageid=3&eventid=3858

    A local Islamic finance consulting company anchored by prominent Shariah scholar Dr Mohd Daud Bakar is looking to expand its presence in Australia and Europe to tap the growing business opportunities in those regions, attempting to tap into changes in regulation to accommodate Islamic finance and also the growing need to structure Shariah-compliant products.

    Amanie Business Solutions is looking at opening up offices or partnerships in Australia, while the choice for Europe is between London and Luxembourg.

    “There are concrete proposals to the [Australian] Government to amend some laws to accommodate Islamic finance. These are some of the areas of interest,” Dr Daud Bakar told The Malaysian Reserve.
    He was referring to the Australia financial centre report presented to the Australian Parliament and made public in mid-January which had recommended on withholding tax on offshore borrowings and on Islamic finance, to improve its ‘access to offshore pools of savings at competitive rates, so as to provide more diversified and cheaper funding for Australia’s investment needs’.
    Commonly known as the Johnson Report, it was commissioned by the Government in September 2008 as part of its commitment to secure Australia’s future as a leading financial service centre.

    The move would make Amanie a Shariah consultancy with one of the widest global presence. Most Shariah consultants tend to concentrate in either London or Dubai, while Malaysia is populated more by individual Shariah scholars who work mostly with Islamic banks and takaful operators who require their services.
    The developments coming out of Australia would have been the impetus for legal firm Zaid Ibrahim’s to open offices in Sydney and Melbourne in the December 2009.
    One of the largest local legal firms in Malaysia, Zaid Ibrahim had stated that its primary focus would be to promote Shariah-compliant business. Zaid Ibrahim, with offices in Singapore, Thailand, Indonesia, Vietnam and Dubai, had set up in 2008 an Islamic finance advisory firm called ZI Shariah Advisory Sdn Bhd.

    Dr Daud Bakar, who also chairs the influential Bank Negara Malaysia’s Shariah Advisory Council (SAC), is no stranger to the Islamic finance scene in Australia. Amanie has advised a number of deals originating from there, including LM Investment Management Ltd’s (LM) Islamic property fund and Crescent Investments Australasia Pty Ltd’s equity fund, both being the first of their kind in that part of the world.
    “LM came to see us in Dubai. In fact, they were our first clients in Dubai,” he said. The Dubai-based vehicle, Amanie Islamic Finance Consultancy and Education LLC chaired by Dr Mohamed Ali Elgari, signed off the fatwa for Crescent’s fund. The other signatories on that document, displayed on the company’s website, are Dr Daud Bakar, Dr Muhamad Amin Ali Al-Qattan and Dr Osama Al-Dereai.
    LM, which described itself as privately owned specialist Australian income funds manager, floated the LM Australian Alif Fund. It said that it is a ‘Shariah compliant fund, with fatwa confirming the Shariah compliant status’ of the funds and its investments, suitable for investors seeking ‘Australian assets delivering profit in a Shariah compliant manner, and is available for investment in a range of major international currencies’.

    As for the European move, industry observer note that European cities like London, Dublin and Luxembourg are vying to be international hubs for Islamic finance.
    Luxembourg, for example, is key domicile of funds in Europe and have amended a number of taxation laws to accommodate Islamic finance funds. “Here, they would be interested in originating and listing of funds,” said one observer.
    Dr Daud Bakar said that Amanie sees ‘potential business expansion’ in Luxembourg. “We have some experience endorsing few Islamic funds licensed from Luxembourg using UCIT 3 and SICAV structure,” he said.
    UCITS3 is an European Union initiative. Funds go through a stringent regulatory process which then allows it to be floated in the EU jurisdictions without much further local clearance. SICAVs, a vehicle much like an umbrella for funds, are increasingly being cross-border marketed in the EU under the UCITS directive.

    Asked what prompted the move to expand further, Dr Daud Bakar said: “Looking at global financial movements, we’ve seen some strong interest in some jurisdictions like South Korea, Australia, Luxembourg, Kazakhstan. We like Kazakhstan, where we have partners who take care of our interest.
    “We are a global Shariah firm, originating from Malaysia. We then expanded to DIFC [Dubai International Financial Centre] in 2008. Now we are seriously considering to position Amanie in other new potential markets and jurisdictions. Islamic finance is a global industry. We need to be close to out clients, be in the same time zone. We’re proud to fly the Malaysian flag in other countries.”

    “If anybody thinks that kings, nobles, priests are good conservators of the public happiness, send him (to Europe)” Thomas Jefferson

    Best Regards
    ZULKIFLI HASAN
    DURHAM, UK

  • 060420095111
  • With Dr. Mohamad Daud Bakar, at his office, Amanie Islamic Finance Learning Centre, No.44, Level 41, Emirates Towers, Sheikh Zayed Road, P.O. Box, 31303, Dubai, UAE.

    South Korean firms set to boost Asian sukuk market

    South Korean firms set to boost Asian sukuk market
    Available: http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=272940

    MANAMA: South Korean institutions are showing increasing interest in Islamic financing to diversify capital raising avenues. That was the conclusion of delegates at a seminar on Korean sukuk held this week in Seoul by BNY Mellon, a leading provider of corporate trustee and agency services on Islamic transactions and other complex structured finance deals globally.

    As the global financial markets recover from the financial crisis, Islamic finance is appealing as an alternative to conventional financial instruments. Islamic bond issuers do not need to be Islamic entities, nor is the market restricted to the Middle East. There is anecdotal evidence which suggests that most sales of sukuk this year will be generated from Asia.

    Malaysia continues to dominate the sukuk market today with an 80 per cent market share in the global Islamic bonds market, but last year also saw other sovereigns such as Indonesia, with its successful sukuk treble, make their way into the market. Singapore also made a relatively small but significant debut.

    Although a relatively latecomer to Islamic finance in Asia, South Korea is following the stated ambitions of its neighbouring countries, such as Hong Kong and Singapore, in trying to establish itself as an international Islamic capital market hub. The country’s National Assembly is currently considering a bill aimed at facilitating tax neutrality for the issuance of sukuk.

    “South Korea was largely unaffected by the sub-prime crisis and is financially well-positioned globally as it accelerates out of the financial turmoil of 2009,” said BNY Mellon’s head of corporate trust business in the Asia Pacific region, Gary Lew. “Sukuk can help Korean firms diversify their financial resources, and expose them to Middle Eastern and Southeast Asian markets. “If they choose to use it, sukuk can offer Korean companies a new fund-raising avenue through which they can leverage the pool of Islamic capital. “If the legislation passes, the industry could see the first South Korean corporate sukuk as early as late 2010.” BNY Mellon’s corporate trust business services nearly $12 trillion in outstanding debt from 58 locations in 20 countries.

    Underlying most arguments against the free market is a lack of belief in freedom itself.” Milton Friedman

    Best Regards
    ZULKIFLI HASAN
    DURHAM, UK

  • Texas, USA

    Islamic Megabank

    No chance of an Islamic megabank says CPI Financial poll

    By: Mike Gallagher Available at: http://www.cpifinancial.net/v2/fa.aspx?v=0&aid=458&sec=Islamic%20Finance

    Will an Islamic megabank emerge in 2010? The debate continues to rage with proponents and opponents passionately arguing their case in a CPI Financial poll. Megabank, Islamic megabank, cimb, maybank, hsbc, standard chartered, dib, dubai Islamic bank, saadiq, poll. Is the idea of an Islamic megabank grounded in reality? The concept usually pops up into the headlines around the first quarter of the financial year as analysts speculate about which bank might claim the grand mantle.

    However, a poll on the CPI Financial website generated a flood of voting when it posed the question: Will an Islamic megabank emerge in 2010? A slim majority of 55 per cent said ‘no,’ when the votes were tallied. Some people have dismissed the whole idea of an Islamic megabank as utterly ridiculous for a wide number of reasons. Plenty of questions are being asked about how it will take shape and the biggest question is where the skilled staff will come from.

    Another is how it will be created. The investors and the good intentions may be there, but does the capacity exist? Building a global presence as an Islamic megabank is fraught with regulatory hurdles. Will conventional banks be converted? What if they can’t get a licence in a given country? Where will the bank come from? Will it be Asia, the Middle East or Europe? Will a number of Islamic banks with a global presence in different countries agree to merge to become a single, giant entity? Again, more scepticism.

    Megabank sceptics like to point out that ambitious, egotistical chief executives are unlikely to want to hand over power and take a lower position. Some Middle Eastern Islamic banks are owned by prominent families who may be unwilling to see their creation disappear into the arms of a more powerful neighbour. Regional and local rivalries are common. Arcane laws which impose limits on foreign ownership in Asia may trip up the unwary.

    This year all the speculation (not for the first time) is on Al Baraka Banking Group (ANG), which is led by Sheikh Saleh Abdulla Kamel. ABG (by Islamic banking standards) has a fairly wide geographical reach. It has a presence in a number of countries in the north and south of Africa (Tunisia, Egypt, Algeria, Sudan and South Africa) and is also on site in Pakistan and Indonesia, not to mention a number of Near Eastern (Turkey and Lebanon) and Middle Eastern (e.g Bahrain, Syria and Jordan).

    Sameer Abdi, Head of Islamic finance at Ernst & Young seems to think it is likely to be a possibility this year. “The key shareholders I would say are on board and we are looking for an imminent launch, within six months to a year,” he told the Reuters Islamic Banking and Finance Summit in Bahrain. There has been speculation that Saudi Arabia-based Al Rajhi Bank could claim the title. It has 19 branches in Malaysia. Or maybe it could be Dubai Islamic Bank with its teams already in place in Ireland, Pakistan, Iran, Turkey, the Bahamas, Jordan, Sudan, Bahrain, Bosnia and Yemen.

    Malaysia’s Maybank is on the ground in Bahrain, Brunei, Cambodia, China, Hong Kong, Indonesia, the Philippines, Singapore, the US, the UK, Uzbekistan and Vietnam. CIMB from Malaysia is another contender. It has a presence in Bahrain, Brunei, Hong Kong and China, Indonesia, Myanmar (Burma), Singapore, Thailand, the UK and the US and HSBC Amanah with its immense global presence also cannot be discounted. Another significant presence in emerging markets with lots of Islamic potential is Standard Chartered Saadiq. Takaful companies may be asking the same questions. When will a megaTakaful company come along?

    “A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.” Robert Frost

    Regards
    ZULKIFLI HASAN
    DURHAM, UK

  • Oxford University