With the gap between Islamic and conventional banking solutions narrowing substantially, banking assets of the Shariah-complaint segment — growing twice as fast as conventional banking assets — are expected to reach $1.1 trillion globally in 2012, up 33 per cent from 2010, Standard Chartered said on Monday.
With the fast development of the Islamic banking industry, Muslim high net worth individuals, or HNWIs, are increasingly expecting Shariah compliance in managing their wealth, making Islamic wealth management solutions a key market need, Standard Chartered Private Bank said at the launch of a comprehensive suite of Islamic financial solutions for its clients. In an earlier forecast, Standard Chartered said Islamic banking assets in the UAE would grow to 20 per cent of the total banking sector in 2012 from an estimated 18 per cent in 2011.
The bank had said it expected Islamic assets to constitute 38 per cent of total consumer banking assets in the UAE in 2012, compared to about 35 per cent in 2010. It didn’t provide a 2011 estimate. According to the Dubai Chamber of Commerce and Industry, the collective assets of the eight Islamic banks in the UAE were at Dh269 billion at the end of 2010, accounting for around 16.2 per cent of the overall banking assets of Dh1.66 trillion.
Noor Islamic Bank chief executive Hussain Al Qemzi, speaking recently at the 2nd Annual Middle East Islamic Finance and Investment Conference, said the global Islamic finance industry could grow from its present $1 trillion to around $4 trillion within five years as untapped markets such as China open up and new products drive demand.
The new suite of financial solutions from Standard Chartered include fiduciary deposits, property financing, equities, Islamic fixed income instruments, or sukuks, mutual funds, third-party structured products and discretionary services. These solutions are now available to clients across the Private Bank’s booking centres in London, Geneva, Jersey and Dubai Standard Chartered Saadiq.
Khalid El Gibaly, Standard Chartered Bank’s regional head of consumer banking in the UAE and Middle East, said the bank had identified a latent demand among its existing and prospective private banking clients for Islamic private banking solutions. “The launch of our Global Islamic Private Banking offering out of the region is testament to our strategic focus on the Middle East region,” he said.
The new Islamic financial solutions will be delivered in collaboration with Standard Chartered Saadiq, the bank’s Islamic banking arm. With the launch of this offering, Standard Chartered is now able to provide private banking clients a full spectrum of financial solutions — from those who require conventional to those who require Islamic banking, said El Gibaly.
Commenting on the Islamic private banking potential, Stephen Richards Evans, Standard Chartered’s regional head of private banking for Europe, Middle East, India, Africa and Americas, said in the GCC alone, there are more than 500,000 HNWIs with net investible assets of over $1.7 trillion, and this number is rapidly growing in light of relatively better economic conditions in the region compared to other parts of the world.
“However, this segment remains one of the most underdeveloped and underserved amongst all the Islamic banking client segments,” he added.
Wasim Akhtar Saifi, Standard Chartered Saadiq’s group head of Islamic banking and consumer banking, said although Islamic banking solutions have become increasingly available, there are few viable Shariah-compliant alternatives for HNWIs. “There is a need to adopt a more holistic view towards wealth management for this segment. The launch of Islamic financial solutions for our private banking clients broadens the overall spectrum of wealth management solutions... We plan to continue to expand the range of Shariah-compliant solutions.”