WAHEED QAISER Astana Final 4.5.2011 by huanghengdong


									 Islamic Finance

Survivor of Financial Crisis


Savior of Financial Crisis ?

       4th May 2011
                                     Evolution of Institutional Framework

                  Dubai Islamic
                                                                           Islamic Financial
                  Bank established                                                                      Total Islamic assets
                                          Fiqh Council of the              Services Board (IFSB)
First             under special                                                                         aggregate to USD 300
                                          OIC declares Takaful             established in Malaysia.
Islamic           law pioneering                                                                        billion, growing at the
                                          as fully Islamic paving          The organization
Bank              Islamic Banking                                                                       rate of 10-15% over
                                          the way for Islamic              enhances stability of
established       in the region                                                                         past 10 years
                                          Insurance to flourish            the industry by issuing
in Egypt

  1963               1975             1983             1985         1991           2002          2005             2007         2012

  Islamic Development Bank                                    Accounting and Auditing
  (IDB) established to foster        Malaysia passes          Organization for Islamic      IFSB introduces              Islamic assets
  the economic development           comprehensive            Financial Institutions        ‘Standards’ on               expected to grow
  and social progress of             legislation on           (AAOIFI) established. The     Basel II compliance          at 15% and
  member countries and               Islamic Finance          Institute acts as a nodal     for Islamic                  exceed USD 1
  Muslim communities. IDB                                     body advising on              institutions                 trillion
  participates in equity capital                              standards to be followed
  and grant loans for projects                                by Islamic institutions
  in member countries                                         worldwide
                             Evolution of Products & Services

Over the years the complexity and innovation of products and services has increased
                                   Market Gaps – Potential Opportunities

Segments            Product Covered partly through
                    conventional banks               Potential Gaps                       Remarks

                    •   Relationship
                    •   Portfolio management                                              • High growth & profits
Private Banking     •   Advisory                     • Islamic products and solutions     • Competitive
                    •   Financing                                                         • Edge for Sharia compliant solutions
                    •   Wealth Management

                                                     •   Sharia’a liquidity funds
                                                     •   Exotic equity fund
                    •   Real estate funds
                                                     •   Sukuk fund                       • High growth
                    •   Distressed asset fund
Asset Management                                     •   Commodity fund                   • Under served
                    •   GCC equity funds
                                                     •   RE / REITs fund                  • Low competition
                    •   Global equity funds
                                                     •   Hedge funds
                                                     •   Portfolio management

                                                     • Venture capital
                    •   Venture Cap. Fund
                                                     • Proprietary funds in specialized   • Room for selective RE funds.
                    •   P.E. funds
Private Equity                                         industry                           • Focus on buy-out & infrastructure
                    •   Proprietary investments
                                                     • Growth financing                     funds
                    •   Family specific funds
                                                     • Acquisitions

                    • Corporate & Trade Finance &
                      Advisory services
                                                     • Securitization                     • High growth
Corporate Banking   • Project financing
                                                     • Project & Debt Advisory            • Under served
                    • Commercial Lending
                    • Mortgages
       Component Of Sharia’a & Sharia’a Concepts

                              Objective of Islamic
                            banking is to be Sharia'a

                                 Sharia'a derived from
Quran -                                                                  and sayings
Holy book                                                                 of Prophet
  for the                                                                   (pbuh)

                    Ijtehad               Ijmaa           Qiyas
                    Reasoning           Consensus        Analytical
                    applied by             of            comparison
                     Scholars            Ummah

   Fiqh Al-Ibadat                   Sharia'a concepts
    Dealing with
  religious matters
                                                                Fiqh al-Muamlaat
                                                                 Dealing with civic
 such as Tauheed,
 prayer, Zakat, Hajj,                                                Matters
      Has Islamic Finance been affected by the financial crisis?

•   Part of Global Economic System – not immune to the recession

•   Islamic Banking – provides stable growth

•   Prudent risk management practices

•   Real Assets - can get sick but will not die

•   Risk sharing

•   No Speculation or uncertainty

•   Inflation control

•   Unhurt by Toxic Assets?
                  Huge Opportunity for Islamic Finance

•   Islamic Banking – provides stable growth

•   Revival of centuries old system – faith based

•   Helps control inflation

•   Based on themes of community & ethical Banking

•   Ethical and Socially Responsible Investments

•   Socio-economic justice

•   Filling - market gap
                      Cooperation between IFI & CFI

•   Build a more robust global financial system

•   Combining credit assessment and risk management disciplines

•   Marrying up inherent strengths and stability of the Islamic banking model

•   Build and strengthen the Islamic investment banking model

•   Competitive and solid platform

•   Islamic Instruments are more resilient

•   Authorization of new Islamic Financial Institutions

•   Tax reforms; changes in constitution and receptive approaches
                  Lessons provided by Islamic Finance

•   Islamic finance products can enhance the financial system's stability

•   Deal in real economy – Constructive trading activity

•   Conservative Leverage

•   No Greed and Exploitation

•   Risk Management tools

•   Investment Ethos

•   Sound and systematic alternative banking system
                         Islamic Finance and Asia

•   Asia was in better shape and less affected

•   Corporate, trade and infrastructure financing

•   Over 60% of the Muslim population from Asia

•   Recession has been an eye opener

•   Conventional sufferers are moving into IF model and they are roaring to
    take a slide in the more robust Asian markets

•   IF provide immense opportunities in the CIS

•   Kazakhstan has potential for a well capitalised wholesale bank

•   Transparency and Liquidity
•   Immaturity of the sector and complexity
•   size and shortage in skilled human capital
•   lack in innovative products
•   Contracts and documentation risk
•   Sharia’a compliance throughout the lifecycle of the product
•   Long termism – visionary approach
•   Capacity building
•   Liquidity management – supply side challenges
•   Trade-ability of assets – secondary markets
•   Governance Standards has to grow further
•   Economic Dynamics
Thank you

            Waheed Qaiser
            Vice Chairman
            Maxim Corporate Finance LLP
            55 Old Broad Street
            London United Kingdom
            EC2M 1RX
            Tel +44 7965 608801
            email.   waheed.qaiser@maximllp.com,

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