Islamic Investment Banking Euromoney Book Sample

Islamic Investment Banking:Emerging Trends, Developments

and Opportunities

00-Islamic IB-prelims-ccp.indd 1 14/04/2010 07:44


Islamic Investment Banking:Emerging Trends, Developments

and Opportunities

Edited by

Sohail Jaffer

EUROMONEY

BOOKS


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Contents

Lord Mayor’s foreword xvi Christian Sautter’s foreword xviii Yves Mersch’s foreword xx Editor’s notes and acknowledgements xxi About the editor xxiv About the contributors xxv

Part I: Islamic investment banking: global trends

1 Innovation, globalisation and diversification: the key to success for Islamic investment banking 3

Sohail JafferIntroduction 3The strengths and resilience of the Islamic banking sector 3Sukuk – a challenge to overcome for the sector 4The future is bright 5Compelling long-term prospects 7

2 Growth and development of Islamic capital market – the Malaysian experience 11Zarinah AnwarIntroduction 11Origins in meeting community needs 11Orderly growth 12The critical role of the Shariah Advisory Council 13Current Islamic capital market landscape in Malaysia 14Pioneering the sukuk market 15Broadening the range of listed Shariah-compliant products 15Building the base for Islamic fund management 17Islamic structured products as a hedging instrument 18Strong regulatory and facilitative tax frameworks are critical success factors 18Human capital development 19Conclusion 20


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3 Overview of Shariah-compliant investment banking: global challenges and opportunities post-global credit crunch 21 Saleh Jameel Malaikah

Introduction 21The impact of the credit crunch and beyond 21Modernising the Shariah governance process 23Islamic investment banking – innovate or stagnate 23Private equity the mainstay of Islamic investments 24The power of ‘bricks and mortar’ 25The wealth management revolution beckons 26Product development and corporate governance need of the time for Islamic banking 27Takaful – the untapped financial services giant 27Opportunities for GCC banks to expand beyond the regional frontiers 28The Sukuk market and beyond 29What more can international financial centres in the region like Dubai International Financial Centre (DIFC), Bahrain, Qatar

and King Abdullah Financial District in Riyadh do to promote Islamic banking and finance? 31

Conclusion 32

4 Strategic choices for Islamic banks in service provision for home and overseas markets 33Rodney WilsonIntroduction 33Extending the range of Islamic financial services 34The capacity of Islamic banks 34Strategic options for Islamic banks 36Vertical or horizontal expansion 37Al Rajhi Bank in Saudi Arabia 38Al Rajhi Bank in Malaysia 41Overseas expansion strategy of KFH 42Dubai Islamic Bank 43Qatar Islamic Bank (QIB) 44Conclusion 45

5 London as an international centre for Islamic finance 47Gillian WalmsleyIntroduction 47A continued commitment to development 47Recent developments 48Islamic finance at the London Stock Exchange 49Sukuk 50Shariah-compliant exchange traded funds 50


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A centre of excellence and specialist expertise 51Looking to the future 52

6 Opportunities and challenges faced by Islamic banks in the UK 53Aly KhorshidGlobal market for Islamic financial services 53Shariah-compliant financial services 54Shariah advisory board members 56Roles of Shariah scholars 57Government strategy for development of Islamic finance in the UK 58Impact on investment decisions 59Risk management and Islamic banking 59Islamic finance offers several answers to risk management in banks 60Sukuk and current UK legislation 62Potential for Sukuk in the secondary market 63Characteristics of secondary market Sukuk and the conventional debt market 63Limited number of instruments within the Sukuk market 64The path to liquidity in the secondary market 64Treasury management of Islamic banking 64Understanding of Shariah law creates challenge for standardisation 65Future challenges 66Growth and business development 67What more must be done? 68Government intervention has to protect the taxpayer 68

7 M&A opportunities in MENA and cross-border expansion of Islamic financial institutions in the wake of the global crisis 70Alexander von PockIntroduction 70M&A: drivers and risks 71A look at the past 73Effects of the crisis 74Way forward 75

8 The outlook for Shari’ah-compliant investments including alternatives post global crisis 78Henry ChinDefining Shari’ah-compliant investment 80Overview of different financial instruments and structures 81Demand for Islamic finance 82Sources of capital 84Market potential for Shari’ah-compliant investments 85


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Capital mobility and allocation 85The challenges of Islamic finance 87The outlook for Shari’ah-compliant alternative investments 87

Part II: Islamic capital markets

9 The Malaysian sukuk market 93Zainal Hasfi HashimRapid growth of the global sukuk market 93Impressive growth of Malaysian sukuk industry 93Key growth drivers underpinning strong sukuk development 95Malaysia’s leading edge as a global sukuk hub 97Facilitative rules for issuance process 97Well-defined Shariah governance framework 98Competitive pricing 99Innovative structures and human capital development 101Incentives for investment activities 101Comprehensive infrastructure 102

10 Innovation in Sukuk structures 104Moinuddin MalimHistorical overview 104Basic structures and issues 108Structuring Sukuk 109Rating and listing of Sukuk 115The approach to structuring Sukuks 118Emerging market leader 120Sukuk defaults 122Conclusion 123Appendix A 126Appendix B 131

11 The growth and development of Islamic capital markets following the global crisis 135Farmida BiIntroduction 135The growth of sukuk before the global financial crisis 135AAOIFI statement 136Global financial crisis 136Primary and secondary sukuk markets 137Sukuk defaults 137Lack of transparency and untested restructuring 139Signs of recovery 139


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Other positive signs 141The future 142

12 Islamic capital markets: the case for a more intelligent positioning in an evolving global industry 144Ayman H. Abdel KhaleqExecutive summary 144Capital markets considerations applicable to Islamic capital markets products 144Legal form of investment vehicles 145Regulation of Islamic products and investor suitability requirements 145Exchange suitability 146Shari’a compliance certificates (Fatawa) 147Nature and location of the assets 148Enforcement and bankruptcy considerations 149Tax 150Conclusion 150

13 Swaps – profit rate swap and cross currency swap 152Kareem Hussaini and Wanda ReginaThe structure of global swap markets 152Profit rate swap 152Cross currency swap 158An analysis of some pros and cons of the structures 160Some challenges 161Credit risk and swaps 162Conclusion 163

14 Shariah-compliant financial intermediation: a natural fit for investment banking 165Zamir IqbalIntroduction 165Financial intermediation in Islamic financial system 166Shariah-compliant intermediation and investment banking 167Challenges for Shariah-compliant investment banking 170

15 Islamic liquidity management 175Majid DawoodThe essence of liquidity 175Definition 175Introduction 176Current options and current concerns 178New and needed developments 181The future 182Conclusion 182


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Part III: Wealth management

16 Islamic investment post-financial crisis: opportunities and challenges 187Gul KhanIntroduction 187An opportunity for Islamic finance 187Equity funds 188Other investments 190Sukuk 194Conclusion 196

17 Buy side Shariah products 198Omar Saleem Asghar

18 Recent buy side innovations in wealth management 206Naveed AhmadIntroduction 206Markets and investor segments 206Product selection 208Public equities 213Conclusion 217

19 Innovations in Shariah-compliant mutual funds 219Rejina RahimIntroduction 219Innovation is not a strange concept in Islam 220Shariah assets breakdown 221Malaysia 223Saudi Arabia 223Customer profile surprises in Malaysia 226Is Islamic asset management coming into the mainstream? 227Can Shariah-compliant mutual funds be a viable investment tool? 228Issues plaguing Islamic asset management 229Is the party over for Islamic finance? 233Conclusion 233

20 Attractiveness of Luxembourg for Shariah-compliant investment funds and Sukuk 235Pierre WeimerskirchAn attractive segment 235Increasing competition among countries and financial centres 237How attractive is Luxembourg as a gateway for Sukuk and Islamic funds? 237Looking to the future 243


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21 Irish domiciled Shariah-compliant investment funds 245Brian Higgins and Emmet QuishIntroduction 245Ireland as a fund domicile 245Key features of an Irish domiciled Shariah-compliant fund 246Irish fund legal structures 248UCITS funds and compatibility with Shariah 250Latest developments in UCITS product – UCITS IV 253Non-UCITS Shariah-compliant investment funds 254Conclusion 255

22 Investor services to the Shariah-compliant mutual funds industry 256Richard StreetA breadth of funds 257Shariah funds structure 258Prohibited businesses 258Prohibited instruments and activities 259Accounting-based screening 259Maintaining a list of Shariah-compliant companies 260Dealing with a change in status 260Income purification 260Fund administration and custody 261Support for international development 263

23 Real estate Islamic funds: market analysis, opportunities and structuring techniques 265Anass PatelIntroduction 265Real estate market overview and post-crisis trends 266Are Islamic real estate funds the panacea in the long run? 272Structuring active real estate funds and sharia-compliant investments 277Islamic REITs in a non-listed environment 284Concluding remarks regarding the competitive landscape of Grand Paris 285

24 Challenges and opportunities for the growth of Takaful 287Tommy Trask

Part IV: New trends and developments in the international arena

25 The GCC sovereign wealth funds and voluntary governance 301Zeinab Karake-ShalhoubIntroduction 301GCC SWFs 302


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Portfolios of GCC SWFs 303SWFs and the Santiago Principles 305Conclusion 307

26 The role of sovereign wealth funds in promoting Islamic investment banking 311Alberto Brugnoni

27 Improving the core under the Shariah overlay 318Amin RajanBefore the credit crunch: 2000–2007 318After the credit crunch: 2007–2010 322Concluding remarks 327

28 International centres promoting Islamic finance 328Ken OwensInternational centres – a little bit of background 328International centres enabling the growth of Islamic finance 328Human capital 331International tax issue for Islamic finance 332Regulating Shariah, audit and compliance 333Malaysia International Islamic Financial Centre 334Dubai International Financial Centre 334Bahrain Financial Harbour 335London – United Kingdom 336Paris – France 336Luxembourg 337International Financial Services Centre (IFSC) Dublin, Ireland 337Conclusion 338

29 Islamic finance in international financial centres 339Natalie SchoonThe role of international financial centres 339Global developments 341The role of regional financial centres 346Regional versus international, is one better than the other? 347

30 The convergence of Islamic and sustainable finance: the revival of common sense 349Natacha GuerdatIntroduction 349Sustainable finance 350Islamic finance 352More than ethical screening 353Supporting change 354


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Impact investing 354Microfinance, convergence by objectives 355Conclusion 356

31 The role of the UK as an international centre for Islamic banking and finance 358Mohammed AminIntroduction 358Political stability 359The English legal system 359The UK tax system 360Travel and the time zone 361Professional resources and the network effect 361Supportive UK government policy for Islamic finance 361A successful approach to adapting the UK tax system for Islamic finance 362Equality of regulatory treatment and an open licensing approach 366Competition from other financial centres 367Conclusion 368

32 Potential for Islamic investment banking in France 369Valéry FousséA completely new international situation 369What drives the French situation? 370What will have impact on a long term basis? 371Where Islamic finance investment banks will potentially have a role 371Where the competition is important and players are financially strong 372France tries to preserve its competitiveness and attractiveness 373A political move ahead to enhance France’s financial market and open it to Islamic finance 375A strong mathematical school 377French banks do have strong expertise in Islamic finance but … 377New entrants are welcomed but should be fathered 378A vast potential of development for potential new entrants 378

33 Islamic banking in Turkey: the Istanbul Financial Centre plans further expansion 380Paul Wouters

34 Technology trends in Islamic investment banking – towards best of breed solutions 387Bill Willison


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Introduction 387Technology investment drivers 388Current technology 391Future trends 394Conclusion 395

Part V: Shariah, regulatory and supervisory framework

35 Islamic investment banking and European regulation 399Tim PlewsThe current position 399The scope of this chapter 399Global financial turmoil 399Islamic finance and the global financial turmoil 400Islamic investment banking and the turmoil 400EU regulatory policy-makers and Islamic investment banking 401A growing profile within Europe 401The EU’s regulatory structure 401A ‘do-nothing’ approach towards EU regulation? 402The exceptional position of London and the UK 402The rest of Europe is not standing still 403Islam’s political dynamic 403Islamic investment banking: articulating its ethical proposition 403Who should provide an education on Islamic finance? 404What these institutions can do 404The key points for communication to the European Commission 405Islamic finance lacks a global regulator – does that matter? 405So what should happen next? 405

36 The role of Shari’ah boards and the evolution of underlying Shari’ah principles 407Mohd Daud BakarIntroduction 407Shari’ah board: is it a Shari’ah advisory or Shari’ah supervisory board? 408Who is a Shari’ah board member? 410What are the roles and duties of a Shari’ah board? 411An overview of the evolution of some underlying principles in Islamic finance 412Conclusion 415

37 Rethinking the strategic significance of Shari’a supervision boards 416Abdel-Maoula ChaarIntroduction 416


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Shari’a boards’ interlocks effect on the Islamic financial field 417The case study of the Lebanese Islamic banks 424The institutionalisation effect of Shari’a boards 428Conclusion 431

38 The role of IIFM in the global expansion of Islamic capital and money market 433Ijlal A. AlviIslamic capital and money market 433IIFM’s profile and its contribution to ICMM 434IIFM master agreements for treasury placement (MATP) 435IIFM/ISDA Tahawwut master agreement (TMA) 435Liquidity management in Islamic financial institutions (IFIs) 436Exploring I’aadat Al Shira’a (repurchase) potential 436Wakala master agreement 437Sukuk 437Promotion of ICMM 438Conclusion 438


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Lord Mayor’s foreword

The past quarter century has seen a series of immense changes in the world of finance and supporting professional services – accompanied, as we are only too aware at the moment, by crises and market failures, but also by the creation of major opportunities. The balance of the global economy has changed radically and is still changing. These changes have been accom-panied by changes in financial techniques and products. The evolution of Islamic finance and the scope for participation in it are a major part of these developments.

London, as a global financial centre, looks inwards to the evolving European single mar-ket, westward across the Atlantic and eastward towards the Middle East, Africa, South Asia and the markets of the Pacific Rim. In all these areas, there is scope for the development and application of Shariah-compliant finance.

So London’s evolving position as a centre for Islamic finance makes economic and busi-ness sense. It is a practical response to new opportunities. But there is a wider element to it. The British Government, with the support of the Bank of England and the Financial Services Authority, has made changes in the fiscal and regulatory system to give Islamic finance the same status as conventional ‘Western’ financial techniques. There are several policy drivers – the first is to widen access to financial products and to the broader economy for Britain’s growing and increasingly prosperous Muslim population. It makes ethical as well as practical sense for Muslims to buy property, to save, to access retail banking and to obtain cover against risk in ways consistent with their faith.

There is nothing divisive or discriminatory in the availability of an Islamic mortgage, a Shariah-compliant savings product, or motor cover through a Takaful provider. It is entirely open to a non-Muslim to open an account with a bank offering entirely Islamic products and an increasing number have done so. Equally, Muslim individuals who for entirely practical and pragmatic reasons participate in the conventional system can continue doing so – in the same way, of course, as do the governments, central banks and sovereign wealth funds of Muslim countries.

I continue to emphasise, as did my predecessors, that Islamic finance here in the London market is not something strange, exotic and arcane – it is a natural and welcome addition to the range of products and services that UK-based companies, regardless of nationality of owner-ship and as participants in the City’s brand, offer to individuals, households and companies here, and to the wider process of global trade and development.

This is illustrated by the list of firms and organisations involved. Certainly it includes exclusively Islamic banks, some with major shareholders from the Middle East, but alongside them are the majority of British retail banks and some building societies and major insurers.

Advising them and providing the legal and accounting framework are a number of UK-based international law and accountancy firms with active and growing Islamic finance teams.


Lord Mayor’s foreword

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Neither is the element of intellectual depth and development neglected. Several business schools, including the City’s own Cass Business School, offer specialist post-graduate MBAs, and the Chartered Institute for Securities and Investment has a growing programme of quali-fications and training, delivered in the UK and in other markets. Beside them, a number of institutes and professional groups study the principles of Islamic finance, the market for it and the scope for its development. We should not forget, of course, the need for the close study of risks and of crisis-handling. Although Shariah-compliant banks and other institutions look to have fared better than ‘Western’ ones during the current crisis, nobody should pretend that risks, and maybe unresolved problems, are not out there in the Islamic finance market as they are elsewhere.

The sheer scope of this book, however, illustrates the second driver for UK policy – the immense worldwide opportunity for the spread and development of Shariah-compliant prod-ucts and techniques. As economic weight shifts eastwards, so ways need to be developed to mobilise capital in a way consistent with the ethical approach of its owners. The global econ-omy needs investment – in financing trade, in developing infrastructure, in providing capital for new and growing businesses. An increasing proportion of this investment is likely to flow from Muslim countries and, as I have stated above, Shariah-compliant products are needed to channel that flow.

I recommend this book to a wide range of readers – to those involved in the market and those contemplating it, to those raising capital and those likely to need it, to business aca-demics and to their students. Whilst its scope is international, I am delighted that it gives due coverage to London’s position as the major Islamic finance centre outside the Muslim world – a position I and those with whom I work am determined to uphold.

Alderman Nick AnsteeThe Right Honourable The Lord Mayor of London

The Mansion House, London EC4December 2009


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Christian Sautter’s foreword

Financing needs of Western countries have increased due to the financial crisis. France is not immune to this necessity, and access to Islamic finance is one part of the solution which has to be brought to the debate in the context of the mobilisation of essential resources in the financ-ing of our economy. As outlined by Elyes Jouini and Olivier Pastre in their November 2008 report, Islamic finance represents a €100 billion market potential for the Paris business place. The government seized this opportunity, and sukuk issuance is now possible in France.

As the assistant to the Mayor of Paris in charge of employment, economic development and international incentives, I am naturally interested in any type of financing. I therefore wish to underline here the strengths which Paris offers to foreign investors and in particular to the Islamic finance operators.

1 An important potential market for all Islamic banking activities

Paris and its district, but more generally France, offers an important captive market for retail Islamic banks: indeed the Muslim community counts for 9% of the French population – six million people. In order to serve this population, partnership opportunities are broad, in par-ticular with the ‘mutualist banks’.

The market is also ready to welcome financing and investment from Islamic banks thanks to the presence of many major corporations. Indeed, Paris is the second business place for the 500 largest global companies, behind Tokyo but in front of London and New York. Moreover, the French private sector has developed privileged ties with the Muslim world’s private players, particularly in North Africa. Large French infrastructure companies, seeking stable resources in order to finance their long term projects, already have recourse to Islamic financing.

2 Paris in the middle of the euro area

Very early, London took a position on the Sharia-compliant products but Islamic financial institutions based there would do well to also consider a continental European base in the euro zone, offering a stability which allows protection against currency exchange risk.

3 A varied economic network

Paris has managed to keep an important sectoral diversity which makes the Île-de-France market the premier economic and scientific area of Europe today. The seven international competitive clusters set up in Île-de-France (ICT, software, health, aeronautics, eco-activities, finance and transport), give the area a prestigious position for the future and highlight an


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Christian Sautter’s foreword

economic dynamism. Innovative SMEs are emerging due to this expanding ecosystem and are looking for capital in order to develop. Islamic financial institutions on the other hand are seeking to invest their surplus capital: another important market potential.

4 Real estate: a changing territory

To foster new entrants to its territory, Paris is forging ahead in developing its commercial property. Two million square metres of additional office space will be provided by 2020, thus giving Paris a total of 18 million square metres. Organisations which comply with Islamic finance principles are potential options in financing this real estate development. Investment funds from Muslim countries are most welcome and sought after. Gulf countries’ investors already have a strong presence in the Paris real estate market.

According to the professionals I regularly meet during trade fairs, real estate Paris market events, which stood the crisis quite well, still have substantial growth potential and profitabil-ity rates are among the highest in Europe.

In the hotel industry in particular, Paris intends to promote the creation of 7000 additional rooms by 2020. This plan falls under the 35,000 additional rooms regional prospect for Île-de-France. Foreign candidates for these reliable and profitable investments in this key interna-tional tourist city are numerous.

5 A skilled workforce

Parisian schools and universities educate well-respected mathematicians and financial engi-neers who are valued worldwide. Therefore Islamic banks will find a skilled workforce readily available in Paris. Added to that, I would mention the new Islamic finance Master’s degree created at Dauphine, one of the most prestigious Parisian universities, well known for the excellence of its finance training.

As you can see, there are numerous reasons for Islamic finance to settle sustainably in Paris. I invite you to read Islamic Investment Banking, which I am sure will convince you of the opportunities offered by Islamic finance.

Christian SautterAdjoint au Maire de Paris

ParisMarch 2010


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Yves Mersch’s foreword

While the global economy slowly recovers from the recent unprecedented crisis, it is necessary to revisit our economic and financial paradigms and to shift them away from excessive risk taking and towards ethical practices that emphasise on socially responsible investment.

In this context, the principles underlying Islamic investment are interesting: it promotes fair entrepreneurship and aligns finance with the real economy. The Islamic prohibition on leverage activities and, generally, its principles of justice and participation, reduce perceived risk and stabilise the global financial system.1

Islamic finance spreads across the worldwide economy. It transcends the Muslim popu-lation and extends into new geographic areas and new customer classes that present a signifi-cant untapped economic growth potential.

However, the thirty-year growth of Islamic finance presents certain challenges, notably its lack of product diversification and its over-reliance on real estate as asset class, and we should all study how to sustain that growth.

On the one hand, Islamic investment institutions need to meet the demand for Islamic products and services as diversified and as comparable as those offered by conventional counter parts. On the other hand, the authorities need to regulate Islamic financial institutions fairly and efficiently to ensure equivalence in prudential supervision.

The various topics of this book are of the utmost interest. They contribute greatly to our knowledge of Islamic financial practice and show its shortcomings.

From its creation in 1998, the Banque centrale du Luxembourg has helped spread know-ledge about Islamic finance. In 2005, the Banque centrale du Luxembourg was the host of the first Islamic Financial Services Forum organised in Europe by the Islamic Financial Services Board. Furthermore, as at January 1 2010, the Banque centrale du Luxembourg is the first European central bank to be admitted as associate member of the Islamic Financial Services Board. Through this membership, the Banque centrale du Luxembourg intends to contribute to adapting standards in order to allow Islamic financial institutions to trade on equal terms and to remove hurdles in managing Shari’ah-compliant liquidity.

Providing reliable and extensive Shari’ah expertise, this new opus is most welcome. It will help the whole financial industry rise to the challenge and it may also shape Islamic investment innovation, harmonise and optimise market practices, and help consolidate the regulation for this growing industry.

Yves MerschPresident of the Banque centrale du Luxembourg

March 20101 Chris Morris et al. ‘Has the crisis shown the strengths or the weaknesses of Islamic finance?’ IFM Global Market

Monitor, October 21 2009.


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Editor’s notes and acknowledgements

As good as it feels to see secular countries embrace the concept of Islamic finance in general and Islamic investment banking in particular, it is undeniably in the Middle East and South-East Asia we see the bulk of Shari’ah-compliant financial activity. Islamic investment banking can be traced back to the 1950s when the first credit unions were established in Pakistan and Egypt. Today, Gulf Cooperation Council countries such as the United Arab Emirates, Bahrain and Qatar have become regional Islamic finance hubs in their own right. Malaysia, the Islamic finance international hub in South-East Asia, remains the main issuer of Sukuk, with over $5 billion so far in 2009, which includes the remarkable international Petronas global issuance for $1.5 billion. Since the inception of Sukuk in Malaysia, both corporates and the government have issued over 673 bonds worth $26 billion. The UAE, spearheaded by the Dubai Inter-national Financial Centre (DIFC), comes close second with a grand total of 35 Sukuk worth over $22 billion. In the Middle East, Qatar and Dubai have paved the way for the creation of international hubs, both increasingly attracting companies to operate from their financial centres. However, despite the fact Islamic financial Institutions are more aware of the necessity to diversify their asset portfolio to attract a growing number of investors, it will not be until Sukuk can be issued in all currency denominations, especially in Euros, that the market will truly flourish and expand globally.

Within Europe, London is well positioned to become the international hub for Islamic capital markets, with 18 Sukuk (Islamic bonds) worth $10 billion listed on the Stock Exchange, followed closely by the Luxembourg Financial Place (14 Sukuk worth $5.5 billion). The Square Mile also counts five fully Shari’ah-compliant banks as well as one Takaful company and as far as asset management is concerned, seven Islamic exchange traded funds (ETFs) have been launched so far. In a survey conducted by BDO, 13% of the 173 experts contacted thought that London was likely to be the leading international centre for Islamic finance issuance and 16% for Islamic finance investing. Competing for the European gateway to Islamic finance position, Paris is close behind London and the French government has just passed a law enabling the issuance of Sukuk. The financial crisis, which has impacted conventional and Islamic markets, has brought on the imperative necessity for governments and corporations to protect and, if possible, grow their capital, even in adverse conditions. In the Middle East and South-East Asia, many conventional banks have understood the huge potential of Islamic investment banking. Calyon, BNP Paribas, Deutsche Bank, Citigroup and HSBC all provide advice and capital-raising solutions which are Shari’ah-compliant, such as syndicated financing, trade, commodity and structured finance as well as capital market solutions. Citigroup for example has recently opened an advisory unit in the Middle East, servicing corporations in the UAE, Bahrain and Kuwait. The rationale behind this new entity was to service the global capital flows being redirected to the Middle East region. Global Securities House in the UK is another


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example of expansion into Islamic investment banking when it merged with Gatehouse Bank into one entity. The advisory and asset management arm of the business was united with the Capital Markets expertise of the bank in order to reduce costs but also to offer Islamic products from a single platform. One of its focuses today is to bring the Islamic mandates to the UK and European corporates, believing that Islamic finance will expand both in terms of geographic footprint but also of product diversification.1 In October 2009, Gatehouse Bank announced it joined Paris Europlace, which promotes the French capital as an Islamic finance centre. This move propels the UK-based bank in the rank of experts but also demonstrates the firm inten-tion from the French to welcome Shari’ah-compliant finance within its territory and become the leading European hub. Indeed, the government has shown its determination by making some changes to the tax regime as well as proposing a law change in parliament to facilitate Sukuk issuance.

Another way for corporations to raise capital and survive a challenging environment is through mergers and acquisitions (M&A). According to a survey by Norton Rose conducted amongst 1,000 senior executives, half the companies in the Middle East and North Africa plan at least one M&A deal this year. In times of crisis, corporations only keep the parts of their business that meet long-term objectives and sell those that do not. The primary aim of consolidation is to pool resources to enable firms to survive the downturn, but for those bigger corporations who do not have a cash flow problem, M&A activities will be golden opportuni-ties to buy companies in difficulty at a lower price.

The changing economic landscape has also increased the need for innovative risk manage-ment tools, such as Islamic derivative instruments. According to an article written by Clifford Chance in Euromoney’s ‘Islamic Finance Review 2009–2010’, a growing number of Shari’ah scholars take the view that as Islamic finance is getting more sophisticated, investors should be able to enter into hedging arrangements. For a long time, those were not considered Shari’ah-compliant as they fell under the category of speculation or uncertainty. Interest rate swaps, Murabaha-based products as well as Wa’ad-structured products (for example, currency swaps or FX options) all form part of the Islamic financial landscape and according to the law firm, it is only the beginning for innovative Islamic financial risk management products. On top of risk management, solid corporate governance practices are also needed if Islamic investment bank-ing stands a chance to flourish. Currently, there is a concerted effort by the industry, including financial institutions, corporations and regulatory bodies, to introduce homogeneous regulations and best practices in order to provide consistent Islamic financial services throughout the globe. Recently the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has expressed the willingness to stand as the industry watchdog in order to ensure all products launched are Shari’ah-compliant. But what the industry truly needs is a global common trade association made up of major financial institutions and corporates, which would provide the industry with the cement it badly needs and with the accreditation it is due. Initiative strongly supported by Shari’ah scholars as well as institutions such as the International Islamic Financial Markets (IIFM) in Bahrain or the Islamic Financial Services Board (IFSB) in Malaysia.

I hope you will find this guide to Islamic investment banking and its obvious potential a valuable source of information. Sections will cover various subjects, including the latest developments in the Islamic investment banking arena, in the two main Islamic financial hubs (Middle East and Malaysia), but also in the international arena. You will also find sections on



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capital markets, wealth management, international developments and regulations. I hope those will provide you with some insight into the challenges faced by the industry today as well as the opportunities Islamic investment banking offers worldwide. The content of this book is organised in five distinct parts:

I: Islamic investment banking: global trendsII: Islamic capital marketsIII: Wealth managementIV: New trends and developments in the international arenaV: Shari’ah, regulatory and supervisory framework

In order to provide the most complete information, we have invited leading practitioners to contribute their knowledge and experience. I hope you will find their contribution a useful source of guidance and information on Shari’ah-compliant investment banking.

I would like to thank the individual authors for their important contributions, time, encouragement and support. I am very grateful they chose to share their significant knowledge and impressive expertise in their chosen field. I am also indebted to Alderman Nick Anstee, Lord Mayor of London, Mr Christian Sautter, Deputy Mayor of Paris and Mr Yves Mersch, Governor of the Banque Centrale du Luxembourg for sharing their perspectives on how London, Paris and Luxembourg respectively are well positioned to grow the Islamic banking business in Europe. Special thanks to managing editor, Sanjeevi Perera and her team for their excellent assistance in reviewing and realising this unique publication. I am also very grateful to Nesrine Jaffer for her invaluable research, review, assistance and contribution to enhancing the overall quality of this new publication.

Sohail JafferPartner

FWU Group, Luxembourg

1 BDO ‘Islamic finance, challenges and opportunities’.


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About the editor

Sohail Jaffer is a partner and the head of international business development for ‘white label’ bancassurance and investment services within FWU Group, an independent financial services group headquartered in Munich. The group’s main activities include asset management, bancassurance and individual pension plans. For FWU Group, Mr Jaffer has successfully concluded several important bancassurance distribution deals with major banks in MENA and the Far East.

From June 1998 until June 1999, Mr Jaffer was senior vice president within the Inter-national Mutual Funds Group of Scudder, Stevens and Clark Ltd, based in London where he was responsible for international product development in Europe and Japan. From January 1989 until May 1998, he was vice president at Citibank (London), where he worked within the Financial Institutions Group as head of structured products including alternative investments until 1996. He later joined Citibank’s Alternative Investment Strategies (AIS) Group where he was a regional director and his responsibilities included international business development and asset gathering from institutional investors in Europe and the Middle East region. He was also a member of Citibank’s Hedge Funds Policy and Strategy Committee involved in hedge fund manager selection and due diligence.

Mr Jaffer was an audit partner with the Price Waterhouse practice in Africa from July 1984 until September 1988. He is a UK qualified certified accountant (FCCA). He is currently regional advisory council member (EMEA) of the Alternative Investment Management Association (AIMA), was a council member of AIMA for the period 2001 to September 2008 and past chairman for the period 1997 to 2000. He is also a member of ALFI’s Asset Management Advisory Committee and of their Hedge Fund Committee. ALFI is the Association of the Luxembourg Funds Industry. He is also an active member of the Islamic Finance Working Group of Luxembourg for Finance, commissioned by the Luxembourg Finance Minister and designed to promote Shari’ah-compliant finance in the Grand Duchy.

Mr Jaffer has written extensively on alternative investments and has edited several Euromoney publications on hedge funds, wealth management, Islamic banking, asset management and insurance as well as two editions of the CPI publication on investing in the GCC Markets. World Finance has voted him ‘Best Business Leader in Europe’ in its Islamic Finance Awards 2009.


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About the contributors

Ijlal Alvi Ijlal Alvi is an experienced professional with over twenty years experience in the financial services industry with strong credentials; specifically in the areas of foreign exchange, money market, fixed income securities and asset and liability management. He has extensive hands-on experience in setting up new treasury functions, strategic planning, policy making and banks restructuring/formation as well as mutual and special purpose fund and financial institutions. Prior to moving to the Gulf, he had spent 10 years at senior positions in the areas of treas-ury and capital markets with international and regional financial institutions. Since 1997, he has served at senior positions with a number of Middle East based financial institutions. Mr Alvi is the chief executive of IIFM since mid 2005 where he has been instrumental in initiat-ing standardisation of documentation, products and processes in Islamic money and capital market. Mr Alvi has been involved on several working committees at international level such as the Islamic Financial Services Industry’s 10 year Framework, Islamic Money Market Task Force and Islamic Financial Sector Development Working Group. He currently manages a number of IIFM’s global working groups focused towards developing a unified approach in documentation and products covering liquidity management, hedging and other Islamic capi-tal and money market related issues. Last year he had overseen the launch of Islamic Financial Services Industry’s first documentation standardisation in the form of Master Agreements for Treasury Placement. Mr Alvi has presented a number of papers in Islamic finance and Islamic capital and money market at several forums, seminars and workshops worldwide. Moreover, he is a regular contributor in the printed media where his contribution is particularly focused on standardisation in the Islamic financial services industry.

Mohammed Amin Mohammed Amin, MA FCA AMCT CTA (Fellow) is a member of the HM Treasury Islamic Finance Experts Group, established by the Economic Secretary to the treasury to advise the government on Islamic finance strategy. He also chairs the Business and Economics Commit-tee of the Muslim Council of Britain. Until recently Amin was a partner in Pricewaterhouse-Coopers LLP and led PwC’s Islamic finance practice in the UK. He has presented on Islamic finance in cities as far afield as Kazan, Jakarta, Melbourne, New York and Sao Paulo.

Zarinah AnwarZarinah Anwar is the chairman of the Securities Commission (SC), Malaysia a post she assumed on 1 April 2006. She had served as deputy chief executive of the SC and has been a member of the commission since 1 December 2001. Zarinah is vice chairman of the emerging markets committee of the International Organizations of Securities Commissions (IOSCO).


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She was chairman of the ASEAN Capital Markets Forum, a grouping of chairmen of ASEAN securities regulators, from 2006–2008. Zarinah currently chairs the Malaysian Venture Capi-tal Development Council (MVCDC) and the Capital Market Development Fund (CMDF), and is a member of the Labuan Offshore Financial Services Authority (LOFSA), the Malaysia International Islamic Financial Center (MIFC), the Financial Reporting Foundation (FRF) and the Board of Directors of the Institute Integrity Malaysia (IIM) and the Asian Institute of Finance Malaysia (AIF). Zarinah started her career in the government legal and judicial service where she served in the courts as well as the attorney-general’s chambers. Zarinah subsequently spent 22 years with Shell and was deputy chairman of Shell Malaysia prior to joining the SC.

Omar Asghar Omar Asghar heads wealth management for Mashreq, Dubai. He is responsible for shaping the customer experience and driving the bank’s high-end businesses. These include HNW-centric Mashreq Gold services for conventional and Islamic customer segments, investments and insurance business, retail deposits, payments and transactional product management. In addition, Omar drives CRM, customer loyalty programmes, business analytics and segmenta-tion strategy for the bank. Omar graduated from the University of Rochester, New York and possesses a very strong and diverse financial services, people and business management skill set. Prior to joining Mashreq in 2006, Omar worked with Citibank in their New York and Dubai offices looking after a variety of high impact responsibilities including retail product manage-ment, remote distribution and marketing. Prior to that, Omar worked with ABN Amro Bank in Pakistan, where he started his banking career as a wealth management RM and progressed to branches and sales management before transitioning to run the alternate delivery channels for the franchise. Omar is married and based out of Dubai. His interests anchor around magical realism in literature, art and digital media.

Dr Mohd Daud Bakar Dr Mohd Daud Bakar is the president/CEO of International Institute of Islamic Finance (IIIF) Inc. (BVI), Amanie Business Solutions Sdn. Bhd (Kuala Lumpur) and Amanie Islamic Finance Consultancy and Education LLC ( DIFC, Dubai). Prior to this, he was the deputy vice-chancellor at the International Islamic University Malaysia.

He received his first degree in Shari’ah from University of Kuwait in 1988 and obtained his PhD from University of St. Andrews, United Kingdom in 1993. In 2002, he completed his external Bachelor of Jurisprudence at University of Malaya, Malaysia. He has published a number of articles in various academic journals and books and presented many papers in vari-ous conferences both local and abroad. Dr Mohd Daud is the authority in Islamic legal theory and Islamic finance in Malaysia. He is currently the chairman of the Central Shari’ah Advisory Council of the Central Bank of Malaysia and a member of Shariah Advisory Council of Secu-rities Commission of Malaysia. He is also a member of Shari’ah board of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) (Bahrain), International Islamic Financial Market (IIFM) (Bahrain), Dow Jones Islamic Market Index (New York), Oasis Asset Management (Cape Town, South Africa), Unicorn Investment Bank (Bahrain), Financial Guidance (USA), BNP Paribas (Bahrain), Morgan Stanley (Dubai), Jadwa-Russell



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Islamic Fund (Kingdom of Saudi Arabia), Bank of London and Middle East (London), Noor Islamic Bank (Dubai), Islamic Bank of Asia (Singapore) and in other financial institutions both local and abroad. Apart from that, Dr Mohd Daud is also actively advising in capital market product structuring such as Sukuks both local and abroad.

Farmida BiFarmida Bi is a partner at the law firm Norton Rose LLP. Farmida is a recognised expert in the Islamic capital markets field and has advised on many of the most innovative sukuk issues, such as the $3.5 billion musharaka sukuk issued by DP World to fund its acquisition of P&O and the first ever Sharia-compliant RMBS issue by Tamweel. Farmida advised the UK Government on its proposed sukuk issue in the form of Sharia-compliant treasury bills and is currently acting for the delegate on the $650 million Golden Belt sukuk issue which is in default. Farmida is the only female named as a leading individual for Islamic finance in the legal industry guide, Chambers UK 2009, which ranks solicitors and barristers in over 60 specialist areas of law.

Alberto G. BrugnoniAlberto G Brugnoni is a former director with Merrill Lynch Bank and is an independent Islamic finance adviser. His unique professional background combines Islamic, conventional and ethi-cal finance. In the mid 1980s, Alberto pioneered some of the first murabaha transactions and participatory investment schemes (mudharaba) ever done in the West. In 1997, he released ‘Pilot Project Genoardo’, a seminal study for the establishment of a Mediterranean develop-ment bank based on Shariah-compliant principles He now runs ASSAIF (www.assaif.org) a financial engineering think-tank that structures and develops Shariah-compliant products and instruments with a particular focus on structured products, Takaful, home financing and micro-finance. ASSAIF is also at the forefront of finance research in some key areas, such as the nature of money, the monetary system and accountancy and strives to join Shariah-compliant contractual structures with the aims and goals advocated by Islamic finance. ASSAIF offers professional consultancy and training in legal, fiscal, administrative, financial engineering and marketing areas and works with governments, central banks, public and private institutions, local and regional authorities, professional practices and investors. Alberto regularly chairs the major events on Islamic finance around the world and gives presentations in Italian, French, English and Arabic.

Abdel Maoula Chaar Abdel Maoula Chaar is the head of research and development at the Lebanese Ecole Super-iéure des Affaires. He leads the development of Islamic financial programmes and activities, among which the Executive Master of Islamic Financial Management (XIFM) elaborated in cooperation with the Rotterdam School of Management. Mr Chaar holds a Master’s degree in Strategic Marketing and Communication from ESCP Europe and a Master’s degree in Research in Strategic Management from the University of Paris XII. He is currently finishing his PhD thesis on the influence the Shari’a mindset has on the elaboration of the strategies of Islamic banks and on the dynamics of the institutionalisation of the Islamic financial field. Mr Chaar is a professor of Islamic finance. He is an editor and qualified trainer of the international


www.assaif.org

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Islamic Financial Qualification (IFQ). He has written a number of articles and participated in numerous books on Islamic financial management issues.

Henry ChinHenry Chin, PhD is global alternative investments strategist, vice president at RREEF Alterna-tive Investments, the global alternative investment business of Deutsche Bank’s Asset Man-agement division. In this role, Henry is responsible for developing and co-ordinating RREEF Alternative Investments’ global coverage of real estate, and infrastructure capital markets. Prior to joining RREEF Alternative Investments in August 2005, Henry worked as a researcher at DTZ Research in London to develop real estate research for Asia-Pacific real estate capital markets. Henry has seven years research experience of Asia Pacific and Global real estate mar-kets. He holds a BA in Land Economic and Administration from National Taipei University (Taiwan); an MSc in Real Estate from the University of Reading (UK) and a PhD in Real Estate Investment from Oxford Brookes University (UK). He has presented and published a number of papers at various leading international real estate conferences and academic journals. Henry is a guest lecturer at Oxford Brookes University and National Taipei University; a member of the Society of Property Researchers (SPR), Investment Property Forum (IPF), Urban Land Institute (ULI) and UKSIP. He holds an Investment Management Certificate (IMC) in the UK.

Majid DawoodMajid Dawood is an experienced financial services professional. He is the CEO and has been a key individual in the establishment of Yasaar Limited, the first Shariah compliance services company which assists financial institutions structure cost-effective Shariah-compliant financ-ing structures around the globe. Prior to setting up Yasaar, Majid held the position of country representative for Credit Lyonnais Securities (Asia) Ltd as well as capital markets consultant to Credit Lyonnais and Jardine Fleming.

Majid is a well known speaker on Islamic finance and Shariah, having presented on these topics globally as well as having authored numerous articles for industry journals and chapters for books. In 2004, Majid was presented the Deloitte & Touche award for the most innovative Islamic finance product for the Caravan 1 Sukuk. Under his leadership and guidance in Decem-ber 2007 Yasaar was voted the Best Islamic Finance Advisory Firm by the readers of Islamic Business and Finance magazine and in January 2009 won the same award for the second year running. Also in 2009 he set up the publication capability by establishing Yasaar Media. Yasaar Human Capital, the Islamic finance executive search and recruitment division was launched in Q3 in 2009. Majid holds a BA (Economics) from the University of Massachusetts.

Valéry FousséValéry Foussé, MS ESCP Europe, expert-comptable and commissaire aux comptes, is a part-ner of KPMG France. He has twenty years experience of serving French and international banks acting in the retail banking, private banking, asset-backed financing or investment bank-ing sectors, and a strong international experience of auditing in the financial services and real estate sectors, including two years in KPMG’s London-based financial services group – invest-ment banking department (1998–2000). He is the French correspondent of the Islamic finance international group within KPMG.



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Natacha GuerdatNatacha Guerdat is a partner of Conser Invest, an independent advisory firm dedicated to sustainable and responsible investment solutions. Conser provides tailor-made solutions to institutional and private clients wishing to combine financial performance and sustainable development principles. Natacha has 10 years’ experience in sustainable finance. She joined Conser Invest in 2008 from the private bank Lombard Odier Darier Hentsch & Cie where she worked as portfolio manager dedicated to sustainable investing. Prior to this role she worked in the buy-side equity research department as a financial analyst and contributed to the devel-opment of the responsible investment unit. She was also responsible for the coverage of the alternative energy industry. As such she created and managed a dynamic alternative energy basket and a mutual fund investing in alternative energy, water and waste treatment.

Natacha is co-founder of ‘Sustainable Finance Geneva’, a non-profit association which aims to promote responsibility and sustainability in finance. She holds a master degree in international relations from the Graduate Institute of International and Development Studies in Geneva (IHEID).

Zainal Hasfi Hashim Zainal Hasfi Hashim is the manager in the Islamic banking and Takaful department, Bank Negara Malaysia (Central Bank of Malaysia). He started his career in central banking in 1990 and has worked in the bank regulation department before being seconded to the Labuan Off-shore Financial Services Authority (LOFSA) as assistant manager in charge of offshore bank-ing operations. He has on several occasions been invited as a resource person and speaker for the Central Banking Course, the Financial Sector Talent Enrichment Programme (FSTEP), Islamic Finance Regulator Programme and a moderator for the examination of Part I and Part II courses of the Chartered Islamic Finance Professional Programme (CIFP).

He holds a Bachelor’s Degree in Business Administration from Ohio University, USA; a Bachelor of Science (Honours) Degree in Politics and International Relations from the University of London and Master’s degrees from the University of Malaya and the International Islamic University Malaysia. Zainal Hasfi obtained his PhD from the University of Manchester, United Kingdom.

Brian Higgins Brian Higgins is a partner in the financial services department of Dillon Eustace which is one of Ireland’s leading law firms. He advises international financial institutions and asset managers on carrying on business in Ireland. In particular, he advises on the structuring, estab-lishment and operation of all types of investment funds (including UCITS, non-UCITS and Shariah-compliant funds) and asset management firms. Brian is a co-author of the Irish Insti-tute of Bankers’ manual for its diploma in financial services and regularly contributes articles in relation to investment funds to international publications. Brian is recommended in Euro-pean Legal Experts 2009 in the area of investment funds.

Kareem HussainiKareem Hussaini, Vice President of The Islamic Bank of Asia, is a banker with more than twelve years’ experience. At The Islamic Bank of Asia (IB Asia), Kareem Hussaini is leading


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the efforts on the development of Treasury and Wealth Management products. He is also responsible for developing the business in the Middle East and Far East for the Shariah-compliant products offered by IB Asia. Having earned the right to use the Chartered Financial Analyst designation, Kareem is currently a member of the CFA Institute, USA, and a Chartered Accountant from the Institute of Chartered Accountants of India. He graduated from Sydenham College of Commerce and Economics, India.

Zamir Iqbal Zamir Iqbal works as lead investment officer with the quantitative strategies, risk and analyt-ics department in the Treasury of the World Bank in Washington, D.C. He earned his PhD in international finance from the George Washington University, USA where he also serves as adjunct faculty of international finance. He has published several articles on Islamic finance in reputed journals and has presented papers at international forums. He has extensive experience with capital markets, structured products, risk management, financial sector development, and financial modelling. His research interests include Islamic finance, financial engineer-ing, structured finance and international banking. He is co-author of Introduction to Islamic Finance: Theory and Practice (2007), Risk Analysis for Islamic Banks (2007), and New Issues in Islamic Finance and Economics: Progress and Challenges (2008), Globalization of Islamic Finance (2009) and Stability of Islamic Finance (2010).

Zeinab Karake-Shalhoub Zeinab Karake-Shalhoub is director of research at the Dubai International Financial Centre (DIFC), in the UAE. Before joining DIFC, she was a professor at the American University in Sharjah. Zeinab served as the associate dean of the School of Business and Management, the director of marketing, management and MIS, and the chair of MIS. Before coming to AUS, Zeinab was a professor of business at Catholic University in Washington, DC (1989–2001). She also served on the faculty of business at George Washington University for four years (1986–1989). Zeinab has a BBA and MA from Catholic University of America (Washing-ton, DC, 1982) and a PhD from the George Washington University (Washington, DC, 1987). Zeinab completed three summers of professional, post-doctoral programs at MIT in Boston, Massachusetts. She is a visiting scholar at INSEAD (2006). Zeinab is the author of more than 50 published articles, monographs, and reviews. She is also the author of six published books Technology and Developing Economies (1990); Information Technology and Managerial Con-trol (1992); Organizational Downsizing, Discrimination, and Corporate Social Responsibility (1999); Trust and Loyalty in Electronic Commerce: An Agency Theory Perspective (2002); The Diffusion of Electronic Commerce in Developing Economies: A Resource-Based Approach (2007).This book is already in its sixth print and has been translated to Arabic; and Cyber Security in Developing and Emerging Economies (2010). Zeinab is also the regional editor of Management Decision Journal. Zeinab is twice recipient of the prestigious Emerald/MCB University Press International Excellence Research Award for her groundbreaking research (1995, 2002). She also received the AUS Excellence in Teaching and Service Award in 2001. Zeinab was elected and served as the founding president of the AUS Faculty Senate (2000–2001). In 2003, Zeinab received the Best Researcher Award from the American University of Sharjah; and more recently she was nominated and received the prestigious 2007 Emirates



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Business Women Award for innovation. In addition to her work as a researcher, college admin-istrator, professor, writer and editor, Zeinab has developed and delivered a number of seminars and training programmes for mid-and-high level American and international managers, both in the United States and abroad. She delivered keynote speeches at a number of conferences and serves as a consultant and resource specialist for a number of national and international companies and institutions.

Ayman H. Abdel Khaleq Ayman H. Abdel Khaleq is a partner at Vinson & Elkins based in Dubai. His practice focuses on advising clients on structured finance and debt capital markets transactions with a particular emphasis on the structuring and documentation of Islamic finance and investment products (including Sukuk offerings backed by pools of global assets). In addition, he advises clients on the structuring and formation of innovative Shari’a-compliant real estate, infrastructure and private equity funds and investments. Ayman has been involved in a number of privatisa-tion and deregulation transactions across a number of Middle East countries such as Bahrain, Saudi Arabia, Qatar, and Jordan, and has been advising foreign investors on doing business in the Middle East for over thirteen years. Some of the key sectors in which Ayman practices include infrastructure, telecommunications, media and technology, energy (including renew-able energy) and real estate. Ayman is qualified in New York State and Jordan and is fluent in Arabic and English. He holds LLM (honours) from the George Washington University and an LLB (highest honours) from the University of Jordan Faculty of Law. He has published a number of articles on Islamic finance topics and on doing business in the Middle East, and has spoken at a number of international conferences and seminars dealing with the said topics.

Gul Khan Gul Khan is the global head of wealth management at HSBC Amanah, the Islamic banking business of the HSBC Group. He is responsible for growing HSBC Group’s Islamic premium banking and wealth management business. Prior to this role, he was the regional head of pre-mier, home finance and insurance, for HSBC Middle East. Gul joined HSBC over 11 years ago and during his time as an international manager for the bank has held a variety of management positions in geographies as varied as North America, Asia-Pacific, Europe and the Middle East. His roles have encompassed retail banking, wealth management, islamic banking and corporate banking, and he has also held strategic positions at the HSBC Group head office, in the UK.

Dr Aly KhorshidDr Aly Khorshid is a recognised scholar in Islamic finance and expert on Shariah-compliant finance, within the Islamic law and contracts. He is CEO of Islamic finance with Elite Hori-zon economic consultancy, his role includes; structuring, endorsing and advising on Shariah-compliant products with particular experience in capital and stock market products, consultant to central bank on regulating and establishing Islamic banking system, conducting compre-hensive due-diligences for potential investment opportunities. He has been a Shariah board member since 1997 with bank Al-Baraka UK. He is now serving as a Shari’ah board member in several Islamic institutions. Dr Khorshid has a PhD on Islamic studies and economics, a


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Master’s degree in management, University of Leeds (UK), and has studied Fiqh and Sha-riah at Al-Azhar University (Egypt). His publications include, Islamic Insurance: A modern Approach to Islamic Banking, and the Euromoney Encyclopaedia of Islamic Finance. He also has many articles published on Islamic finance. Dr Khorshid is a trustee member of Academy UK, member of the institute of management consultancy (UK), and visiting lecturer in El-Azhar University, Egypt and SOAS University of London on Islamic finance. He is a regu-lar speaker on Islamic finance issues at conferences and TV. He can be contacted by email: [email protected] or by phone: 00447944411777.

Dr Saleh Jameel MalaikahDr Saleh Malaikah is currently the chairman of Rusd Investment Bank, Malaysia and is the chairman of a group of financial entities in several countries. In addition, he is a member of the boards of the National Industrialization Co. (NIC), Saudi Tabreed Co. (STC), and Nabaa Development & Investment Co. (NDIC). Since 1990, he has been assistant professor at King Fahd University for Petroleum & Minerals (KFUPM). In 1992 he was the chief executive officer (CEO) of Al-Tawfeek Investment Bank which became a model of Islamic investment banking. Between 1995 and 2000 he was CEO of Albaraka Investment & Development Com-pany, the financial services sector (FSS) of Dallah al-Baraka Group (DBG), acting as holding company for DBG holdings in financial institutions. He oversaw the group’s investments in around 45 companies in 30 countries, with total assets above $5 billion. In 1995 he started his own business in hotel management and UMRA services in Makkah Al-Mukkarramah and in 2003, left AlBaraka to fully oversee his own business. Dr Malaikah was a founding member on the Board of Trustees of the Accounting & Auditing Organization for Islamic Financial Institutions. He is currently a member of the Audit Committee of Bank Al-Jazira. He is also a member of the National Investment Committee of the Association of Saudi Chambers of Commerce, and is head of the Executive Investment Committee for the Society of the Gifted, which is headed by the Custodian of the Two Holy Mosques, King Abdullah bin Abdul-Aziz Aal Saud. Dr Malaikah is a well-known speaker in finance, insurance, banking, investment and Islamic economics. It is worth noting that in his various capacities, Dr Malaikah has been instrumental in developing Islamic finance practices in the Saudi economy. His leadership in the field was recognised by his peers. Thus, he was named in 1997 the Dealmaker of the Year of the Islamic Banking & Finance Forum, and the next year he was awarded the Lifetime Achievement Award of the Islamic Banking & Finance Symposium (LARIBA). He was also recognized as the Islamic Banker of the Year 2000 by ISNA/IBTF (Islamic Society of North America and Islamic Business and Trade Forum). In 2007 he received the Takaful Leader of the Year award during the Second World Takaful Conference. Dr Malaikah obtained his PhD, specialising in finance and investment, after graduating with BSc (Eng) and MBA.

Moinuddin Malim Moinuddin Malim brings with him a vast experience of Islamic banking stretching over 19 years. Today, Moin is the chief executive officer of Mashreq Al-Islami (MAI), previously known as Badr Al-Islami, which is the Islamic initiative for the entire Mashreq group repre-sented through the Islamic finance company as well as Islamic Banking of Mashreq PJSC. As the head of the Islamic initiative, Moin has successfully transitioned the business model of



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MAI all across the bank through retail, institutional and wholesale banking channels. Origin-ally, Moin joined Badr as head of corporate and investment banking where he was responsible for establishing the wholesale banking channels and successfully led this initiative. In a short span of three years, Moin has led Badr to become the market leader in real estate trust account management. Badr’s presence is recognised and respected in large corporate entities from all across UAE and the rest of GCC for bilateral, club, syndication and Sukuk advisory deals. The wholesale banking group has been profitable from the very first day and has started to contribute 10% of the Mashreq group’s net profit in less than two years of operations. MEED has ranked Badr at number 26 amongst the top 50 Islamic Banks in GCC, and number 9 in UAE (3% market share in UAE) by assets whereas non of its UAE based peer group namely Siraj (FGB), Meethaq (ADCB), Al Wifaq (UNB), Bayt Al Mal (RAK Bank), Marooj (NBAD), Aseel, and Mawarid who were all licenced at the same time in December 2006, made it to the list.

Prior to MAI, Moin established the asset management and capital markets unit in Dubai Islamic Bank (DIB) and left the bank as managing director for the two units in 2006. Under him, the bank lead arranged a number of the Sukuks starting from the inaugural, first ever $1 billion Sukuk Al Ijara for the Department of Civil Aviation, Government of Dubai. During his stay a total of $9 billion Sukuks were led arranged by the bank including Nakheel, DP World, DCA, Emirates and DMCC. He was at the forefront of bringing first ever international Musharaka Sukuk and other ground breaking structures. Under Moin, DIB established its cre-dentials as Best Global Sukuk House (Euromoney), Best Sukuk House (Banker Middle East), led the Euromoney Lead Tables in 2004 and 2005 and other regional awards. He created a full spectrum of Shari-compliant investment products for retail, wholesale and private bank-ing channels from capital protected funds, to real estate, shipping, aviation, power, local and regional and international stock funds.

Moin joined DIB from the International Investor (TII) where he was a senior partner lead-ing the investment banking activities for the group in UAE and later in Qatar. In TII, he led a number of private placement project and public offerings of equity during his stay between 1999 and 2003.

Before TII, he headed the international finance division at Al-Tawfeek Company for Investment Funds (Dallah Al Baraka Group), where he was responsible for extending Islamic financing facilities to global cliental and had a large portfolio of financing assets. He picked up his enthusiasm for Islamic banking from this pioneer group during 1992 until 1999.

Prior to devoting his career in Islamic banking, Moin worked at the University of Toledo as research assistant in the department of finance for almost two years from 1990 to 1992 as well as with a private consultancy firm specialising in financial advice to banks.

Moin holds Master of Business Administration in Finance & International Business and Bachelor of Business Administration from University of Toledo (USA) and Bachelor of Sci-ence from University of Karachi (Pakistan).

Ken OwensKen Owens is an audit partner in the Asset Management Group in PricewaterhouseCoopers, Ireland and has extensive knowledge and 16 years experience in advising and auditing asset management clients including mutual funds, hedge funds and private equity funds adminis-


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tered in Ireland. Ken also works with asset managers and administrators based in Ireland. He provides a range of services to his clients including fund and corporate audit services, and regulatory advisory services.

Over the years Ken has assisted clients in structuring new funds and advised on various accounting, tax and operational matters. Ken has been involved with the Irish Funds Industry Association (IFIA) for a number of years and is a member of the IFIA’s governing council. Ken has lectured on auditing and accounting issues to the asset management industry in Ire-land on behalf of the IFIA and the Institute of Chartered Accountants in Ireland.

Ken is a fellow of the Institute of Chartered Accountants in Ireland and sits on the Insti-tute’s audit and assurance committee. Ken is also a member of the Investment Funds Listing Committee of the Irish Stock Exchange.

Anass Patel Anass Patel is the director of investment and strategy of DTZ Asset Management. He is responsible for developing new fund ideas, innovative vehicles and strategic relationships with top-tier fund managers. He is in charge of key account management and development such as GE Asset Management (on behalf of GE Pension Trust at the European level), Dubai Islamic Bank for the Al Islamic Pan-European property fund compliant with the sharia rules, and the Hexagone fund, a co-developed French property fund with Aviva Investors. With more than 10 years of experience in finance and real estate, he previously worked at GE Capital from 1999 to 2006, as investment and then risk specialist in Europe and the US. He also worked at HRO as head of the research activity. Anass has a post-graduate degree from Ecole Centrale Paris and graduated from ESC Lille business school. He is a CCIM member from the US (Certified Commercial Investment Manager). Anass is also the founder-president of AIDIMM, a not-for-profit organisation that promotes Islamic finance towards the general public from France and French speaking countries.

Tim PlewsTim Plews is a partner in Clifford Chance LLP and co-head of its financial services prac-tice in London. Mr Plews advises many of the world’s leading financial institutions on the implications of financial services law and regulation. He advised Islamic Bank of Britain plc on its establishment in the UK and the grant of its banking licence by the Financial Serv-ices Authority: the first Sharia-compliant bank to be established in either Europe or North America after 9/11. Mr Plews has more recently advised European Islamic Investment Bank on its establishment in the UK. Mr Plews is also engaged on a number of assignments in the Middle East that are connected with the further development and institutionalisation of Islamic finance.

He is a member of the UK Treasury’s working party considering the UK regulatory approach to Islamic finance and a member of the International Monetary Fund’s experts group on cross-border bank resolution. Mr Plews advised the Dubai International Finance Centre on the establishment of its legal and regulatory framework. He has also advised the Dubai Inter-national Financial Exchange. Mr Plews is also advising the Qatar Financial Centre Authority and also advising organisations interested in the QFC. He joined Clifford Chance in 1985, having read law at Cambridge University. He is a member of the advisory board of Complinet,



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the editorial board of Cambridge University Press’ Practitioner’s Guides to Law and Practice and a guest lecturer on international regulation in the Centre for Financial Services at New York University Law School.

Dr Alexander von PockDr Alexander von Pock is a principal at A.T. Kearney, based in the firm’s Dubai office. He has more than 10 years of experience in strategy consulting with a focus on financial services. His clients include leading financial institutions – both conventional and Islamic – in Europe and the Middle East, where he has worked on diverse management issues, including overall business strategy, M&A, product and pricing strategies, market entry strategy, growth strategy, post-merger-integration, reorganisation and operations improvement. He also regularly writes on banking and Islamic finance issues, and is a frequent speaker at banking and Islamic finance conferences. Dr von Pock is a graduate both in economics and in Near and Middle Eastern studies from the University of Bonn. He has received a doctorate in economics from the Uni-versity of Bochum with a thesis on ‘Strategic Management in Islamic Finance’.

Nor Rejina Abdul Rahim Nor Rejina Abdul Rahim is Nomura Asset Management Malaysia’s managing director. She is Nomura Asset Management’s first woman and non-Japanese national to head their overseas branch. Rejina who is a qualified barrister at law, started off her career as a legal officer with a Malaysian stock broking house before joining a regional fund management outfit in 1998 where she was involved in various roles from compliance, legal, risk management, product development to marketing and client services. Rejina has actively contributed towards the development of both the unit trust and asset management industry in Malaysia through close work with the industry’s associations and the Securities Commission of Malaysia. Rejina holds a fund manager’s representative licence. She is also the secretary for the Malaysian Association of Asset Managers (MAAM) and has spoken at a considerable number of Islamic finance conferences globally.

Amin Rajan Amin Rajan is the CEO of CREATE–Research, a UK based think-tank that specialises in the future trends in global fund management. It works with prominent partners to publish much acclaimed annual reports on prospective challenges and potential responses in the industry. The reports always attract a long series of feature articles in the Financial Times, Global Investor, Financial News and IPE. He also writes for these papers regularly. Amin also offers strategic advisory and coaching services to CEOs and CIOs in fund management as they grapple with unfolding industry dynamics. He has developed special expertise in the emerging business models and their successful implementation. Since 2001, he has undertaken specialist advisory assignments for clients as diverse as Aviva Investors, Allianz Global Investors, Axa Investment Managers, BlackRock, Citigroup Asset Management, Credit Suisse Asset Management, Deutsche Asset Management, Invesco, M&G, Martin Currie Investment Management Morgan Stanley Asset Management, Principal Global Investors, T. Rowe Price, and UBS Asset Management. Amin has presented the results of his work at over 100 major events in the USA, Europe and Asia Pacific in the last five years. His expertise covers, amongst


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others, leadership and new business models in financial services. He is the author of 17 best selling research reports. Details are available from [email protected]. Amin has published numerous books and articles on leadership, business cultures, socio-economic forecasting, globalisation and new technologies. He is a visiting professor at the Centre for Leadership Studies at Exeter University and a Fellow at Oxford University’s Said Business School.

Wanda Regina Wanda Regina is an analyst in the product development team at the Islamic Bank of Asia (IB Asia), focusing on the development of Shariah-compliant treasury and wealth manage-ment products. She has been involved in the development of products offered by IB Asia such as Shariah-compliant profit rate swap, foreign exchange forward, and structured products. Wanda graduated from the Business School of the National University of Singapore.

Dr Natalie Schoon Dr Natalie Schoon, CFA joined the Bank of London and the Middle East plc (BLME) in April 2007 as head of product research. Prior to this Natalie was at Barclays Capital where she worked as a senior consultant on the Basel II programme. Natalie has worked in international financial organisations such as ABN Amro and Gulf International Bank. She began her career in Islamic finance whilst working in Bahrain, Kuwait and Dubai during the 1990s. Natalie holds a PhD in financial analysis (thesis subject: Residual Income Models and the Valuation of Conventional and Islamic Banks) and is an accredited trainer for the Islamic Finance Qualification.

Richard StreetRichard Street is director, head of securities and fund services Middle East, global trans-action services, Citi. Based in Dubai, Richard leads the development of Citi’s securities and fund services capabilities in the Middle East and the client relationships for the product range. Prior to this Richard was the co-head of securities and fund services sales for global trans-action services in Europe, the Middle East and Africa, with specific responsibility for the UK, Ireland and the Channel Islands, the Nordic region, Central and Eastern Europe, Middle East and Africa.

Tommy Trask Tommy Trask is head of industry research and ratings advisory at Alpen Capital (ME) Limited. Alpen Capital offers M&A, debt and equity advisory services to clients in the Middle East and South Asia from its offices in the UAE, Qatar, Oman and India. It was awarded Best Investment Bank, by Banker Middle East Industry Awards in 2009. Tommy has worked for over 13 years in the investment banking industry in London, New York, Frankfurt and Dubai. While working for Dresdner Kleinwort as director (debt capital markets) and for Standard & Poor’s as associate director and global industry coordinator (industrial ratings), Tommy managed many successful credit rating projects in Europe, the US, Latin America, the CIS and the Middle East. In 2002 Tommy was awarded Standard & Poor’s Gold Award for Customer Service.



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Gillian Walmsley Gillian Walmsley is head of fixed income products at the London Stock Exchange and covers the group’s London markets for fixed income and Islamic finance in addition to ETFs and securitised derivatives. Before joining the Exchange in 2008, Gillian was part of the interest rate product development team at Liffe, the derivatives arm of NYSE Euronext, where she worked on the design and launch of various short-term interest rate, bond index and govern-ment bond futures and options contracts and on the structuring of exchange credit derivatives. Previously, she was part of the equity derivatives team and worked on the launch of stock futures, the development of the UK equity options market and the introduction of flexible equity and index contracts. Gillian began her career in the City on the Liffe trading floor as an exchange official overseeing open-outcry trading activity in the fixed income option pits. Gillian holds the Securities & Investment Institute’s Islamic Finance Qualification.

Pierre Weimerskirch Pierre Weimerskirch is a partner in the business advisory services practice at Ernst & Young Luxembourg. Pierre leads the firm’s advisory services to private equity and real estate funds and is a member of the EMEIA Real Estate Advisory leadership team. He also leads Ernst & Young Luxembourg’s Middle East/Islamic finance initiative. He has a doctorate in finance. Pierre has 20 years experience in financial services. Pierre started working with UBS Bank as an asset manager in the institutional asset management department. Afterwards he joined the financial services advisory practice of Arthur D. Little in Germany. In 1999 Pierre joined the business risk services practice of Andersen in Luxembourg which combined with Ernst & Young in 2002. He has a deep experience, providing a wide range of advisory services to primarily European and global investment management, wealth management and real estate businesses and respective service providers. He has been involved over the last five years in various projects in the Middle East where he helped clients with the set up of operations and the launch of investment structures. Pierre is also lecturer at the University of Luxembourg and the author and co-author of numerous articles and books in the area of investment and wealth management.

Bill Willison Bill Willison is an associate consultant with Braxxon, a management and systems consul-tancy serving the financial markets, with expertise in both conventional and Islamic investment banking. He has worked in IT and banking for all of his career, having started with IBM UK in the London Banking Branch, before moving to Logica and subsequently joining JP Morgan where he became a senior vice president responsible for international technology. He special-ises in information systems strategy, process improvement and programme management, and became involved in Islamic finance in 2007, as programme manager for the set up of Gate-house Bank, including system selection, process design and implementation.

Professor Rodney WilsonProfessor Rodney Wilson is director of the Islamic finance programme in Durham University. He currently chairs the academic c ommittee of the Institute of Islamic Banking and Insurance in London and is acting as consultant to the Islamic Financial Services Board with respect to


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its Shariah governance guidelines. His previous consultancy experience included work for the Islamic Development Bank in Jeddah and the Ministry of Economy and Planning in Riyadh. He has written numerous books on Islamic finance for leading international publishers includ-ing Edinburgh and Columbia University Presses and Brill and has recently published articles on Islam and capitalism, sukuk securities and Shariah-compliant private equity finance.

From January until June 2009 he was a visiting professor at the Qatar Foundation’s Faculty of Islamic Studies in Doha, and he has returned there in 2010. He has recently completed a paper for the Kuwait programme of the London School of Economics on Islamic finance in the GCC and an article for Islamic Finance News in Kuala Lumpur on Islamic finance in Qatar.

Professor Wilson teaches masters level courses on Islamic economics and finance and supervises PhD students working on Islamic finance. He has acted as course director for Euromoney Legal Training in London, Bahrain, Kuwait, Riyadh, Abu Dhabi, Shanghai and Singapore, and taken courses for the Kuwait Investment Authority, the Commercial Bank of Kuwait, the Arab Banking Corporation, Citibank, HSBC, the Monetary Authority of Singa-pore and SJ Berwin, the international law firm and private equity specialist. Further details and research interests for Professor Wilson can be found on www.dur.ac.uk.

Paul Wouters Paul Wouters went from being a Belgian lawyer specialising in international financial regula-tions and corporate consulting to being resident in Istanbul-Turkey for many years, where he is now a consultant to Bener Law Office. Focusing on Islamic finance and contract law, he has introductions from the GCC over Turkey to South-East Asia. Paul is amongst other things a member of the Advisory Board of Islamic Finance News and consults, lectures and writes on ethical and legal aspects with respect to the Islamic finance sector. At present he is based in South-East Asia and can be contacted at [email protected].


www.dur.ac.uk

Documents

Islamic Investment Banking Euromoney Book Sample