Islamic Investor: Islamic Investor: - Islamic Finance News

STATEMENT
Beyond Banking
Global Islamic issuers are fast recognizing
Asia as a high potential market for Islamic
issuances; particularly Sukuk. In Malaysia
alone, the Sukuk market in the first half of
this year is estimated at RM40.3 billion
(US$13.5 billion); standing at 60.4% of
last year’s total issuances in the country,
and is expected to supersede last year’s
total issuances by the end of the year.
Recognizing this, Bank Islam, Malaysia’s pioneer
Islamic bank, is looking to grow its corporate investment
banking suite - whilst maintaining its lead as one of the country’s
largest Islamic banks to cater to this thriving market. In an interview
with Islamic Finance news, Bank Islam’s managing director Zukri
Samat and director of corporate investment banking, Mashitah Hj
Osman, share their insight on how the bank plans to enhance its
position as a regional leader in the development and provision of
Shariah-based products and services.
Malaysia is currently the largest Sukuk issuer globally.
How does Bank Islam aim to capitalize on its position as
the country’s pioneer Islamic bank?
Bank Islam was one of the first Islamic banks to structure and
arrange the issuance of Sukuk in Malaysia: the KLIA Sukuk. With
the KLIA Sukuk, Bank Islam provided the country and the Islamic
finance sector its first Bai’ Bithaman Ajil (BBA) Sukuk issuance
template. In addition, Bank Islam also formulated the template
for the first foreign-currency denominated Sukuk Ijarah, issued
offshore out of Labuan. These templates were widely adopted
for subsequent issuances and are generally regarded as the
catalyst that spurred the development of the local Sukuk market.
Bank Islam plans to capitalize on this track record and the Shariah
advisory expertise that resides in the bank to further contribute
to the development of the Sukuk market by introducing more
innovative Sukuk structures to fulfil the requirements of its clients.
What steps has Bank Islam taken to develop its product
offerings and how does the bank plan to increase its
share of the Malaysian market?
Our strategies include:
• Staying true to our pioneering and innovative heritage so
that we can continue to lead in the transformation of Malaysia
into a global Islamic financial hub and consequently
increase our market share in Malaysia.
• Continuing to develop and introduce trend-setting financial
solutions, as we have in the past, creating some of the firstof-their-kind
products in the region and the world.
• Setting up dedicated departments that look into product
development and innovation. The bank’s product development
team is backed by a strong advisory team that focuses
its priority on creating innovative products, along with quality
assets and services to increase market share.
From the traditional financing, savings and investment types of
products exclusively for retail customers in the early years of its
establishment, Bank Islam’s Shariah-based financial solutions
today are all-encompassing including those
related to wealth management, capital markets,
commercial banking, investment banking,
treasury and structured products, among
others: customized to suit the financial
needs of all customers, from individuals
to small businesses to large corporations.
Such innovations help widen the breadth
of our end-to-end Shariah-based financial
products and services, comparable to those
offered by our conventional counterparts.
In terms of the capital markets, what sort of growth do
you anticipate in the Malaysian market, and is this a
main area of focus for Bank Islam?
We are seeing an increase in demand for Islamic instruments,
and the appetite for Islamic finance products and services will
continue to be strong from both commercial and Islamic investors.
However, cost and economic conditions still remain the key drivers
of growth for the capital markets. Credit risk, rating and pricing
(which translates into cost) all play a key role in determining the
extent of market growth for Islamic instruments.
The corporate investment banking (CIB) division offers a complete
suite of products and advisory services to meet the growing needs
of businesses and corporations. These services are not limited
to the debt capital market but also cover the equity side, where
Bank Islam can lay claim to being the sole Islamic bank and only
non-investment bank on the Securities Commission of Malaysia’s
Approved List of Principal Advisors for specific equity-related
corporate proposals. The expansion of CIB’s operations is in line
with the bank’s objective of widening our revenue base through
fee-based income. While our expertise is home-grown, our team’s
extended network stretches beyond Malaysia’s borders. As
an institution, Bank Islam is always ready and open to explore
alliances working with strategic partners and institutions in other
countries to grow the regional market.
With more foreign issuers opting to issue Sukuk in
Malaysia, how do you anticipate the growth of the
ringgit Sukuk market compared to other foreign
currency Sukuk?
The increase in foreign issuers in Malaysia is a testament to the
country’s clear infrastructure and legal framework, its structured
growth, its unwavering government support and a ready supply
of Shariah compliant products and services. We are confident
that the ringgit Sukuk market will continue to grow as it caters for
domestic funding requirements, notwithstanding the increase in
foreign currency Sukuk issuances.
Mashitah Haji Osman
Director/Head, Corporate & Investment Banking
Suite 20-01, Level 20, GTower
199 Jalan Tun Razak
50400 Kuala Lumpur, Malaysia
Tel: +603-2688-2688
Email: mashitah@bankislam.com.my
September 2011 21