DBS Islamic banking wing eyes $1 trillion global market
DBS Group Holdings Ltd's Islamic banking unit plans to expand from its Singapore base into the Persian Gulf this year to target the $1 trillion global market for services that comply with the religion's Shariah law.
The Islamic Bank of Asia, 60 percent owned by Southeast Asia's largest bank, may open a representative office in Bahrain to offer corporate finance, wealth management and investment services, Chief Executive Officer Vince Cook said. The four-month old bank aims to become a conduit from which companies and funds can tap clients across Asia and the Middle East.
"Our focus is very much cross-border," Cook said. "We would start fairly small, get our feet wet. The environment in Bahrain is quite conducive for Islamic banking. It enables us to keep a close eye on the market."
Singapore is encouraging companies to boost their range of Islamic products to woo investors from the Middle East to increase the its share of a market estimated to grow to $2.8 trillion by 2015. Singapore has about S$2 billion ($1.3 billion) of Shariah-compliant property funds and S$500 million of Islamic insurance funds, the central bank said in September.
"Singapore is catching up," said Song Seng-Wun, an economist at CIMB-GK Research in Singapore. "Singapore has been building relations in the Middle East and that will help in attracting more wealth."
Under Islamic law, or Shariah, the payment of interest and investment in businesses such as tobacco, alcohol and gaming is prohibited, making many conventional stocks, bonds and banking avenues off limits to Islamic investors.
The central bank has waived double stamp duties for Islamic real estate financing and allows financial institutions to offer investment products through so-called Murabahah transactions, or the sale of goods at a price plus an agreed profit margin.
Islamic Bank of Asia, in which DBS invested $250 million, plans to attract "high-net worth" individuals with new investment products, Cook said.
Bloomberg News
(China Daily 09/13/2007 page16)
