Bank plans to expand to the Persian Gulf
DBS GROUP Holdings’ Islamic banking unit plans to expand from its Singapore base into the Persian Gulf this year to target the US$1 trillion ($1.52 trillion) global market for services that comply with Islamic law, or Sharia.
The Islamic Bank of Asia, 60 per cent owned by South-east Asia’s largest bank, may open a representative office in Bahrain to offer corporate finance, wealth management and investment services, Singapore-based chief executive officer Vince Cook said.
The 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,” Mr 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 and increase the city-state’s share of a market estimated to grow to US$2.8 trillion by 2015.
Under Sharia, 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.
“Singapore is catching up,” said Mr Song Seng-Wun, an economist with CIMB-GK research. “Singapore has been building relations in the Middle East and that will help in attracting more wealth.”
Islamic Bank of Asia, in which DBS invested US$250 million, plans to attract “high-net worth” individuals with new investment products in the next six to 18 months, Mr Cook said.
The Islamic Bank of Asia is trying to strengthen its brand in a market that has attracted competitors such as Standard Chartered, ABN Amro and HSBC.
Started in May by DBS and 22 Middle East investors, the bank plans to increase staff to 60 by yearend from 40.
Qatar National Bank, the Persian Gulf emirate’s largest, opened an office in Singapore in April.
Bahrain’s AlBaraka Banking Group, the world’s fourth-largest Islamic financial services provider, will spend as much as US$300 million to woo clients in India and China. — BLOOMBERG
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