The Inauguration of the Islamic Banking and Finance Society (IBFS) at the Oxford Union Debating Chamber on Wednesday featured presentations by leading figures from the Islamic finance world. They addressed an audience which included professors from the Faculty of Oriental Studies and the Oxford Centre for Islamic studies and MBA students from the Said Business School.
The IBFS hopes to act as a platform for leading professionals in Islamic banking to create relationships with students at Oxford interested in pursuing a career in finance.
The inagural event was entitled: "Islamic Banking: Ethical Capitalism?"
The IBFS mission statement was presented as follows: "As a new society, we are following the City and the financial world in looking at alternative ways of investing and managing money. IBFS hopes to act as a platform for leading professionals in the field of Islamic banking to come and talk to and create relationships with the many students at Oxford aspiring to enter the world of finance and to make them aware of this rapidly growing sector."
At the inaugural reception, the keynote speakers were: Baroness Warsi, Senior Minister of State and Minister for Faith and Communities, and the Ministerial lead on Islamic Finance; Salah Jaidah, vice chairman of Mena (Middle East and North Africa) at Deutsche Bank and chief country officer for Deutsche Bank Qatar; Nigel Denison, executive director of Bank of London and the Middle East (BLME); and Azeemeh Zaheer, vice president of Gatehouse Bank and former vice consul, US oil & gas sector head for the British Consulate General.
Baroness Warsi said: âIslamic finance is growing 50 percent faster than traditional banking and Britain is committed to being part of that rise. London is already the Western capital of Islamic finance, but we want to go further - we want Britain to become a global hub of Islamic finance. âKey to this is attracting the brightest and the best to this sector. And the Oxford Islamic Banking and Finance Society will do just that - bringing the opportunities of one of the world's fastest growing markets to students at one of the world's top universities.
Warsi, who launched the UK's first Islamic Finance Task Force in 2013, and chairs the Global Islamic Finance & Investment Group, also noted that "the skyline of London is being changed by Islamic finance". It is important, she said, for there to be "an Islamic finance market that doesn't sleep." She said: "We need to make sure that all time zones are trading in terms of Islamic finance products."
Reflecting on the issues that had to be resolved to clear the way for the UK's planned launch of a sukuk later this year, she said: "Two years ago, someone said to me that a sovereign sukuk in Britain 'is impossible.' Having fought the battles through that and shown that it can be achieved, I'm confident that standardisation is something that we can make real headway on."
On a personal level she said: "As a Muslim, I believe in the principles of Islamic finance. As a Conservative, I can see the huge economic benefits of Islamic finance and as somebody who feels that Britain's best days are still ahead of us, I feel that Islamic finance provides another opportunity to reach out to the world and bring the benefits of that for our citizens."
Salah Jaidah, Middle East vice chairman of Deutsche Bank, speaking "on behalf of myself as an Islamic banker" described the core elements of Islamic finance, observing, "the base of Islamic Finance is definitely the ethical part and most of the conducts within Islamic banking prevent the over-leverage that we have seen on the conventional banking side. Every transaction has to have an underlying asset, so there is value creation for the person who is taking the finance or the person who is extending the assets."
He added: "With these principles I think if institutions used similar ethics and built in this spirit of profit sharing, and when you say profit sharing you have to say profit/loss, this will give everybody the responsibility of making sure that the due diligence, asset value and potentiality of the investments are positively recognised. And in case of failure, everybody has to take a portion of the fault."
He concluded by saying: "That's the spirit of Islamic banking. How much it is practised in reality - well, I think it depends on the institutions - some are and some are not."
Denison, who prior to joining BLME, the largest Islamic Bank in Europe, was head of European distribution for WestLB's Global Markets unit, spoke about the importance of education in Islamic finance. "It's a very young industry; one of our big challenges is educating people around Islamic finance in a non-Muslim country."
He added: "In 2007 the UK government started addressing the tax rules to make Islamic Finance, if not competitive with, then at least operating on the same basis as conventional finance. We hope we'll see the UK government sukuk later this year which will be an announcement that Islamic finance has really arrived in the UK."
Speaking of the challenges around Islamic finance he said: "There's the regulatory level; in other words, can Islamic banks compete with their conventional peer group on the same basis? In most cases the answer now is yes.' Most of the regulation is set up so that Islamic Finance is not disadvantaged. But what is more difficult is when you are in a new industry - building up to the kind of size that conventional banks have got to."
He pointed out that even the biggest Islamic banks globally such as Kuwait Finance House and Al Rajhi Bank, are "less than a tenth of the size of the big global banks - and clearly that makes it more difficult to compete."
Denise Marray, "Oxford Islamic finance society looks to be platform for industry experts" Gulf Times February 15, 2014
"IBFS Upcoming Events" Oxford Islamic Banking and Finance Society Fevruary 12, 2014
"Salah Jaidah to open Oxford Islamic Banking Society" Zawya February 10, 2015
Reproduced with permission from Islam Today