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SCB to launch Sukuk in Gulf region soon

Published: 10/07/2012 10:02:00 AM GMT
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Dubai: One of the leading banks of the world, Standard Chartered Bank, has planned to launch Sukuk (Islamic Bonds) in the Gulf region as its sees the region has great potential of Islamic finance.

By Farhan Iqbal


Dubai: One of the leading banks of the world, Standard Chartered Bank, has planned to launch Sukuk (Islamic Bonds) in the Gulf region as its sees the region has great potential of Islamic finance.

According to a senior official of Standard Chartered Bank, the bank is arranging up to four Sukuks in the Gulf region.

The CEO of Standard Chartered’s Islamic banking unit, Afaq Khan, informed that the bank is involved in 3-4 corporate and sovereign Sukuks are expected to be issued this year.

Khan revealed this on the sidelines of a forum organized by Institute of Chartered Accountants of India (ICAI) in Dubai, UAE earlier this week.

He stated, “There are 3-4 sukuk deals in the pipeline that Standard Chartered is working in the region. These are UAE dirham, US dollar and Malaysian ringgit denominated sukuks to be issued by corporates and sovereigns.”

However, he did not disclose the value of sukuks but assured that they will be of at least benchmark size.

Standard Chartered has recently been involved in sukuk issuances of DIFC Investments ($1 billion), Sharjah Islamic Bank ($300 million), JAFZA ($650 million) and MAF ($500 million).

Successful raising of funds through this Islamic window by Dubai Inc. and other UAE firms shows the confidence is returning towards the local entities.

Khan said, “The recent successful issuances by local corporates show the growing confidence in Dubai Inc.”

Asia-focused Standard Chartered said earlier this week that it would begin offering Islamic financial products to its private-banking clients to boost its share of a fast-growing market.

Khan observed, “Islamic banking is growing pretty fast as clients are increasingly shifting away from conventional to Islamic banking.”

He said that there is no impact of European crisis spilling over to the Gulf region’s Shariah-compliant institutions as they have little or no exposure to the crisis.

Dubai-based lender Emirates NBD CEO, Rick Pudner, has also recently said at a forum in Dubai that the UAE lenders are unlikely to take a hit from the European crisis as they have no exposure.

Secretary of Dubai Chapter of ICAI, Nimish Makvana, also addressed the ICAI seminar and said, “The Islamic banking industry is considered to be one of the fastest growing sectors in the financial industry. Due to the increasing demand for Shariah-compliant investments worldwide by both Muslims and non-Muslims, the industry has grown by an estimated 20 per cent annually in the last five years to reach $1.3 trillion in total assets in 2011 and is projected to hit $1.14 trillion in 2012.”

He further added, “One of the key aspects of Islamic banking is its profit and sharing scheme where the banks go into partnership with entrepreneurs, and in doing so, shares their risk, prompting banks to make serious considerations before providing funds to the investor.”

“The other is the cost plus scheme known where banks purchase assets desired by customers and sell it to them via installments at an agreed sum, thus adhering to Sharia principles banning the provision of interest,” Makvana concluded.



Afaq Khan, Standard Chartered's CEO of Islamic banking unit

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