Islamic finance set to surge

19/04/2012 07:51 AST

The Eurozone crisis and widespread protests against the global financial system present the $1 trillion Islamic the finance industry with a big opportunity to accelerate growth, Hussain Al Qemzi, chief executive of Noor Islamic Bank said.

Speaking at the 2nd Annual Middle East Islamic Finance and Investment Conference on Wednesday, Al Qemzi said greater cooperation, rather than competition, between the Middle East’s Islamic financial institutions is necessary if the industry is to provide a real alternative to the conventional international banks operating in the region.

“We need to build bigger banks, bigger capital and to cooperate,” Al Qemzi said.

He said regional Islamic banks do not have the financial punch to challenge their larger competitors from the US, Europe and the Far East. He said the global Islamic finance industry could grow to around $4 trillion from $1 trillion at present within five years as untapped markets such as China open up and new products drive demand.

Al Qemzi called for the Islamic banking industry to build scale through consolidation, but said his own bank is currently not considering any mergers and acquisitions activity.

“It is now time to talk about how Islamic finance can contribute to long-term inclusive, equitable and sustainable economic growth not just here, in the Middle East, but in every country across the globe,” he said.

“Though it is true that greater awareness of the inbuilt strengths of Islamic finance has contributed towards increased international participation in Islamic financial markets, awareness alone is not sufficient to ensure sustainable growth for our industry. To remain competitive we have to continually innovate and adapt. If we are to challenge the conventional banks’ entrenched position in international financial deals, we must develop the capacity to structure multi-currency and cross border transactions and build scale,” Al Qemzi said.

Moinuddin Malim, Mashreq Al Islami CEO, said global Islamic banking and finance industry has been on a steady and consistent growth path with the Middle East being its nerve centre.

Though the industry has built a wealth of opportunities and options for investors over the last decade, a lot more still has to be done in order for the industry to successfully compete with their conventional counterparts.

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Khaleej Times