StanChart working on 4 sukuks in Gulf

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

Standard Chartered bank is arranging up to four sukuks in the Gulf region, said a senior official.

Afaq Khan, CEO of Standard Chartered's Islamic banking unit, said the bank is involved in 3-4 corporate and sovereign sukuks likely to be issued this year.

Khan was speaking on the sidelines of a forum organised by Institute of Chartered Accountants of India (ICAI) in Dubai on Wednesday night.

“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,” Khan said.

He, however, refused to disclose the value of sukuks saying they’re mostly at least benchmark sized.

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

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 said Islamic banking is growing pretty fast as clients are increasingly shifting away from conventional to Islamic banking.

Standard Chartered Islamic unit’s head sees no impact of European crisis spilling over to the region’s Shariah-compliant institutions as they’ve little or no exposure.  

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

Islamic finance

Addressing the ICAI seminar on Wednesday, Nimish Makvana, Secretary of Dubai Chapter of ICAI, 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.

“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 said.

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