LONDON, 11 June 2007 — If Badlisyah Abdul Ghani, CEO of CIMB Islamic Bank and head of Islamic Finance of the CIMB Group, one of the top three flagship banking entities in Malaysia, has his way, then CIMB within the next few years would become a well-known brand in the GCC countries marketing Islamic financial products. At 34, he is the youngest CEO in Malaysian banking, already serving on several influential banking committees both at home and abroad.
Following the major restructuring of the CIMB Group earlier this year, which saw it becoming a universal banking entity encompassing investment banking, consumer banking, asset management and private banking core functions, Abdul Ghani has no illusions about the future direction of the CIMB Group.
“Our aim is become the most valued Malaysian bank in Southeast Asia, and later in other regions as well,” he told Arab News.
“We have a presence now in 12 countries, including Tokyo, New York, London, Hong Kong and Bahrain. We even have a subsidiary in Mauritius. In all these jurisdictions, we are seriously and aggressively enhancing our business. In Malaysia, we will have the whole spectrum of business. Overseas we will concentrate on investment banking through our regional investment bank platform CIMB GK. In countries such as Indonesia, where we have a consumer bank subsidiary, we also offer Islamic consumer financing services. As an overall strategy, whatever Islamic business we have in the Malaysian market, we want to be able to do this in all the other jurisdictions. From a Shariah perspective, we are flexible and can accept decisions in other jurisdictions, which gives the best value to our customers.”
Last year CIMB got a license from the Central Bank of Bahrain to establish an Islamic investment company in Manama, CIMB Kanoo Islamic Finance Company, a joint venture with Yousuf Bin Ahmed Kanoo Holding, one of the leading private investment companies in the GCC. CIMB Kanoo started operations in February 2007, and after the initial “teething problems” are sorted out, will offer Islamic banking services such as asset management, corporate finance and debt capital markets products to primarily institutional and high net worth clients.
“We decided to go to Bahrain because it has the most established Islamic finance market in the GCC, and the most effective legal and regulatory framework for Islamic banking in the region,” he said. “Bahrain also gives us easy access to Saudi Arabia, Qatar, Kuwait and the UAE, where the major pools of Islamic funds are located. We refuse to be suitcase bankers. When we do business in the GCC, we need to be sure that we are committed to our GCC customers. From Bahrain, we will be looking to six GCC countries as primary target markets. From there we will look at growing organically and inorganically to explore all opportunities, including the broader MENA (Middle East & North Africa) region, especially Algeria, Morocco, Egypt, Turkey, Syria and Pakistan. This is our long-term perspective for our Islamic banking and finance business in the GCC and MENA region.”
Abdul Ghani is excited about the recent UK initiatives in possible Sukuk issuance in the wholesale sterling market. “Logically,” he declared, “looking at the traditional linkages between GCC and the UK, we must ensure greater synergy between CIMB Kanoo and our branch in London. Our license in London allows us to do Islamic business. We are now exploring how we can enhance that business and link it to our customer base in the GCC. The UK initiatives are a good development. Any jurisdiction that facilitates Islamic financial transactions must always be commended for taking that initiative.”
“What they have done in the UK would spur further growth in that market. Predominantly, most of the Islamic transactions in the UK are more home financing schemes and quite significant commodity Murabaha trade finance passing through London. This new development would allow players like CIMB Islamic to do more business there.”
However, the development of a Eurosukuk market will take some time. It allows diversification of investment to investors and allows issuers better access to capital — a choice of US dollar, sterling or euro — to meet specific requirements of investors.
Issuers out of the euro market may have a better rating compared with issuers from other parts of world. So, this would create a better benchmark for the Islamic capital markets industry.
He is convinced that the Malaysia Islamic Finance Center (MIFC) offers a very good value proposition to the rest of world especially in terms of capital raising and investment opportunities. The Malaysian government has packaged the country’s two-and-a-half decades of Islamic banking into a new brand —MIFC.
“We are looking to marketing Malaysia more aggressively and in a more structured manner, to showcase what is possible to be done in this context. The MIFC, London, Bahrain — all these financial centers catering to Islamic finance, can coexist and are all interdependent,” he added.
The Islamic finance market is big enough for all to operate and be successful. Malaysia has the most effective legal, regulatory and Shariah framework any where in world, encompassing all the major components of a financial system — investment banking, consumer banking, Takaful, Islamic interbank money market, Islamic capital market, Islamic microfinance, Islamic non-banking financial institutions, Waqfs, and even the recently launched Islamic derivatives market.
In the past, information exchanges between the GCC and Malaysia have been poor, resulting in institutions from each region ill informed about each other’s credit and market risk.
This is changing with the greater involvement of players from each side in both markets, with CIMB Kanoo, and Alrajhi Bank’s license in Malaysia as good examples. Abdul Ghani admitted that the process is slow.
“It is better slow than never. What is important when we interact, we need to be able to respect each other’s position in Shariah, financial regulation and structures. There should not be a position where we condemn or criticize each other,” he added.
