LONDON, 26 May 2008 — The UK Government will be publishing its response to the consultation on the possibility of issuing a debut sovereign Sukuk (Islamic bond) in the wholesale sterling market on June 2, 2008, confirmed Kitty Ussher MP, the Economic Secretary to the Treasury in London a few days ago.
The response, according to Minister Ussher, will also give “a firm indication of the details of any government Sukuk issuance, and show the progress that (the government) has been making — not just on government-issued Sukuk, but across the Islamic finance sector. This is an exciting sector — and I think that we’ve got an exciting six months ahead of us.”
She was addressing a packed audience at a seminar at City law firm Norton Rose on ‘Women in Islamic Finance’ on 19 May 2008. Women have been actively involved in trade, financial and investment matters throughout Islamic history, explained Halima Krausen, a Shariah scholar and academic from Germany. In fact, the Prophet (pbuh) worked for a businesswoman Khadija who subsequently became his wife. London now boasts some six Islamic banks authorized by the Financial Services Authority (FSA). But all of them are headed by men. In fact, the dominance of men in top jobs in the City and financial services in general continues unabated. Not surprisingly, Minister Ussher expressed hope that perhaps one day a woman chief executive officer would head one of the UK Islamic banks.
Malaysia of course already leads the sector in this respect. Only recently Bank Negara Malaysia, the central bank, approved the appointment of two women CEOs of local Islamic banks. Jamelah Jamaluddin has been appointed CEO of RHB Islamic Bank and Fozia Amanulla has been appointed CEO of EONCAP Islamic Bank — making them the only two female CEOs of Islamic banks in the world.
Of course the two most important regulators in financial services in Malaysia are also women — Tan Sri Dr Zeti Akhtar Aziz is the globally respected Governor of Bank Negara Malaysia and Dato Zarinah Anwar is the chairperson of the Securities Commission of Malaysia, the securities regulator. Dr Zeti is often regarded as the most powerful woman in international finance, widely respected and who won the FT’s ‘Central Banker of the Year’ Award a few years ago.
While the involvement of women in senior positions in Islamic finance is increasing in southeast Asia, the situation elsewhere in the GCC countries, Pakistan, Iran, Turkey and Egypt is much less encouraging. In the GCC states, for instance, forced or cultural gender segregation policies have put many aspiring women bankers at massive disadvantage. Dr Nahed Taher, the former chief economist of National Commercial Bank, was forced to leave the Kingdom to take a post as a CEO of a Bahrain-based conventional bank, a position she could not be appointed to in her native Saudi Arabia.
Even in other GCC countries and wider markets, the involvement of women banking professionals in the sector, are limited. Experienced women bankers, who very often outperform their male counterparts, are privately exasperated that their career chances are governed by the socio-cultural norms imposed by men. They are not satisfied with heading marginalized women-only departments at banks; or women-only financial institutions. They want to be acknowledged as leaders in their fields in the mainstream Islamic or conventional financial services sectors, irrespective of gender or other barriers to entry. If women are increasingly required to contribute their part to GDP in GCC and Middle Eastern economies, as the governments seem to suggest, many of them argue that they need to operate in a level playing field with access to equal opportunities in order to realize their full potential and contribution.
However, the chances of any major movement in this direction are disappointing. In the recent Kuwaiti National Assembly elections, for instance, not a single woman candidate won a seat, perhaps to the chauvinistic delight of the Islamist groups that now dominate the Parliament. Some of the women candidates were indeed offered bribes not to stand, while others received threats if they did participate in the electoral process.
The fact that there are several notable GCC women who run companies and the odd financial institution are exceptions rather than the norm. They are extraordinary and highly capable women whose families usually educated them abroad and had no hesitation for them to join and run the family businesses.
However, in Islamic finance, how many women are responsible for overseeing the sector at a government level in the Muslim countries? Two — Dr Zeti of Malaysia and Dr Shamshad Ahtar, Governor of the State Bank of Pakistan.
In the UK of course it is Kitty Ussher who is immediately responsible for the government’s Islamic finance policy. In London today, more than 20 banks provide Islamic financial services — more than the rest of Western Europe combined. And the UK has the only standalone Islamic financial institutions in Europe, including investment banks, a retail bank and a Takaful provider.
“Islamic finance is one of the most exciting, innovative financial services sectors around at the moment,” she confirmed. “In the retail sector, the Islamic mortgage market is now worth over 500 million pounds a year, and the UK’s Shariah compliant banks now have more than 40,000 customers. Islamic finance products, particularly in the retail market, are also very important for the people who buy them.
“We do believe that it’s right that everyone, regardless of their religion, should be able to participate fully in the financial system — and should have the opportunity to make the most of their money. So, both because of the benefits for customers, and to help make sure that London is at the forefront as the sector continues to develop, we want to do everything we can to encourage the development of Islamic Finance in the UK.”
The main plank of the UK Government’s approach is to establish a level tax and regulatory playing field between conventional and Islamic finance. And over the years, London has introduced a steady stream of legislation to move toward that including the removal of double stamp duty for Islamic housing and real estate finance transactions and the concept of alternative finance arrangements, including Islamic saving schemes for ISAs; Shariah-compliant Child Trust Fund accounts; a new tax framework for Sukuk.
On the UK government sovereign Sukuk issuance, Minister Ussher urged patience and warned that the government wants “to make the right decision, not a hasty one. And we have had to consider the potential costs and risks, and look closely at a number of detailed issues — I’m sure you don’t need me to tell you just what a complicated issue this is.”
She revealed that the Treasury hopes to publish a document later this year, setting out its view of the UK’s strategy for Islamic finance in the years ahead.
“Our perspective,” she added, “is that this is a hugely important sector for the UK’s competitiveness in financial services, and at the retail end for ensuring that everyone has access to competitive financial products. We’ve come a long way already in supporting the (Islamic finance) sector — and the growth that we’ve seen over the last few years is a sign that what we’ve done, along with what the industry has done, has worked. But there is more to do if we’re going to make sure that London really is established as a leading gateway for international Islamic finance; and that people really do have the same financial options whatever their religion.”
