Industry specialists debate impact of global financial crisis on Islamic finance

Five UK specialists shared their perspectives on the global financial crisis' impact to the Islamic finance sector as well as highlight the partnership opportunities between the GCC and UK today in a roundtable discussion at the 15th World Islamic Banking Conference (WIBC).

Organised and hosted by UK Trade & Investment, the speakers were from the London Stock Exchange, HSBC Amanah Bahrain, Norton Rose LLP, Bank of London and the Middle East and KMPG.

The session was opened by British Ambassador to Bahrain, Jamie Bowden who said:

"I am confident that the UK as a global centre of financial activity will weather the storm. The impact on the Islamic finance sector is perhaps less affected by the global crisis than the conventional sector".

"The debate today showcases what the UK can do for the global Islamic Finance sector, highlighting solutions and opportunities that UK firms can bring for potential investors seeking Islamic Finance as a suitable alternative financing option. The discussion should highlight to audiences the UK's ambition to become a partner of choice for businesses that need support in Islamic Finance expertise and capability".

Moderator, Nima Abu Wardeh; a well renown media personality from the BBC's Middle East Business Report continued a lively and dynamically charged session that focused on issues that were contingent on the global financial crisis and the impact to the Islamic Finance sector.

When asked how vulnerable the sector was to the global crisis, Neil D Miller Partner from Norton Rose LLP stated, "Islamic finance was not going to be immune from the crisis; whilst they have no toxic assets, Islamic financial institutions do have concentration issues of their own in sectors like regional private equity and real estate. However, it is generally believed they are still in better shape than many conventional banks and so will be better placed to exploit the upturn when it comes ... if they wish to diversify, now may be the time to start cherry-picking new opportunities. The UK is both an Islamic finance market in its own right and a gateway into Europe".

On a positive note too, Humphrey Percy CEO of the Bank of London and the Middle East (BLME) added, " Despite the times, BLME itself is experiencing growth, and is winning business particularly from those businesses who traditionally used conventional finance and who are now willing to look to Islamic Finance as an alternative source of funding".

London it seems will still have many opportunities for growth and these will stem from strengths of its financial infrastructure as a world leading financial centre.

Darko Hajdukovic, International Product Manager from the London Stock Exchange stated, "London has laid down the necessary infrastructure for development of Islamic Finance. The London offers complimentary service to regional centres and adds a new dimension to Islamic finance with its greater investor base and visibility in our system. London offers a unique pool of experts, some of which are laid down the foundations of the industry; a balanced regulatory policy from the FSA; government support as well as an international pool of capital. If Islamic finance is to grow in a global way - London will provide that way".

Moreover, opportunities for growth extend to the wider Gulf region. Khalifa Al Harmasi Al Hajeri- Head of HSBC Amanah -Bahrain stated, "There is a two-way relationship with the UK. There are currently more than half a million high net worth individuals from the GCC that trade with the UK, and we are dealing with more cash flows that come in and back, basically it's a long-outstanding relationship".

Neil D Miller from Norton Rose LLP agreed and said:
"We are being asked to look at all kinds of opportunities, both debt or equity, and with capital flowing both to and from the Middle East. Making these opportunities happen requires education about what differentiates Islamic finance from conventional banking."


And the future for Islamic finance, will it move from a niche to a mainstream offering?

Darshan Bijur Director of Islamic Finance at KPMG noted that " Three years ago, it was very difficult to convince conventional borrowers in the UK to consider using Shariah compliant financing. Now, in the last month I have had conversations with ten UK companies which are keen to explore using it. The gathering of this trend I believe will lead to the move of Islamic finance from niche to mainstream."

The roundtable was part of a wider UK presence at WIBC that included a UK pavilion to showcase some of the best of what UK based companies have to offer those looking for a global partner in Islamic finance.

Moderated by BBC World Middle East Business Report Nima Abu Wardeh, the speakers were:



- Darko Hajdukovic - London Stock Exchange International Product Manager
- Khalifa Al Harmasi Al Hajeri - HSBC Amanah Bahrain Head of Islamic Finance
- Neil Miller - Norton Rose LLP Global Head Islamic Finance
- Humphrey Percy - Bank of London and the Middle East CEO
- Darshan Bijur - KPMG Director Islamic Finance & Investments