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Royal Bank of Canada plans to enter Islamic finance market

12 juil

After a few years of strong growth focused largely in the Middle East, a new generation of Islamic bank startups is setting its sights on the West. And as the wealth of Gulf countries swells with skyrocketing oil prices, more Western banks, including some Canadian banks, are looking to those pools of capital. Banks such as Citigroup Inc., Lloyds TSB Group PLC, Deutsche Bank AG and Barclays PLC are now offering services along Islamic finance lines. In the Muslim world, some have partnered with local sharia banks to form joint funds. In the West, London ranks as the leading Islamic banking centre, with conventional banks, such as HSBC Holdings PLC, opening Islamic banking units.

“Islamic banking is growing faster than any other sector of the banking industry and the West is just starting to wake up to its potential,” says Anouar Hassoune, a Paris-based senior analyst with Moody’s Investors Service who specializes in sharia banking.

In February 2008, Royal Bank of Canada hired Zaher Barakat, who teaches Islamic banking and finance at Cass Business School in London, as head of financial products for the Middle East. RBC is targeting a variety of clients in the region, including sovereign wealth funds, private banking arms of local banks and government pension funds. While the priority is to market the bank’s existing services and products into the Middle East, RBC is planning to enter the Islamic finance market, Mr. Barakat said. “We are working now on one fund to transform it to be sharia-compliant,” he said.

Bank of Montreal, through its London institutional management group Pyrford International, manages sharia-compliant products for Middle Eastern clients and is expanding the offering, said BMO spokesman Paul Gammal.

Islamic banking forbids interest and obliges deals to be based on physical assets, not on speculation. Sharia-compliant products seek to replicate the structure of interest through cost-plus transactions, leasing arrangements, or by linking payments to returns on assets.

In Canada, sharia-based banking is available, but on a limited basis. The issue sparked controversy earlier this year when the Canada Mortgage and Housing Corp. launched a study on Islamic banking, as Ottawa considered its first applications to start up Canadian banks operating within Islamic law.

The proposals drew fire from the secular Muslim Canadian Congress, which argued that faith-based banking had no place in Canada, and the presence of Islamic banks would pressure Canadian Muslims to subscribe to costlier products.

Walied Soliman, a Toronto-based lawyer at Ogilvy Renault, said “Canadian banks haven’t been as quick either on raising money from the Middle East for financial institutions in Canada or in terms of offering up structured products or issuers for investment in the Middle East.”

But that may be changing, he said. “Canada is very quickly getting onto the radar of [sharia] investors and other issuers looking to engage in M&A transactions with Canadian issuers, and as a result we’re going to see growing interest in Canada and the bankers will adapt to that and learn more about the sector as the demand grows.”

Source: ReportOnBusiness.com

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6 Commentaires

Publié par le juillet 12, 2008 dans Canada

 

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6 réponses à “Royal Bank of Canada plans to enter Islamic finance market

  1. Junaid Iqbal

    janvier 27, 2012 at 7:38

    Salam ,
    I am a Licensed realtor working in BC, I understand that this is the need of many people but still no serious efforts have been taken.

     
  2. Fadi Marwan

    octobre 11, 2011 at 11:07

    Salam,

    I actually just finished closing on my home with Ijara Loans. They were very helpful and aggressive in getting everything completed on time and so effectively. If you are interested you can find more information on their site at ( http://www.ijaracanada.com/ ). Good luck All

     
  3. ribh

    novembre 1, 2009 at 12:01

    @ Uzma Arif :

    For the moment no Canadian bank proposes islamic financing for home purchase. Meanwhile some cooperative have set up islamic financing for this purpose, the most important being UM group.

    More here :

    http://ribh.wordpress.com/2008/03/21/islamic-home-finance-mortgage-america/

     
  4. uzma arif

    octobre 31, 2009 at 11:47

    How can we purchase a house/Apt. in Windsor, Canada on the basis of Islamic Financing? What are the services your Bank can offer ? Is there any such provision available in Canada as is available in UK and N.America. Please advise. Thanks

     
  5. ribh

    septembre 1, 2008 at 8:58

    There are no islamic banks in Canada but you have the alternative option of Sharia compliant housing cooperatives. You can have a look on our Home Finance page above or following this link:

    http://ribh.wordpress.com/2008/03/21/islamic-home-finance-mortgage-america/

     
  6. Ajaz Rahmatullah

    septembre 1, 2008 at 7:37

    How can we purchase a house/Apt. in Edmonton, Canada on the basis of Islamic Financing?What are the services your Bank can offer?I there any such provision available in Canada as is available in UK and N.America. Please advise. Thanks

     

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