Business
Finance
ISLAMIC FINANCE REDUX The world’s most prestigious Islamic finance conference is coming to Luxembourg. Will it help jump start the segment’s growth in the Grand Duchy? Text: Aaron Grunwald — Photos: Olivier Minaire
Luxembourg’s government has a stated goal of cementing the Grand Duchy as Europe’s Islamic finance hub, and a conference next month will give the country a chance to showcase its savvy in the specialty. It is also a chance to re-establish itself as the region’s market leader, at a time Britain is gaining ground in the field. Leaders of the World Bank, Dubai’s financial regulator, Istanbul’s stock exchange, Japanese and US credit rating agencies--not to mention six central bankers--will all present at the 8th Islamic Financial Services Board Summit. The Grand Duchy’s Yves Mersch (see interview on page 30) tells Delano that during his address “I will highlight those key features of Islamic finance that contribute to financial stability such as embedded connection with the real economy and the absence of leverage activity and specula-
DATE LINE March 2011
tion. I will also address, however, its shortcomings in liquidity management.” Indeed, the International Islamic Liquidity Management Corp (IILM) will be a top topic at the summit, believes Sufian Bataineh, managing director of Dananeer, Luxembourg’s first Islamic finance consulting and training firm. Based in Kuala Lumpur, the IILM is owned by 14 central banks, including Luxembourg’s. “They will discuss the need for increased liquidity between Islamic financial institutions and so how they can better manage the IILM.” CORPORATE GOVERNANCE “I think corporate governance will be fairly well discussed,” states Fouad Rathle, president of the Luxembourg bankers’ training institution (IFBL), and director at Garanti Bank Luxembourg. “Islamic finance is in a way rather ethical, because of
UNISEX POLICIES Insurance companies MAR can no longer use gender when determining premiums or payments, the European Court of Justice ruled. Today women typically receive 10% less in retirement benefits due to longer life expectancy, but pay less for accident coverage.
1•
all the restrictions. This comes in handy today. We have seen a renewed and intensified interest in the west in ethical and green investment, so the two purposes converge.” For Philippe Neefs, Islamic finance leader at KPMG Luxembourg, the most interesting discussions will surround “capital adequacy requirements for Islamic banks or fund providers. The evolution of Basel III will certainly have a big influence.” He says it remains to be seen “ how Islamic finance players will decide to establish themselves, as a bank or as another type of financial service provider” in order to avoid Basel’s global bank capitalisation requirements. At the same time, playing host to the conference is good marketing opportunity as the Grand Duchy needs to revitalise its Islamic finance segment, says Bataineh. “We have in Europe, two main centres for Islamic finance. London plays a
WHITE LISTED Luxembourg was reMAR moved from the international money laundering and terrorist financing grey list, said the justice ministry. The Financial Action Task Force took the Grand Duchy off the watch list following last October’s major legislative overhaul.
2•
SKYPE ADVERTS Skype introduced adMAR vertising. Initially customers in Germany, the UK and US will see ads on the home tab of the communications application. The move is seen as a way for the Luxembourg-based firm to boost revenue ahead of its planned US$100 million IPO.
7•
26 - delano - April 2011
05_p26-28_business_calendar.indd 26
31.03.2011 10:10:51 Uhr