By Neeraj Gangal
HSBC Amanah plans to extend into Egypt, Turkey and Oman when it's possible - official
HSBC Amanah, the Islamic arm of bank HSBC, plans to open 125 branches
throughout the Middle East and Asia by the end of 2012 eyeing rapid growth in
the $1 trillion Islamic finance industry, a top executive said.
Middle East and Asian markets will fuel growth in the industry with
compounded annual growth rates of over 6 percent in the next five years, said
Razi Fakih, HSBC Amanah's deputy chief executive in an interview with Reuters
Fakih added that a number of attractive markets, such as India and China,
are beginning to explore Islamic finance and the company will aspire to enter
those markets when the regulatory environment opens up.
"We would also like to extend into Egypt, Turkey and possibly in Oman
when it's possible," Fakih said.
The Islamic unit also plans to expand further into Bangladesh within three
He said the company, which has close to 100 branches in the Middle East and
Asia, sees the most dramatic expansion in Malaysia. Fakih said in Malaysia,
Amanah, will have 10 branches by the end of the year and targets 26 branches by
The executive said central banks from Asia and the Gulf are working together
to try to alleviate challenges in the Islamic finance space, including the lack
of liquidity management tools and standardization.
Eleven central banks signed an agreement in October establishing the
International Islamic Liquidity Management Corp. (IILM) to help Islamic
financial institutions work towards an Islamic money market and manage cash if
faced by a liquidity crisis.
"It's still very early but it's definitely a step in the right
direction," Fakih said. "The industry continues to build an
infrastructure and that's a positive development in the evolution of the
Fakih said HSBC Amanah is also on a committee working with global
standardization body International Islamic Financial Market (IIFM) to create a
standardized master agreement for wakala contracts.
Wakala is an agency agreement in which one firm accepts funds from another
to invest on its behalf in a sharia-compliant manner.
"A wakala agreement is very much on the cards," he said.
"While its never going to take away a default, a wakala agreement will
standardise the documentation and allow for growth and consistency across the