The UK Government remains committed to Islamic finance and will continue to work with the other authorities and with industry to establish and maintain the UK as a global gateway to Islamic finance, stressed Sarah McCarthy-Fry, Exchequer Secretary to the UK Treasury in London on Thursday.
Mrs. McCarthy-Fry, who is the minister responsible for leading Islamic finance policy at the UK Treasury, was giving the keynote address at the inaugural session of the 2009 London Sukuk Summit held on 2nd-3rd July at the Radisson Hotel in London and organized by ICG Events. The Summit, the third annual one to date organized under the theme ''Innovating for the Future: The Next Generation of Post Credit Crunch Sukuk Structures/Preparing for the Next Wave of ICM Offerings', once again attracted a good attendance from a wide variety of regulators and market players.
The Summit was preceded by a Sukuk Masterclass titled 'Understanding Sukuk - Issues, Structuring, Innovation' which was held at the offices of City law firm, Ashurst LLP and which once again was well attended. Similarly, the 2009 London Sukuk Summit Islamic Finance Awards was held on the evening of 2nd July at a Gala Dinner and which recognized the achievements and progress of institutions and individuals in the Islamic finance industry.
The Exchequer Secretary, Sarah McCarthy-Fry, speaking in the presence of Professor Rifaat Abdel Karim, Secretary- General of the Islamic Financial Services Board (IFSB) and Mohammed Tariq, Head of Treasury at the Islamic Development Bank (IDB), maintained that in these difficult times for international financial markets, "new opportunities for growth and development become increasingly important. The Islamic finance market presents huge long-term opportunities for London and for the UK....Islamic finance is an opportunity that we want to see realized for the benefit of Britain as a whole - strengthening London's position as - not just one of the world's leading financial centres - but as the world centre."
Indeed the Exchequer Secretary commended the London Sukuk Summit initiative stressing that "events like these are crucially important. They forge networks where conversations can be continued and where relationships and business can be built."
Perhaps equally important is the reassurance from Mrs. McCarthy-Fry that the decision not to issue a sovereign Sukuk by the UK Treasury at this time, "in no way reflects a diminished Government commitment to Islamic finance in the UK. I hope that other progress, including the measures announced in the recent Finance Bill (2009), will pave the way for the Islamic finance industry to grow, and that corporate Sukuk products will thrive as alternative source of funding for UK and overseas firms."
Bankers in the UK and those from abroad attending the Summit were encouraged by the minister's remarks and by the fact that the UK Treasury is soon publishing details of a consultation on the measures to facilitate corporate Sukuk issuances out of the UK.
Mohammed Tariq of the IDB confirmed that the IDB was in track in issuing its latest international Sukuk, which would be a minimum of $500m but could be higher depending on the pricing and the demand from investors. Sukuk and other capital markets instruments, he added, were a key part of the IDB's resource mobilisation strategy going forward. The IDB, he revealed, is considering also issuing a Euro-denominated Sukuk and could also go to the market with private placements to raise smaller amounts for specific and targeted use in certain markets.
The London Sukuk Summit makes a conscious effort to add value to each of its events. This year Tim Harvey, Head of EMEA Sales, ETF Securities Ltd, showcased the opportunities for investors in Islamic exchange traded funds (ETFs) and exchange traded commodities (ETCs). In fact, ETF Securities last year launched the first Islamic ETC, which is a physically backed precious metal ETC and which track the spot price of the underlying precious metal. "Precious metals," stressed Mr. Harvey, "have historically provided a safe haven, a hedge against inflation and a hedge against currency risk."
David Testa, CEO of Gatehouse Bank plc, stressed that despite the current difficult times, equity appetite is much stronger than appetite for debt-equivalent products in the Islamic space. Gatehouse Bank, he added, has a good pipeline of transactions. Future opportunities, he added, include Sukuk and syndication opportunities in the GCC; UK "blue-chip" corporate Sukuk; and social housing, clean technology and infrastructure financing opportunities in the European Union.
Haroon Ahmad, Head of Business Development, Emirates NBD Asset Management, which is pioneering Sukuk funds, said that credit tightening and default fears have led to Sukuk issues trading at deeply discounted levels. This gives access for investors to the secondary Sukuk market with low minimum investment levels starting at $25,000.
Tan Sri Zarinah Anwar, Chairman of the Securities Commission of Malaysia, in her special keynote address on 'Innovating for the future: Challenges for Islamic Capital Markets' in the inaugural session of the second day of the Summit, called on the sector to help restore faith in finance especially in the aftermath of the global crisis. The Islamic finance sector needs to pay particular attention to consumer interest, acceptability in terms of Shariah compliance, and cost competitiveness and efficiency.
Future innovation in the Islamic capital markets should focus on risk management, fund-raising and investment instruments. "Right now pools of Islamic liquidity remain fragmented and this makes it difficult to tap opportunities. What we need is to build more links between our economies and markets to promote the growth of Islamic financial markets worldwide. Financial innovation will return, albeit in a slightly modified way - and most likely for the better. With more attention given to consumer interest, acceptability, and cost-competitiveness, the Islamic capital markets will be in a strong position to benefit from the global recovery and meet the demands for risk management, investment and fund-raising."
The Shariah and Issuers Panel discussion once again was very popular. There was some consensus that Shariah advisories should be regulated either by some authority or peer organization. Similarly, some scholars agreed the need for the development of a scientific approach to the Shariah governance process.
Stephen Timms, UK Treasury Minister, also hosted a luncheon reception at the famous Lancaster House in St James' for Summit delegates in the afternoon of 3rd July. Minister Timms highlighted the importance of Islamic finance to London and the UK Government's commitment to develop alternative investment instruments to enhance London's position as a major international and Islamic financial centre and to give Muslims and others access to these products under the Labour Government's financial inclusion policy.
Full List of the 2009 London Sukuk Summit - Islamic Finance Awards Recipients
1. Outstanding Contribution to the Development of Islamic Capital Markets
Tan Sri Zarinah Anwar, Chairman, Securities Commission of Malaysia
2. Outstanding Leadership in Islamic Finance
Dr Ahmad Mohammad Ali, President, Islamic Development Bank (IDB, Saudi Arabia
3. Outstanding Contribution to Islamic Finance in the UK
Neil D. Miller, Partner, Norton Rose, United Kingdom
4. Most Innovative Islamic Financing Transaction
Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC) for the Djibouti Container Terminal Financing, Saudi Arabia
5. Most Innovative Sukuk Structure/Deal
Islamic Development Bank (IDB) for the RM1billion Medium Term Notes for Malaysia, Saudi Arabia
6. Best Administrator/Trustee/Bookrunner
CIMB Islamic Bank, Malaysia
7. Best Arranger(s) of a Sukuk Structure
Gatehouse Bank for the Milestone Capital Sukuk Programme, United Kingdom
8. Zaki Badawi Award for Excellence in Shariah Advisory
Dr. Daud Bakar, Malaysia
9. Zaki Badawi Award for Outstanding Young Shariah Advisory
Mufti Muhammad Nurullah Shikder, United Kingdom
10. Best International Islamic Finance Centre
Malaysia Islamic Financial Centre (MIFC)
11. Outstanding Contribution by a Law Firm to Islamic Financial Services
Norton Rose, United Kingdom
12. Islamic Banker of the Year
Ayman Sejiny, CEO, Unicorn Bank, Saudi Arabia
13. Young Islamic Banker of the Year
Nazmi Camalxaman, CIMB Islamic Bank, Malaysia
14. Outstanding Contribution by a Regulator to Islamic Financial Services
Mohammad Al-Jasser, Governor, Saudi Arabian Monetary Agency (SAMA)/
15. Most Innovative Islamic Real Estate Financing Transaction
Ali Al-Ghannam, Kuwait Finance House, for the Multi-Million Dollar Iskandar City Development Project, Kuwait
16. Best New Entrant in the Sukuk Market
Emirates ND, Dubai
17. Most Innovative Islamic Bank
Kuwait Finance House (KFH)
18. Best Sukuk Structure by a Private Corporate Issuer
Dar Al-Arkan for the SAR 750 million Sukuk, Saudi Arabia
19. Outstanding Institutional Contribution to the Islamic Finance Sector
Lembaga Tabung Haji, Malaysia
20. Outstanding Contribution in CSR by Institution Offering Islamic Financial Services
Oasis Group Holdings of South Africa for the Restoration of the Islamic Library in Timbuktu
21. Outstanding Contribution to the Development of Global Islamic Finance
National Commercial Bank of Saudi Arabia
22. Best Islamic Wealth Management Service Provider
Siraj Capital, Saudi Arabia
23. Outstanding Contribution by an Accounting & Auditing Firm to Islamic Financial Services
KPMG, United Kingdom
24. Best Sovereign/Quasi-Sovereign Sukuk Issuance
Monetary Authority of Singapore for the Reverse Enquiry Sukuk Facility
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