Tamkeen and Ernst & Young to train 130 Bahraini graduates

Tamkeen has signed a $1.2m contract with Ernst and Young to train 130 Bahraini graduates in Islamic finance and business accounting, the labour fund’s CEO said on Monday.

Bahrain’s emergence as a banking hub in the region has created a growing need for professionals qualified in Islamic financial work, Tamkeen said.

A recent survey conducted by the firm found that more than 1,340 banking and investment specialists are needed to fill vacancies in the financial sector.

“One of the major challenges facing Islamic finance was the availability of a trained national workforce,” said Deen Jayah, the director of Ernst & Young's Business Community Training Center.

The Bahraini government plans to increase the number of nationals working in the private sector by 185,000 people over the next five years, with at least 35,000 locals to be trained in post secondary graduate and doctoral programmes to replace qualified expats.

Abdulellah Ebrahim Al Qassimi, chief executive of Tamkeen, said: “There are even greater opportunities in the Islamic finance area and we were keen to tap this arena of career growth for Bahrainis."

Ernst & Young is the only approved training provider for the Chartered Institute of Management Accountants (CIMA-UK) programmes in Bahrain.

As part of a new initiative by the CIMA, graduates will study and sit exams for the Certificate in Business Accounting or the Certificate in Islamic Finance, over a one year period. Students will also be trained to work in private banks at the same time, Jayah said.

Students will be separated into three batches, with training provided by professionals at the Ernst & Young's Business Community Training Center. Applicants will be selected through a competitive exams, interviews and group discussions.

Al Qassimi added that the scheme intends to empower Bahrainis by giving them opportunities to stand out as employees of choice, who can power the growth of the nation.

Link: http://www.arabianbusiness.com/576289-tamkeen-and-ernst-aamp-young-to-train-130-bahraini-graduates

Islamic banks need to revamp business model - E&Y

Islamic banks in the Gulf Arab region need to adopt a new business model and take on more customers to weather the economic downturn, Ernst & Young's head of Islamic finance said on Thursday.

Islamic banks, many of which are investment houses, have been heavily exposed to the real estate market, which saw prices start to plummet at the end of last year.

They channelled the wealth accumulated during the six year oil boom that ended in mid-2008 into regional real estate through private equity and asset management."They relied heavily on selling investments and placements and that business model is being questioned," Sameer Abdi, who is also a partner at Ernst & Young, told Reuters.

The global liquidity constraints will force Islamic banks to look for new customers and sources of funding, including moving into corporate banking, trade finance and retail banking, Abdi said.

Islamic banks cater to investors who do not want to earn or pay interest, viewed as usury under Islamic law.

Some banks have already started to set up funds that enable retail customers to buy sukuk, or Islamic bonds, which in the past were mostly bought by regional banks and large Western financial institutions.

However, analysts have said that it will not be easy for Islamic banks to reduce their heavy exposure to real estate, as they are too small to move into such areas as regional infrastructure and energy projects, which require large investments.

Islamic and conventional banks in the region still have more of the financial crisis ahead of them, Abdi said. "The financial industry is not out of the woods in the Middle East at all, in fact we are still in the middle of our crisis," he said.

"It's going to take some support from regulators and governments to actually come out of the crisis, and that may be six to nine months away, at least."

The restructuring of the debts held by troubled Saudi family groups Saad and Algosaibi could heavily impact many banks in the region.

The UAE alone faces at least $3bn in potential losses from their exposure to the two groups, Emirates Business reported on Thursday. Abdi also said corporate defaults of private sector companies in the region were very likely over the next six months. (Reuters)

Link: http://www.arabianbusiness.com/560856-islamic-banks-need-to-revamp-business-model

Global Takaful market could touch US$7.7 billion in 2012: Ernst & Young

Global Takaful contributions have grown from US$1.4b in 2004 to US$3.4b in 2007

In 2009, investment portfolios, human resources and competition are key business risks for the Takaful industry

Takaful operators that successfully adapt their business models and mitigate against changing business risk will have opportunities to expand

Dubai, 14^th April, 2009: Ernst & Young's World Takaful Report 2009 notes that global Takaful contributions have risen to US$3.4 billion in 2007 as compared to US$2.5 billion in 2006. Saudi Arabia, with contributions totalling US$1.7 billion in 2007, and Malaysia, with US$797 million, are the top two Takaful markets worldwide. The report was unveiled at the Annual World Takaful Conference 2009.

Takaful, or Shari'a compliant cooperative insurance, has been expanding by tapping into large Muslim markets globally. However, there are still significant untapped markets in Asia and the MENA region. The GCC, Malaysia and Sudan are the top three markets for Takaful while the Indian Subcontinent, Indonesia, Egypt and Turkey, remain the least penetrated Muslim markets.

Compared to the reported losses of almost US$350 billion of conventional insurers and government supported enterprises in the Americas, Europe and Asia, the Takaful market has largely shown resilience in the current economic downturn.

However, the last quarter of 2008 has seen a decline in the returns-on-equity of major Takaful operators. As a consequence, Takaful operators are increasingly concerned with the strategic, operational, compliance and financial risks they face today.

New challenges, new risks

Omar Bitar, Managing Partner, Advisory Services, Ernst & Young Middle East, said, "The global downturn has affected everyone and Takaful is not immune. Takaful operators now need to better manage their costs in a more challenging market as the risk landscape has changed substantially. Investment portfolios, human resource expertise and competition will be their most pressing business risks over the coming 12 months. Operators will also need to reassess their core business, move away from a reliance on high-risk investment returns, and focus on achieving underwriting profit."

Ernst & Young's report recommends that to counter high-risk investment portfolios, Takaful operators need to enhance their portfolio management capabilities and improve risk-adjusted returns. This risk for the operators is an opportunity for asset managers, who need to address the unique risk-return profile of Takaful operators.

To deal with human resource expertise risk, operators are advised to focus on developing local talent and partnering for quick market entry. Hiring indigenous talent and providing structured internal training programs helps to create a development culture and reduces turnover. For conventional insurers, partnering with established local operators can provide existing infrastructure and access to Shari'a compliance expertise. For local Takaful operators, international insurers provide expertise in risk management and specialist lines of business.

Opportunities ahead

Favorable demographics, increased income earnings, the propensity to consume and changing social attitudes towards insurance are the fundamental long-term demand drivers of Takaful. A young population in core Takaful markets will need more coverage as government subsidies decrease and more families require private coverage. Regulatory support and framework, insurance legislation and compulsory coverage will facilitate its growth in the medium term.

The window of opportunity in the coming 12 months rests on operators capitalizing on increased alliances, cross selling and BancTakaful, product innovation, multiplying their distribution channels, mergers and acquisitions and expansion in underpenetrated emerging markets.

According to Sameer Abdi, Head of Ernst & Young's Islamic Financial Services Group, "Takaful markets now span much of the globe but there still exists a large, expanding and untapped Muslim population on almost every continent. We estimate that the global Takaful market could be as high as US$7.7 billion by the end of 2012.''

 "The ensuing recession has tempered growth forecasts in almost every region and sector, including major Takaful markets. Takaful operators who can successfully adapt their business models and mitigate against changing business risk will have opportunities to expand through acquisition activity. They will benefit in the long-term from strong demographic growth, rising income levels and a growing desire to consume Shari'a compliant products," concluded Sameer.

-Ends-

About Ernst & Young Middle East
The Middle East practice of Ernst & Young is an independent professional services firm, which has operated in the region since 1923 and is a full member of Ernst & Young Global.  For over 80 years, the firm has evolved itself to meet the legal and commercial developments in the region.  Ernst & Young Middle East currently has over 3,500 staff working from 18 offices in 13 Arab regions.

For more information, please visit www.ey.com/me

About Ernst & Young Global
Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 130,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve potential.

For more information, please visit www.ey.com.

Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. 

Contact name: Lamice Murshid  
Company: Ernst & Young
Tel: +971 4 332 4000
E-mail: lamice.murshid@ae.ey.com

Contact name: Sandeep Sharma
Company: Weber Shandwick MENA
Tel: +971 4 320 077
E-mail:  sandeep.sharma@ws-mena.com

© Press Release 2009

Link:

http://www.zawya.com/Story.cfm/sidZAWYA20090414093048/Global%20Takaful%20market%20could%20touch%20$7.7%20billion%20in%202012:%20Ernst%20%26%20Young