Future Trends Of Ifs

IABS International Arab Banking Summit "Euro-Arab Economic Dialogue" 23.- 24. Juni 2005, Frankfurt am Main - Marriott Hotel

Workshop

Islamic Banking and Europe: Exploring Future Trends

Current Market ➢

Statistical data about the market size and growth very limited

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General Council for Islamic Banks and Financial Institutions (CIBAFI): ➢

2004: market size ca. USD 270 bn

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Noriba: similar size estimated for Islamic windows

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Totalling around USD 500 bn in 2004

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Growth rates estimated with 15 % p.a.; any proof unknown

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New Islamic banks worldwide either as fully licensed banks or windows

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Europe: ➢

September 2004: Islamic Bank of Britain licensed

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April 2005: European Islamic Investment Bank funded

Overview

Non profit area Insurance

Money lending

Takaful next to enter Europe

Interest-free lending: niche in Sweden

Profit area Asset Finance

Equity

Services

Consulting Dominating Private Equity and services the Islamic growth sector not yet finance in the Gulf significant industry countries business trend

Insurance - Takaful ➢

Solidarity Bahrain plans expansion to Europe

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Islamic Bank of Britain wants to establish Takaful

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Other market players going to enter the takaful market

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Currently integration Banking – Takaful weak, cross selling very low

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Funds under management will be attractive for asset managers: ➢

Friends Provident will manage Assets in Europe for Solidarity...

Asset Finance: Sukuk – a megatrend ➢

Annual volume 2004 below USD 7 bn – an extreme niche market

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Drivers: Islamic banks and private client portfolios

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Capital adequacy and liquidity rules for Islamic banks resulting in need for Sukuk

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Private clients dominated by real estate and stock market investments – fixed income products like Sukuk desperately needed

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Sukuk market will grow: 5 years from now potential USD 150 bn

Megatrends in Islamic Banking

"The Islamic banking industry still needs some big institution to cater to the needs of primary and secondary markets. Over 82 per cent of the Islamic banks have $25 million or less assets, which really narrows their scope to participate in any kind of activity," Dr Al Khoja said. Bahrain Tribune - 17/05/2005

Megatrends in Islamic Banking ➢

Capital increase and potential mergers to enable larger deal sizes

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Creation of one or more high capitalised Islamic banks ➢

European Islamic Investment Bank: paid up capital: GBP 110 mn (later GBP 300 mn)

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GCC: USD 1 bn initial paid up capital in formation (later USD 2 bn)

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Starting to integrate Takaful and Islamic Banking

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Globalisation: Sudan gains Momentum, Nigeria next – Singapore committed

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More sophiscated product range

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Higher standardisation

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Professionalization: Corporate Governance standards (IFSB, Kuala Lumpur)

Megatrends leads to an industry ...

2010:

Sukuk market USD 150 bn ? Total size of Islamic banking niche: USD 1000 bn ? ... w e w o r k o n it !

Contact Details Michael Gassner Consultancy Kyffhäuserstr. 8 50674 Cologne Germany

Phone: +49 7000 42 77 637 Fax: +49 7000 42 77 637 [email protected] www.IslamicFinance.de

What we do as consultant: Structuring: Coordination of Shariah, tax, legal and market issues ● Marketing: Direct investments, roadshows, market strategy ● Training: Introduction, Sukuk, Wealth Management, Private Equity ... ● Publications: “IslamicFinance.de – Executive News” - monthly free of charge newsletter based on ongoing research ● Independent consultancy firm with international network, e.g. Shape ●

TM