OSK Investment Bank Bhd’s (OSKIB) Islamic banking division is taking measures to unlock value in the Islamic finance realm, in tandem with its measures in addressing the challenges currently faced in the segment.
The World Bank has valued the global Islamic finance asset size at about US$1.3 trillion currently and expects it to reach US$1.6 trillion by year-end. In Malaysia, the Islamic banking segment represented 18 per cent of the overall banking sector’s RM1.78 trillion total assets as at end-2011.
OSKIB’s Islamic banking division director and head Yazit Yusuff recently told The Borneo Post that the measures included shifting of focus on business development into more Islamic capital market activities.
“The bank has identified various initiatives including the setting up of a full-fledged Islamic fund management company. There are also projects in the pipeline including establishing an Islamic stock broking window and introducing syariah-compliant equity derivative products.”
In addition, he mentioned “continuous sourcing for financing mandates especially on opportunities to participate in syndicated Islamic financing arrangements with other Islamic banks to finance capital market activities.”
With regards to collaboration and consolidation, he also noted the bank’s greater potential via “benefitting from a bigger and stronger balance sheet through the proposed merger initiative with RHB Investment Bank.”
“The new developments include establishing an Islamic stock broking window to offer a full range of syariah-compliant equity businesses from a selection of syariah-compliant stocks to provision of Islamic Share Margin Financing.”
In terms of new products, OSKIB had identified more new syariah-compliant products such as syariah-compliant equity derivative products including warrants, options and dual-currency investments as well as retail deposits in the form of syariah-compliant negotiable instruments of deposits.
The fund management business would be looking at market expansion in which syariah-compliant funds will be issued and marketed out of the regional offices like Singapore and Hong Kong, he said.
“Kuala Lumpur is the hub for our Islamic fund management activities and all products offered will take into account screening methodology used by other jurisdictions to ensure global acceptance.
“In the current changing market, there is a wide range of Islamic banking products offered by many financial institutions to meet the demands and needs of investors in the Islamic capital market.
“OSKIB is dedicated to expand its current Islamic based products into a full-fledged Islamic capital market offering through growing its capabilities in product structuring, asset management, project financing, stock broking and capital services that would be made available to current and future investors.
Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com