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Friday, 6 February 2015

Indonesia weighs merging Islamic banking units, but 2 banks say no plan yet

Indonesia's state enterprises ministry and financial regulator are talking about potentially merging the Islamic units of three state-controlled banks, but two of them said they have no plans for any such merger yet.
Local media previously reported that PT Bank Mandiri Tbk , PT Bank Rakyat IndonesiaTbk and PT Bank Negara Indonesia Tbk (BNI) may merge their Islamic banking businesses.
"That is just an initial thought that is developing between the state-owned enterprises minister and the regulator," Nelson Tampubolon, the executive head of banking supervision at the Indonesian financial services authority, told Reuters in a text message on Wednesday.
"It has to be further assessed because it has to involve the parents of each sharia bank," he said, adding that he cannot forecast when such a merger may take place.
Authorities in Indonesia want to reshape the country's Islamic finance industry by encouraging consolidation and building a new regulatory system, as the sector seeks to catch up with more mature markets in Malaysia and the Middle East.
Mandiri Corporate Secretary Rohan Hafas said it has no plans yet to merge its Islamic finance unit with others, while CEO Budi Gunadi Sadikin separately said that it is currently focusing on a rights issue.
BNI also has no plans for such a merger, Corporate Secretary Tribuana Tunggadewi said.

"Fundamentally it is up to the shareholders, but there must be some certainty on the purpose of this merger," said Imam Teguh Saptono, a business director at BNI Syariah, the Islamic unit of BNI.
(Reuters / 04 Febuary 2015)
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North Africa: Islamic Finance Experts Predict Maghreb Market Growth

Casablanca — Islamic banks can play an important role in the economies of Maghreb countries - particularly those struggling with socioeconomic development, a pan-African conference concluded last week.
According to the 6th African Islamic Finance Forum (FAFI) in Casablanca, Islamic products should not be simply limited by halal and haram, but should be designed as a source of wealth and job creation.
"Islamic finance, as a source of finance for African economies, must offer competitive products to attract customers and not focus solely on compliance with Sharia law," said banker Youssef Baghdadi of Dar Assafaa bank said at the 2-day event, which wrapped up on January 29th.
Lotfi Bouaicha, a former executive advisor of Tunisia's Zitouna Bank (the first Islamic bank in the Maghreb), adopted a similar stance.
"Quite apart from being Islamic, these are first and foremost banks that offer banking products and must meet the needs of their customers, offering a quality service and being just as competitive as traditional banks," he explained.
Abdelmalek Alaoui of consulting firm Global Intelligence Partners noted what he called the "paradoxical attitudes among a number of governments".
These governments turn to Islamic banks, he said, "for considerable amounts of funding, but at the same time want to control their development because of fears about their competition with conventional finance".
Khalid Labniouri, a bank clerk, emphasised that the debate over Islamic finance needed to be viewed separately from religious considerations. He stressed "the advantages of Islamic banking in a society like Morocco", pointing out that current bank service penetration was only 53%.
Sharia-compliant financial products and services could offer a real alternative, suggested Omar Kettani, the head of the Moroccan Islamic Finance Association (ASMECI).
Islamic banks, he explained, are there to serve the economy and the social sector.
Africa offered real opportunities to develop Islamic finance, financial analyst Najib Foukari said, pointing to a 6% growth rate and efforts to improve transparency and governance among institutions.
However, the shortage of suitable human resources is still a major challenge that needs to be overcome, he said.
In 2015, a number of Islamic financial institutions are being set up in Tunisia, Mauritania, Mali, Côte d'Ivoire and Chad.
Morocco has also just adopted a legal and regulatory framework for the establishment of Islamic financial institutions.
(All-Africa / 04 Febuary 2015)
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