British giant HSBC Holdings plc is interested in introducing banking products modelled on Islamic principles in the Middle East and Asia, a report said on Tuesday, November 14.
HSBC's Asia-Pacific chairman David Eldon, attending a regional economic gathering in Brunei, told the Borneo Bulletin that the bank would like to expand a London office which currently offers advice to Muslim clients.
“If we introduce Islamic banking products into this market which find acceptance from the customers here, yes, we would be interested," he said in the interview, held at the Asia-Pacific Economic Cooperation (APEC) forum.
“Now for a number of years we actually have an Islamic banking arm that operates principally out of London, but are looking at the Islamic market like those in the Middle East, Indonesia, Brunei and Malaysia where we can introduce Islamic products," Eldon said.
Staff from the HSBC London Islamic operation "actually visit Asia and the Middle East just to talk to regulators, the customers, just to see what the prospects are.
"If there are things that will work, then we would be very happy to try it out ourselves."
However, HSBC had to ensure it made a clear division between its Islamic and commercial banking operations to assure religious authorities, Eldon said.
As an executive in Saudi Arabia during the early 1980s, Eldon said he "tried very hard to put some Islamic products into the marketplace."
"That time we weren't able to do so because we couldn't get this separation, we couldn't get the religious leaders in Saudi to accept that you could separate Islamic products from commercial products," he said.
"Now I think we're making some progress where that can be done, as long as you keep them separate."
Islamic financial institutions are estimated to have a total of $140 billion invested in more than 40 countries. Those investments are growing annually by 15 to 20 percent.
Interest is banned under the Islamic banking system, as the religion forbids usury.
"Murabaha" is a classic practice of Islamic banking, under which a borrower has to pay an extra amount agreed in advance. This amount is regarded as a "reward" for the risk taken by the bank.
Islamic banks also typically take part in joint investments, sharing in the profits or the losses of a business venture.
The APEC host nation Brunei has launched a drive to become an international as well as Islamic financial centre.
Sultan Hassanal Bolkiah on Saturday relaunched the Development Bank of Brunei as the Islamic Development Bank of Brunei Bhd, the oil-rich state's second Islamic financial institution.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com )