Global Islamic assets hit $1.3 tln in 2011

Islamic funds reached $58 bln, a new high

* Islamic assets represent 1 pct of global market

By Anjuli Davies

LONDON, March 29 (Reuters) - Islamic financial assets around the world hit $1.3 trillion in 2011, a 150 percent increase over five years as the industry expands into new country's beyond core markets in the Middle East and Malaysia, a report on Thursday estimated. Learn more The Stability of Islamic Finance: Creating a Resilient Financial Environment for a Secure Future (Wiley Finance)

Developed markets in Malaysia, Iran and the Gulf remain fertile ground for future growth, but considerable potential also exists for expansion as more countries look to cultivate Islamic banking operations, including Australia, Azerbaijan, Nigeria and Russia, the report by lobby group TheCityUK's UK Islamic Finance Secretariat (UKIFS) said.
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The figures were based on UKIFS growth estimates projected on end-2010 figures from a survey of the top 500 Islamic Financial Institutions conducted by The Banker publication.

"Considerable potential exists for expansion of the industry worldwide, although appropriate legal and regulatory structures are crucial for its development in individual countries," the report noted.

Morocco is also looking to launch its first fully-fledged Islamic bank in 2013, Reuters reported on Monday

A lack of global standardisation among Islamic institutions has been one of the main challenges for the Islamic finance industry. While regulatory bodies such as AAOIFI in Bahrain and IFSB in Malaysia have attempted to provide standards for sharia-compliant transactions, they are guidelines rather than enforceable rules.

The long-term impact of the Arab spring uprisings as new countries open up to Islamic finance remains to be seen and any further spread of political unrest could negatively affect prospects in some Middle Eastern countries, the report said.

Egypt, for instance, has raised the possibility of issuing a sovereign sukuk (Islamic bond), while Tunisia has set up a working group that will study how to develop Islamic finance in the country.Learn more Risk Analysis for Islamic Banks

Sukuk issuance globally increased 62 percent to $84 billion in 2011, with Malaysia accounting for two thirds of that.

Islamic funds under management reached a high of $58 billion in 2010, with the available pool about 10 times larger at over $500 billion, the report found. Fierce competition, though, has driven down management fees worldwide from 1.5 percent in 2006 to 1 percent in 2011.

The new figures are higher than those predicted by Ernst and Young in a report in November, in which the consultancy estimated Islamic finance assets could climb 33 percent from 2010 levels to $1.1 trillion by the end of 2012.

Islamic assets represent only around 1 percent of the global financial market.

UKIFS is a wholly-owned subsidiary of TheCITYUK, a lobby group composed of members across the financial services sector, including lawyers, bankers and asset managers.
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Source : Reuter.com
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Oil Minister: Iran facing no problem in selling its oil

Oil Minister Rostam Qasemi said despite the recent ban imposed by the European Union on Iran’s oil exports, Tehran faces no problems in selling its oil.
1391/01/21 - 09:59

Speaking to reporters, Rostam Qasemi said the Iranian oil has high economic value and the international oil market would never neglect it.

About exports to Greece, Qasemi said Iran does not sell its oil to that country right now.
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He added there is no final agreement on the issue yet.
Source : IRNA.com
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Islamic banks see Iran opportunities

Several foreign banks see huge untapped opportunities in Iran for Islamic finance, spurred on by hopes U.S. President Barack Obama's new approach toward the Islamic Republic will end years of sanctions hampering business.

Home to some 70 million people, Iran might become one of the hottest markets for the industry due to expected privatizations, a need for infrastructure projects and a young population, executives told the Reuters Islamic Banking and Finance Summit.

The U.N. Security Council has imposed three rounds of sanctions on Iran since late 2006 for refusing to halt sensitive nuclear enrichment activities, while the United States has added sanctions to curb business with the Islamic Republic.

But in a sharp change of U.S. policy, Obama has offered a new start in relations.

"I hope that the world leaders will embrace Iran because I think it's (got) great potential for our business," said Simon Eedle, managing director of Global Islamic Banking at France's Calyon.

"We've been present in Iran for many years and we've done business in Iran for many years. We are only constrained by international sanction agreements."

Islamic lenders in Bahrain, a regional center for Islamic finance located just across the Gulf from Iran, couldn't agree more.

"The minute you see a green light from the U.S., everybody will jump in," said Nabeel Kazerooni, head of private equity business at Bahrain-based Gulf Finance House (GFH) GFHB.BH.

MASSIVE MARKET

Majid al-Sayed Bader al-Refai, chief executive of investment bank Unicorn, took a similar view. "I think Iran is a massive market, it's huge, if you don't see that you just don't know the market ... I think President Obama has done a fantastic job so far. If he keeps this up we're on the right track."

Demand from the world's 1.3 billion Muslims for investments that comply with their beliefs has soared and assets that comply with Islamic law are estimated at between $700 billion and $1 trillion.

Iran's banking system adheres to Islamic rules that prohibit earning or paying interest. Iran uses what are officially termed "provisional" interest rates, as rates paid to depositors or received from borrowers should reflect the profits or losses of a business.

Granted, investing in Iran still presents problems. GFH's Kazerooni said legal and political uncertainties were an obstacle after past ownership deals or terms in privatizations were changed after being signed. "Iran doesn't have a good track record, people are a bit wary," he said.

While the Gulf Arab region has attracted many international banks seeking to tap opportunities in the world's top oil-exporting region, many Western banks have halted or reduced Iran-related business as a result of U.N. and U.S. sanctions.

Yet others still see ways in to a potentially major market.

"With the whole notion of Islam being inclusive, it is almost against the logic to exclude a country and a market of opportunity," said Knut Storholm, a partner at Boston Consulting Group.
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