Summit Notebook

Exclusive outtakes from industry leaders

Awaiting the alternative energy sukuk: Innovation vs conservatism

MANAMA, Feb 18 (Reuters) – Dubai’s debt fiasco and real estate bubble bust pushes investors to look out for alternative assets underlying Islamic finance products – could renewable energy provide a way-out?

Predominantly, Islamic finance and investment products have been backed by infrastructure or commodities assets. But executives at the 2010 Reuters Islamic Banking and Finance Summit said product diversification was needed to cut the over-reliance on real estate in the Gulf.

“Sharia scholars are eager to support the renewable energy initiative, but the Islamic banking industry (in the Gulf) does not seem to be overly interested in this area although I am aware of a couple of deals involving acquisitions of clean tech companies in the U.S. and wind farms in the UK,” said Ayman Khaleq, partner at the Vinson & Elkins law firm in Dubai.

“The big banks have teams that focus on renewable energy as an asset class. However, the problem is that Islamic banks are not big enough to be able to cover specific sectors such as alternative energy,” he added.

Fatwa shopping? Not for Barclays

The limited number of Sharia scholars has meant the same
group of men are on various advisory boards which has led to criticism
that people can go “fatwa shopping” and that scholars are in it for the money.

Not so, says Harris Irfan, head of Islamic products at
Barclays Capital.

“We’re not out fatwa shopping,” he said at the Reuters
Islamic Banking and Finance Summit. “We want to work with the
scholar who’s willing to say ‘no’ (to non-Sharia products)”

Skeletons in the closet, sprawling ownership stymie Gulf bank consolidation

Anyone waiting for Gulf banks to consolidate — a long talked about prospect — can forget about it for now.

With debt markets shut, leaving only pricey equity financing, budding suitors are standing frozen, unable to make a commitment.

from Global Investing:

101 ways with halal

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SheepThe technicalities of Islamic finance may seem arcane to outsiders but participants of the Reuters Summit on Islamic Banking and Finance have been keen to take it to a broader audience.

On Tuesday Mahesh Jayanarayan, CEO of Halal Industries, unveiled his ambitious plans for a halal park in Wales, whilst stressing the industrial site could also house Welsh cottage industries. Halal is simply an Arabic term that means “permissible” but in the West it is largely associated with the preparation of meat and poultry.

from Global Investing:

Dubai World crisis dispels wishful thinking

Dubai WorldThe Dubai World crisis has forced sukuk bond investors to wake up to the reality that sukuk isn’t completely straightforward, said Farmida Bi, a partner at Norton Rose, speaking at the Reuters Islamic Banking and Finance Summit in London on Monday.

“There seems to have been a lot of wishful thinking around implied (sovereign) guarantees and enforcement, which isn’t straightforward in this region,” she said.

from Global Investing:

The best of both worlds?

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Combined Shariah and ethical/SRI products could be the way forwards for Islamic finance investing, according to Dr Humayon Dar, CEO at BMB Islamic, the Shariah consultancy at BMG Group.

Speaking at the Reuters Islamic Finance Summit today, Dar highlighted the development of an upcoming F&C fund that will meet both ethical and Shariah investing criteria, and can be sold to both Muslims and non-Muslims. "I see this as the way forward in markets such as Malaysia, where a significant proportion of the population is non-Muslim," he said, adding that once such products have established a track record, it should appeal to a broader audience, and encourage other launches.

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