Summit Notebook
Exclusive outtakes from industry leaders
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)”
A study last year by Funds at Work, a consultant for the fund industry, looked at scholars’ engagement by financial firms in the Gulf Arab region. It found the top 10 scholars hold about 46 percent of all available positions in the region.
Internationally, excluding the Gulf, the top 10 scholars – out of 70 active outside the region — hold 58 percent of board positions.
Scholars can earn up to $150,000 per project and it can take four to six months for a Sharia-compliant project to be developed. For the scholar, that can mean between four to six weeks of work on a project.
It may look cushy but often these same scholars will work for nothing to help develop standards for the industry.
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.
But the lack of reasonable financing for mergers is not the only obstacle, according to Frederick Stonehouse, head of strategic mergers and acquisitions at Bahrain’s Unicorn Investment Bank .
Valuing the assets of privately-owned banks, the best candidates for consolidation, is no easy task.
“Many of the banks which I feel should be looking for consolidation are unlisted, so how do you value those?” he says.
And then there is the old, familiar issue of transparency — as in, the lack of it in the region.
“You think everything may have come out of the woodwork but maybe it hasn’t. You could be going into an institution and paying quite a price for it and then finding that the problems are a lot deeper than you imagined,” he says.
