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HSBC
May Expand Into Islamic Banking
BANDAR SERI BEGAWAN (AFP) - British giant
HSBC Holdings is interested in introducing banking products modeled on Islamic
principles in the Middle East and Asia, a report said on Tuesday.
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 visits 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%.
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 center.
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.
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