HSBC Holding To Pick Malaysia as Takaful Hub

HSBC Holding is planning to make Malaysia a hub for the group's global "takaful" business worldwide.

"We are considering using our dedicated takaful company here to branch out and go to other markets," said Keith Driver, the chief executive officer of the HSBC Amanah Takaful (M) Sdn Bhd.

Driver said the move will allow HSBC Amanah Takaful to reach new customers from among the world's 1.6 billion Muslims.

Takaful (Islamic insurance) is based on mutual cooperation in the sharing of risk and addresses key features associated with conventional insurance that is incompatible with Islamic Shari`ah.

The HSBC Amanah Takaful is expected to apply for an international takaful operator license (ITO) and centralize its global takaful activities in the Muslim country.

"We are evaluating this in line with the information and regulations as they are developed and advised. We are keen to explore ways to work within this initiative," Driver added.

Last month, Bank Negara Malaysia issued guidelines for financial institutions to offer Islamic transactions in foreign currencies.

It followed a scheme of a 10-year tax exemption as of 2007 for institutions offering products in foreign currency.

HSBC Amanah Takaful is a joint venture between HSBC Insurance (Asia Pacific) Holdings Ltd, Jerneh Asia Bhd and the Employees Provident Fund, Malaysia's biggest state pension fund.

Booming Market

HSBC Holdings said it expects the global takaful market to grow fivefold to $14 billion (RM51.52 billion) by 2015.

"We have a competitive advantage here (in Malaysia). We have a takaful company, favorable fiscal initiatives that make it attractive commercially for basing here and the support of a strong Islamic finance business which can help make sure resources are available to make it happen," he said.

Driver said that HSBC Amanah Takaful "can develop new products centrally and give them a home".

The Islamic banking industry, which began almost three decades ago, has made substantial growth and attracted the attention of investors and bankers across the world.

There are an estimated 300 Islamic banks and financial institutions worldwide holding $300 billion in assets predicted to grow to $1 trillion by 2013.

American International Group (AIG.N), the world's largest insurer, said on Sunday, October 1, it will offer its first insurance coverage complying with Islamic law, tapping a market that could be worth $15 billion by 2015.

Europe's giants like Britain, Germany and the Netherlands expanded over the past three years in producing banking services and products aimed at the Muslim clients.

Japan is planning to introduce Shari`ah-compliant dealings into its beefy banking system in a bid to attract lucrative Middle Eastern oil money.