Island could play vital Islamic Finance role

By added on 25/11/2011

Business Bermuda says the island is poised to play “a vital role” in Islamic Finance, Bernews reports

Organisation CEO Cheryl Packwood told the “Gulf Daily News” she has already committed to coming back to the country’s next World Islamic Banking Conference and hopes to bring Bermuda’s Minister of Business Development along for the 2012 edition.

“This is my fifth visit to Bahrain in the past four years but in the past we have been here for Islamic fund conferences,” Ms Packwood said.

“We clearly see that a financial centre like Bermuda has to have a role in the growing world of Islamic finance and clearly Bahrain is the centre where you need to be in this industry.

“We have been very excited about what we have seen and heard at this event. I thing it has been fantastic and for us it has been a major success.

“Bermuda is a growing centre in the West for Islamic finance and there is a great deal to be gained from a closer working relationship with colleagues in Bahrain,” she added.

PricewaterhouseCoopers director of asset management and chairman of Bermuda’s Islamic finance task force Belaid Jheengoor believes there is more growth to be seen.

“Global Islamic finance is fairly new, only having been in existence for the last 25 years and the market currently stands at about US$1 trillion,” he said.

“Numerous studies by global industry leaders say this US$1 trillion, within the next three to five years, could grow to be anything north of US$3 trillion to US$6 trillion.”

At the Bahrain conference, Ms Packwood and Mr. Jheengoor took part in the panel discussion “Upgrading Regulatory Frameworks and Risk Management Capabilities: New Approaches to Ensure Stability and the Successful International Development of Islamic Finance.”

The panel session, moderated by Nadine Hani, anchorwoman for Al Arabiya News Channel, discussed the improvements necessary for the current regulatory framework. The panel also examined new international regulatory developments and new dimensions in risk management and compliance.

Cheryl Packwood said : “Bermuda has historically been renowned internationally for its world class standards of regulation, something which has stood us in great stead in our ambition to become the Western hub for Islamic finance.

“Honesty and ethics are at the core of the way Bermuda does business, much like the Islamic Finance industry and this is crucial when discussing improvements to regulatory frameworks.”

Mr. Jheengoor also represented Bermuda with Fawaz Elmalki, director at Conyers Dill & Pearman, at the “New Frontiers – New Opportunities Exploring New International High-Growth Markets for Islamic Finance, Country Focus Roundtable”.

The panel discussed Bermuda’s appetite for Islamic finance and the initiatives it has taken in recent years, such as the creation of guidance notes by the Bermuda Monetary Authority on Islamic Collective Investment Schemes facilitating the establishment of Islamic investment funds in Bermuda.

Mr.Jheengoor commented: “Bermuda has built strong ties with the GCC in recent years, including signing a Double Taxation Agreement with Bahrain which provides structuring opportunities for both conventional and Shariah compliant investors accessing the GCC.

“Its regulatory structure already provides mechanisms which cater to the specific requirements of Shariah compliant services and structured finance transactions, such as sukuk and Shariah compliant funds as well as takaful and retakaful insurance structures.

“It was mentioned during the discussion that if a non- regional country wants to be taken seriously as an Islamic centre it should issue a sukuk; the first sukuk to be issued by a top ten Fortune 500 US company was structured using a Bermuda limited liability exempted company as an Ijarah sukuk to finance global portfolio of aircraft leases. This transaction is proof of the benefits that businesses outside of the region can gain from Shariah-complaint investors.”

The Country Focus Roundtable also discussed the potential for Islamic finance in non-Islamic countries such as Bermuda.

Mr. Elmalki said: “Islamic finance is no longer a niche industry. At a time when conventional financial services are being hit by the financial crisis, Islamic finance is a growing component of the international financial system.

“Bermuda is gaining a steady stream of international business in the establishment and management of Shariah-compliant companies, partnerships and trusts. It is now a primary jurisdiction for sukuk issuances backed by aircraft.”

Representatives of Business Bermuda, including Peter Hughes, Group Director at Apex Fund Services, Nicolas Angio, Managing Director of Apex Fund Services Bahrain and UAE, joined Cheryl Packwood at the Business Bermuda booth in talking to leading members of the Islamic finance industry from across the world to explore the potential for Islamic finance in Bermuda and the Island’s advantages over its onshore competitors.

Mr. Jheengoor also took part in two panel sessions, as part of a pre-conference event hosted by the IIFM, “Trends in Global Sukuk Market”, focussed on the latest developments and growing trends in the industry as well as sukuk structures, ownership rights, the role of SPV’s and standardisation requirements in sukuk.

The second session explored the prospects and challenges in “Collateralized Repo in Islamic Finance” including the regulatory and legal environment, challenges in margin maintenance and structuring challenges as well as the types of securities suited for collateralization. The panel also discussed the effects of capital treatment, Basel III and the role of the custodian bank in Islamic finance.

Business Bermuda is a business organization of Bermuda resident service providers that provide quality banking, legal, accounting, re/insurance, financial, trust, management and e-commerce services and products to the international client.

The organisation works with the private sector and Government to develop and promote the island as one of the world’s foremost centers for international business.