AbuShamma’s tenure is also subject to the adoption by the Malaysian Parliament, the Dewan Rakyat, of a Special Enabling Act which would accord the IILM a special diplomatic status and its attendant privileges.
The law is currently in a draft stage and at the time of writing was going through the various debates and readings in Parliament. It is a mere formality that the law will be adopted, after which it will be sent to the Malaysian monarch, the Agong, for royal assent.
AbuShamma comes to the IILM from HSBC Amanah in Dubai where he was until recently in charge of the Islamic banking division’s global relationships, including governments, high net worth individuals and top corporate clients.
Prior to that, he helped set up HSBC’s Amanah Syariah unit — the first foreign bank to open an Islamic retail banking unit in Indonesia, and served as its head from 2003 to 2010.
In appointing AbuShamma, the IILM governing board, headed by governor of Bank Negara Malaysia (BNM) Zeti Akhtar Aziz and governor of Banque Centrale du Luxembourg Yves Mersch as her deputy, has opted for a relatively younger candidate who has a mere 12 years experience in banking.
This is an encouraging departure for multilateral Islamic financial institutions or organizations which tend to shy away from appointing highly qualified younger executives in favor of older and perhaps more conservative apparatchiks.
The one special personal attribute that any new CEO of the IILM would have to possess in addition to the usual organizational and market attributes is vigor tempered with a certain degree of chutzpah.
For it is going to take a huge amount of energy to establish the IILM come next February and to begin to meet some of its pre-natal and post-natal challenges. These are potentially huge and it remains to be seen whether AbuShamma indeed does have the overall experience to meet and deal with them head-on.
He will report to the IILM’s governing board, which will set its strategic policy direction, and to the board executive committee for its general conduct of operations.
Both these bodies are chaired by Zeti, who is arguably one of the outstanding central bank governors of her generation and who has been named as one of the top central bankers in the world for two successive years (2009 and 2010) by the US-based Global Finance magazine.
The IILM has an authorized capital of $1 billion of which $80 million is paid in. BNM, together with Saudi Arabian Monetary Agency (SAMA) are two largest subscribers to the equity of $10 million each, followed by a $5 million subscription each by the central banks of Luxembourg, Mauritius, Kuwait, Qatar, Indonesia, Turkey, Sudan, UAE, Nigeria and Iran and the Islamic Development Bank (IDB) and its private sector funding arm, the Islamic Corporation for the Development of the Private Sector (ICD).
The IILM has one main objective to facilitate liquidity management across borders for Islamic finance. The only participants in the IILM are central banks, monetary authorities and multilateral agencies.
“Liquidity management is part of the role of central banks,” reminded Zeti recently.
“We inject or withdraw liquidity from the system. There are very strict criteria for the eligibility of assets. It is not the shareholders themselves that would allocate assets. Central banks can nominate entities to donate assets, which can be monetized. They will issue Islamic commercial papers (ICP) against these assets through special purpose vehicles. They will be the primary dealers and they will create the markets. As such, a network of primary dealers would have access to these instruments. But we don’t want scenarios like pension funds in California buying all the papers in the primary market. They can buy some but the market has to be much wider.”
IILM will issue papers periodically in tranches in different currencies. The first two tranches will be in the US dollar and the euro. The corporation will also be business-driven with top class management.
From a financial stability perspective, warned Zeti, it is important that liquidity in the financial system does not evaporate; or the system is dysfunctional because of inadequate liquidity.
“The need is for highly-rated short-term instruments that can be traded in the international market. In Islamic finance we don’t have liquidity management instruments but institutions hold highly liquid assets. If the assets can be traded through the IILM, then much fewer of these assets will be held by the institutions,” she added.
The IILM governing board at the same time also appointed its inaugural Shariah advisory committee, which will decide on any Shariah issues relating to business, operations or activities of the IILM, its subsidiaries, special purpose entities or trusts.
The committee comprises six Islamic legal experts who will serve for a three-year tenure, including Ahmed Ali Abdalla Hamad, Cecep Maskanul Hakim, Mohamed Ali Elgari, Mohd Daud Bakar, Umar Bashir Aliyu and Waleed Bin Hady Al-Mullah.
Source : http://arabnews.com/economy/islamicfinance/article219214.ece - Dec 20, 2010
The law is currently in a draft stage and at the time of writing was going through the various debates and readings in Parliament. It is a mere formality that the law will be adopted, after which it will be sent to the Malaysian monarch, the Agong, for royal assent.
AbuShamma comes to the IILM from HSBC Amanah in Dubai where he was until recently in charge of the Islamic banking division’s global relationships, including governments, high net worth individuals and top corporate clients.
Prior to that, he helped set up HSBC’s Amanah Syariah unit — the first foreign bank to open an Islamic retail banking unit in Indonesia, and served as its head from 2003 to 2010.
In appointing AbuShamma, the IILM governing board, headed by governor of Bank Negara Malaysia (BNM) Zeti Akhtar Aziz and governor of Banque Centrale du Luxembourg Yves Mersch as her deputy, has opted for a relatively younger candidate who has a mere 12 years experience in banking.
This is an encouraging departure for multilateral Islamic financial institutions or organizations which tend to shy away from appointing highly qualified younger executives in favor of older and perhaps more conservative apparatchiks.
The one special personal attribute that any new CEO of the IILM would have to possess in addition to the usual organizational and market attributes is vigor tempered with a certain degree of chutzpah.
For it is going to take a huge amount of energy to establish the IILM come next February and to begin to meet some of its pre-natal and post-natal challenges. These are potentially huge and it remains to be seen whether AbuShamma indeed does have the overall experience to meet and deal with them head-on.
He will report to the IILM’s governing board, which will set its strategic policy direction, and to the board executive committee for its general conduct of operations.
Both these bodies are chaired by Zeti, who is arguably one of the outstanding central bank governors of her generation and who has been named as one of the top central bankers in the world for two successive years (2009 and 2010) by the US-based Global Finance magazine.
The IILM has an authorized capital of $1 billion of which $80 million is paid in. BNM, together with Saudi Arabian Monetary Agency (SAMA) are two largest subscribers to the equity of $10 million each, followed by a $5 million subscription each by the central banks of Luxembourg, Mauritius, Kuwait, Qatar, Indonesia, Turkey, Sudan, UAE, Nigeria and Iran and the Islamic Development Bank (IDB) and its private sector funding arm, the Islamic Corporation for the Development of the Private Sector (ICD).
The IILM has one main objective to facilitate liquidity management across borders for Islamic finance. The only participants in the IILM are central banks, monetary authorities and multilateral agencies.
“Liquidity management is part of the role of central banks,” reminded Zeti recently.
“We inject or withdraw liquidity from the system. There are very strict criteria for the eligibility of assets. It is not the shareholders themselves that would allocate assets. Central banks can nominate entities to donate assets, which can be monetized. They will issue Islamic commercial papers (ICP) against these assets through special purpose vehicles. They will be the primary dealers and they will create the markets. As such, a network of primary dealers would have access to these instruments. But we don’t want scenarios like pension funds in California buying all the papers in the primary market. They can buy some but the market has to be much wider.”
IILM will issue papers periodically in tranches in different currencies. The first two tranches will be in the US dollar and the euro. The corporation will also be business-driven with top class management.
From a financial stability perspective, warned Zeti, it is important that liquidity in the financial system does not evaporate; or the system is dysfunctional because of inadequate liquidity.
“The need is for highly-rated short-term instruments that can be traded in the international market. In Islamic finance we don’t have liquidity management instruments but institutions hold highly liquid assets. If the assets can be traded through the IILM, then much fewer of these assets will be held by the institutions,” she added.
The IILM governing board at the same time also appointed its inaugural Shariah advisory committee, which will decide on any Shariah issues relating to business, operations or activities of the IILM, its subsidiaries, special purpose entities or trusts.
The committee comprises six Islamic legal experts who will serve for a three-year tenure, including Ahmed Ali Abdalla Hamad, Cecep Maskanul Hakim, Mohamed Ali Elgari, Mohd Daud Bakar, Umar Bashir Aliyu and Waleed Bin Hady Al-Mullah.
Source : http://arabnews.com/economy/islamicfinance/article219214.ece - Dec 20, 2010
No comments:
Post a Comment