SINGAPORE - BANKING - Potential for growth in S'pore

www.todayonline.com - Singapore is challenging established wealth centres more fiercely than anywhere else in Asia, according to UBS bank and Campden Research. Yet, in Islamic banking, it lags behind.

Even though Singapore has had Islamic banking since 1995 and there are investments such as the NTUC Income Takaful Fund, banks generally offer only a few choices such as savings and checking accounts. Some banks have far less.

DBS' Islamic Bank of Asia offers corporate banking and asset management, for example, and not consumer products. And when Standard Chartered Bank launched new Islamic financial solutions for private banking clients in June, it did so in London, Geneva, Jersey and Dubai - but not Singapore, where it is still working on regulatory approvals.  (source)


Just across the causeway though, there are Islamic banking products from mortgages and credit cards to savings accounts and investment services. PricewaterhouseCoopers calls Malaysia "a leading international and regional hub of Islamic finance". Standard Chartered sees such potential it is making Kuala Lumpur its global hub for Islamic consumer banking.

With relatively few products in Singapore, growth remains slow.

Even though Monetary Authority of Singapore (MAS) Managing Director Ravi Menon has said that "Singapore aims to encourage financial institutions here to grow their suite of products and services for the Islamic finance industry", there is little specificity about what might drive growth. Myriad issues, from a lack of products and talent to an opaque regulatory structure, seem to hinder expansion.

Deloitte M&A partner and Islamic finance specialist Suresh Marimuthu said that, while Singapore has the fundamental framework for Islamic banking to grow, little has been done to encourage expansion. A separate blueprint and regulatory framework for Islamic banking and capital markets, new licensees, more attractive tax structures and more Islamic banking talent are needed, he said. With these, Islamic banking here could grow quickly, perhaps even surpassing Malaysia.



Richard Hartung is a financial services consultant who has lived in Singapore for more than 20 years.

Source: http://www.todayonline.com/Business/Wealth/EDC120801-0000005/Potential-for-growth-in-Spore  - Aug 1, 2012