He said that it was in no way a hedge fund, but a reliable way of producing a Shariah-based strategy to positively produce an absolute return regardless of the direction of the market.
Denison said that the bank, which has its own Shariah Supervisory Board (SSB), has been doing quite well since opening just three years ago and has been providing Islamic investment and finance services to the 15 million Muslim population in Western Europe, as well as customers in Turkey. He explained that the bank's customer base includes people of all faiths who want a trustworthy place to bank.
"All we do is Islamic finance and currently have five divisions of private banking, corporate advisory, corporate banking, asset management, and markets. We don't do retail banking but have had customers of various faiths who are looking for ethical banking services. Other people have customers who are Muslims and use our services because they must comply with Shariah. We also have non-Muslims who have come to us just because we are a bank and because our financing options and prices were superior over other banks, making our customer bases three-fold," he said.
Denison said that marking its anniversary in July, the first European launched Shariah-compliant money market fund, the Shariah Dollar Income Fund, has been bringing in returns of just over 30 basis points or three per cent over the past year. "We had initially been looking for a return of 100 basis points or 10 per cent but due to global financial crisis, expect the yields to normalise raising in the near future to our previous estimated target," he said.
Dension said, "We are trying to build our products around what a family business might look like, while catering to those businesses and other individuals. Currently we are targeting the property market to invest in as a majority of people and investors are doing business around property in one form or another. Many people in the Middle East are looking to buy property in the UK while also maintaining their homes and lifestyle in the Middle East. We want to be seen as a reliable bank in the UK that can offer these customers the trust of Shariah-based financial products that they would get back home."
He added that the bank currently has predominantly Kuwaiti shareholders and would someday like to build a presence in the Kingdom. "Certainly with Saudi Arabia as the largest economy in the region we would have to consider opening a branch in Saudi Arabia at some point after the bank grows more," he said. About the unified GCC currency, Denison said he and other BLME offficials had met with the vice-governor of the Saudi Arabian Monetary Agency (SAMA) in Riyadh, who said that they were progressing slowly towards the development of the currency and are doing so in order to make sure all aspects are properly dealt with before the launch.
"They said that they were currently watching the global economy and what was going on with Greece and other European as well as US markets because of the region's peg to the dollar. In addition, SAMA said that they realised that since Saudi Arabia was the largest economy in the GCC they would be the ones making the general decisions," he said, and added, "I think they are right to move slowly into the unified currency while getting all the elements right."
Source: http://www.zawya.com/story.cfm/sidZAWYA20100927034352/BLME%20plans%20Shariah-compliant%20fund - Sept 27, 2010
