OCBC Bank yesterday said its full-fledged Islamic banking subsidiary in Malaysia has started operations with its first branch at Jaya One in Petaling Jaya.
OCBC Al-Amin Bank, as the unit is known, is licensed to offer a full range of services that comply with syariah, or Islamic, principles, including Islamic hire-purchase and syariah-compliant corporate finance activities.
Speaking at a media conference to announce the opening of the branch, OCBC Al-Amin chief executive Syed Abdull Aziz Syed Kechik said the bank plans to open four more branches next year.
'What's really exciting to us is the level of acceptance our current set of products has achieved among both Muslims and non-Muslims,' he said.
OCBC is not the only local financial institution involved in grabbing a slice of the global Islamic banking pie, which is valued at about US$1 trillion (S$1.5 trillion).
DBS Bank has a subsidiary, the Islamic Bank of Asia, which is its vehicle into the world of Islamic banking.
Last Friday, DBS' fund management unit, DBS Asset Management, announced that it had jointly launched a global Islamic investment management entity with its Malaysian partner Hwang-DBS Malaysia. The joint venture entity, called Asian Islamic Investment Management, is based in Malaysia and will start syariah investment management activities soon.
Syariah finance blends Islamic economics and modern lending principles. It has become popular with wealthy Gulf Muslim investors, and has also caught on with non-Muslims.
Observers say that in the light of the meltdown in asset values in Western financial markets, non-Muslim investors might want less risky alternatives.
Already, the competition is heating up as Singapore and Hong Kong play catch-up to Malaysia to be crowned Islamic banking hub in this part of the world, industry watchers say.
Just last week, Hong Kong Monetary Authority deputy chief executive Eddie Yue said that despite the global financial crisis, its priority is to develop an Islamic bond market.
The Monetary Authority of Singapore also said recently that it was in the final stages of setting up a sukuk issuance facility to provide financial institutions here with syariah-compliant regulatory assets.
Sukuk is an Islamic financial certificate, like a bond in Western finance, that complies with Islamic religious law.
This article was first published in The Straits Times on December 02, 2008.
