Canada’s The Province reports that Canada’s biggest banks have still not tapped a growing pool of investors and borrowers sitting on piles of cash or in need of loans. The Province reports that there is a need for Islamic financial instruments, but also, for Islamic and Shariah compliant retail banking.

“We have immigrants who come to us and sit in our offices and tell us they have a million dollars sitting in one of the Big Five banks, in cash,” said Omar Kalair, president of UM Financial, one of the few providers of Muslim mortgages in Canada, to The Province.

The potential market is huge, with the Canadian Muslim population expected to reach 1.5 million by 2017. And, according to The Province, a recent poll indicated that around half of Muslims would prefer shariah-compliant retail banking options.

The Province reports that Guidance Residential LLC, the biggest player in the United States, has provided more than $1 billion in Islamic mortgages. There is currently $2.75 billion invested in mutual funds that comply with shariah. And globally, Thomson Reuters recently pegged the value of the Islamic finance industry at $1 trillion.

Since 2005, UM Financial has provided 500 homebuyers in Canada with $120 million in murabaha financing. And the company recently partnered with MasterCard to introduce the first “credit” card in North America aimed at Muslim consumers. Cardholders must first load up their cards with cash, spending only money they actually own and avoiding interest payments or credit-card debt.

Kalair said to The Province that it is now only a matter of time before UM teams up with a major bank to expand and extend its line of products. “Even though there are limited products and the pricing is high … in the Muslim community, if they were provided an opportunity, they would be ready to switch over.”

For more information on Islamic financial instruments or Shariah-compliant loans or lending, please contact info@islamic-finance-blog.com.

For the original story courtesy of The Province, please click here: http://www.theprovince.com/life/story.html?id=2754081

In the next few months, Saudi Arabia will move forward in pushing the frontiers of Shariah complaint lending/financing practices by issuing its first mortgage law. Bloomberg reports that the legislation will boost the real-estate industry and allow banks to diversify their balance sheets.

Apparently, Saudi Arabia’s property market is suffering from a shortage of housing units, shielding the kingdom from corrections in the real estate markets of other Gulf Arab states. Real estate prices in Dubai plummeted around 50 percent from their peak, according to Deutsche Bank estimates.

The Sharia-compliant legislation which has been discussed for the past two years will consist of five parts. It will define the terms of mortgages, how they are designed, how they are granted, how companies are licensed and how procedures will be enforced.

The legislation is on the way to the council of ministers before going to the Shura Council, the country’s consultative assembly, for final approval.

Full story, here: http://www.bloomberg.com/apps/news?pid=20601104&sid=afy6Vy3FViNg

Canada’s National Housing Agency has issued a report that Shariah-compliant mortgages would pose no legal problems, nor would other Islamic financial products. The 88-page study was done at the direction of Canada Mortgage and Housing Corp., by the assistance of Canadian law firm Gowling, Lafleur Henderson LLP.

“Islamic financial products should not present any particular difficulties under Canadian accounting standards,” says the study by the Canadian law firm Gowling, Lafleur Henderson LLP, released in late January.

Apparently, no Candadian chartered banks currently offer Islamic mortgages. The Canada Mortgage and Housing Corp. report says there would be no legal obstacles if private entities offered the financial services to Canada’s Muslim community, believed to number at least 700,000.

The Islamic mortgages would follow typically “diminishing musharakah” or similar installment-purchase models employed by Islamic financial instruments.

For the full story, click here: http://blog.beliefnet.com/news/2010/02/canadas-housing-agency-approve.php

Just when many of the world’s financial systems have been working to weather the capital market turmoil and its spread to economies around the globe, Islamic finance growth has stayed strong and will likely be brisk during the next year, said Standard & Poor’s Ratings Services in a report titled “Islamic Finance Is Likely To Advance In 2010 On Firm Growth And Widening Geographic Reach,” published today on RatingsDirect.  

“We believe Islamic finance has become a recognized and a specific segment of finance on its own with still-bright growth prospects. We think Islamic finance is set to make further inroads in developed Western markets while Southeast Asian countries will likely fuel the Islamic finance advance in Asia in 2010,” said Standard & Poor’s credit analyst Mohamed Damak.

“At the same time, though, we believe there are a number of important questions for which the answers are not necessarily yet clear but that may play a part in shaping the sector’s future growth. Specifically in non-Muslim countries, and especially in Europe, we consider they include the size of demand for Sharia-compliant products, regulatory and tax environments, the support of the political and financial communities, sovereign sukuk issuance, and the possibility of a common strategy for extending Islamic finance across EU countries.”

Assets of the top 500 Islamic banks expanded 28.6% to total $822 billion in 2009, compared with $639 billion in 2008, according to S&P.    For the press release click here: http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245205629399 

NCB Capital, the invesment banking arm of National Commercial Bank, Saudi Arabia’s largest bank, believes that the Middle East is now set to become a new global growth engine reflecting an ongoing structural shift in the global balance of economic and financial power. In the January edition of the Gulf Cooperation Council monthly economic bulletin, NCB Capital chief economist Jarmo Kotilaine points to a number of facts that back that assertion:

• Attractive macroeconomic fundamentals will likely ensure robust economic growth rates in the years ahead.
• Emerging markets have generally experienced a much milder cyclical correction in this downturn. Moreover, ample surpluses accumulated thanks to cautious government policies during the boom years have been effectively mobilized to smoothe over the cycle without creating major new borrowing needs.
• Driven by oil, demographics and diversification, the GCC is set to become a $2 trillion economy in the next decade, with surpluses largely being utilized toward the development of the non-oil sector. Also, with a young population base, the GCC is well positioned to reap the demographic dividend.

Full Story Here: https://www.arabfinance.com/News/newsdetails.aspx?Id=159487

Unicorn Investment Bank (Unicorn), the Bahrain-based financial services group, has been named Best Investment House as part of the 2009 Islamic Business and Finance Awards organized by CPI Financial in Dubai. Unicorn has offices in a variety of locations, including Chicago.

Full Story Here: http://www.albawaba.com/en/countries/Bahrain/258496

Indo-Asian News Service has reported that UAE-based hotel management company Landmark Hotel Management LLC intends to launch Shariah compliant hotels and apartments in the UAE and Saudi Arabia by the end of 2010. The move would cater to the increasing demand for Shariah compliant hotels in the Middle East. According to the World Tourism Organization, travelers from the Gulf region spend more than $12 billion annually on leisure travel.

Full Story Here: http://newshopper.sulekha.com/uae-firm-to-launch-shariah-compliant-hotels_news_926996.htm