Category Archives: Accounting firms

KPMG nets Miller as Global Head of Islamic Finance

KPMG nets Miller as Global Head of Islamic Finance

 

 

 

KPMG has hired Neil Miller as global head of Islamic finance. Miller joins from Norton Rose where he led their global Islamic finance practice and will continue to be based in Dubai, where he has been since 2009.

According to KPMG, ‘Neil has specialised in Islamic finance since he moved to Bahrain in 1995. He then returned to London in 2000 to set up Norton Rose’s Islamic finance group which went on to win numerous industry awards under his leadership, with Neil becoming a highly regarded industry figure internationally.

Miller said, “KPMG’s global reach, vast client relationships and deep industry insights will provide me with an opportunity to identify services and products tailored to the Islamic Finance Industry. This, and the commitment of the senior partners in the firm to the development of Islamic finance, was an important factor in my decision to join KPMG. To prosper and grow, the Islamic financial industry needs to be served by firms that can deliver well researched and designed tools that are Shariah compliant and commercially viable, but also comprehensively consider taxation, audit and accounting perspectives. KPMG already has a strong Islamic finance offering and I look forward to developing this further through its international network.”

KPMG’s announcement comes shortly after Deloitte lost its head of Islamic finance, David Vicary, to Islamic finance education house INCEIF.

Source: http://www.theislamicglobe.com/index.php?option=com_content&view=article&id=530:kmpg-nets-miller&catid=15:article&Itemid=38

Sukuk issuance to reach pre-crisis level by end 2011: Daud Vicary Abdullah

Sukuk issuance to reach pre-crisis level by end 2011: Daud Vicary Abdullah

Global issuance of Islamic bonds will take another year to reach pre-crisis levels as new markets in Europe and Asia have yet to make up for the slump in the Gulf, said Deloitte’s head of Islamic Finance on Tuesday.

Underwritten issuance of Islamic bonds, or sukuk, reached $14.3 billion last year, according to Thomson Reuters estimates, well below the $20-30 billion in annual issuance before the global financial crisis.

Malaysia, the industry’s biggest market, held up well in 2010 but issuance in the Gulf Arab region has been hurt by some sukuk defaults and investor confidence has yet to return.

“I think it’s going to be another year or so before (sukuk issuance) gets back to pre-crisis levels,” said Daud Vicary Abdullah, head of Islamic finance at advisory firm Deloitte.

He said that new markets will help a come back in sukuk issuance, as governments in Brazil, Australia, Western Europe and Central Asia are considering issuing sukuk to tap the Muslim wealth pool and nurture their own Islamic financial industries.

He said that American re-insurers are considering entering Islamic re-insurance business, or re-takaful, which would also increase demand for Islamic bonds.

The global financial crisis popped a Gulf real estate bubble in 2008, severely hitting regional investors and pushing the region’s business hub Dubai to the brink of default.

Investors are still holding back their funds as the full extent of the damage took long to surface due to a lack of strong and transparent regulations in the region.

“This market is always much more sensitive to economic ups and downs…there is still some ground to make up and people are sort of nervous about what they have seen in Dubai,” said Abdullah.

The Gulf saw a modest revival in sukuk issuances in the last quarter of 2010 but market experts fear it could be a fragile recovery with investors fearful of any more bad news. [ID:nLDE69618P]

Sukuk issuance has also been hurt by a debate about the compliance of some of its structures with Islamic law. Sukuk are structured around underlying assets, from which returns to bondholders are derived.

Estimates of sukuk issuance can vary significantly depending on the methodology applied.

Experts polled by Reuters in October estimated that sukuk issuance will likely be less than $25 billion as Gulf debt restructurings and state deficit constraints dampen borrowing.

Source: http://sg.news.yahoo.com/rtrs/20110111/tbs-sp-islamicfinance-sukuk-7318940.html

Ernst & Young projects mixed outlook for the Islamic finance industry

Ernst & Young projects mixed outlook for the Islamic finance industry

Islamic financial institutions are at cross roads entering 2011, said Ernst & Young. The industry is expected to continue to show resilience in the face of a challenging economic scenario. This is despite the fact that growth levels of the Islamic finance industry, at more than 20 per cent per annum for the past several years, came under tremendous pressure in 2010.

Ashar Nazim, Executive Director and MENA Head of Islamic Financial Services Group at Ernst & Young says: “Having achieved the critical volume estimated at US$1 trillion in Islamic assets, the question reverberating across board rooms, and among users of Islamic financial services, is about differentiation, or the lack thereof, that Islamic financial institutions have on offer.  Effectiveness of the existing Shari’a governance framework, as well as synthetic product structures commonly in use are especially under discussion.”

No longer business as usual

Scarcity of data and under-investment in analytical tools means that Islamic banks’ focus remains limited to a handful of asset classes while their operating costs are, in many cases, higher than their conventional peers. Future opportunities may no longer come from traditional captive clientele. Instead, Islamic financial institutions urgently need to upgrade their business models to tap mainstream segments.

Ashar Nazim added: “Decision makers at Islamic financial institutions need research and tools to assist in making informed decisions on the future growth trajectory of their businesses. Implications of Shari’a rulings on governance, product structures and markets need to be appropriately incorporated at the planning phase itself.”

Ernst & Young was voted the Best Islamic Advisory Firm and also won the award for Best Islamic Research at the 2010 Islamic Business and Finance Awards organized by CPI Financial. Ernst & Young’s Islamic Financial Services team was acknowledged for its original thought leadership to help steer the industry through the difficult business environment.

Ernst & Young also recently joined hands with AAOIFI*, the leading standard-setting body for Islamic finance industry, to provide product and contract certification that would strengthen universal acceptability of Shari’a compliant products offered by Islamic financial institutions.

New direction for the industry

Ernst & Young’s World Takaful Report highlighted the fluid nature of the takaful industry, as well as tremendous growth potential. The industry is expected to grow three-fold from an estimated US$9 billion in 2009 to $25 billion by 2015. “The biggest challenge for the takaful operators is to bring out the differentiation, its unique Islamic proposition, for its stakeholders. This was the key message for the industry during 2010,” said Ashar.

Ernst & Young’s Islamic Funds and Investment Report 2010 confirmed that more than half the Islamic fund managers may be operating with less than the minimum assets under management needed to remain viable. The opportunity is for global fund managers as well as for consolidation within the industry. Islamic endowment, or Waqf, with an estimated US$105 billion wealth pool, was highlighted as a key emerging sector that could potentially stimulate strong liability generation for Islamic banks, as well as help revive the Islamic fund management industry.

Source: http://www.zawya.com/story.cfm/sidZAWYA20110109091715

International takaful (Islamic insurance) market could be worth $7.7bn by 2012: Ernst & Young

International takaful (Islamic insurance) market could be worth $7.7bn by 2012: Ernst & Young

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Takaful is the great success story of this region’s insurance industry, but will it ever catch on in the West, and are its Gulf prospects truly long-term?
From Manama to Malaysia, takaful, or Islamic insurance, is on the rise.While still a relatively immature industry, takaful is looking to ride on the back of the explosive growth of Islamic finance in the Arab world, and increase its share in the global insurance market.

Global accountancy firm Ernst & Young predict that the international takaful market could be worth $7.7bn by 2012, up from a mere $1.4bn in 2004. Last October, the world’s second largest reinsurer Swiss Re said in a report that takaful grew 25 percent a year from 2004 to 2007, while the conventional insurance market posted low double digit growth at 10 percent in the same period.

Half of the market will go Takaful. It could be as high as that; up to 50 percent in five years.Like all Islamic financial products, takaful has to adhere to the strict principles of Sharia law. Income derived from interest is forbidden, along with revenue derived from prohibited activities or trade such as gambling, pornography, and alcohol. Takaful in Arabic means joint guarantee and it works on the basis that a group of people agree to share risk by putting money into investment funds, sometimes through a charitable donation, and then draw on these funds when there is damage or loss to a party.

"There is tremendous opportunity because it [insurance] is very underserved – insurance as a whole is very underpenetrated [in the Gulf], says Dinesh Chandiramani, director of distribution in equity and credit sales at Dubai-based investment bank Arqaam Capital.

"People are looking at decent growth for the sector of around 15 to 20 percent on an annualised basis because there is a nascent market right now which is in the process of being built up. It could grow significantly beyond that if the product is well-received and people start to buy into it," he continues.

Nick Frei, chief executive of Bahraini Islamic insurer t’azur predicts that takaful could have a 50 percent market share in the Gulf’s insurance sector by 2014.
"I firmly believe half of the market will go takaful. It could be as high as that; up to 50 percent in five years" says Frei.

But the rise of takaful has not been plane sailing. It still only makes up a fraction of the global insurance market and the sector’s growth has been hamstrung by a dearth of takaful reinsurers. Some are emerging, such as the Dubai-based Takaful Re, but generally there are too few companies to underwrite the risks of the smaller takaful players.

Therefore, many takaful companies go down the conventional route when it comes to reinsurance, and because of the lack of options available to the industry, it usually comes with Sharia scholars’ approval.

Currently, Malaysia, the world largest Islamic financial centre, is the market leader in takaful. It is home to some of the biggest Islamic operators in the world such as Takaful Malaysia, which aims to capture over half of the market share of the industry in under three years-despite the economic gloom. In comments made by the group’s managing director Datuk Hassan earlier in the month, the industry is worth RM12bn ($3.65bn), with his company’s current share at $1.13bn.

In conventional insurance, risk is sold at a price depending on age, background and financial status, introducing a largely commercial aspect. In takaful, transactions that are deemed to be uncertain are banned.For example, a Western insurance broker will sell risk, such as home insurance, not knowing whether there will be claim on the house.

In the West, insurance companies may invest in ventures which make their money from interest or in sectors that are forbidden by Islam.

Source

Islamic Bonds Worth $27.5 Billion to be Issued in 2009, Says Ernst & Young

Islamic Bonds Worth $27.5 Billion to be Issued in 2009, Says Ernst & Young

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Although Islamic investment funds face bigger risks this year due to the global economic crisis, new issues of Islamic bonds, or sukuks, are likely to rise by 56 per cent from last year, financial services firm Ernst & Young said on Monday.

Shariah-compliant investment assets grew nearly three-fold to $736 billion in 2008 from $267 billion in the previous year, but investment growth may stall this year as large sums committed to financial instruments such as equities have been affected by the slowdown, Ernst & Young said in a report on Islamic Funds & Investments.

Read the rest …

KPMG: Best Islamic Assurance and Advisory Services Provider

KPMG: Best Islamic Assurance and Advisory Services Provider

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KPMG firms were named Best Islamic Assurance and Advisory Services Provider for the second year in a row at the 2009 Euromoney Islamic Finance Awards ceremony in London.

Now in its seventh year, the awards are regarded by many in the sector as the benchmark awards for the global Islamic finance industry.

Read the rest …

Ernst & Young: The Islamic Funds and Investments Report

Ernst & Young: The Islamic Funds and Investments Report

The Islamic wealth management industry has grown tremendously in recent years. With the economic landscape in the region, increasing wealth and strengthening demand for Shari’a complaint investments indicates immense potential for further growth of the industry.

Reflecting these developments, the Ernst & Young Islamic Funds & Investments Report 2007 identifies key trends in the Islamic wealth management industry and highlights the implications of these for industry players.

Read the report here …