Jun 21 2012
|more articles from|
Deloitte: Saudi Arabia Islamic Finance Assets estimated at US$ 94 billion
Deloitte: Total Saudi Arabia Islamic Finance Assets represent 26% out of GCC total
A Deloitte Middle East Islamic Finance Knowledge Center (IFKC) report, entitled 'Empowering Risk Intelligence in Islamic Finance', addresses and investigates the important issues in practice and regulation in Islamic Finance in the current market challenges. The report also assesses the impact of Islamic Financial Institutions in different countries, highlighting that Saudi Arabia is one of the main contributors to the Islamic Finance industry, with an estimated US$ 94 billion in Islamic Finance Assets.
Based on analysis provided by Deloitte Middle East Islamic Finance Knowledge Center, the total of the Saudi Arabia Islamic Finance Assets, valued at US$ 94 billion, represent 26 percent out of total GCC Islamic Finance assets and 8.2 percent out of total Global Islamic Finance assets.
The report also focuses on the governance and structural aspects of an effective risk management framework in Islamic Finance. It presents new findings in the practice of Islamic Finance risk management that offer guidance to boards in managing risk in troubled times. It is based on a survey and group of case studies developed during the second half of 2011, on 20 leading Islamic Financial institutions from the Middle East and South East Asia, with aggregate assets of more than US$50 billion. It also includes several interviews conducted with industry leaders and risk management executives.
The Deloitte report finds that Saudi Arabia saw the launch of one the first and most important institutions in the Islamic Finance (IF) Industry. The Islamic Development Bank (IDB) is a multilateral development financing institution established in Jeddah in 1975. Up until today, the (IDB) has contributed over US$ 200 million of technical support to nearly 70 Islamic Financial Institutions (IFI) around the world.
Today, there are four Islamic Commercial Banks operating in KSA. They include: Al Rajhi Bank, US$ 58.8 billion total assets; Bank Al Jazira, US$ 10.3 billion total assets; Alinma Bank, US$ 9.8 billion total assets and Bank Albilad, US$ 7.4 billion total assets.
Aside from Islamic Commercial Banking, Cooperative Insurance industry evolved considerably in the KSA during the past 9 years. There are currently more than 30 Cooperative insurance companies, total assets of over US$ 7 billion with the largest company being The Company for Cooperative Insurance (Tawniya) with total assets of US$ 1.9 billion. The concept of Cooperative Insurance was introduced in KSA in 2003 after all conventional insurance companies were exempted from Saudi Arabia and the Cooperative Insurance regulations were passed, setting the basis of providing insurance on a cooperative basis in accordance with Islamic Shari'a. However there was no detailed guidance as to what constitutes cooperative insurance but it is accepted that there are differences to the Takaful model.
The Sukuk market in Saudi Arabia (the Islamic equivalent of debt) is considered the third largest in the world after Malaysia and UAE, according to the IIFM Sukuk report. Total issue number of 25 with issue size of US$ 17.1 billion up until December 2011. The single largest Sukuk issue ever was issued from General Authority of Civil Aviation in Saudi Arabia in January 2012 with an issue size of US$ 4 billion on a Murabaha. Many Islamic finance forecasts and analysis predicts that Saudi Arabia and South East Asia will dominate the Sukuk market in 2012 with high quality quasi-sovereign issues.
However, in light of the global regulations in the financial services industry, Islamic Financial institutions are being heavily impacted.
Islamic Financial institutions and their systems of governance will continue to evolve as new regulations are issued. Executives of Islamic Financial Institutions, along with executive risk offers, will equally play an important role in coordinating risk management implementation and activities between boards and Sharia'a Supervisory Boards and other business supporting units in the institution.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte's approximately 195,000 professionals are committed to becoming the standard of excellence. Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities
About Deloitte & Touche (M.E.):
Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence for over 85 years. Deloitte is among the region's leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with over 2,500 partners, directors and staff. It is a Tier 1 Tax advisor in the GCC region (International Tax Review World Tax 2010, 2011 and 2012 Rankings) and was recognized as the 2010 Best Consulting Firm of the Year in the Complinet GCC Compliance Awards. In 2011, the firm received the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW).
© Press Release 2012
© Copyright Zawya. All Rights Reserved.
People Who Read This Also Read
Related to this article
- Sustainability on the rise: The Environment Public Authority and Ernst & Young host joint Sustainability Awareness Workshop
- Mashreq introduces the UAE's Best Travel Programme
- Saudi Arabia Islamic finance assets reach $94b
- Mashreq receives 'Best Regional Retail Bank Award'