Dec 18 2008
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'GCC will have focused Islamic private banks soon'
In the backdrop of investors and depositors across the world turning their focus on Islamic banking as safe and reliable bet, private non-Islamic bankers and wealth funds should get rid of commercial banking mentality and be committed to customers' wealth care, they said.
Saying GCC banks should gear up to compete with global lenders, Saadat Muzaffar, Head of International Wealth Management, Dubai Islamic Bank, told Emirates Business: "GCC is likely to have its first Islamic private bank very soon. Despite the region having immense potential to offer reliable banking services, there is no Islamic private bank yet. Private non-Islamic banks and wealth funds need to improve after-sales service. Local banks are still unable to offer focused and customised banking services."
Though private banks, retailing banks and co-operative banks managing a significant chunk of revenues in the GCC, they need to move up the value chain to compete with global banking players on the home front, he said.
Over the recent years, the private banking system has moved on from a remote tax-driven offshore activity to a prominent onshore business model because of international pressure on tax avoidance. Onshoring of financial assets has led to change choice of future offices, distribution model and corporate structure.
Saying that interest rates and speculation were prime reasons for sub-prime crisis, Muzaffar said that these are "haram" in Islamic banking.
He added: "GCC banks must focus on private banking and wealth management services for individuals and high net worth individuals (HNIs). There is a growing need to create niche products for private banking clients and customers.
It is estimated that the wealth held by HNIs in the GCC is likely to go up from $2.1 trillion (Dh7.7trn) in 2007 to $3.8trn in 2012. Hence, there will be good demand for Islamic wealth management and private banking in the near future, Muzaffar said.
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