Middle East finance sector set for major transformation

Dead Sea Jordan/Dubai: 22 May, 2007 - Innovative products and efficient service levels are the key to closing the gap between conventional and Islamic financing. Innovation does not necessarily have to start by re-inventing, but could be achieved by converting conventional structures to Islamic shar'iah compliant products, according to Soud Ba'alawy, Executive Chairman of Dubai Group.

Addressing the panel on Islamic Finance during the World Economic Forum on the Middle East in Dead Sea, Jordan, Ba'alawy said Islamic finance has the potential to transform the broader financial sector across the Middle East. He emphasized the importance of adopting an innovative compensation structure and investment instruments that match conventional products.

Furthermore, Ba'alawy drew attention to the need to streamline operational procedures in order to meet market expectations and have a competitive edge.

Commenting on the growing popularity of Islamic finance among institutional investors, Ba'alawy said: "Islamic finance contributes towards the growth of corporations through Musharakah (joint venture) structures, diversified equity financing opportunities and participation in profit and risk at equity level."

Ba'alawy added that while the industry was experiencing exceptionally strong growth, the sector was undergoing a significant transformation with more Islamic banks joining the market, conventional banks offering Islamic products, and large corporations offering sukuks.

"Islamic finance currently focuses on real estate investment. This needs to diversify with a shift towards the development of capital market strategies, in line with GDP growth figures and sustainable returns," said Ba'alawy.

Massive corporate efforts are underway to accelerate development of the Islamic finance sector. The establishment of Noor Group, a Dubai Group company, which focuses purely on Islamic activities, incorporates Commercial Banking, Real Estate and Takaful. Noor Group also has plans to launch Noor Islamic Bank, set to be the world's largest Islamic bank.

Ba'alawy said, "Dubai Group has invested heavily in this profitable sector by acquiring a major stake in Bank Islam in Malaysia as well as through its efforts to establish the largest Islamic bank in the region - Noor Islamic Bank.

"We believe the prospects for Islamic financial services are good, and clients and corporations will continue to demand Islamic shar'iah compliant products."

-Ends-

About Dubai Group
Dubai Group was established to focus on three key industries; Investments, Banking and Insurance, both at a regional and global level.  Dubai Group has three members; Dubai Investment Group, Dubai Capital Group and Noor Group. 

Dubai Investment Group has built an impressive track record over the past 6 years with a specific industry/sector focus including Alternatives, Financial, Industrial and Islamic with an objective to create a solid platform of earnings through the acquisition of profitable operating companies.

Dubai Capital Group is the regional asset management company of Dubai Group, and the activities of the underlying companies are asset management including private equity, brokerage and corporate advisory.

Noor Group focuses purely on Islamic activities and incorporates Commercial Banking, Takaful and Real Estate. 

For further information on Dubai Group, please contact:
Natasha Sterling
JiWin
The Public Relations Subsidiary of Dubai Press Club
Dubai Media City
Tel: +971 4 3613887
Mob:  +971 50 252 8014
Fax: + 971 4 3888001
Email: natasha.sterling@jiwin.ae

© Press Release 2007