Live Currency Rates
  Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

HSBC's dropping of Amanah could impact loyal customers  Join our daily free Newsletter

MENAFN - Arab News - 08/10/2012

No. of Ratings : 0
Add to Mixx!


(MENAFN - Arab News) HERE'S some good news: HSBC bank will focus its Islamic financing operations in Saudi Arabia. Here's the bad news: It's dropping its Islamic banking operations in seven other countries, including the United Kingdom, and has already divested its assets in nearly 30 other countries.

HSBC's reasons for getting out of the Islamic banking game in some countries is because of the pitiful state UK banks have been in since the global economic meltdown of 2008 and the restructuring efforts now underway to revive the industry. But HSBC, as a conventional bank, also could not really compete against the big Islamic banks.

A case in point was HSBC's success in becoming the first Western global bank to sell 500 million sukuk, but still falling far short to become a significant competitor against the big Islamic banks.

HSBC and similar conventional banks offering segregated Islamic services also faced criticism from scholars who complained the traditional institutions did not go far enough in serving Muslim clients. And Islamic banks often said they faced unfair competition from the large global players.

It's unknown whether the bank's change in direction had anything to do with the scandal earlier this year in which a US Senate subcommittee determined that the bank violated regulations that led its affiliates to move drug trafficking funds and alleged terrorist financing to the US. HSBC acknowledged its failure in following financial regulations and promised to adhere to the rules.
The bottom line is that dropping its Amanah services in the UK allows HSBC to cut costs and transfer its Amanah employees to the main operations.

Ultimately, however, the move will deprive the UK's 2.87 million Muslims of banking based on principles that ban funds speculation, and interest on checking and savings accounts. Perhaps it's a prudent cost-saving measure for HSBC, but it certainly does little to maintain a loyal Muslim customer base.
The wider implications of HSBC eliminating its Islamic banking services in the UK is whether conventional Western banks can serve Muslim communities with a relatively small customer base and either absorb the losses or earn some measure of a profit.

There are few banks in the United States, which has a Muslim population of just 1 percent, that are inclined to open Shariah-compliant accounts. The Michigan-based University Bank's subsidiary, University Islamic Financial, has only a regional reach. And Standard Chartered Bank has offices only in California, New York, Texas and Florida. Ask a bank manager at JPMorgan Chase Bank or Bank of America for a Shariah-compliant account and you get only a blank stare in return.

Yet even in Muslim countries conventional banks offering Islamic products and services continue to struggle. In addition to the UK, HSBC, once a pioneer among Western financial institutions in offering Islamic services, pulled out of Bahrain, Bangladesh, the United Arab Emirates, Mauritius and Singapore.

Qatar had banned conventional banks from offering Islamic products to guarantee the "purity" of Islamic funds. And HSBC had only been offering Shariah-compliant services in Bangladesh less than two years before pulling out.

Jaap Meijer, who is in charge of equity research for Arqaam Capital in Dubai, told reporters recently that HSBC's "Islamic activities in the affected countries were sub-scale so they decided to wind them down in an effort to reduce costs. Except for maybe the UAE, it's not likely to have a big impact on the Gulf region."

And that's despite the fact that HSBC Amanah will retain 83 percent of its overall Islamic business revenue.

In Malaysia, HSBC still must go head-to-head with Standard Chartered Bank, which enjoys a solid foothold there. But the British bank is competing well against Malayan Bank and CIMB Group Holdings.

HSBC, operating through holding, Saudi British Bank (SABB), is also good position in Saudi Arabia. According to Bloomberg, HSBC helped sell 6.4 million sukuk in Saudi Arabia. It also served as the underwriter for SR 15 billion in a General Authority of Civil Aviation offering to fund the new Jeddah airport.

HSBC is also well established in Oman, sharing much of the funding market with BankMuscat.

By curtailing its Islamic funding operations elsewhere, HSBC can focus on Saudi Arabia and a select few other Muslim countries. However, missing from the picture is the low- and middle-income customers in non-Muslim countries who depend on Shariah-compliant banking. At the moment, there is no other conventional bank willing to step into the void left by HSBC, and Islamic banks have yet to demonstrate an inclination to reach out to non-Muslim countries.


  MENA News Headlines
Apr 23 2014Omantel launches service package for youth ,MENAFN
(MENAFN) Omantel announced launching 'Ozone' plan, a new package designed especially for the youth. This comes with the company"s constant efforts to enhance the communication needs of its customers, ...

Apr 23 2014Dh154 billion for Arabtec projects ,Khaleej Times
(MENAFN - Khaleej Times) Arabtec will spend dh140 billion on building one million low-cost houses in egypt and dh14 billion on five mixed-use residential projects in abu dhabi and dubai its chief ...

Apr 23 2014?Titli? makers excited about Cannes selection ,Khaleej Times
(MENAFN - Khaleej Times) The movie about the badlands of delhi?s dystopic underbelly will be in competition as part of the un certain regard section of the 67th cannes film gala to be held may ...

Apr 23 2014Saudi- Yaroub Bashraheel: In search of peace ... underwater ,Arab News
(MENAFN - Arab News) You've heard of diving snorkeling and other water activities but rarely has anyone heard of free-diving. it's a form of diving underwater without the aid of any breathing ...

Apr 23 2014Saudi- Schneider highlights intelligent health care solutions at forum ,Arab News
(MENAFN - Arab News) Schneider electric a global specialist in energy management is set to showcase its leadership in intelligent health care solutions at the second saudi forum for planning and ...

Apr 23 2014Saudi- Divorcees can seek housing ,Arab News
(MENAFN - Arab News) The kingdom will accept applications from saudi divorced women and widows for financial and housing support said justice minister muhammad called on applicants ...

Apr 23 2014Saudi- New passport office opens at Red Sea Mall ,Arab News
(MENAFN - Arab News) The passport department has opened a new office for citizens and residents at the red sea mall.gen. abdul rahman bin abdullah al-tuwairki deputy director general of the ...

Apr 23 2014Kowait- Police deportation powers curbed ,Arab Times
(MENAFN - Arab Times) Kuwait city april 3 (afp): kuwaiti police will no longer be able to deport expatriates without interior ministry approval under new rules published thursday after officers ...

Apr 23 2014Kowait- Amiri Diwan urges all off tape case ,Arab Times
(MENAFN - Arab Times)  kuwait city april 9 (agencies): the amiri diwan has called on everybody to steer clear of the controversial tape issue and let the public prosecution take the necessary ...

Apr 23 2014Saudi Savola Group revenue up 43 pct in Q1 ,MENAFN
(MENAFN) Saudi Arabia's Savola Group registered a 43 percent increase in profits in the first quarter, well over expectations of analysts, Arabian Business reported. According to a statement to ...

Apr 23 2014Dewa and GE explore collaboration opportunities ,Khaleej Times
(MENAFN - Khaleej Times) Saeed mohammed al tayer managing director and chief executive officer of the dubai electricity and water authority (dewa) recently received a ge delegation to explore ...

Apr 23 2014Local international companies come out in force ,Khaleej Times
(MENAFN - Khaleej Times) Cityscape abu dhabi has started showing stronger interest from property developers who have showcased their upcoming projects. the three-day realty show was opened by ...

Apr 23 2014Tamouh steps up activity on projects ,Khaleej Times
(MENAFN - Khaleej Times) Abu dhabi-based real-estate developer tamouh has scaled up construction activity on all of its announced reem island projects to meet the rising demand for prime spaces in ...

Apr 23 2014Here?s your chance to share screen space with SRK ,Khaleej Times
(MENAFN - Khaleej Times) Groupon india has joined hands with srk?s red chillies entertainment to give fans a chance to feature with the superstar in his upcoming film ?happy new year?. if you ...

Apr 23 2014Saudi- Noha Al-Sharif — an expert in Islamic sculpture ,Arab News
(MENAFN - Arab News) Saudi sculptress noha al-sharif is known for her islamic inspired sculptures that reflect both religion and lifestyle. the concept of modern art attracted her to this medium ...

Apr 23 2014Kowait- New hospital to be ready by 2014 end ,Arab Times
(MENAFN - Arab Times) Kuwait city jan 14 (kuna): director of the 'mega projects 3' group at kuwait oil company (koc) yaqoub dashti said on tuesday that the new ahmadi hospital would be ready to ...

Apr 23 2014Sale of Gate Towers penthouses launched ,Khaleej Times
(MENAFN - Khaleej Times) Aldar properties has launched the sale of 21 exclusive duplex penthouse apartments at gate towers the penthouse collection in shams abu dhabi on al reem island. one of ...

Apr 23 2014Saudi- ASUS showcases product series at Aramco Week ,Arab News
(MENAFN - Arab News) Asus described as the world's renowned consumer notebook vendor and producer of the 'world's best-selling motherboards" recently participated in aramco week and showcased a ...

Apr 23 2014Seven tied for the lead in chess championships ,Khaleej Times
(MENAFN - Khaleej Times) Former champion sukandar grabs lead of asian continental women?s chess. former asian women’s champion wgm irene sukandar of indonesia (left) beat wim ni shiqun ...

Apr 23 2014Two suspects held for robbing pedestrians in Sharjah ,Khaleej Times
(MENAFN - Khaleej Times) The sharjah police on tuesday arrested two stateless citizens for allegedly robbing many persons posing as criminal investigation department (cid) officers. the suspects ...





Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  

Middle East North Africa - Financial Network

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details


Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks

Saudi Arabia 

Investment Game
Economic Calendar
Financial Glossary

Portfolio Tracker


Financial Calculators

RSS Feeds [XML]

Corporate Monitor


Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters

© 2000 All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help