S’pore: Future hub for Islamic private banking?

SINGAPORE — The Republic has the potential to become a hub for Islamic private banking services as more Syariah liquidity flows from Europe to this part of the world, although it lacks the demand to drive substantial growth in the consumer segment, said a senior Standard Chartered executive.

This is a growth area that Singapore can tap, on top of its growing footprint in the Islamic wholesale banking space, said Mr Shayne Nelson, Chairman of Standard Chartered’s Saadiq Islamic Banking, during the 4th Annual World Islamic Banking Conference: Asia Summit (WIBC Asia) yesterday.

Standard Chartered, the United Kingdom’s second-largest bank by market value, has benefitted from Asia’s growth through the last decade.

The lender, whose largest shareholder is Temasek Holdings with a stake of about 18 per cent, is keen to bring its mainly London and Geneva-based Islamic private banking offerings to Singapore. It is “closely examining” a potential expansion of its wealth management products here, said Mr Nelson.

“To me, one of the big opportunities for Singapore is that it’s already a significant wealth management hub,” he said. “With Switzerland having somewhat lost its shine for Middle East clients … there’s an opportunity for Singapore to capture those cross-border flows.”

Meanwhile, Singapore is also gaining traction as a hub for wholesale offerings. Securus Fund, the world’s first Syariah-compliant data centre fund, recently completed its second round of fund-raising here.

Sabana REIT, the largest Islamic real estate investment trust by listed assets, also issued its first convertible sukuk in Singapore last year, said Mr Lim Hng Kiang, Minister for Trade and Industry and Deputy Chairman of the Monetary Authority of Singapore, at the opening of WIBC Asia.

“We are encouraged that more sukuk issuances are also in the pipeline. Just recently, Swiber, a major Singapore-listed company … announced its intentions to set up a sukuk programme in Singapore in the coming month,” Mr Lim said.

“These developments suggest that the growth potential for Islamic finance in Singapore has yet to be fully realised.”

The developments also reflect the rapid growth of Islamic banking assets, which are expected to increase to US$2 trillion (S$2.5 trillion) by 2015 from about US$1.6 trillion currently, said Mr Nelson.

But even against this backdrop, Singapore’s efforts to develop Islamic finance face challenges from limited domestic demand.

“Economies of scale is important for banking and, historically, Singapore doesn’t have a huge Muslim community to pull the demand,” he added.

“We need better support from governments, from investors and even sovereign wealth funds, which will ideally put their vast holdings in Syariah-compliant funds.”