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MALAYSIA: Bank Muamalat
Malaysia yesterday signed an MoU with UK’s Bank of London and The Middle
East (BLME) through which the two Islamic financial institutions will
collaborate in establishing a joint Islamic private banking presence in
Malaysia. The agreement, which marks the first MoU to be signed between a
UK and Malaysian bank, reflects the growing economic power of
Shariah-seeking high net worth individuals (HNWI) which has captured the
attention of Islamic banks worldwide.
“The MoU is a
start for Bank Muamalat and BLME to work towards the research and
development of a viable business model to offer private banking services
in Malaysia, focusing on offering products and solutions to domestic and
cross-border clients in Malaysia,” said Mohd Redza Shah Abdul Wahid, CEO
of Bank Muamalat Malaysia. “If everything is positive, then we will
launch [the service] next year.” The Malaysian bank has confirmed that it
has begun due diligence on product concepts and expects to ready a
framework within the next six months.
The potential
entry of BLME and Bank Muamalat Malaysia adds to the increasingly vibrant
Islamic private banking scene of Malaysia, of which CIMB Islamic and
Maybank Islamic are household names; and while the global Islamic private
wealth management sector is relatively small with limited product
sophistication, the industry is nonetheless gaining foothold in various
Islamic financial markets due to the rising affluence of Muslims.
According to
data lifted from the Knight Frank Wealth Report 2013, the number of HNWI
in traditionally Muslim regions has increased significantly with the
Middle East charting an 8.1% year-on-year growth in HNWI population from
2011-12 while total wealth distribution for this demographic jumping 8.6%
over the same period to US$1.8 trillion, a figure placed by some experts
as the value of the entire Islamic financial industry in 2013. Asia
Pacific registered phenomenal HNWI population growth at 9.4%, commanding
the highest accretion in HNWI investable wealth at US$12 trillion (a
12.2% increase over 2011-12); Malaysia alone projects the number of its
high net worth investors to double within the next five years to 60,000,
according to industry reports. Africa, which in recent years has
aggressively moved forward with its Islamic finance ambitions, perhaps
holds the most potential for the Shariah compliant private wealth
management sector as the region’s ultra HNWI population is predicted to
increase by 16.1% in 2018, growing in tandem with the continent’s robust
economic growth which the World Bank forecasted to be at 5.2% this year,
up from 4.7% last year.
“Clearly,
there’s a very large opportunity in asset management that will feed the
wealth management of the private banking area,” said Humphrey Percy, CEO
of BLME. And although it is still early days for Islamic private banking
and wealth management which is faced with product development challenges,
the sector is on the right track towards capturing a larger market share
as market players strive to attract growing Muslim wealth.
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