Islamic banks tap a rich new business

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Islamic banks tap a rich new business

In little more than a decade, Islamic banking has grown into a $200 billion a year industry. With top global banks entering the market, it is deepening its professionalism and broadening out with sophisticated and ingenious new products, including private equity, mortgages and even some securitization. Regulators are striving to impose stricter regimes. But individual Sharia courts can still be at odds over what is deemed compliant with Islamic law.

Egyptian Coptic Christian community banks like the high quality of service. In Malaysia, the good rates of return appeal to Chinese businessmen. And in Europe the socially aware may find the ethical credentials attractive. Islamic banking's appeal is indeed as broad, if not broader, than that of secular commercial banking. Atif Abdulmalik is typical of the new breed of dynamic, innovative manager that is transforming Islamic banking. Abdulmalik, chief executive of First Islamic investment Bank, jets between such cities as Houston and the bank's modern headquarters in Bahrain's capital selling the bank aggressively.

In the past four years, he has helped stretch the boundaries of Islamic investment significantly. Now Gulf nationals can invest in private equity in the US. This has been deemed acceptable under the Sharia (Islamic) code of law since it involves holding physical assets.

Abdulmalik is tweaking the tail of Investcorp, a long-established and highly successful conventional firm that specializes in finding international private-equity investment from the Gulf for deals in Europe and the US. Abdulmalik and several senior executives left Investcorp in 1997 when First Islamic was set up. Their ability to tap this new market so quickly - First Islamic has nine ventures in the US to the value of $800 million and has already exited successfully from two projects - shows the enormous versatility of the business.

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