Japanese bank to promote Islamic finance

BANK of Tokyo-Mitsubishi UFJ (Malaysia) Bhd (BTMU) has embarked on an initiative to take a leadership role in promoting Islamic financing to its clientele across the globe.

It aims to not only attract such transactions to Malaysia but also to pro-actively participate in the transactions originating from the Middle East and other region.

In a statement in Kuala Lumpur on Friday, the bank said the move follows the introduction of the Malaysian International Islamic Financial Centre and in support of Bank Negara Malaysia's initiative to enhance Malaysia's position as a centre of origination, distribution and trading of Islamic financial instruments.

"In line with our aim to be the first Japanese bank to aggressively promote Islamic finance, our initiative is supported fully by the Bank of Tokyo-Mitsubishi UFJ Ltd and the parent bank and head office in Tokyo has also established a high-level standing committee to promote Islamic banking and further support all Islamic financing activities of the group," the bank said.

 
In February 2008, the bank received BNM's approval to set up the International Currency Business Unit within Bank of Tokyo-Mitsubishi UFJ Malaysia.

It then established the Islamic Banking Department in April 2008, followed by the historic appointment of Syariah Committee by a Japanese bank.

BTMU said with the continued growth of importance and acceptance of Islamic finance, it wanted to encourage more of this business to originate from Malaysia.

"It is said that there is approximately US$700 billion to US$1,000 billion (RM2,436 billion to RM3,480 billion) of funds within the Islamic finance system, growing at around 10 to 15 per cent annually.

In the Gulf and Asia, Standard & Poor estimates that 20 per cent of banking customers would now spontaneously choose an Islamic financial product over a conventional one with a similar risk-return profile," BTMU said.

The Islamic financial market's growth in importance has also attracted some of the largest capital markets in the world such as London and Singapore to develop financial services and products to capture this market.

The bank said Malaysia has progressed significantly in the development of Islamic financial services, especially in terms of the size of investments and an increase in the number of Islamic financial institutions.