London Sukuk Summit 2015 diary

Piles of miserable cash

Sometimes sitting on a pile of cash can be pure misery.

That was a central gripe of Islamic bankers at the London Sukuk Conference, held in the Abu Dhabi-owned Jumeirah Carlton in upmarket Belgravia.

What happens when you combine a shortage of Sharia-compliant high quality liquid assets, and regulatory insistence that banks hold enough cash to keep them solvent for 30 days of continuous outflows?

Miserable bankers sitting on piles of useless cash.

Regulators demand Islamic banks hold more liquid assets. But bankers grumbled that they had done little to make markets in these assets.

A clarion call to sovereigns everywhere, from Islamic bankers: bring us your high-grade sukuk, and we will buy them gladly.

An issue or two in London

Mutterings, then, that South Africa and the UK are mulling follow-up issuances to their 2014 debuts, caused ears to prickle.

Unnamed South African treasury officials have muttered gentle promises into the ears of a reporter or two, it appears.

“I cannot speak for Her Majesty’s Government,” said Jeremy Fern, head of City Affairs at the City of London Corporation, the local government of the Square Mile, with a glimmer in his eye. “But the ten times oversubscription of London’s debut sukuk must say something and something significant.”

Islamic bankers are frustrated with the UK’s visa regime, however. The Conservative party, re-elected in May, has promised to cut net migration from outside of Europe. And that means even highly-skilled bankers from Organisation of Islamic States members are having difficulty entering the country.

If London shrugs, its rivals will come knocking.

Islamic finance’s unlikely convert

To Russia, where Islamic finance has won an unlikely convert: The Eastern Orthodox Church.

Orthodox Archpriest Vsevolod Chaplin told a conference of the many theological congruences between Sharia and Eastern Christianity, especially in ethical finance.

But Herman Gref, chief executive of Sberbank, Russia’s biggest bank, might have given the geopolitical game away.

“We will actively promote the development of such a tool as Islamic banking, as it opens up a good opportunity to work with international partners amid sanctions,” he was reported by state news agency Russia Today as saying.

Interesting systems in Kuwait

Apparently, even Sharia is not immune from Disruption, that Schumpeterian force much beloved of Silicon Valley executives.

What Uber has done for the roads of London, Kuwaiti telecommunications company Path Solutions promises to do for Islamic investment banks, with its “Sharia-compliant IT systems”.

How exactly, you may wonder, as you thumb rapidly through the Hadith in search of guidance, does one make an IT system Sharia-compliant?

“It doesn’t have the word ‘interest’ anywhere in it,” says Mohammed Kateeb, the company’s chief executive.

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