Bank Of Tokyo-Mitsubishi UFJ (Malaysia) To Promote Islamic Finance

Bernama: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 here Friday, the bank said the move follows the introduction of the Malaysian International Islamic Financial Centre (MIFC), 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 (ICBU) within Bank of Tokyo-Mitsubishi UFJ Malaysia.

It then established the Islamic Banking Department in April 2008, followed by the historic appointment of Shariah 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 to US$1,000 billion of funds within the Islamic finance system, growing at around 10 to 15 percent 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.

In addition, ambitious plans have been announced to make London the western capital of Islamic finance as the government announced tax relief for sukuk in March 2007.

Other financial centres such as Hong Kong has also joined the bandwagon.

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.

In meeting the needs of the growing Islamic financial services, BTMU has taken the leadership role in attracting deals to Malaysia and actively participating in the Islamic financing transactions originating from the Middle East and other regions.

Towards this, it established the ICBU which can play an active role both as a booking office and as an arranger for Islamic financing activities.

The bank's ICBU will facilitate the potential participation of the bank in large deals originating from various parts of the world.

With the increasing number of players from Malaysia, the MIFC (Malaysia International Islamic Financial Centre) will attract more banks to set up their respective hub in Malaysia not only to enjoy the incentives provided but also to participate in the ever-increasing size of the Islamic financing opportunities.

The bank's financial products, vetted for its documentation and implementation by the Shariah committee, will be at par with all global Islamic financing products.

Among the reasons for the BTMU's move to embark on Islamic financing business include the huge opportunities in the sector, especially funds originating from the Middle East, and the vast opportunities emerging in Malaysia's new regional growth corridors.