Islamic Bank of Asia (IB Asia), in which DBS has a just over 50 per cent stake, has transferred 10 of its 65 staff to DBS and redeployed others to new roles within the Islamic bank, a spokeswoman said.
“IB Asia will continue to focus on wholesale banking but prioritise its business focus on fee-based investment banking business activities and in private equity,” she added in response to queries from Reuters.
“We remain committed to growing our Islamic banking franchise in this region.”
IBA, Singapore’s only wholly-owned full licensed Islamic bank, suffered a loss of US$77.1 million in 2009 after making specific allowances on debt owned by customers in the Gulf region.
The bank had US$725 million in assets as at end-2009, including US$453 million in payments due from non-bank customers.
A source had earlier said the Islamic unit of DBS planned to get out of the lending business entirely. The bank has also not replaced departing staff, including former CEO Vince Cook who left in December.
Islamic finance has been slow to take off in Singapore despite the central bank’s support and the city state’s reputation as an Asian banking hub.
Sukuk sales have been sporadic and there has been little interest from retail investors and syariah-compliant funds.
A thriving Islamic finance industry would complement Singapore’s position as a regional banking centre and enable it to tap cash-rich Gulf investors who can only invest in syariah-compliant assets.
But practitioners see little growth in Singapore’s Islamic finance industry in the coming years.
“Islamic finance will take off in Singapore but it’s going to be quite slow,” said Haszeri Hussin, Islamic treasury head at the Malaysian unit of Singapore’s No. 2 lender Oversea-Chinese Banking Corp.
“Singapore must encourage more issuance of sukuk. The MAS (Monetary Authority of Singapore) must be able to issue more, then they can create a lot of liabilities to match assets.
“Retail doesn’t have the critical mass to make it a big presence in Singapore.”
To encourage the growth of Islamic finance, Singapore has removed double stamp duties and given similar tax treatment for sukuk investors.
source : btimes.my