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Friday, 10 July 2009

AL-AMANAH Islamic Investment Bank of the Philippines to Acquire the Best Practices in Islamic Finance

AL-AMANAH Islamic Investment Bank of the Philippines will be sending some of its employees for training in Malaysia in its bid to acquire the best practices in Islamic finance and to turn around its finances.

"We are sending a group of 15 employees to Malaysia next week to study Islamic banking because we want the bank to give special focus on this kind of banking system," Armando O. Samia, newly elected interim chairman and chief executive officer of Al-Amanah, said in a statement.

He also said the bank is currently exploring possible tie-ups with other Islamic banks that would allow it to learn the best practices in Islamic finance.

Malaysia is the world’s largest Islamic finance market. It is the largest issuer of Islamic bonds called sukuk and has built up expertise in Islamic fund management and insurance.

According to auditing firm PriceWaterhouseCoopers, Malaysia’s Islamic financial system is regarded as one of the most progressive in the world.

Islamic finance, a $1-trillion global industry, is considered as one of the fastest-growing financial sectors — by as much as 20% annually — due to wealth from oil.

Mr. Samia was formally elected as the new head of the Islamic bank at a special stockholders’ meeting on Wednesday.

Mr. Samia, who previously headed the marketing sector of the Development Bank of the Philippines (DBP), replaced Jaime F. Panganiban who resigned to attend to private business.

Al-Amanah, the first and only Islamic bank in the country, whose mandate is to serve the banking needs of the Muslim community in the country, was formed by virtue of Presidential Decree No. 264 issued by then President Ferdinand E. Marcos.

Unlike a universal or commercial bank, an Islamic bank adheres to the laws of the Koran. As such, it does not charge interest but instead earns by acting like an equity investor to its borrowers by forging partnerships, lease-to-own deals and similar arrangements.

Al-Amanah is currently controlled by state-run DBP, which purchased the stakes of the national government, state pension funds Government Service Insurance System and Social Security System, and those of other individual investors last year.

Al-Amanah has been operating as a commercial bank since 2006 to make it attractive to investors after it incurred hundreds of millions in losses starting in 1990.

However, it will revert to Islamic banking on 2013, the end of a five-year development plan created by DBP.

(by Gerard S. dela Peña /BusinessWorld Online)

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