(Reuters) – Islamic finance has been given the boost it needed in the Gulf by a Qatari ban on conventional banks offering sharia-compliant services. Qatar’s move last month draws a line in the sand between Islamic banks and their conventional peers, which control 83 percent of the region’s banking assets. Even before Qatar’s shock decision, the Islamic finance industry was expected to grow by between 15 to 20 percent a year, PricewaterhouseCoopers said in a report in November. If Qatar’s move to separate conventional and sharia-compliant operations is mirrored by other central banks eager to prove their commitment to the nearly $1 trillion Islamic finance industry, this will be higher. “I wouldn’t be surprised if market share in the UAE were to double from 25 percent to 50 percent in the next five years. Given this move in Qatar, I think it is even more likely,” Humayon Dar, chief executive of consultant BMBIslamic said. Islamic banks have suffered from Western banks in the region offering sharia-compliant products, eating into their market share during 2010. Now Islamic institutions will no longer have to compete with them for loans and deposits and would potentially be able to buy their Islamic portfolios at favorable terms, Goldman Sachs analyst Waleed Mohsin said in a research note. Continue reading
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