HSBC signs MoU with IDB affiliate

DUBAI: HSBC Holdings signed a memorandum of understanding with an affiliate of the Islamic Development Bank (IDB) to facilitate Shariah-compliant trade financing activities on behalf of the affiliate’s customers, the lender said in a statement.

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The affiliate, International Islamic Trade Financing Corp., (ITFC)is expected to disburse over $2 billion of trade financing to companies in Asia, the Commonwealth of Independent States, Middle East and North Africa (MENA) and Africa, said Waleed Al-Wohaib, chief executive of the ITFC.

It seeks to develop and increase trade among the 57-member countries of the Organization of the Islamic Conference (OIC). The statement did not provide any financial details regarding the partnership.HSBC will provide the letters of credit on behalf of ITFC customers who import or export goods as well as offer syndication and co-financing to help boost Islamic trade finance.

“Islamic trade financing is set to become the next pillar of growth for the industry,” said Razi Fakih, deputy chief executive of HSBC Amanah, the bank’s Islamic arm.

“HSBC believes that trade and capital flows between the emerging countries of the world are likely to increase significantly over the next few decades.”

As part of the deal, ITFC is also expected to invest its liquidity in HSBC’s Shariah-compliant overnight commodity Murabaha investment product.

Total trade finance among the OIC members, which includes Saudi Arabia, Malaysia and Turkey, is expected to reach $4 trillion by 2012, according to AAOIFI and could spur growth in the nearly $1 trillion Islamic finance industry.

Source: http://arabnews.com/economy/article485602.ece

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