JPMorgan - big ambitions for Islamic finance When JPMorgan (JPM) hired veteran Islamic banker Dr Hussein Hassan away from UBS in January 2013 to lead its global Islamic finance practice, the industry took it as a clear sign of a move to grab a larger market share and consolidate JPMs position in the Shariah compliant banking universe after a period of apparent disinterest in the market following the financial crisis. And true enough, within less than two years the bank has now managed to reach the rank of second-biggest Sukuk arranger in the GCC for 2014 (after HSBC), underwriting US$1.3 billion-worth of transactions according to Bloomberg; while mid-December data from Dialogic places JPM at #10 in the list of top Sukuk managers. An achievement indeed for Dr Hassan, whose ambitions in this space looks to be large. “This is part of our strategy and it will remain so for 2015,” he confirmed to IFN yesterday. The bank has gone through some tough times recently. Suffering a US$400 million loss for the three-month period ending September 2013, and with an estimated US$22 billion shortfall to make up when the new capital requirements come into play, its no wonder the market has been jittery. JPM has however turned things around this year: with its latest consolidated financial results showing significant improvement in the third quarter of 2014 with a net income of US$5.6 billion. Already commanding the largest banking share in the US and a formidable presence in international jurisdictions, the bank is now making key Islamic markets a major priority. “We have a global focus with a strategy that is broad and in line with JPMs strengths and platform, explained Dr Hassan to IFN. We do see from a geographic perspective the Middle East, Turkey and Malaysia as areas of specific interest.” Within these areas of focus, Saudi Arabia of course remains JPM’s strongest base: a market in which the bank has been active for decades and the obvious launching pad for its Islamic ambitions. In the past year, the bank has been involved in multiple big ticket Shariah compliant transactions (all from the top 25 global Sukuk issuers, according to Dealogic) including Saudi Electricity Cos US$2.5 billion Sukuk deal in April, which catapulted the bank to top of the Sukuk league. Other deals include National Commercial Bank’s SAR5 billion (US$1.33 billion) Sukuk and Saudi Telecom’s SAR2 billion (US$532.84 million) Islamic offering. It comes as no surprise that JPM is able to win mandates for high-profile Sukuk deals, considering its international repertoire, and the bank is rapidly gaining traction – to the point where it can even now challenge longstanding names such as Deutsche and HSBC for deals in the Gulf. However, will JPM be able to gain the same momentum in mature markets such Malaysia, where it must compete with local Islamic finance heavyweights such as CIMB Islamic and Maybank (two of the top three Sukuk managers for 2014 according to Dealogic)? With the formation of a mega Islamic bank comprising CIMB, RHB Capital and Malaysia Building Society looking very likely next year, coupled with the country’s strong support for domestic players, the bank will face tough competition if it attempts to crack the worlds biggest Sukuk market. With everything to play for and the challengers lining up already – 2015 looks to be an interesting year.
Posted on: Thu, 18 Dec 2014 08:52:20 +0000
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