By Edward Russell

Malaysia’s Hong Leong Bank will launch the first full service Islamic finance banking window in Hong Kong.

 Hong Leong Bank has been granted approval by the Hong Kong Monetary Authority to open the city’s first Islamic finance banking window. This will allow Hong Leong to expand its existing portfolio of Islamic finance products into mainland China, West and North Asian markets from its current base in Malaysia.

Malaysia is trying to establish itself as the Islamic finance hub of the region. Islamic finance is based on Islamic law, or Shar’iah, which prohibits the collection of interest and includes aspects of ethical banking, for example avoiding investments in pork, prostitution or gambling. Profit and loss sharing is also an integral part of Islamic finance. Typically, providers of Islamic finance are keen to point out that they don't just target Islamic investors -- but rather a broad spectrum of potential clients, be they people looking for ethical options or those simply seeking good returns by well-managed banks.

Hong Leong’s approval to offer Islamic finance banking window is in line with Hong Kong’s plans announced last winter to attract Islamic banking and capital to the city. Indeed, Hong Kong has also said it wants to become Asia's hub for Islamic banking. The city sees the addition of Islamic finance as key to maintaining its position as an international finance centre.

Initially in Hong Kong, Hong Leong will only offer its Commodity Murabahah security, a product based on the price mark-up and used in liquidity management. Eventually, Hong Leong plans to offer other Islamic banking products, including ijara (leasing), mudaraba (profit sharing) and musyarakah (partnership).

 Source: http://www.asianinvestor.net