While Islamic banks have so far appeared largely immune to the global credit crisis, a Reuters Wealth Management Summit in Singapore has been told that some could yet fail as a result of frozen credit markets and slumping property prices.
Leading sharia lender and chief executive of Malaysia’s CIMB Islamic Bank, Badlishyah Abdul Ghani, told the summit that sharia lenders in the Gulf would be harder hit by the credit crisis than Asian banks due to their greater direct exposure to the property market.
He said that the sovereign-backed Islamic banks were very safe and would be supported by the sovereign if they had liquidity problems, but privately-owned banks would face difficulty.
“Whether or not they are going to fail is anybody’s guess, but the expectation is that some will (fail),” Abdul Ghani said.
He said that Asian Islamic lenders were expected to fare better because they had less direct exposure to property markets and funds that invested in real estate.
