Deutsche Bank is partnering with CIMB Islamic Bank (CIMB Islamic) to provide Shariah custody to clients in Malaysia and add to its existing Shariah custody business in the region, according to a December 11 media release.
In addition, Deutsche Bank has new Shariah compliant custody capabilities in Singapore to complement its CustodyOne product. Singapore is seeing growing demand as customers expand their operations across Asean. Deutsche Bank's CustodyOne offering covers 30 markets globally, including 12 in Asia Pacific (Apac).
The majority of targeted clients in Malaysia are fund managers governed by the Securities Commission’s guidelines for Shariah capital markets products.
Samir Dhamankar, Deutsche Bank’s head of securities services for Indonesia & Asean, told FinanceAsia: “We have observed demand from financial institutions looking to use Shariah compliant services. Not only fund managers, but also cross-border institutional investors have been looking for end-to-end solutions for their Islamic and Shariah investments. As cross-border capital flows grow to & from the Asean region, which includes Malaysia and Indonesia, financial institutions and intermediaries are anticipating demand growth.”
Jakarta-based Dhamankar added that there is “growing financial activities and investment intermediation in the Middle East/GCC region are also adding an element of cross-border demand. As Islamic and Shariah regulations are being reviewed and developed in Malaysia, we are observing institutional demand.”
Deutsche Bank also offers Islamic custody services in Indonesia which is complaint under the prevalent regulatory framework. Dhamankar told FA that it is “committed to providing clients with solutions in this segment, and will continue to strengthen our presence in a manner that is consistent with evolving regulations and client demand.”
CIMB expansion
CIMB has also been looking to expand its Islamic finance presence abroad,
Ahmad Shahriman Mohd Shariff, chief executive officer of CIMB Islamic, said in the media release, “We are pleased to partner with Deutsche Bank to strengthen their Shariah services and deliver on our long-term growth objectives of advancing Islamic finance, in line with Bank Negara Malaysia’s Financial Sector Blueprint.”
Lawrence Loh, CIMB Group’s co-chief executive officer of group commercial and transaction banking, added: “We are pleased to collaborate with Deutsche Bank, not only to support their clients in Malaysia, but to expand our foreign custody services in over 100 markets.”
Shariah funds globally held $105 billion in assets under management as of the end of Q2 2023 and Malaysia held the largest share of this total with 27%. Southeast Asia accounts for 80% of Apac’s total Shariah banking assets and market growth is forecasted at 8% over the next two years.
Malaysia and Indonesia are the most dominant markets for Shariah banking in Apac.
