(Reuters) - Standard Chartered (STAN.L) has
launched Islamic banking services in Kenya, the first foray of its
"Saadiq" brand into Africa, and it will use Kenya as a test bed for
expanding the brand across the continent, a bank executive told Reuters.
The
move comes after Kenya proposed a separate regulatory framework for Islamic
finance, part of a broader strategy designed to boost capital markets in east
Africa's biggest economy.
"Our
experience and success in this market will certainly determine our future
strategy for the rest of Africa," said wasim Saifi, the bank's global head
of Islamic consumer banking.
"I
would expect the next two to three years to be focused on building the Kenya business before
we evaluate other markets in east and West Africa."
Standard
Chartered will offer its full range of Shariah-compliant products in a market
currently served by two full-fledged Islamic banks and
the Islamic windows of a handful of conventional banks.
The lender,
which makes 90 percent of its profit in Asia, the Middle East and Africa, will
use its existing 28-branch network in Kenya; selected locations in Nairobi and
Mombasa will have dedicated Islamic windows, Saifi added.
Standard
Chartered will roll out products covering current and savings accounts,
mortgages and auto finance, as well as trade and term finance.
Islamic
finance, which follows religious principles such as bans on interest payments,
accounts for roughly 2 percent of total banking business in
Kenya, where Muslims make up about 15 percent of the population of 40 million.
Standard
Chartered, however, hopes to attract a broader client base.
"We are
not looking to target market share from the 1.5 to 2 percent share that Islamic
banking has today, but to target the 98 percent that currently is not with
Islamic banking."
The
development of a specific regulatory framework for the industry would provide a
platform for growth; this has been observed in countries such as Malaysia and Pakistan,
Saifi said.
"Similarly
in Kenya, as the industry develops, we will expect to see the regulatory
framework also expand and refine to enable this development."
Earlier this
month, Standard Chartered said it expected income and profits to remain "challenged"
in the first half of this year after the bank reported its first drop in annual
profits for a decade.
Kenya is
attracting interest from at least one other Islamic bank; Dubai Islamic Bank's
DISB.DU chief executive told Reuters this month that it planned to expand
operations into Kenya.
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