TOKYO – Japan’s 3 megabanks are trying to conceive how they will offer financial services under Islamic law overseas now that the Financial Services Agency will allow them to start their such operations at their foreign branches starting as early as April, 2015.
Mitsubishi UFJ Financial Group are going to offer deposit and lending services that are allowable under Islamic law, at its Dubai branch in the United Arab Emirates as early as fiscal year 2015, depending on approval from the local authorities.
Sumitomo Mitsui Banking Corp. may provide similar services at its Dubai and Singapore branches. Mizuho Financial Group will also make its London branch the operational centre for Islamic finance in the Middle East.
The government’s regulatory reforms made in June call for easing rules on Islamic finance at foreign branches of Japanese banks. Such financial services have been permitted only at local branches of Japanese banks. The three megabanks currently offer Islamic finance through their local subsidiaries based in Malaysia or Europe. But lately, they are accelerating efforts to expand this business.
Assets under Islamic finance in six countries including Saudi Arabia, UAE and Malaysia are worth 6.6 trillion yen (S$74.38 billion). Some estimates show that figure will be reaching 162 trillion by 2018.