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VV Finance Focus Dr. Heinz R. Kubli Ian Felice
Principal Fundabilis GmbH Münstergasse 12 8001 Zürich
Partner- Hassans & CEO- Line Management Services Limited 57/63 Line Wall Road, Gibraltar
Tel - +(350) 200 79000 Fax - +(350) 200 71966 Email - ian.felice@hassans.gi Website - www.gibraltarlaw.com
Islamic Finance in Europe
Heinz R. Kubli (1969), Dr. oec. publ., CFA, graduated in Economics and Business Administrations at the University of Zurich in 1995.
Heinz is a financial engineer and the founder of fundabilis (www.fundabilis.ch), a Zurich based independent asset manager and advisor to institutional clients in structured products/structured finance, alternative investments, US life settlements and Islamic Finance.
He is also a lecturer in Finance at the University of Applied Science in Zurich in the field of Behavioural Finance, Alternative Assets, Structured Finance and Structured Derivative Products. Further, he is a co-founder of the European Islamic Advisors’ Association (www.eifaa.org) and of the Swiss Derivative Institute® (www.s-d-i.ch) and a regular lecturer at their courses, teaching banking professionals on derivatives.
In his entire carrier, he has held positions with institutions such as the Swiss Bank Corporation, UBS and HypoVereinsbank Group; dedicated to derivatives, risk management products, alternative investments schemes, quantitative analyses and financial engineering.
Q
What are the main areas of Islamic Finance that you have
experience in?
Over the past years, we have had requests from clients on the investment side for setting up Investment Funds for Mudarabahs and Sukuks, as well as products mimicking kind of a Capital Guaranteed Product on an Islamic Equity Index. On the financing side fundabilis and other members of the EIFAA have been working on offerings for Sukuks.
Currently, we are looking into the opportunity of financing renewable energy projects as Musharakas, a kind of joint venture between the financiers and the energy producer, who wants to install new capacities. One version of the Musharaka allows the partner who is carrying out the business to pay out the other partner with profits made. In such structures, investors, who are chasing yields in today’s low interest environment, have the opportunity to get better returns and still could get their money back as if they’d invested in a bond type of structure.
Q
What are the main principles of Islamic Finance?
The most important principles in Islamic Finance are:
No Ribaa – the ban of interest: it is the most important and best-known rule of Islamic financial services. No interest shall be charged when money is borrowed to someone.
Ghorm – the distribution of profit and risk: it asks for taking on business risks as a lender when loans are granted.
Gharar – the prohibition of uncertainty: A business that is based on the occurrence of unforeseen events in the future is not allowed. Mandatory contractual terms in any trade are the purchase price, the quality of goods or services and their delivery. Naked short sales are banned!
Haram - forbidden activities: it is prohibited to transact businesses which are related to
pork, tobacco, alcohol, gambling, cinemas, nightclubs, music, adult entertainment, production of weapons, abortion and human cloning, hotels (except Islamic concepts), and non-compliant financial services.
Zakat – obligatory charity: it is an obligatory act and ordered by Allah to be performed by every adult and able bodied Muslim. It is one of the five pillars of Islam. Zakat is a part of the wealth and property that Muslims must pay annually, to help the poor of their community. It therefore is an instrument to redistribute wealth more evenly within the community. One of the main purposes of Zakat is to keep those who are wealthy clean, monetarily, from sin.
Q
What do you believe the reasons are for the recent growth in
Islamic Finance?
I see three major points for the recent growth of Islamic Finance.
First, the instruments at hand are often more basic than the ones in the conventional finance space. By nature, basic transactions are easier to understand by the parties and risks involved are understood much better.
Second, most of the transactions are asset based. In today’s environment, where everyone is scared about the collapse of the financial system, investors prefer transactions where physical collateral is in place. This is simply because physical assets can always be traded for anything else; other physical assets, services or a new currency.
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