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Islamic Bank Case Study

Islamic Bank Case Study

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Published by: Dewi Meirina Sianturi on Oct 08, 2010
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11/07/2010

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www.frsglobal.com
User case study: conventional bankconverting to Islamic bank
local knowledge global solutionsThis user case study describes how one of the leading banks in Dubai uses RiskPro for its ALM andMarket risk management
One of the leading banks in Dubai, UAE opted forRiskPro in the beginning of 2006 for its Asset LiabilityManagement and Market Risk Management.At the time of this decision, the bank was operatingas a fully conventional bank, having most of theconventional products on its Balance Sheet.By the end of 2006 the original riskproimplementation was nearing completion for thisconventional bank, when they decided to puteverything on hold and convert to a
fully IslamicBanking entity
reacting and leading to their newmarket opportunities and conditions.An essential component of the new operationalstructure required that they were now able to managerisk as represented by this new approach within theBank.When the implementation re-started in early 2007,the team handling the riskpro implementation facedthe unique challenge of implementing the solution forIslamic Banking based on Shariah principles. Thisbrought the capability and flexibility of riskpro underscrutiny.Many clients in varied jurisdictions have successfullyemployed RiskPro with all the flexibility it provides interms of mapping the contracts and cash flow forconventional banking. However, this time thechallenge was altogether different.Many of the products in Islamic Banking are acombination of some of the base contract types,including, Mushãrakah, Mudãrabah, Murãbaha,Salam, Istisnã, and Ijãrah but with no interestelement present for Islamic financial contracts.In addition, the uncertain element of profit broughtadditional challenges.However, with input from a strong research anddevelopment team, consultants, and businessexperts, together with the client bank, the challengewas accepted by the RiskPro team and within sixmonths, the client was able to implement most of theproducts used within the newly converted IslamicBanking unit.The RiskPro system from FRSGlobal demonstrated:Flexibility in the capability to manage eventhe newly structured Islamic products andFacilitated the bank’s repositioning in themarket with a proven risk managementsystem adapted to its business needs.
The extensive capability of RiskPro was onceagain proven this time within the context of RiskManagement for Islamic Banks.
For more information, please visit thewww.frsglobal.com website and/or m
ore details are available on requestinfo@frsglobal.com
 
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