Islamic ‘first’ from Stanchart

Standard Chartered Bank has announced the launch of the industry’s first Islamic Euro Nostro[1]Account. Islamic banks across the world will now be able to earn Sharia-compliant profits on their account balances at Standard Chartered Bank’s branch in Frankfurt.

Bank Alfalah, one of the leading banks in Pakistan, was the first to sign an agreement with Standard Chartered for an Islamic Euro Nostro Account at the recently concluded “Bankers Conference 2012” which was held in Istanbul.

The Standard Chartered Saadiq EUR clearing account utilises a Sharia-compliant account sweep facility. At the end of each business day, the available EUR balance in a client’s Saadiq clearing account is invested using the Islamic finance mode of Murabaha. The profit generated from such transactions is credited on a monthly basis.

“Following the success of our Saadiq[2] US Dollar Nostro Account last year, we have identified a need to extend this innovation to our Euro clients,” said Afaq Khan, Standard Chartered Saadiq’s chief executive for the Bank’s global Islamic banking business. “We would like to congratulate Bank Alfalah for being the first financial institution to benefit from this unique Sharia-compliant structure.”

Ali Sultan, group head, treasury and financial institutions division, Bank Alfalah said, “We congratulate Standard Chartered for leading the way in Islamic banking and introducing this innovative product. Standard Chartered Bank has always been one of our valued correspondent banks and we are proud to be the first to sign up for this product.”

The Saadiq EUR Nostro Accounts will be available to clients globally, across the SCB network. The facility also provides a range of commercial and treasury payment capabilities, including a full suite of beneficiary deduction and principal protected products for incoming and outgoing payments as well as the ability to customise transaction fees on multiple levels – by customer, beneficiary, country, branch or code word.

Anurag Bajaj, global head of clearing and liquidity management, Standard Chartered Bank, commented, “The launch of the Islamic Euro Nostro Accounts is a direct consequence of our client-led approach. We have been able to deliver another industry first through frequent client interaction and feedback.”

To ensure Standard Chartered’s products comply with the principles of sharia, the bank is advised by an independent committee comprising three of the world’s most renowned Sharia scholars – Dr Abdul Sattar Abu Ghuddah, Sheikh Nizam Yaquby and Dr Mohamed Ali Elgari.

[1] A Nostro account is established in a foreign country and usually in the currency of that country for the purpose of carrying out transactions

[2] Standard Chartered Saadiq is the Bank’s global Islamic banking arm