Could you provide a brief journey of how you arrived where you are today?
I studied in Amsterdam and subsequently worked for Sakura Bank (now SMBC) in Brussels and London before joining Standard & Poor’s (S&P) in 1998. I analyzed the utilities sector when I first joined before focusing on project finance. I was placed in charge of S&P’s regional project finance and transportation team in 2000 and became increasingly involved in the Middle East. In 2006, I began coordinating all of S&P’s Middle East activities and oversaw the opening of our office in the Dubai International Financial Centre in early 2008.
What does your role involve?
As the main representative of S&P in the region, my prime task is to ensure that we remain the leading rating agency in the Middle East and at the forefront of developments in Islamic finance. This requires ongoing, interactive discussions with regional issuers and investors to ensure that they are educated about our processes, products and underlying commitment to quality. Our role is to provide market participants with independent and objective opinions about the creditworthiness of issuers or issues.
What is your greatest achievement to date?
Setting up S&P’s regional office in Dubai was very rewarding, as it provided me with the opportunity to deal with new management challenges that I had not been exposed to in my previous role as an analyst.
Which of your products/services deliver the best results?
It is important to acknowledge that the Middle East market is still very much in a developing mode and in line with experiences in other developing markets, the focus is very much on credit ratings. In the GCC, we have issued around 110 public credit ratings and this has grown at about 25% a year on average since 2005. We have also assigned ratings for over US$21 billion of Sukuk transactions to date, and rate more Takaful firms than any other agency. The increasing sophistication of the Middle East capital markets and development of the asset management sector means that our qualitative fund management ratings and benchmark and investable Shariah and conventional indices will play a more prominent role in our growth going forward. Demand for education and information is also creating opportunities for our data, information and securities evaluation services.
What are the strengths of your business?
Independence, integrity, high quality services, global consistency and all the people delivering this. As one of the world’s leading sources of credit ratings, indices, investment research, risk evaluation and data services, S&P provides financial decision makers with the intelligence they need to feel confident about their decisions.
What are the factors contributing to the success of your company?
S&P has built strong expertise in assessing the creditworthiness of Shariah compliant issuers and debt issues over the past decade. We apply the same criteria and ratings methodology to Islamic and non-Islamic financial institutions. The surge in demand for Islamic finance products and our long history of understanding and rating these products — including our ratings for profit-sharing investment accounts — clearly contribute to our success. Many investors know S&P for its role as an independent provider of credit ratings and as the home of the S&P 500 benchmark index. But we also provide a wide array of financial data and information as we are the world’s largest source of independent equity research and a leader in mutual fund information and analysis. S&P’s Fixed Income Risk Management Services division provides data, analytics and research in the fixed income asset class.
What are the obstacles faced in running your business today?
The ongoing transformation of the financial markets requires us to continue to bring more innovative thinking, greater resources and improved analytics to the ratings process. Credit ratings reflect our opinion of an issuer’s creditworthiness; they are not investment advice and are not designed to — and don’t address — issues such as pricing, liquidity or volatility.
Where do you see the Islamic finance industry in, say, the next five years?
Underpinned by strong liquidity and the increasing diversification of Shariah compliant products, S&P expects Islamic finance to continue growing at the same impressive pace, attracting additional interest from Muslim and non-Muslim countries. In the Gulf and Muslim Asia, where Islamic finance has been far more entrenched, we estimate that more than 30% of banking customers would now spontaneously choose an Islamic financial product over a conventional one with a similar risk-return profile. The growth of participants in Islamic finance, as we are currently witnessing in the Takaful industry, will also increase competition that in turn should increase innovation.
Name one thing you would like to see change in the world of Islamic finance?
Over the past decade, Islamic finance has gained in complexity with the emergence of sophisticated Shariah compliant products on offer, including assets in the real estate, industrial, infrastructure and tourism sectors in mature, efficient, transparent and diversified Western economies as well as in emerging markets. Recent market volatility has highlighted the need for better transparency and objective benchmarks to gauge risk, and I believe Islamic finance, like conventional finance, would benefit from increased transparency.