Westpac trade deal courts Islamic investors
Westpac is poised to bolster its exposure to the fast-growing Islamic finance market by offering a commodity-trading facility aimed at overseas investors that operates under the principles of Islamic law.
Islamic finance prohibits the earning of interest. Instead, there is a focus on profit-sharing based on buying and selling tangible assets such as property.
The move by Westpac coincides with an Australian federal government attempt to promote involvement in Islamic financing.
The Trade Minister, Simon Crean, launched a study outlining opportunities for the financial services sector to tap into the sharia-compliant investment and banking markets.
It follows the recommendation last month by a government-backed finance taskforce to overhaul tax rules to ensure Islamic financing products receive equal treatment.
The Australian Financial Centre Forum, which released a broader report into the nation's finance sector, highlighted Islamic financing as a potential funding source for the nation's banks.
The market for Islamic financial services has grown rapidly in recent years, and is estimated to be close to $1 trillion.
Sydney Morning Herald