INTERVIEW: Islamic finance comes to Kazakhstan: BNE

Clare Nuttall in Almaty
May 6, 2009

Fattah Finance was launched in March, immediately after Kazakhstan's law on Islamic finance came into force. By moving quickly, the firm hopes to carve out a large share of the market for Sharia-compliant financial services.

A subsidiary of Almaty-based financial services provider Almaty Financial Centre, Fattah currently offers only brokerage services, but plans to expand its range of activities later this year as it grows its team. It offers its clients shares that are listed both in Kazakhstan and in other markets. "It doesn't matter where the shares are listed, only whether they are Sharia compliant or not," says Ussenzhan Turdiev, head of Fattah's information and analysis department.

The firm works in accordance with internationally accepted standards to determine whether a product is suitable to invest in. Key criteria include that the company isn't active in areas such as alcohol, cigarette production or gambling, that the debt-equity ratio does not exceed 33%, and that accounts receivable are no more than 45% of the company's capital.

According to Turdiev, Fattah can't yet provide any bonds from the Kazakh market where only conventional bonds are available, but it will offer Islamic bonds - sukuks - from other countries. The company hopes to see revisions to the law on Islamic that would make it easier to issue sukuks in Kazakhstan. Currently, only Islamic banks and national holdings, or companies 100% owned by national holdings, can issue sukuks. "It would be a great opportunity for us if the situation concerning sukuk issues was changed in Kazakhstan. If we issued some sukuks here, we could easily sell them," says Turdiev. "For example, Indonesia, which has a lower sovereign rating than Kazakhstan, carried out a $650m sukuk offering, and demand was seven times higher than supply."

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