Reuters Summit-Rich Asians still cool on Islamic finance

SINGAPORE, Oct 13 (Thomson IM) - Islamic finance hasn't yet fired up the imagination of wealthy Asians who want to see a longer track record from the industry before jumping in, a private banker said on Monday.

Sharia banking has boomed in recent years but there are concerns about whether the $1 trillion sector will go out of fashion as energy prices come down to earth. Strong growth in the business has been largely driven by Middle East oil earnings as crude prices shot to a record high earlier this year.

Modern Islamic finance has its roots in the 1970s oil surge and its fortunes have revived in the last few years as suspicion from the West after the Sept. 11 2001 attacks prompt cash-rich Gulf investors to seek alternative investments.

But wealthy Asians want to see a track record of healthy Islamic industry returns and bankers need to persuade them that the sector is here for the long haul, said Joseph Poon, head of the Asian private wealth business for Australian investment bank Macquarie.

'Islamic finance has not come to the forefront of their minds,' Poon told the Reuters Wealth Management Summit in Singapore.

'It's a special facet of investment which hasn't tickled the client's fancy. Something new such as structured products and Islamic finance hasn't really caught their minds as something that will survive the test of time.'

Asia's booming economies are producing many millionaires.

According to Capgemini and Merrill Lynch's 2008 Asia Pacific Wealth Report, the number of high-net-worth-individuals in the region increased by 8.7 percent to 2.8 million last year, surpassing the global growth rate of 6 percent.

Asia-Pacific is home to 28 percent of the world's high-net-worth-individuals, defined as people with investible assets of more than $1 million.

Marcel Kreis, head of Asia-Pacific private banking at Credit Suisse also said Islamic finance had not drawn a lot of interest from the bank's Asian clients.

But Islamic lenders should survive the current downturn better than conventional banks, as oil earnings provide a buffer, he said.

'With developments in energy prices, the Middle East has seen an absolute bonanza,' Kreis said at the same summit.

(Editing by Kim Coghill)