Additional Tier 1 Capital Instruments under Basel III: A Sharīʿah Viewpoint

Beebee Salma Sairally, Madaa Munjid Mustafa, Marjan Muhammad
  • Arab Law Quarterly, February 2016, Brill
  • DOI: 10.1163/15730255-12341314

AT1 capital instruments under Basel III: A Shariah Viewpoint

What is it about?

This research aims to compare the regulatory capital instruments for Islamic banking institutions (IBIs) ─ in particular the qualifying AT1 capital instruments ─ as defined by Basel III, Bank Negara Malaysia (BNM) and IFSB-15 (issued by the Islamic Financial Services Board). Principally, the research examines the Shariah issues, especially related to subordination, arising in equity-based contracts when used for structuring AT1 capital instruments.

Why is it important?

It is important to determine the most appropriate Shariah-compliant contract that would be suitable for structuring AT1 capital instruments for Islamic banking institutions. The study is an important reference point to Islamic banks when structuring AT1 capital instruments.

Perspectives

Dr Salma Beebee Sairally
International Shariah Research Academy for Islamic Finance (ISRA)

The present study is considered an original attempt in examining an under-researched topic relating to Basel III and its Shariah perspective. I hope its content proves useful to stakeholders of the Islamic banking industry when structuring AT1 capital instruments.

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http://dx.doi.org/10.1163/15730255-12341314

The following have contributed to this page: Dr Salma Beebee Sairally and madaa mustafa