Bank of London and the Middle East Deploys Reval for Sharia’a Compliant Hedge Accounting

 

London, 7 June 2010 – Reval, a leading global provider of risk management and hedge accounting solutions, announced today that Bank of London and The Middle East (BLME), one of the first Sharia’a-compliant banks in the world to qualify for hedge accounting under International Accounting Standard (IAS) 39, has deployed Reval® Software-as-a-Service (SaaS) for a more robust and flexible solution for its hedge accounting requirements.

The bank has deployed Reval in place of its original in-house application primarily for fair-value hedging of its large portfolio of bond-like instruments, called Sukuk, and for cash flow hedging of its portfolio of deposits.

“As a leading Islamic wholesale Bank with a sizeable leasing business, BLME prudently hedges its exposures to market interest rate volatility using products and structures that enable us to comply with the core tenets of Sharia’a,” said Nigel Denison, Executive Director and Head of Markets at BLME. “For example, we use profit rate swaps, which use reciprocal murabaha transactions to create an instrument with the risk management characteristics of a conventional interest rate swap.”

 “Reval is an industrial strength solution supported by an excellent team of experts,” says BLME Treasurer Mark Lynch. “Part of the solution that is of significant benefit to BLME is the advanced regression methodologies that demonstrate the effectiveness of our Sharia’a-compliant hedges and qualify more hedges under IAS 39 accounting rules.”

The Islamic finance market has experienced rapid growth with the introduction of sophisticated structures that enable companies to finance themselves in compliance with Sharia’a principles. This growth in turn has led to an increasing demand in complementary products and the creation of an OTC market in Sharia’a-compliant instruments.

“Reval is extremely pleased to be able to partner with a pioneering bank such as BLME to implement an efficient hedging framework that complies with both the core tenets of Sharia’a and international accounting standards,” said Nigel Sirett, Managing Director EMEA, Reval.

About BLME

Bank of London and The Middle East plc (“BLME”) is an independent UK wholesale Sharia’a compliant bank based in London. BLME received FSA authorisation in July 2007 and is the largest of its peers in Europe. It is led by a management team that brings together a combination of experienced international bankers and leading experts in Islamic finance.

The five core areas that set the foundations for BLME’s competitive offering are Private Banking, Asset Management, Corporate Advisory, Corporate Banking and Markets Division.

BLME is dedicated to offering innovative Islamic investment and financing products to businesses and high net-worth individuals in the European, US, SE Asian and MENA regions. To ensure that BLME’s services and operations are wholly Sharia’a compliant, the Bank has a dedicated Sharia’a Supervisory Board (“SSB”). The SSB’s role is to review contracts and agreements relating to all transactions ensuring that they are consistent with the principles of Islamic jurisprudence.

For more information about BLME, please visit www.blme.com.

About Reval

Reval is a global SaaS provider for Treasury and Risk Management, helping enterprises better manage cash, liquidity and financial risk, and account for and report on complex financial instruments and hedging activities.

For more information, visit www.reval.com or email info@reval.com.

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