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Onward, Christian bankers

Christian finance | Onward, Christian bankers Ian Fraser

Islamic finance has been in vogue in recent years, with Sharia-compliant products being widely introduced by many of the world’s largest banks and financial institutions. HSBC even has its own Islamic finance portal, HSBC Amanah.

Yet, perhaps as a result of St Matthew's decree that "No man can serve two masters ... Ye cannot serve God and mammon" (Matthew VI, 24), funds and other financial products professing an adherence to the Christian faith and principles have been in markedly short supply.

That seemed to start to change earlier this week when Deutsche Bank plunged into the Christian market with the launch of an exchange-traded fund specifically designed to suit Christian sensibilities. The Frankfurt-based bank said that its new ETF tracks the performance of a basket of stocks and shares which have been selected to comply with the “values and principles of Christianity.”

Stock selection is handled by what Deutsche Bank describes as “an independent Christian faith commission”, with parallels to the way in which Sharia-compliant financial products are advised upon by groups of Muslim scholars. Deutsche said that companies operating in certain taboo areas - such as the arms trade or gambling - would be automatically excluded. Hartmut Graf, chief executive of Stoxx said:

“The Stoxx Europe Christian Index offers a broad coverage of European companies that act in an ethically and environmentally-conscious and socially-responsible manner and thus are in line with Christian values. By licensing the Stoxx Europe Christian Index, Deutsche offers the first ETF based on the index.”

I'm beginning to wonder if this could be the beginning of something big. The previous Friday, Accra-based Black Star Advisors launched a Christian fund of their own, the Christian Community Mutual Fund (CCMF).

The fund, sponsored by the Christian Council of Ghana, is designed to enable "Christians to attain financial empowerment and security through a diversified long-term saving vehicle". Modern Ghana said that:

"Launching the fund, Rev. Dr. Nii Amu Darko, vice president of the Ghana Baptist Convention called on Christians to learn to use money acquired under God's blessings judiciously. Rev. Darko, who is also a member of the Council of State, stressed that many Christians found it difficult to prudently spend their funds and said it was appropriate for such people to use such money to buy shares."

At the time of writing other serious Christian financial players remain relatively thin on the ground. Following a quick trawl of the internet I discovered they include Texas-based Christian Investment Services and associated organization the Christian Financial Association of America.

According to the CIS/CFAA website the organizations' goal is to

"change the financial culture of America through promoting and providing stewardship, education, biblically responsible investments, Christian insurance services, and a Christian credit union."

You can also watch CEO Bob Barber's "Daily Devotionals" on the CIS/CFAA website.

There is also the California-based Evangelical Christian Credit Union, an established if niche Christian institution that focuses on providing banking and financial services to evangelical churches, faith schools, associations, ministries, and missionaries. ECCU’s core assets stand at $1.2 billion, while its total assets under management are more than $3 billion.

In the UK, Nottingham-based Kingdom Bank, a subsidiary of the Assemblies of God Property Trust, has also been going strong for half a century and proclaims its aim as being

"To glorify the Lord Jesus Christ by providing distinctive Savings, Loans, Insurance and Investment products which advance his Kingdom, changing lives."

However these seem to be very much minority players. There is, however, one mainstream bank where Christian values are implicit rather than explicit, and ironically it is the one that is also a leading player in Islamic finance. Stephen Green, the outgoing chairman of HSBC, is also an ordained clergyman (I have no idea whether his successor Douglas Flint is devout). In an interview with The Times, Green said, “No, I don’t believe money is evil, of course I don’t … But as St Paul said, the love of money is the root of all evil."

However, being close to a church doesn't always ensure righteous behaviour from bankers. The Vatican bank, also known as the Institute for Religious Works, has been mired in a money-laundering scandal ever since police seized €23 million of its assets in September.

Also it’s worth pointing out that when a mainstream bank launches a clerical offshoot or faith-based division -- as many banks have done with Islamic finance - customers sometimes remain sceptical that the Chinese walls between the specialist unit and the rest of the bank really count for much.

This seems to be the case at Lloyds Banking Group which has quietly shelved some of its Islamic finance products in the UK, including Sharia mortgages. According to a report in the Independent, this is partially because some Muslim customers, aware of the bank's unethical behavior in other parts of its empire, wondered whether these might be a bit of a charade.

Note:

There is also a huge market for socially-responsible investment, which I neglected to mention this in the above post. While not overtly Christian, many SRI funds follow similar principles, including not investing in companies that are considered to be doing harm to society or the environment (these can include mining companies, tobacco manufacturers and defense contractors). The latest European SRI Study, conducted by thinktank Eurosif and published last month, found that SRI investments in Europe have nearly doubled from €2.7 trillion in 2007 to €5 trillion today. The report said the financial crisis has given impetus to the sector and that whereas most SRI funds have traditionally been equity funds, fixed-interest now accounts for more than half the total. At the end of 2009, bonds made up 53% of SRI funds under management, up from 39% in 2008.

Further reading on faith-based investing and socially responsible investing:




Tags: environmental and social governance , exchange-traded funds , fund management , Islamic finance , socially responsible investing , socially responsible investment
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