Credit intermediation and stock markets have hugely expanded over the past half-century. Since the 1960s, credit by banks and other financial institutions to households and businesses has grown three times as fast as economic activity. Stock markets have expanded, too, but starting from a lower base and at a much slower pace, so that today their value equals 65% of GDP, a little more than half that of financial sector credit.
Improving the structure and composition of finance is as important as avoiding credit booms for the health of our economies. Facilitating stock market funding through ***lowering the costs of equity floatation and making taxation more neutral between debt and equity, is linked with higher GDP growth (Figure 1). Hence, encouraging changes in the mode of finance, away from debt and towards equity,*** would be particularly powerful in raising economic activity. [page 2 link below]
Muslim investors have been urged to pour money into major British construction projects as David Cameron revealed a catalogue of sharia-compliant opportunities. UK Trade and Investment has produced a "pitch book" containing details of 18 projects which comply with the strict conditions of Islamic law. A total of £17 billion of projects are included in the document, with schemes including a transport upgrade project in Leeds, the regeneration of Slough town centre and housing developments in Manchester. At a lavish reception in Kuala Lumpur, Mr Cameron set out his vision of making the UK a centre for Islamic finance.
The State Bank of Pakistan (SBP) held a signing ceremony for Financial Innovation Challenge Fund (FICF) on promoting excellence in Islamic finance in Pakistan under its financial inclusion programme funded by the UK’s Department for International Development (DFID). The signing ceremony marks the beginning of the implementation phase of the FICF innovative Islamic finance education and research projects in partnership with higher education institutions which was earlier launched by Finance Minister Ishaq Dar on January 9, 2015. At the ceremony, three projects were signed with Institute of Business Administration (IBA), Lahore University of Management Sciences (LUMS) and Institute of Management Sciences (IM Sciences).
UK Trade & Investment (UKTI), a Government Department which helps UK-based companies succeed in the global economy, has released a brochure which contains Sharia compliant UK regeneration investment opportunities in the UK. The Regeneration Investment Organisation (RIO) has identified projects at a point of development where project and finance structure can be discussed with project promoters. These projects are listed in the brochure in their totality: some parts may not be Sharia-compliant. Meanwhile, Islamic finance investors are taking a keen interest in UK real estate by funding a number of high profile projects.
Kuveyt Turk has issued Sukuk totalling TRY 160 million ($58.4 million) with a tenor of 189 days. The bank said that the initial public offering attracted a record-breaking number of subscribers and is its largest issue to date. The Sukuk was issued by KT Kira Sertifikalar? Varl?k Kiralama A.?., a 100 per cent subsidiary of Kuveyt Turk, Halk Yat?r?m Menkul De?erler A.?. was the consortium lead and Bizim Menkul De?erler A.?. was the consortium partner in the issuance. Ufuk Uyan, CEO of Kuveyt Turk, said, that at the end of the maturity, the underlying assets shall be transferred back to the sourcing entity. The principal and lease yield shall be paid to the investors in one go at maturity.
Dubai Bank PJSC wants to sell its shareholding in BankIslami Pakistan, a stock filing said on Wednesday. Another shareholder, Jahangir Siddiqui and Company, reported that it has received a letter from the UAE-based bank, saying it wants to sell 144.2 million shares in BankIslami Pakistan. The stake that Dubai Bank PJSC wants to sell constitutes 14.3% of the total issued shares of BankIslami Pakistan. Dubai Bank is offering its stake to Jahangir Siddiqui and Company and another (unnamed) shareholder of BankIslami Pakistan under its shareholders’ agreement that mandates a right of first refusal on a proportionate basis.
Malaysia Building Society Bhd (MBSB) is on track to obtaining a full-fledged Islamic banking licence, that will come together through a merger with Bank Muamalat Malaysia Bhd. Plans were being laid out to realise MBSB’s goal to get a full-fledged Islamic banking licence. This comes seven months after news-grabbing three-way merger between MBSB, CIMB Group Holdings Bhd and RHB Capital Bhd fell through in January. In May this year, MBSB was reportedly eyeing Kuwait Finance House (M) Bhd as an option for a merger exercise. One of MBSB’s setbacks as a non-conventional bank is its inability to tap low-cost funds from the money market that are accessible to conventional banks.
Ivory Coast will launch the first tranche of a previously announced Islamic bond programme this year, government spokesman Bruno Kone said on Wednesday. The local currency sukuk bond will be for 150 billion CFA francs ($252 million). In April, Ivory Coast announced that it would conduct a 300 billion CFA franc ($504 million) Islamic bond programme in two phases between 2015 and 2020. African countries are increasingly tapping the sukuk market for funding to take advantage of rising demand for Islamic paper among investors in the Middle East and southeast Asia.
LCI Helicopters has closed an Islamic pre-delivery payment facility with Bank of London and the Middle East and Lloyds Bank. The facility will be used for Airbus H175s and H224es delivering over the next three years. LCI says it will be used to make pre-delivery payments on helicopters worth $250 million. The LCI deal relied on a master Murabaha facility with Lloyds also providing a conventional loan. Lloyds was mandated lead arranger for both facilities. BLME also closed a $25 million pre-delivery facility for LCI in December that financed AgustaWestland pre-delivery payments.
Kuwait Finance House’s Turkish affiliate Kuveyt Turk has issued Sukuk totalling TRY 160 million ($58.4 million) with a tenor of 189 days. The bank said that the initial public offering attracted a record-breaking number of subscribers and is its largest issue to date. The Sukuk was issued by KT Kira Sertifikalar? Varl?k Kiralama A.?., a 100 per cent subsidiary of Kuveyt Turk, Halk Yat?r?m Menkul De?erler A.?. was the consortium lead and Bizim Menkul De?erler A.?. was the consortium partner in the issuance. The principal and lease yield shall be paid to the investors in one go at maturity. The lease certificates have a gross annual yield of 10.63 per cent.
The MENA Private Equity Association has launched its ninth “MENA Private Equity & Venture Capital” Annual Report. According to the Report, 2014 was a significant year for the industry and has demonstrated the highest levels since 2008 in investment values and fund raisings. 2014 has also seen growth in investment and divestment volumes compared to 2013. The year was characterised by some of the largest private equity deals seen in the region. Fund managers had demonstrable success in assembling and working with consortium partners, including international private equity investors, to close major transactions. Overall, there was a sense of returning confidence and increased opportunities as the region continued to emerge from the impact of the Arab Spring.
The value of bonds and sukuk issued by GCC entities during H1 2015 amounted to $48.13 billion, down by 15.19 per cent from the same period in 2014. This is according to a report issued by Kuwait Financial Centre (Markaz) and titled GCC Bonds & Sukuk Market Survey. The study highlights the trends pertaining to issuances in the GCC region during H1 2015. The report adds that during the first half of 2015, central banks in Kuwait, Bahrain, Qatar and Oman raised a total of $28.29bn, pointing out that the Central Bank Local Issuances are fixed-income securities issued by GCC central banks for the purpose of regulating levels of domestic liquidity.
An estimated 20 percent of Libya’s $67bn-plus sovereign wealth fund, the Libyan Investment Authority (LIA), has yet to be fully traced since the death of Colonel Gaddafi. The LIA appointed Deloitte in 2012 to conduct an audit of all of its assets – many of which are tied up in investments outside the country. The auditor’s report was sent to the LIA in 2013 but has never been made public. The only detail the LIA released was the fund’s total value, estimated by Deloitte to be around $67 billion. The audit involved sourcing, verifying and valuing the assets of a fund its chairman Hassan Bouhadi describes as a “big black hole” whose contents are unknown to all but a few.
Bahrain Islamic Bank (BisB) has realised BHD 8.2 million as net income for the six month period ended 30 June 2015, compared to BHD 4.0 million for the same period last year, an increase of 105 per cent. The Bank has reported for the three months ended 30 June 2015 net income of BHD 5.1 million compared to BHD 1.5 million for the same period last year while gross income reached BHD 11.2 million as compared to BHD 7.8 million for the same period last year. Total expenses for the three months period ended 30 June 2015 remained the same at BHD 5.3 million. Net provisions for the three months ended 30 June 2015 amounted to BHD 786 thousand as compared to BHD 1 million for the same period last year.
Malaysia attracted the weakest demand at a sovereign sukuk auction in almost eight months amid concern it will need to bail out state-owned investment company 1Malaysia Development. The Treasury sold 3.5 billion ringgit ($916 million) of Shariah-compliant bonds due October 2025 to yield 4.105 percent on Thursday. The bid-to-cover ratio of 1.85 was the lowest since Dec. 5. Prime Minister Najib Razak removed his deputy Tuesday as he seeks to head off a public rift within his cabinet over his handling of financial probes into debt-ridden 1Malaysia Development Bhd. The entity’s borrowings totaled 41.9 billion ringgit ($11 billion) at the end of March 2014.
Kuwait is preparing legislation to facilitate issues of Islamic bonds by the government as it assesses options to finance a big budget deficit caused by low oil prices, Finance Minister Anas al-Saleh said. Early this month, Kuwait’s parliament approved a budget for the current fiscal year that envisages a deficit of 8.18 billion dinars ($27.0 billion) - nearly half total spending - because of oil’s plunge since mid-2014, which has slashed energy export revenues. The government is looking at ways to save money by limiting energy subsidies and other handouts, and this has worried a public used to a lavish cradle-to-grave welfare system.
Demand for housing in Saudi Arabia is translating into a rush for some of the lowest-rated Islamic debt in the six-nation Gulf Cooperation Council. Three sukuk from Dar Al Arkan Real Estate Development Co are among the five best-performing Shariah-compliant bonds in the region this year. The company’s notes due May 2019 returned 8.2% through July 21, compared with an average 2.1% for the GCC sukuk market. The gains underscore efforts by Saudi Arabia’s King Salman to stoke construction amid an estimated shortfall of 2mn homes. The securities have been helped by a clamour for high-yielding assets as the US Federal Reserve prepares to raise interest rates for the first time since 2006.
The General Council for Islamic Banks and Financial Institutions (CIBAFI) and the World Bank are pleased to announce their joint international conference on "Corporate Governance for Islamic Financial Institutions: Lessons from Recent Global Developments", which is due to take place in Amman, Jordan on 15th and 16th September 2015. The one and half day conference aims to bring together various stakeholders from the private sector, multilateral development institutions, international and national regulatory bodies, policy-makers, and academia to discuss the issue of corporate governance in the Islamic financial services industry (IFSI).
Dubai Islamic Bank will reportedly advise Pakistan on selling its 40 per cent stake in Kot Addu Power Company (Kapco) as the country’s economic upsurge lifted its benchmark stock market index to a record this month. The emirate’s biggest Sharia-compliant lender would lead an advisory group that includes Deloitte, Lummus Consultants International, and Mohsin Tayebaly and Company. Pakistan has rejuvenated its economy in recent years after the IMF provided a US$6.6 billion bailout loan in 2013. The country, a net energy importer, is also set to gain from the collapse in oil prices and China’s $46bn investment plan to build transport infrastructure connecting the two countries.
The Department of Inspection for Factories and Establishments (DIFE) yesterday requested Islami Bank Bangladesh, the financier of Swan Garments, to further lend Tk 1.39 crore to the apparel maker so that it can clear one month's salaries of its workers. Both the DIFE and the bank had been in trouble finding a successor of the company after the death of its Chinese owner, Ming Yuen Hon (Toby), in April. Disputes over the ownership have to be settled to resume operations of Swan Garments, and if Islami Bank wants to continue financing, it will need permission from the central bank as the company's loans have already been classified.