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Indonesia is about to get an annual scorecard from Islamic bond investors and the signs are good. The nation’s first dollar sukuk in a year may yield 3.8 percent to 4.5 percent if the tenor is 10 years. That’s less than the 6.125 percent on 2019 global Islamic notes sold last September. Bank Indonesia has added $18 billion to currency reserves over the past year, inflation has almost halved from January and bond risk fell as Joko Widodo fended off legal challenges to his victory in July’s presidential election. Demand for Indonesia’s sukuk will be buoyed by a shortage of global Shariah-compliant securities. The nation’s dollar sukuk due November 2022 returned 17 percent this year, outpacing gains of 9.2 percent and 12 percent for similar notes from Malaysia and Dubai.
A consortium comprising a reputable bank, royal families, and a group of leading businessmen in the GCC, has announced that an agreement to set up the first Islamic bank in the eurozone has now been concluded.
Eurisbank will have a start-up capital totalling Euro 60m, branches in Paris, Brussels, The Netherlands and Frankfurt are planned. Set to be headquartered in Luxembourg, the founders, promoters and Deloitte have concluded a meeting with the CSSF (Luxembourg's Supervisory Authority), which has welcomed the idea. Deloitte has completed a feasibility study for the bank, which is said to demonstrate high return on investment, taking advantage of being the first of its kind to operate from the eurozone countries.
slamic banks in the Gulf and elsewhere could increase their issuance of Additional Tier 1 sukuk over the next two years to support growth, according to an analyst at Standard & Poor’s. Gulf nations including Saudi Arabia, Kuwait, Qatar and the UAE are at different stages of implementing Basel III guidelines, giving Islamic banks an additional incentive to strengthen their capital buffers. Most Islamic banks are well capitalised, but there are still compelling reasons to issue capital in the near future, according to S&P. Several bonds have already been issued that the issuers said were compliant with Basel III regulations. One of the key recommendations is that any instrument must contain elements of loss absorption to comply with Basel III.
Turkish Islamic lender Bank Asya said in a note to Borsa ?stanbul that the company continued its banking operations smoothly, defying any kind of uncertainty regarding the bank’s shareholders and board. The bank’s statements follow on the heels of an announcement from state bank Ziraat Bankas? a few hours earlier. Ziraat said it had ended unofficial talks to acquire Bank Asya, saying such a purchase was not in line with its priorities. Observers said the statement from Bank Asya would help ease earlier concerns that the bank would be seized by the state amid an intense pressure from President-elect Recep Tayyip Erdo?an’s ruling party.
Malaysia’s 11 takaful companies should consider merging soon, especially in the general takaful business due to potential limited growth prospects in addition to insurmountable competition especially with the upcoming detariffication of motor and fire insurance in 2016. Apart from new regulatory requirements like the Islamic Financial Services Act 2013 which many companies have difficulties to comply with, takaful products have failed to differentiate itself from conventional insurance products. In addition, limited product offerings by takaful makes conventional insurance more attractive. Nonetheless, other than the regulatory aspects, the synergy offered by a merger would make the company more competitive in addition to having more products to offer.
The domestic Islamic finance asset is expected to continue posting double-digit growth at between 10 per cent to 15 per cent over the next five years, said the Association of Islamic Banking Institutions Malaysia (AIBIM). Products like takaful, will, consumer and corporate products are all maturing and with such maturity level, Islamic finance also grows, said its President Datuk Mohd Redza Shah Abdul Wahid after a briefing on the upcoming Global Islamic Finance Forum (GIFF 2014) here today. GIFF 2014 will be held from September 2 to 4, in Malaysia, discussing key issues in the development of Islamic finance industry. The association today revealed the domestic Islamic finance market share now stands at 24.2 per cent, estimated to be worth RM548 billion.
The Turkish regulator Capital Markets Board (SPK) said it won’t consider Bank Asya’s (ASYAB) application to sell 140 million liras ($65 million) in debt, dealing another blow to the suspended Istanbul-based lender. It cited ambiguity over ownership. The shares have been on hold since Aug. 7, after large swings on contradictory government statements about a possible state purchase. Bank Asya was subsequently suspended from trading on the Istanbul exchange and removed from the main indexes. Regulators have also revoked the bank’s right to collect tax on behalf of the government. The bank said it applied to sell the debt in March. Bank Asya shares declined 14 percent this year before being suspended. That compares with a 20 percent gain on the Turkish banking index this year.
Europe is the preferred target of Arab investors with 80% of the expected $180bn Arab investment flowing in to UK and Europe over the next 10 years. In the UK, London is the preferred destination. Arabs have invested heavily in European commercial real estate in recent years and have made huge profits from these investments. Some of the cash-rich Arab countries are unwilling to invest in the region because of the protracted social and political tensions in the region and see European market as safe havens to park their money. According to the latest report by global property advisor CBRE, Middle Eastern investors are expected to spend $180bn in commercial real estate markets outside of their own region over the next decade.
The DIFC Laws Amendment Law 2014, which amends the Regulatory Law 2004 and various other laws related to the Dubai International Financial Centre, is expected to give a new boost the financial services business from DIFC. The Amendments that will come to effect on August 21 makes a number of significant changes to the Dubai Financial Services Authority’s (DFSA’s) regulatory regime and investment laws. They are an important step in simplifying and improving the structure and procedures for decision making and review of DFSA decisions. They will also strengthen DFSA supervisory and enforcement powers, and improve the supervisory oversight of auditors.
L’assurance islamique, dite “takaful”, débarque en Algérie grâce à la compagnie Salama Assurances Algérie. La compagnie algérienne prévoit de lancer des produits d’assurance islamique, soit l’équivalent de la mutualité, dans un proche avenir, comme l’a indiqué Abdelhakim Hadjou, son directeur général. Selon ce dernier, le fait que la législation algérienne n’encadre pas encore ce type d’assurances ne sera pas un frein à la commercialisation de ce service. Il peut y avoir dans les mois à venir un intérêt. On a même parlé de cela au Parlement avec la participation des banques. Il y a eu débat sur l’opportunité de légiférer sur le takaful, a-t-il ainsi déclaré.
Malaysia-based International Islamic Liquidity Management Corp (IILM) will raise $790 million through its Islamic bond programme next week, according to a filing with the central bank. The IILM, a consortium of central banks from Asia, the Middle East and Africa, will auction a three-month $390 million sukuk and a six-month $400 million sukuk on Monday Aug. 25. IILM last went to the market in July to re-issue $860 million worth of three-month papers, in order to meet a shortage of highly liquid, investment-grade financial instruments which Islamic banks can trade to manage their short-term funding needs.
London-based Gatehouse Bank has purchased the leasehold interest in the Marriott Residence Inn ("Residence Inn"), Manhattan, New York for an undisclosed amount. The Bank, assisted by Arch Street Capital Advisors, LLC, has acquired the property in partnership with a US-based hotel operator. The Residence Inn is a 17-storey, recently redeveloped building located on 48th Street in Midtown East, Manhattan. The property features 211 guestrooms of multiple room configurations including studios, suites and a penthouse. All rooms include a fully equipped kitchen. The Residence Inn is an extended stay, select service brand of Marriott International that is among the strongest performing brands under the Marriott umbrella.
Moody's Investors Service, has today affirmed the Ba1 insurance financial strength rating (IFSR) of National Takaful Insurance Company K.S.C., based in Kuwait. The rating outlook was changed to stable from positive following the decline in the shareholders' and policyholders' (consolidated) equity in 2013. Moody's Ba1 rating reflects National Takaful's good position, with a top-three market share in the domestic Takaful market. The rating affirmation also reflects the recent improvement in underwriting profitability. This has restricted further deterioration in the policyholders' fund. However the change in outlook to stable from positive reflects the decline in consolidated equity.
The Nigerian Exchange Traded Funds (ETF) market has shown potential for growth, though many investors are yet to recognise its promise. In the less than four years since the market recorded its first entrants into the ETF space, there are three Exchange Traded products valued at N3.209 billion or 0.0178 percent of the total market capitalisation of the Nigerian Stock Exchange (NSE) as at August 6, 2014. Comparison of statutory charges (sell side) on equities against ETFs shows a difference of 0.5964 percent in favour of ETFs; while on the buy side, the charges are the same. On the sell side, charges to equities are 0.7050 percent, while ETFs are 0.1086 percent; on the buy side, the charges are same at 0.3750 percent.
A Takaful insurance operator is to strategically consider the maturity matching approach as an investment mechanism in dealing with liquidity issues of the business at hand. Moreover, the issue of distribution of surplus in Takaful comes only after fulfilling or meeting the Shariah obligation of helping participants who have become victims of various risk crystallization. The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) brought out a valid suggestions on adopting the principle of Iltizam bil Tabarru (pledge or commitment to donate). This gives the participants the ownership rights over the scheme while still having the firm commitment of mutual assistance (Ta’awuni) on the premise that a balance, if any, will be returned by the fund manager for distribution between the donating participants or owners of the fund in proportion to their initial contribution.
Social Islami Bank Limited (SIBL) arranged a Strategic Business Planning Session to evaluate business position and formulate future business strategy of some chosen branches of the bank at its corporate head office in the city recently. Chairman of the Bank Major (Retd.), Dr. Md. Rezaul Haque, was present in the session as the chief guest while Managing Director of the bank, Md. Shafiqur Rahman, presided over the programme.
Malaysia Airports Holdings’ plan to sell perpetual sukuk highlights rising interest in the debt from companies looking to shore up their balance sheets. The manager of all of Malaysia’s 39 airports will hold an investor presentation for the offer on Aug. 25. It will be the nation’s first sale of rated ringgit Islamic bonds with no set maturity following unrated issues by Malaysian Airline System in 2012 and Boustead Holdings in June. Perpetual bonds, which rating companies treat as equity, have been becoming more popular as they allow issuers to raise money without damaging their creditworthiness and offer higher yields to investors. Moreover, it’s more cost efficient because the transaction is tax deductible.
More Islamic banks are expected to issue sukuks eligible for Additional Tier (AT1) capital over the next two years as countries start to implement Basel III, according to Standard & Poor's Ratings Services. Over the past two years, there have been Tier 1 sukuk issuances from three UAE Islamic banks that reportedly qualify as Additional Tier 1 (AT1) capital under Basel III. The oversubscription rates of these three Tier 1 sukuk and their tight pricing suggest a very strong market appetite, which S&P expects to linger unless market conditions shift over the next few months. The introduction of a liquidity coverage ratio might address some of the industry's long-standing weaknesses, particularly the lack of high quality liquid assets.
Khazanah Nasional Bhd., Malaysia’s state-owned investment fund, has sold 1.5 billion ringgit ($476 million) of Islamic bonds. The firm priced the five-year debt to yield 4.14 percent, within its earlier guidance of 4.1 percent to 4.18 percent. The issuance is part of a 7 billion ringgit program to raise funds for corporate purposes. Khazanah will issue the new debt via its unit Rantau Abang Capital Bhd. It’s the second time this year that the company has tapped the ringgit sukuk market after selling 15-year securities in March at a coupon of 5.2 percent. Khazanah is in the process of buying up the 30.6 percent stake in Malaysian Airline System that it doesn’t already own.