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Malaysia: Aberdeen Islamic Asset Management - strategy

Racheal Lee Mei Nyee reported on 16 February in The Edge Daily, that Aberdeen Islamic Asset Management Sdn Bhd aims with the new licence to approach retail investors and launch funds, which it could not do under the conventional licence. The company is seeking seed funding from institutional investors first and look at retail funds only later.

Gerald Ambrose is managing director of Aberdeen Asset Management Sdn Bhd.

Iran is privatizing banks

Iran plans to offer 5 % of Bank Mellat to private investors to study the demand and interest from buyers. Bank Mellat, Iran's second-largest bank after state-owned Bank Melli, is estimated to have a share of around 15 % of the country's banking industry.

It is said two other state banks - Tejarat and Saderat - were next in line to be partly sold off.

Industrial Development Bank becomes Jordan Dubai Islamic Bank

Dubai Islamic Bank (DIB) announced the official re-launch of Jordan-based Industrial Development Bank (IDB) following the completion of a private placement of 26 million shares of IDB, valued at USD 100 mn. As part of the re-launch, IDB has been transformed into an Islamic financing institution to be known as Jordan Dubai Islamic Bank (JDIB).

The parties involved in the private placement transaction include Jordan Dubai Financial (JD Financial), the investment arm of Jordan Dubai Capital, DIB and Dubai International Capital. The private placement was valued at JOD 2.750 per share, based on the pricing equation adopted by the bank's Shareholders General Assembly, wherein the strategic partner, Mesc Investment, covered the entire placement.

Fixed Income market seen as important to Gulf growth

Sean Davidson wrote on 13 February in Business 24/7 about the importance of an active sovereign bond market to strengthen Gulf monetary policies allowing for an integrated market for local currency government bonds where the central, local and forweign banks, individuals and other institutional investors can participate - a matter which plenty of economists agree to.

The UAE government has indicated plans to issue conventional bonds and sukuk in the near future with maturities of up to 30 years.

S&P Placed Kuwaiti Banks On CreditWatch Negative On Large Exposure To Investment Companies

Press Release

Various Kuwaiti Banks Placed On CreditWatch Negative On Large Exposure To Investment Companies

LONDON (Standard & Poor's) Feb. 16, 2009--Standard & Poor's Ratings Services said today that it placed its 'A-' long-term counterparty credit ratings on Kuwait Finance House and Commercial Bank of Kuwait on CreditWatch with negative implications. At the same time, the 'A-2' short-term counterparty credit ratings on these banks were affirmed. Furthermore, Standard & Poor's placed its 'BBB+/A-2' long- and short-term counterparty credit ratings on Al Ahli Bank of Kuwait and Burgan Bank on CreditWatch with negative implications. At the same time, Standard & Poor's commented on its CreditWatch placement of Kuwait-based Gulf Bank. The 'A-/A-2' long- and short-term counterparty credit ratings on Gulf Bank remain on CreditWatch with negative implications, where they had been placed on Oct. 27, 2008.

Britain's First Islamic Motor Insurance

Salaam Halal Insurance, Britain's first Shari`ah-compliant insurer, was launched last July and price-comparison websites show a great demand and competitiveness.

Islamic Securitization - The Right Way Forward?

Heiko Hesse, Andreas Jobst and Juan A. Sole published on RGEmonitor on 13 February an analysis regarding Islamic Securitization and the grown interest for Islamic finance during the financial crisis.

Islamic finance is driven by the general precept of extending religious doctrine in the shari’ah to financial agreements and transactions. Predatory lending, deteriorating underwriting standards, and a series of incentive problems between originators, arrangers, and sponsors, of which all have infested the conventional securitization process, belie fundamental Islamic principles.

The article linked in the source relates the characteristics of this form of securitization to calls for enhanced disclosure and standardization, ratings agency reforms, and better transparency of origination and underwriting practices in conventional structured finance. In particular, it assesses the potential of conflicts of interest (which became apparent in the U.S. subprime mortgage crisis) to contaminate the integrity of the securitization process if it were conducted in compliance with shari’ah principles.

BKME achieves KD 51.4 mln in profits in 08

Bank of Kuwait and the Middle East (BKME) achieves KD 51.4 mn in profits in 2008 versus KD 48.2 mn in 2007 with a 6.6 % increase as compared to the last year.

The conversion of BKME into Islamic Sharia will be completed within the coming months as per the timeframe approved by Central Bank of Kuwait.

Hamad Abdulmohsin Al-Marzouq is the Chairman and Managing Director of BKME.

Global Investment House: Dispute with Housing Bank, Jordan

Rania El Gamal reported on 12 February on Arabianbusiness that the operations of Global Jordan unit were halted by court due to a dispute over a financing by Housing Bank by a Jordanian court. An agreement reached allowed the court to revert its ruling. Housing Bank was no longer willing to a accept a guarantee of Global Kuwait in favour of Global Jordan unit.

The size of Global's portfolio in Jordan in September was about USD 900 mn and included investments in real estate, financial services and industry. Global also opened a brokerage business for Amman's financial markets.

Islamic Project Finance in the Gulf States

Justin Dargin, Harvard University, Cambridge, Mass. wrote in Oil & Gas Financial Journal about the Islamization of project finance in the Gulf states saying that although Islamic financial instruments currently make up a small proportion of global finance, they actually experienced an annual 15% growth from 2005 to 2008, with the energy-producing Gulf nations in the Middle East responsible for much of the increase.

Islamic finance now reached the heavy industry of oil and gas, petrochemicals and manufacturing, with SABIC officially promoting it. However, regional Islamic banks are not widely involved in this business, only Al Rajhi and Bank AlJazira so far.

The conducted transactions may evidence a flight from the endlessly leveraged financial products that brought about the economic crisis to what is actually a more orthodox set of asset-backed and asset-based products, integral to Islamic finance. The author shows in the original article a substantial number of cases and details.

Bank Islam signs MoU with Bank Muamalat Indonesia for Estate Planning

Ellina Badri reported in The Edge Daily about the memorandum of understanding between Bank Islam Malaysia Bhd and Bank Muamalat Indonesia Bhd for the distribution of Islamic trust products.

Islamic trusts involve investments made following syariah principles and asset distribution according to Islamic rules of succession. The range of Islamic trust products include will-writing and estate administration services, and waqf, or a gift of property for religious or charitable purposes.

UAE banking outlook negative according to Moody's

Rebecca Bundhun reported on 14 January in Arabianbusiness that Moody's sees the fundamental credit outlook for the UAE banking system as negative, as it comes under strain from falling property prices and tightening liquidity conditions. Moody’s Investors Service said on Wednesday its prediction covered the next 12 to 18 months and reflects the number of bank loans given to 'opportunistic' developers, who would struggle to repay them as the property market undergoes a correction.

John Tofarides is a Moody's analyst.

Islamic banking law in Kazakhstan came into effect

Clare Nuttal reported on 13 February on Business News Europe that Kazakhstan launches a new commodity exchange and confirmed in the same article that the Islamic finance law came into effect in January.

Bahrain Islamic Bank receives first rating from Moody`s

Martin Morris reported on 10 February on Arabianbusiness that Moody's Investors Service, has assigned Baa1 long-term and Prime-2 short-term local and foreign currency issuer ratings and a D+ bank financial strength rating (BFSR) to Bahrain Islamic Bank. (BisB). The rating outlook is stable.

Yields in the Gulf rising strongly

Soren Billing reported on 10 February in Arabianbusiness that credit default swaps for Mideast lenders have risen substantially led by Bahrain, spreads have widened by 174.2 basis points (bps) in the last three months, followed by Saudi Arabia (114.8 bps), Abu Dhabi (96.7 bps) and Qatar at (70 bps), Corporates in the region have been hit even harder. The CDS spreads on Dubai based companies range between 600 bps and 1,100 bps, which is significantly higher than on Abu Dhabi based corporations, which range between 250 bps and 400 bps. The yield on Nakheel’s Sukuk that matures on Dec. 14 this year reached 41.9 % from 27.7 % a month ago.

Kuwaiti investement banks, firms may merge under rescue plan

Kuwaiti banks or investment firms may have to merge if they want to obtain state help under a USD 5 bn (Dh18bn) rescue plan, a bill devised by the central bank said. Under the plan, the central bank will also decide which investment firms will qualify for aid depending on whether the firm is able to continue its business and has a "good" solvency.

Western companies looking to Sukuk

Cecilia Valente and Frederik Richter reported 10 February on Reuters, that Western companies, especially in the UK and France, are considering issuing Sukuk to tap Middle Eastern investors.

Venture Capital Bank Achieves USD 47 mn Net Profit

Venture Capital Bank Achieves USD 47 mn net profit and recommends 10 % cash dividends and 5 % bonus shares to its shareholders. The bank maintained a capital adequacy rate of 43 %, which is higher than the minimum requirements by the Central Bank of Bahrain's 12%.

Source: 

http://www.zawya.com/Story.cfm/sidZAWYA20090207084444/Bahrain:%20Venture%20Capital%20Bank%20Achieves%20$%2047%20Million%20Net%20Profit

Sharjah Islamic Bank profit drops 23 %

Sharjah Islamic Bank released that its profits declined 23 % to AED 231.59 mn in 2008, down from AED 301.83 mn in 2007.

AmanahRaya-JMF looks into Islamic REITs

AmanahRaya-JMF Asset Management Sdn Bhd, which currently manages RM 7.5 bn in funds, is looking at going into Islamic real estate investment trusts (REITs) in the next two or three years, says managing director/chief executive officer Sharizad Jumaat, and exclude non compliant components by 2011.

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