Bahrain

Islamic #FinTech in 2018

2018 may prove to be a pivotal year for Islamic finance stakeholders and their approach to FinTech. Potential areas where FinTech is likely to have an impact on Islamic finance are remittances, takaful, investment advisory services and online trading. Commentators see FinTech as an opportunity to provide genuine Islamic-compliant alternatives to the traditional banking model. In December 2017, KFH Bahrain, Al Baraka Banking Group and Bahrain Development Bank announced the establishment of a company dedicated to research and development in the Islamic-compliant FinTech sector. Operated by the Bahraini bank consortium, ALGO Bahrain will open in February 2018 and will be the largest dedicated FinTech hub in the Middle East and Africa. Bahrain FinTech Bay is operated by Singapore-based fintech incubator FinTech Consortium.

Head of Islamic finance body AAOIFI resigns

The head of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has resigned. Hamed Hassan Merah presented his resignation after more than three years and the board of trustees accepted it. As a complex organisation with 200 institutional members from across 45 countries, the AAOIFI had been slow to respond to issues relating to conflicts of interest and product standardisation. Under Merah, the AAOIFI tackled such issues head on, launching a review of its accounting, auditing and sharia standards. In November, Merah said AAOIFI would now prioritize wider adoption of its standards by engaging national regulators in key markets, including Turkey and Malaysia. Saudi Arabia’s central bank joined AAOIFI as an institutional member in October 2017.

#Bahrain-headquartered investment firm buys controlling stake in Mentor-based MC Sign

Bahrains's Arcapita has acquired 75% interest in Mentor-based signage and lighting services firm MC Sign. The deal is worth more than $100 million. Atif A. Abdulmalik, Arcapita's CEO, said the company was well positioned to acquire market share in a highly fragmented industry that is dominated by locally-focused, sub-scale service providers. Arcapita's investment in MC Sign reflects the firm's global presence, with offices in Bahrain, Atlanta, London and Singapore. The investment firm has been active in the Middle East too. In October 2017, the firm partnered with Bahrain's sovereign wealth fund Mumtalakat to acquire 90% stake in Abu Dhabi's NAS United Healthcare Services. This was preceded by another deal through which Arcapita acquired logistics assets worth $150 million in Dubai.

Islamic #FinTech in 2018

2018 may prove to be a pivotal year for Islamic finance stakeholders and their approach to developments in FinTech. Potential areas for FinTech are remittances, insurance, investment advisory services and online trading. In the coming years, demand from consumers is expected to give rise to the faster adoption of these technologies. Instead of mirroring conventional financial products, commentators see the opportunity to provide genuine Islamic-compliant alternatives to the traditional banking model. In December 2017, KFH Bahrain, Al Baraka Banking Group and Bahrain Development Bank announced the establishment of ALGO Bahrain. It will be dedicated to research and development in the Islamic-compliant FinTech sector. In addition, the largest FinTech hub in the Middle East and Africa will open in February 2018. The new hub named Bahrain FinTech Bay is operated by Singapore-based fintech incubator FinTech Consortium.

Ibdar Bank: Islamic #fintech will foster a culture of change

In this interview Ayman Sejiny, CEO of Ibdar Bank, speaks about the future of Islamic finance. Ayman Sejiny believes that fintech is going to be one of the biggest drivers of change in the new Islamic banking era. Fintech initiatives will not only improve existing customer’s banking experience, but also have the potential to bring the two billion financially-excluded individuals into the banking system. Malaysia, Indonesia, the UAE and Bahrain, driven by an influx of start-ups in the crowdfunding and payment space, have already positioned themselves to lead the field. They started to formally regulate crowdfunding and implement sandboxes or special fintech licencing schemes. These markets should therefore see huge growth in crowdfunding, P2P and payments platforms and even an increase in the use of AI in the form of robo-advisers. The UK and even the US will also see more investment in fintech startups to meet the demand for Shari’ah products in these markets. Ibdar Bank has set out a comprehensive plan for the engagement with fintech service providers.

Ratings scheme planned for #Islamic #endowments

Islamic institutions in Bahrain and Malaysia are developing a ratings scheme for Islamic endowments, or awqaf. The Bahrain-based Islamic International Rating Agency and the Malaysia-based International Institute of Islamic Waqf (IIIW) hope that greater accountability in the management of awqaf can help integrate them into Islamic financial markets. This could mobilize idle assets which are estimated to be valued between $100 billion and $1 trillion across the globe. Awqaf operate social projects such as hospitals, mosques and schools with donations received from Muslims. Most Awqaf do not disclose financial figures, but their underperformance is believed to be considerable since they have traditionally been run by administrators rather than investment managers.

#Bahrain to launch compulsory risk regime for Islamic banks

The Central Bank of Bahrain (CBB) will publish a consultation on a proposed risk assessment framework for Islamic banks in the first quarter of 2018. Khalid Hamad Abdul-Rahman Hamad, director of banking supervision at CBB, said the bank was planning to issue a very detailed risk management toolkit to improve risk management practices taken by Islamic banks. Under the proposed new rules, banks are required to have proper reserves, be it profit equalisation reserves or investment risk reserves. Whenever banks are investing, they must have a pre-plan regarding how much of bank assets will be funded by unrestricted investment accounts and how much will be invested from funds.

Islamic banks brace to re-engineer itself to address customer needs in digital era

The World Islamic Banking Conference (WIBC) is taking place on December 4th, 5th and 6th, in the kingdom of Bahrain. The theme for WIBC 2017 is Drivers of Economic Growth & Risks: Policymakers & Regulators. WIBC is expected to draw participation from over 1,300 global industry leaders, policy makers, innovators and stakeholders, all focused on navigating through the complexities of the global financial system. CEO of Path Solutions, Mohammed Kateeb, said the Islamic finance industry was going through drastic changes as a consequence of evolving customer behavior, channel proliferation and the digitization of operations. He underlined the importance of recognizing common challenges and opportunities facing the industry at large.

Gulf Finance House begins new #land #acquisition drive

Even though its Tunis Financial Harbour (TFH) mega-project has barely got off the ground, Bahrain's Gulf Finance House (GFH) is already looking to acquire adjacent land.

Islamic banks in #Bahrain urged to fully comply with new standards

Islamic banks in Bahrain have until June-end next year to fully comply with new standards mandated by Central Bank of Bahrain (CBB). According to CBB executive director for banking supervision Khalid Hamad, the new Islamic banking legislation, where independent external scrutiny is a mandatory requirement, will promote corporate governance and compliance with Basel III norms. Hamad said the CBB was also preparing comprehensive and detailed risk management legislation. According to him, Islamic investment banking needs to develop a sustainable business model as well as more mergers for a clear competitive advantage. To enhance governance and performance, Islamic banks are required to obtain a credit rating. The industry also needs to work on building the capacity of board members, senior management and officials, particularly those in risk management, through qualifications and training.

Ibdar: Pioneering a Fully Digitised Islamic Investment Bank

Ibdar Bank is directing its FinTech strategies to position the bank as a fully-digitised Islamic investment bank. The Bank has USD277 million in paid up capital and a geographical reach that spans the GCC and Middle East North Africa Turkey (MENAT) region. The Bank also transacts in Southeast Asia and select developed markets. Ibdar Bank has significant expertise in areas including aviation, infrastructure, maritime, oil & gas, and real estate. According to CEO Ayman Sejiny, Ibdar has set out a comprehensive plan in 2018 for its engagement with global Fintech service providers. In the first phase, the bank is set to digitise its operations internally, the second phase will focus on implementing its service offerings in response to the needs of a Global Islamic Digitised Economy (GIDE). Sejiny added that the Central Bank of Bahrain has taken decisive steps towards a FinTech supportive environment in order to facilitate the growth of the sector.

#Bahrain’s GFH eyes #Saudi asset management moves

Bahrain’s GFH Financial Group is considering a listing in Saudi Arabia. CEO Hisham al-Rayes said the Group was also keen to participate in Saudi Arabia’s privatisation programme in sectors such as education and healthcare. He added that GFH was looking at asset management and private equity sector as sectors to acquire. Al-Rayes also disclosed that GFH was in talks with an unnamed financial services company in the Gulf. GFH's acquisition of Dubai-based Shuaa Capital was postponed due to a failure to reach acquisition terms and a lack of initial regulatory approval.

AAOIFI, ACCA sign MoU

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Association of the Chartered Certified Accountants (ACCA) signed a landmark Memorandum of Understanding (MoU) in Bahrain. The MoU aims at enhancing the cooperation between the specialized professional accounting fellowship issued by AAOIFI, Certified Islamic Professional Accountant (CIPA) and the international professional fellowship ACCA. According to Farhan Noor, AAOIFI's Head of Professional Development, the new CIPA now requires the candidates to pass four module exams and fulfill a one-year practical experience requirement. By this agreement, ACCA qualified accountants can now get exemptions from half of the CIPA program to acquire the prestigious CIPA Fellowship. The MoU also includes cooperation in different areas such as research, events and continuous development.

Dagong and IIRA maintain the Ratings of Al Baraka Banking Group and revise the Outlook Upwards

Dagong Global Credit Rating and Islamic International Rating Agency (IIRA) have jointly maintained the ratings of AlBaraka Banking Group (ABG) at BBB+/A3. At the same time, IIRA has re-affirmed the national scale ratings of ABG at A+/A2. Outlook on the assigned ratings has been revised to 'stable' from 'negative' indicating the macroeconomic and political stability in ABG’s core countries. ABG operates through a globally diversified franchise spread across 11 jurisdictions in Europe, Africa and Asia. ABG’s ratings derive strength from the recent tier 1 Sukuk issuance this year. While the Group’s subsidiaries are individually governed by their supervisors, the Group maintains close coordination and oversight. Furthermore, Bahrain's institutional framework for Islamic banks ensures adherence to a strong framework for Shari'ah governance.

Interview: How #Bahrain Is Aiming To Position Itself As A Regional #Fintech Hub

In this interview David Parker, Executive Director of Bahrain's Economic Development Board, talks about the kingdom's efforts to position itself as a fintech hub. He recognizes that certain regulatory requirements can make it more challenging for firms to experiment. To mitigate this, the Central Bank of Bahrain launched a regulatory sandbox to help enable innovation. A number of accelerators and incubators have also launched operations recently, including the region’s first cloud accelerator, operated by C5 and powered by Amazon Web Services (AWS). When determining the structure of the regulatory sandbox, the Board was in close consultation with the industry. An agreement was signted with the Singapore Fintech Consortium and advisory firm Trucial Investment Partners to support the local Fintech ecosystem. The Central Bank also issued directives on crowdfunding for both Shariah compliant and non-Shariah compliant platforms and launched a national e-wallet.

Ibdar Bank and partners acquire Boston office building for $48mln

#Bahrain-based Ibdar Bank has acquired a prime office building in Boston, USA. The deal is a collaboration with US property manager Lincoln Property Company and asset manager Ritz Banc Group and the total size is $48 million. The Boston property is a single-let building leased to Amazon Robotics, a wholly-owned subsidiary of Amazon Inc. The area is regarded as the "technology corridor", and is home to many well-known technology-related companies making it the epicentre of robotic innovation. The bank’s head of real estate, Bassam Kameshki, said the Boston metropolitan area has witnessed substantial growth within the technology and medical sectors. He ensured that Ibdar Bank will be working to add further value to the property and ensure a profitable exit scenario.

Arcapita And Mumtalakat Acquire NAS United Healthcare Services

Arcapita and Bahrain Mumtalakat Holding Company have partnered to acquire an approximately 90% stake in NAS United Healthcare Services (NAS). Arcapita is a global Shari'ah compliant alternative investment manager. Mumtalakat is the sovereign wealth fund of the Kingdom of Bahrain. Abu Dhabi-based NAS is a regional leader in the provision of third-party administrator services to more than 40 health insurance and takaful companies in the Arabian Gulf. NAS services a pool of more than 500,000 insured members and processes more than 3 million medical claims per year. The market for outsourced medical claims management in the GCC region is expected to grow significantly. Most GCC governments have either implemented mandatory healthcare insurance coverage or plan to launch initiatives in the next 2 to 3 years.

#Mergers among smaller Islamic banking industry likely in GCC

There are several rumors about possible mergers of the smaller Islamic banks in the GCC region. According to UCapital, the relatively small size of Islamic banks is one of the compelling reasons for them to consider consolidation. However there is no compelling reason for a big number of regional banks to rush into merger deals. Banks across the region are facing pressure on profitability and tighter liquidity. The UAE, Bahrain and Oman would benefit from consolidation as many banks in these countries lack sufficient scale. A proposed merger of Kuwait Finance House and Ahli United Bank is expected to result in second biggest Islamic Bank in the GCC. Merger of Qatari banks Masraf Al Rayan, Barwa Bank and International Bank of Qatar which was announced last year is progressing and is expected to complete by end of the year.

BisB denies reported #Sukuk issuance plans

Bahrain Islamic Bank (BISB) has issued a statement denying its reported intention to issue a Sukuk. The statement, signed by BisB CEO Hassan Amin Al Jarrar, said that the bank would not consider such an approach, at least not within the coming 12 to 18 months. The report about the bank was published Tuesday 19 September 2017 in AlBilad’s press release. The bank affirmed the rest of the report, namely, the rise of the bitcoin industry, applying the value added tax, and the bank’s preparedness towards digital and mobile payments.

The $101 Million syndicated #Murabahah financing facility for #Bahrain Islamic Bank closed

Bahrain Islamic Bank (BISB) has successfully closed a debut $101 million one-year Syndicated Murabahah Financing Facility. The Facility will be used for general funding purposes. Initially it was launched for $50 million and following strong interest BISB decided to utilise the significant over-subscription to increase the Facility size to $101 million. A total of eight banks from the GCC and Europe participated in this transaction. They include Bank ABC Islamic, Boubyan Bank, Dubai Islamic Bank, Emirates Islamic, Sharjah Islamic Bank, National Bank of Ras Al Khaimah, The Islamic Corporation for the Development of the Private Sector, Federated Project and Trade Finance Tender Fund, and Federated Project and Trade Finance Core Fund. Sole Bookrunner and Coordinator was the Bahrain-based Bank ABC, which expressed its delight with the closure of the transaction and wished Bahrain Islamic Bank continued growth in the future.

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