IslamicFinance.de

Kuwait's Strategia Investment Company has received the approval of the ministry of commerce and industry to launch an Islamic investment fund with a capital ranging between 5 million Kuwaiti dinars ($17.7 million) and KWD50 million.
This fund will invest in the shares of shariah-compliant companies listed on the Kuwait Stock Exchange and on other bourses in the Gulf Cooperation Council states.

Kuwait's indebted The Investment Dar Company held its first face-to-face meeting with the reconstituted Coordinating Committee last Thursday in Dubai.
At the meeting, the documentation relating to the official engagement of the committee was finalised, it said, and added that committee membership now includes Jordan International Bank, ABC Islamic Bank, Lloyds TSB Middle East, Al Rajhi Bank, the Islamic Development Bank, Bank of Bahrain and Kuwait.

Kuwait International Bank (KIB) is keen on opportunities for mutual ventures and cooperation with Islamic finance and banking institutions, both in and beyond Kuwait.
Assistant Chief Executive Officer (CEO) Diyaa Al-Asfoor was speaking to the press upon a visit by a delegation from the Central bank of Malaysia and noted this visit was important for exchange of expertise in the field.

Kuwait's central bank has rejected a request by Islamic lenders to grant them exceptions from liquidity ratio requirements and allow for the withdrawal of excess liquidity. This is the second time the central bank has rejected such a proposal.

Kuwaiti Islamic firm Investment Dar appointed a new panel of creditors to negotiate its debt restructuring after a previous committee quit over a disagreement.
Four banks from the previous group remain on the coordinating committee and will be joined by two new lenders after a dispute over the terms of the restructuring led to a breakdown in negotiations in November.

Kuwait Finance House (KFH) reported a net profit of $10m following the liquidation of a real estate fund targeting the Turkish market.
The liquidation process seem to come with a return on investment of 14 percent.

After a meeting of The Board of Directors ("the Board") of The Investment Dar on the Nov 25, 2010, the Company issues the following update on its financial restructuring.
The letter gave notice of the CC's resignation effective at the close of business Nov 28, 2010 to immediately begin negotiations on an alternative 'Debt for Equity' proposal and to issue invitations to shareholders to attend an OGM/EGM to discuss a restructuring plan based on this principle.

After a dispute over a restructuring plan Kuwait's Investment Dar has announced that the panel representing most of its creditors has resigned. The coordinating committee of debtors wanted the firm to give up 90% of the company in return for less than half of the debt.

Aref Investment Group signed an agreement with creditor banks to restructure a one-billion-dollar debt.
The deal allows the group to repay the debt over five years with an 18-month grace period.

With trouble at financial institutions in the Middle East concentrated in the Gulf, particularly in the UAE, Kuwait and to some extent Bahrain, the banks know that putting all of their investment eggs in the Gulf's basket makes for inadequate and ultimately dangerous geographical narrowness.
Given the Gulf's unique circumstances, it may make more sense for banks to sell off lines of business where they are weak and acquire parts of other banks where they want to become stronger.

In a recently published quarterly report by Kuwait Financial Centre "Markaz", which aims to analyze the performance of over 150 equity funds across the region, GCC markets were positive in the third quarter as all markets saw gains following a lackluster summer and slow Ramadan month. The Dubai World debt issue was resolved with creditors coming on board for the restructuring.
Fund managers continue to favor Saudi Arabia, with an allocation of 42% though down from 45% in June 2010.

Kuwait Finance House (KFH) CEO Mohammed Al-Omar stated that that the Fatwa and Shariah Supervisory Authority has embodied the moral and social responsibility towards the society as a unit that operates in harmony to protect the client by ensuring that all banking transactions are Shariah compliant. The authority has played a pivotal role in developing numerous products that caused a paradigm shift in the in the history of Islamic banking. He appealed to governments to resort to Sukuk, since Sukuk have greatly succeeded in financing many projects, which made Sukuk highly demanded by worldwide.
Al-Omar added in a paper that he presented during the Islamic Financial Institutions Forum in Beirut, that Sukuk are considered to be the Shariah compliant alternative for bonds, were not granted an opportunity to highlight its role as a suitable financing tool, despite the advantages that Sukuk have, such as creating assets that have a specific value, which makes the financing process based on real tangible assets, in addition to the fact that it does not burden governments and companies.

Kuwait Finance House (KFH), the country’s biggest Islamic lender, saw an 11 percent drop in loan loss provisions in the first nine months of the year.
On Thursday, KFH posted a 23 percent decline in third-quarter net profit. Net income in the three months to Sept. 30 fell to 26.5 million dinars compared with 34.3 million dinars with the same period a year ago.

A report prepared KFHR Limited, a subsidiary of Kuwait Finance House (KFH), brought attention to the fact that the financing deals in compliance with the provisions of Islamic Sharia'a contributed to the growth of aviation and shipping sectors in the region.
This growth was achieved through huge financing deals concluded over the past few years and introduced benefits to these sectors.
The report, which addresses in detail the issues relevant to Islamic finance industry, aviation and shipping, explains that the aviation sector which is seeing strong growth in demand since it emerged from the rescission crisis in 2003 to reach a peak demand in 2007, seems to poise for further recovery given several key factors to support this fact. This level is therefore supported by: (i) rapid development of aviation sector in emerging markets; (ii) booming of low-cost carriers; and (iii) replacement of less efficient aircraft. The overall volume of deals compliant with the provisions of Islamic Sharia'a reached during the period from August 2006 to August 2010, $1.882bn through various structures of Islamic financing.

With the room for further organic growth being limited, mergers and acquisitions should be considered as an avenue for sustained growth, says A.T. Kearney.
According to A.T. Kearney, the global financial crisis has put an end to the heydays of growth in the banking sector and the current market outlook suggests that these days are not returning quickly. Islamic banks, which traditionally grew faster than their conventional peers, are also affected.
The global financial crisis highlighted the need for consolidation in the Islamic banking industry in the region. Growing out of their niche and becoming mainstream business is considered one of their major challenges and if Islamic banks do not succeed, the room for further organic growth is limited as the market space in some GCC countries is already overcrowded.

Kuwait Financial Centre (Markaz) in its recent research on the GCC Fixed Income Market has highlighted the trends in the Kuwaiti bonds and sukuk market during the period from 2003-2009.
CBK issued 1) Treasury Bills, which are debt obligations with maturities of less than one-year and no periodic interest payments, 2) Central Bank Bonds, which are debt obligations with maturities of less than one-year carrying a fixed coupon rate, and 3) Treasury Bonds which are debt obligations with maturities greater than one-year with a fixed coupon rate.

Gatehouse Bank, London-based Shariah-compliant wholesale bank, is planning to launch a £70 million (Dh410m) Islamic bond (sukuk) next month.
In an exclusive interview with Emirates 24|7, Fahed Boodai said the sukuk is targeted at the UK corporates and is expected to be completed in November.
Simon Eedle added that the time is also right for sukuk issuances outside of the Gulf region and he expects more investment money from the West to tap the Islamic finance market in 2011.

Gulf Finance House (GFH), the troubled Islamic investment bank based in Bahrain, wants to raise up to US$500 million (Dh1.83 billion) from investors after declines in Gulf property prices and the fracturing of its business model led to huge losses last year.
GFH was among the hardest hit in the region by the financial crisis and is one of many in Bahrain and Kuwait forced to restructure debts and rethink their methods for raising money, making investments and borrowing.
Shareholders are also to vote on a consolidation of shares through which four old shares would be exchanged for one new.
And the bank will seek a reduction in capital, which observers say will allow it to swallow accumulated losses and start paying dividends immediately after raising new capital. The consolidation would reduce the number of shares on the market but would not affect the company's market value.
Hit by a lack of revenues to finance its operations and pay debts, GFH was forced to reach new terms with creditors on hundreds of millions of dollars of debt.

Persian Gulf Islamic bond issuers are avoiding collateral based on real estate after Dubai property prices plunged 50 percent.
Debt linked to returns from oil fields, aluminum and manufacturing plants are more popular with investors than property.
Defaults by some companies have increased concern among investors about risks associated with Islamic bonds. International Investment Group KSCC, an Islamic financial company based in Safat, Kuwait, said July 26 it was unable to pay $152.5 million to bondholders who demanded immediate repayment after it defaulted on a $200 million Islamic bond.

Standard and Poor's Ratings Services has lowered its counterparty credit and insurer financial strength ratings on First Takaful Insurance Co. to 'BB+' from 'BBB-'. The Kuwait-based insurance company's ratings were removed from CreditWatch. Outlook is stable. "The outlook is stable because we believe that First Takaful will be able to prevent further weakening of its capitalization and operating performance within the next 12 months," said Standard & Poor's credit analyst Wolfgang Rief.