Saudi Arabia

Saudi insurer Malath to capture greater efficiencies in managing Sharia Compliance

Malath Insurance announced today the assignment of Shariyah Review Bureau (SRB) certification and Sharia audit services to help maintain and supervise Sharia compliance. Malath offers comprehensive solutions covering classes of insurances like property, engineering, construction, health and medical for its retail and corporate customers. It currently has about 336 employees and 5 offices throughout Saudi Arabia. Malath CEO Fawaz A. Al Hijji believes that bringing Shariyah Review Bureau on board will strengthen trust in stakeholders and will provide significant scale with low input costs for certifying and auditing Sharia compliant products and investments.

SAMA updates actuarial regulations for insurance sector

The Saudi Arabian Monetary Authority (SAMA) has updated actuarial regulations of insurance and reinsurance companies and is calling on the public and interested parties to provide their comments and views on the draft project. The regulator seeks to protect policyholders as well as develop and regulate the performance of actuaries in addition to the development of promising career and professional opportunities for young Saudis. Saudi Arabia said that actuary plays an important role in the design and pricing of products, in addition to work on financial reports and risk management and internal audit.

#Saudi Arabia's new bankruptcy law faces key test in the courts

Saudi Arabia's new legislation is part of broader efforts to overhaul the economy, create employment and wean off the economy from reliance on hydrocarbons. Simeon Djankov, World Bank Senior Research Director and Founder of the Doing Business Report, said the bankruptcy law was passed and now investors are eager to see whether the courts actually understand how to implement it. Djankov believes the merit of the law should become clearer in about a year after courts handle initial cases. Only three cases were settled using the new bankruptcy law and around a dozen more are expected to be resolved over the next year. Resolving insolvency was an area of improvement for Saudi Arabia, climbing 30 places to 62nd in the World Bank report.

Gulf Bonds Go From Haven to Hazard as Saudi Strikes Stun Market

Money managers poured into the Gulf region till Saturday’s unprecedented attack on Saudi Arabia’s key oil facilities. That drove record gains for bonds in August as they sought refuge in securities boasting an average credit score of A+ amid global trade tensions. According to a Bloomberg Barclays index, Saudi Arabian bonds handed investors the biggest loss, about triple that of Qatari securities. The strikes in Saudi Arabia could escalate into a showdown, with the kingdom and U.S. on one side, and Iran and proxy groups from Yemen to Lebanon, on the other. Iranian-backed Houthi rebels in Yemen claimed responsibility for the assault and warned that oil installations in the Arab nation remain a target.

#Saudi Arabia warns against dealing in #cryptocurrencies

Saudi Arabia’s Ministry of Finance has warned against dealing or investing in digital currencies including cryptocurrencies as they are not recognised by legal entities in the Kingdom. The finance ministry stated that digital currencies are outside the scope of the regulatory framework and are not traded by financial institutions in Saudi Arabia, adding that such cryptocurrencies have been associated with fraudulent activities and attract suspicion. The use of Saudi Arabia’s name, national currency or emblem by any entity for digital currencies marketing will be subject to legal actions.

#Saudi peer-to-peer funding platform signs with SRB

Saudi peer-to-peer funding platform Raqamyah has assigned the Shariyah Review Bureau (SRB) to manage the Sharia compliance affairs of its crowd-funding technology. Raqamyah founder Ammar Bakheet said the company was developing faster ways of connecting funders with SME’s and also enact the spectrum of SAMA’s regulations in the Kingdom. Shariyah Review Bureau, founded in 2004 in Saudi Arabia and licensed by Central Bank of Bahrain in 2007 provides Sharia advisory services from setting up Sharia Boards to Sharia certification and Sharia audits. SRB founder Yasser S Dahlawi said the collaboration with Raqamyah makes SRB the preeminent choice of Sharia Advisor for P2P firms seeking to offer crowd-funding opportunities in the Kingdom.

Lendo enlists SRB for Sharia supervisory services

Saudi-based Lendo has engaged Shariyah Review Bureau (SRB) to help support its Shariah supervisory function by overseeing its offerings, crowdfunding structures and operations. Lendo has been working to acquire its license in Saudi Arabian Monetary Authority’s sandbox regulation while continuing to focus on developing peer to peer funding practices in light of Shariah compliance. Lendo CEO Osama Al Raee expects Shariyah Review Bureau to contribute to the further optimization and improvement in Sharia supervisory oversight and optimize their Sharia risk management system. SRB founder Yasser S Dahlawi said the focus will be to evaluate and optimize existing Sharia control procedures and business processes to ensure well-grounded Sharia structural guarantees.

#Saudi Arabia's Arbah Capital buys Glasgow's Sauchiehall building

Saudi Arabia-based Arbah Capital has acquired the Sauchiehall building in Glasgow, UK, valued at $76m (SAR285m), through a sharia'a-compliant investment structure. Arbah Capital stated that the acquisition represented a core long term investment and would help attain value at a time of uncertainty in the UK. The investment firm added that the Sauchiehall building aligned with its main strategy to focus on acquisitions of distinctive assets. The mixed-use property is a 2.87ha LG+G+6F structure, and features a multi-storey car park as well. Arbah Capital's CEO Mahmood Al Kooheji says this purchase enhances Arbah’s strategic alliances and relationships which further supports its position as an international gateway into the investment market.

SAMA fines 16 financial institutions for violating principles of responsible finance

The Saudi Arabian Monetary Authority (SAMA) has fined 16 financial institutions for violating principles of responsible finance and has instructed them to correct the violations. SAMA stated that the fines were imposed in order to implement principles of justice and transparency without providing details of the fines. The central bank fined some of the Kingdom’s major financial institutions such as Al-Rajhi Bank, Al-Ahli Bank, Saudi Fransi Bank as well as Al-Riyad Bank, Al-Jazira Bank and Dubai-based Emirates NBD Bank. SAMA said that the fines were imposed to ensure fairness and competitiveness of financiers.

Goldman Sachs brings forward claim linked to Saudi debt saga

Goldman Sachs has bought forward a claim against Bahrain’s TIBC whose default 10 years ago triggered the biggest financial crisis in Saudi Arabia. The Bahraini lender raised money in international markets, transferring the funds to now defaulted Saudi conglomerate Ahmad Hamad Algosaibi and Brothers (AHAB). After TIBC defaulted on a foreign exchange deal, AHAB collapsed along with another Saudi conglomerate Saad Group, leaving an estimated $22 billion in unpaid debts. TIBC, administered by the Central Bank of Bahrain, has a claim of around $3 billion against AHAB, while more than 60 banks that have lent money to TIBC remain unpaid.

Dar Al Arkan set to redeem $400m Islamic bond

Saudi Arabia’s Dar Al Arkan Real Estate Development Company aims to redeem its $400-million sukuk by using internal cash reserves. The sukuk, listed on Irish Stock Exchange and Nasdaq Dubai, is set to mature on May 28, 2019. Over the last decade, Dar Al Arkan has issued nine international sukuks and post redemption of 2019 sukuk and Dar will continue to have $1 billion of sukuks. CEO Andy Raheja said that Dar Al Arkan had cash and cash equivalents near SR5 billion. Given the strong free cash flow conversion, the company sees no immediate need to issue any new Sukuks for the foreseeable future.

#Saudi Arabia's Al Rajhi Bank to boost mortgage #lending

Al Rajhi Bank aims to boost mortgage lending as more affordable housing comes on the market. CEO Steve Bertamini said the bank's mortgage book grew 27% year-on-year in 2018 and it is looking for double digit growth for the next two to three years. Al Rajhi, which has traditionally focused on consumer banking, has been expanding its exposure to the private sector. It also sees opportunities in project finance as public-private partnership contracts for water and renewable energy start to be awarded. Saudi Arabia's economy grew in the fourth quarter of last year at its fastest rate since early 2016 due to an expanding oil sector. Fourth-quarter gross domestic product grew by 3.59% from a year earlier.

#Saudi Arabia sells 4 billion riyals of domestic #sukuk

Saudi Arabia's finance ministry sold 4.0 billion riyals ($1.1 billion) of domestic Islamic bonds in its monthly auction. The issuance is actually a re-opening of the issue originally made in July. The ministry sold 2.25 billion riyals of five-year sukuk, 500 million riyals of seven-year and 1.25 billion riyals of 10-year, bringing the total issue size to 7.465 billion riyals.

Hill International to Provide Project Management for Bank Aljazira Project, Supporting #Saudi Arabia National Vision 2030

Hill International has received a three-year contract from Bank Aljazira to provide project management services for Aljazira’s Regional Management Office Building in Riyadh. The project will be one of Riyadh’s landmarks, reflecting Bank Aljazira’s image and its alignment with the Saudi Arabia National Vision 2030. The project location is planned to be north of the Capital, in the center of new major developments for the next 20 years. Hill International provides program management, project management, construction management and other consulting services to clients in a variety of market sectors. According to Engineering News-Record magazine, Hill International is the eighth-largest construction management firm in the United States.

#Saudi’s Al Rajhi Bank says expat exodus could impact its remittance business

Al Rajhi Bank expects low-single digit loan growth for the rest of 2018 as it curtails its loans while economic reforms take shape. A plan to reduce reliance on expatriates to generate jobs for Saudis has seen the number of foreign workers fall by more than 700,000 since last year. Al Rajhi's CEO Steve Bertamini said the expatriate exodus might have some impact on its remittance business. The bank has already seen an overall rise in banking for women and car loans for women have begun to rise substantially from a low base. Bertamini said that their entry into the workforce will mean more demand for accounts, loans and saving products.

Mortgages set to boost lending at #Saudi banking giant Al Rajhi

A jump in mortgages and a recovery in Saudi Arabia’s economy may help Al Rajhi Bank to reverse a decline in lending. According to CEO Steve Bertamini, higher government spending and faster economic growth amid higher oil prices should help the revival. Home loans have risen as much as 6% this year and there are 450,000 Saudis eligible to purchase a home under one of the government programs. Saudi Arabia’s new housing project announced in February includes an 18 billion riyal ($4.8 billion) loan-guarantee program to boost access to funding and 12.5 billion riyals to support down-payments. Al Rajhi Bank in July reported an 18% rise in second-quarter profit to 2.57 billion riyals. According to Bloomberg economists, Saudi Arabia’s economic expansion will accelerate to 1.6% this year from 0.9% in 2017.

#Saudi refinance firm mulls #Sukuk issuance to fund mortgage drive

The Saudi Real Estate Refinance Company (SRC) plans to begin issuing sukuk in late September or early October 2018. SRC aims to refinance 20% of Saudi Arabia's primary home loans market, which authorities hope to expand to SAR 500 billion by 2020. Currently Saudi Arabia’s primary home loans stands at SAR 290 billion. Fabrice Susini, CEO of Saudi Real Estate Refinance Company, said that the company will now begin issuing Sukuk to raise money, first in Saudi riyals but eventually in foreign currencies. The company was founded in 2017 by the Public Investment Fund (PIF) and has so far operated with financing from the sovereign wealth fund and short-term deals with banks.

Saudi-based ITFC, Federated Investors to launch $300 mln trade finance #fund

The Saudi-based International Islamic Trade Finance Corp (ITFC) plans to launch a $300 million fund alongside U.S. fund manager Federated Investors. The sharia-compliant fund is expected to launch later this year and would invest in energy-related structured trade, supply chain financing and project finance assets of sovereign entities. The fund will be managed by ITFC with input from Federated Investors. The two firms have worked together on Islamic trade finance transactions since 2014.

#Saudi Arabia’s first #sukuk issuance through primary dealers positive for Islamic capital market development

Saudi Arabia announced the completion of its first sukuk issuance under the primary dealers program. The Saudi government has been a regular issuer of Islamic bonds since the Ministry of Finance established a Saudi riyal-denominated sukuk program last year. In the new primary-dealer system, the Saudi debt management office appointed five local banks to act as primary dealers for local government securities, namely National Commercial Bank, Samba Financial Group, Saudi British Bank, Bank Al-Jazira and Alinma Bank. The appointed primary dealers purchase sukuk sold at auction directly from the government and later place these securities in the secondary market for final investors, acting as market makers for government securities. The government expects that the primary-dealers scheme will develop the local government sukuk market and the debt capital markets in Saudi Arabia.

New Saudi bankruptcy law 'tries to find balance' between investor and creditor interest

Saudi Arabia’s new bankruptcy law will come into effect in late August and aims to attract foreign and domestic investment in private businesses. The new law is designed to outline bankruptcy proceedings and will offer protection to creditors and embattled companies seeking to conduct their affairs without fear of asset seizure. According to lawyer Dario Najm, an associate in Ahmad bin Hezeem & Associates, the new law allows indebted corporations to maintain their operations while gradually settling their debts. Creditors and debtors will enter into agreements on debt payment schedules. When implemented, the law will be the sole regulation covering bankruptcy, effectively replacing previous rules passed in 1996.

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