IslamicFinance.de

Saudi developer Salman Abdullah Bin Saedan Real Estate Group is planning a debut sukuk issuance in the coming months. Proceeds from the sukuk would be used for Saedan’s social housing projects, which aim to address a shortage of affordable residential properties in Saudi Arabia. The $1 billion sukuk programme will be set up by Ibdar Bank, which was formed in 2013 through a three-way merger of smaller Islamic lenders. The bank's Director of Capital Markets Ikbal Daredia said the sukuk programme would be listed on the Irish Stock Exchange with a possible listing on Nasdaq Dubai. Ibdar Bank aims to bring on board one or two international banks and regional partners as joint lead managers for the deal.

Saudi nationals have been warned against embarking on hazardous investments in cryptocurrencies. According to the Capital Market Authority, there is no monetary oversight inside Saudi Arabia over digital currencies which involve high risks. It warned that digital currencies expose investors to speculative bubbles, loss of capital, fraud, high market volatility, cyber hacking and lack of transparent evaluative regulations. The Capital Market Authority also said that it would be difficult to protect investors as Saudi Arabia has no oversight on the digital currency.

Saudi Arabia is watching the cryptocurrency market closely. According to Mohammed ElKuwaiz, chairman of Saudi Arabia's Capital Markets Authority, the authority is still evaluating the appropriate response and some regulations might be coming soon. However, the regulator comments indicate we should not expect any ban on cryptocurrencies. This is because the local Bitcoin craze has not reached the proportions seen in China or South Korea. There are several cryptocurrency-oriented companies that provide services in the kingdom. Before imposing any regulations, Saudi Arabia would like to see how the new markets behave, so it has left the door open for pilot projects from startups that operate with emerging technologies. Local regulators have initiated a sandbox program to facilitate such activities.

Saudi SEDCO Capital announced the offering of its first Shariah-compliant real estate investment traded fund SEDCO Capital REIT. The fund will be offered to the general public through an initial public offer during the period of Jan. 24 to Feb. 6. With an occupancy rate of over 92%, SEDCO Capital’s real estate portfolio has grown to include seven assets across various geographical regions. According to CEO Hasan Al-Jabri, SEDCO Capital Real Estate Income Fund targets to generate an initial net yield of 7% through the acquisition of additional assets and by utilizing capital. To facilitate the offering period, three receiving entities were appointed for investors to subscribe, these include NCB, Al Rajhi Bank and Samba Financial Group.

The Islamic Corporation for the Development of the Private Sector (ICD) signed a Memorandum of Understanding (MoU) with JANA Bena'a Productive Families of Saudi Arabia in order to test a new banking model named Biniog Sathi. The MOU was singed by Khaled Al-Aboodi, the CEO of ICD and Mohammed Al Khamis, Chairman of JANA Bena'a Productive Families. The new banking model will resolve the problem of credit default in the banking industry with the help of Zakat and Sadaqa. JANA Bena'a Productive Families Centre provides interest free loans to support women in starting their own businesses.

Saudi Arabia has asked banks for proposals to refinance its $10 billion international syndicated loan. The refinancing of the loan, which was raised in 2016, will include a repricing of the facility and the extension of its maturity to 2023 from 2021. An Islamic finance tranche using a murabaha structure will be added to the loan. Fahad al-Saif, president of the debt management office, said the plans were a step towards Saudi Arabia's ambition of establishing a prominent position in international debt markets as part of its economic reforms. The country's $10 billion syndicated loan in early 2016 was followed later that year by a $17.5 billion debut bond issue, the largest bond ever sold by an emerging market issuer.

The proposed merger of Saudi British Bank (SABB) and Alawwal Bank has been delayed but not derailed. The two banks announced in April that they had agreed to start talks, but progress has since faltered because of the complexity of the deal. Progress on the SABB-Alawwal merger has taken longer than expected because the regulatory environment for bank acquisitions in Saudi Arabia is relatively untested. Meanwhile, dozens of princes, high officials and senior businessmen were detained in November in a corruption crackdown. Among those was SABB vice chairman Khalid Bin Abdullah al-Mulhem. Almost all banks in Saudi Arabia were affected by the crackdown when authorities ordered the freezing of more than 2,000 accounts across the sector. A merged Alawwal and SABB would rank as the third-largest bank in Saudi Arabia with assets of $77.6bn, behind National Commercial Bank and Al Rajhi Bank.

The Middle East faces a very tricky 2018. War rages in Yemen. Qatar and its neighbours are at loggerheads, in an inter-Gulf feud without precedent. Saudi Arabia is purging its princes. But bond and loan markets are placid. Overall borrowing in the region in 2017 came in at a much higher level than before the oil price fell in 2014. The feeling across the capital markets is firmly that although the region poses risks, it is also rife with opportunities for 2018. One country where that optimism might not be so high is Qatar. The political turmoil in the region has reined in debt capital market bankers’ enthusiasm about Qatar, once the jewel of the Middle East capital markets. On June 5 last year, Saudi Arabia, the United Arab Emirates, Bahrain, Yemen, Egypt and Libya cut diplomatic ties with Qatar and installed sanctions over allegations of the emirate’s links to terrorist groups. In December 2017, Qatar National Bank and Commercial Bank of Qatar approached the international loan market. Now banks are brushing their concerns aside and bankers are more optimistic about Qatar’s funding capability.

Improving insurance profitability is expected to result in Islamic insurance players refocusing their sectors. According to Moody’s analyst Mohammad Ali Londe, the motor and medical insurance sector have benefited most from the recent premium rate increases in Saudi Arabia and UAE. Therefore, Moody's expects Takaful operators to refocus their underwriting and servicing operations on these lines. Previously, weak underwriting results in the core medical and motor lines forced Takaful insurers to widen their product offerings. GCC Takaful insurers’ results for the first nine months of 2017 reveal that underwriting profitability has improved in most countries. In UAE, motor premium rates rose in 2017 as a result of the country’s new unified motor policy which provides standardised coverages. The improvement in Takaful insurers’ underwriting profitability has started to reverse the previous deterioration in their capital adequacy.

The first phase of the King Abdullah Financial District project is due to be launched next year. The business hub in Riyadh has been under construction since 2006 and will soon get a fresh lease of life under the management of the kingdom’s sovereign wealth fund. The Saudi Public Investment Fund (PIF) will take over the management of the King Abdullah Financial District from the Public Pension Agency. As outlined in the Saudi Vision 2030 plan, the new hub is to be an economic free zone with visa exemptions and a direct connection to the airport. The government is now exploring new incentive options to attract financial institutions to occupy space in the district. The 73-building development has been restructured to reduce office space and increase the number of residential units.

Saudi Arabia's Public Investment Fund (PIF) has finalized a deal to take over the management of the King Abdullah Financial District from the Public Pension Agency. As outlined in the Saudi Vision 2030 economic reform plan, the financial district is to be an economic free zone with visa exemptions and a direct connection to the airport. The first phase of the project is due to launch next year with plans to host the G-20 meeting there in 2020. The government is now exploring new options to attract financial institutions to occupy space in the district. The 73-building site has been restructured to reduce office space and increase the number of residential units. PwC and local regulator Capital Market Authority are among the companies due to take space in the area.

Financial services company Saad has been ordered to pay around $668 million to Citicorp Trustee Company and Golden Belt Sukuk Company. Saad's obligations are tied to sukuk bond and linked to the leasing of land in Saudi Arabia. The judgment was handed down Friday in London's High Court, where Judge Peter Macdonald Eggers ordered Saad to honour its obligations.

The Islamic Corporation for the Development of the Private Sector (ICD) and Mizuho Bank have formalized the signing of a Murabahah deal. The financing is earmarked for the purpose of scaling up of ICD’s projects in its selected 55 member countries. The $150 million Murabahah agreement is the second bilateral Islamic facility that has been extended to ICD by Mizuho Bank. The agreement was signed by Khaled Al Aboodi, CEO of ICD and Shojiro Mizoguchi, CEO of Mizuho Bank. Al Aboodi expressed his strong support for the partnership. Shojiro Mizoguchi said he was very proud to continue to work with ICD and looking forward to leverage on each other’s expertise and experience.

Some of Saudi Arabia's most powerful men were arrested in October as part of a fight against corruption. The government freezed the accounts of the more than three dozen men totalling $33 billion of net worth. The series of arrests has implicated the country's richest people, including Prince Alwaleed bin Talal, Bakr Binladin, Mohammed Al Amoudi, Saleh Kamel and Nasser Al Tayyar. Prince Alwaleed bin Talal is No. 50 on the Bloomberg Billionaires Index ranking of the world's 500 richest people, with $19 billion. Two of the four Saudis on the Bloomberg index haven't been detained, hotel magnate Mohamed bin Issa Al Jaber, who has an $8.3 billion fortune, and Prince Sultan Bin Mohammed Al Kabeer, the biggest individual shareholder in food processor Almarai Co., who has $4.7 billion.

Saudi billionaire Maan Al-Sanea is accused in the English courts of a $650m (£495m) fraud that has triggered a battle between hedge funds and the French bank BNP Paribas. He was arrested by Saudi authorities in October on charges of evading justice and owing large sums of money to creditors. Maan’s Saad Group collapsed in 2009, triggering a long battle to recover billions he had shipped offshore to the Cayman Islands. The High Court trial concerns the arrangement of a $650m sukuk, which was paid to Mr Maan personally to lease land he owned. Judgment in a separate claim brought by the hedge funds against him is due on Thursday. Subsequent arrests of prominent Saudi businessmen sparked debate over whether the moves represent consolidation of power or a genuine crackdown on corruption.

Working closely with Accenture, Al Rajhi Bank has successfully implemented a fully dedicated payment service hub solution. The new hub adds a new payment alternative for all of the bank's payment products and services. In addition to delivering a silo-breaker architecture, the Payment Services Hub (PSH) is designed to reduce time to market for new products, while simultaneously reducing risks. Al Rajhi Bank's CEO, Waleed Al Mogbel, said the new Hub would enable the bank to deliver a leading customer service and increase operational efficiencies. The PSH opens up opportunities for the bank to develop new revenues streams for corporate and retail banking, particular around open banking and real-time payments.

Saudi Arabia’s Jabal Omar Development Company has hired two banks to manage a sukuk sale which could exceed 4 billion riyals ($1.07 billion). Bank Albilad and GIB Capital were hired to arrange the issuance, which is planned for the first quarter of 2018. The property developer's sukuk would be among just a few corporate debt sales expected over the next few months, as the Saudi market is still largely dominated by government bonds. The government has issued a total of 47 billion riyals through monthly sukuk sales since July, and is likely to continue. Jabal Omar’s flagship Mecca development project includes residential units, hotels and commercial malls. The company has raised a number of large bank loans over the past few years, and the sukuk proceeds would be used to refinance its existing bank debt.

Thomson Reuters will provide Alinma Bank with a Shariah-compliant application. It will fully automate deal workflow for Shariah-compliant financial transactions. The application provides a real-time view of Shariah-compliant deals, through an automated online system that minimizes the process of tracking transactions. Alinma Head of Treasury, Abdullah Al Zahrani, said that he was pleased to be the first bank in Saudi Arabia to partner with Thomson Reuters to bring innovative solutions to the Shariah-compliant banking. Nadim Najjar, Managing Director for MENA at Thomson Reuters, said this innovative application would automate the validation process and offer a seamless digital solution for the industry.

Saudi Arabia’s insurance industry needs more consolidation and foreign input to help create solid companies. According to Ahmed Alkholifey, governor of the Saudi Arabian Monetary Authority (SAMA), there are some small firms which are incapable of surviving in the market in their current condition. There are 33 insurance firms listed on the country’s stock exchange with a combined market value of $11.1 billion. The governor said two foreign firms would soon increase their stakes in Saudi insurance companies, but did not mention names. Banque Saudi Fransi sold an 18.5% stake in Allianz Saudi Fransi Cooperative Insurance to Allianz Europe BV. In June, Al-Ahlia Insurance started non-binding talks with Gulf Union on a proposed merger. An agreement is expected to be reached by the first half of 2018.

Saudi Arabia plans to issue an international sukuk in the first quarter of 2018. Fahad Al-Saif, head of the debt management office, said the government would issue domestic sukuk in November and December. Saudi Arabia issued its debut international sukuk earlier this year, raising $9 billion.