Americas

'Halal' Financing for Muslim Entrepreneurs Gains Currency

Bank of Whittier, a community bank in Los Angeles, offers Shariah-compliant products and is one of few institutions specialized in Islamic finance in the United States. The bank, whose staffers speak more than a dozen languages, markets itself to observant Muslim entrepreneurs. Deals are structured so that the bank buys into the venture with the entrepreneur, who runs the company and buys the bank out, with payments structured so that the bank is compensated for its investment. Profits and losses are shared; the overall cost tracks with a traditional loan repayment at a standard interest rate.

Texas Credit Union to Run on Traditional Muslim Model

Texas-based Jafari No-Interest Credit Union, designed for Shia Muslims, will cover costs with fees instead of interest. The current blueprint is to charge members a $3 monthly fee while the credit union tries to keep costs down. However, additional fees may also be charged to members in order to cover operating expenses and build capital.

Brazil farmers reap from Adep's financial lifeline

In order to allow Brazilian farmers to sell their crops between harvests and therefore achieve higher return, Abu Dhabi Equity Partners (Adep) provides inventory finance to them. In return, Adep takes title of the soft commodity. The Abu Dhabi firm has struck deals with Brazilian growers to provide financing worth $100 million for the first half of this year. Despite the risks in form of natural disasters the business has been widely welcomed by Adep founder Muneef Tarmoom's investors.

Sun Life Expands ASEAN Footprint

The Canadian life insurer InSun Life Financial c. (SLF) has forged an alliance with Khazanah Nasional Berhad (Khazanah) to jointly acquire 98% of CIMB Aviva Assurance Berhad, and CIMB Aviva Takaful Berhad. The remaining 2%will be retained by CIMB Group. The bancassurance agreement will cover a span of 20 years and will cost C$586 million. Through this transaction, SLF will be able to expand its international operations in Asia.

Financial lobby group warns on emerging markets

The Institute of International Finance (IIF) warns that rich-country central banks may end their stimulus measures for emerging markets and warned investors to be prepared. Although there are few indications that the world's central banks are about to change course soon, the risk for reversal of rates needs to be discussed in order to avoid a “boom-bust cycle”.

UM Financial bankruptcy comes to a close

Civil proceedings against former UM Financial CEO Omar Kalair and his associates have come to a close since prospects for recovery of expropriated money are limited even in case of a favorable judgment. However, the Royal Canadian Mounted Police and Office of the Superintendent of Bankruptcy are still investigating the events which may lead to criminal charges against Kalair and others.

ADEP closes Brazil's first Sharia compliant agricultural inventory finance transaction

Abu Dhabi Equity Partners (ADEP) closes first Sharia-compliant agricultural inventory finance transaction in Brazil. The investment deal is a combination of a mix of asset backed financing, capital and profit protection from Global investment bank, five to ten times US Dollar deposit yield pick-up, and global trading houses as counterparties. According to the Managing Partner of the company - Mr. Muneef O. Tarmoom - the combination of "back-to-basics" physical asset backed financing and Global 'A' rated banks' capital and profit protection features enables ADEP to originate financing opportunities with a yeald 5 to 10 times larger than current US Dollar murabaha rates. The company's landmark Brazilian agri-based inventory transaction shall serve to finance a leading sugar and ethanol producer in the state of Mato Grosso do Sul.

Bank secures sharia funding for Brazil

A Gulf investment bank has provided sharia-compliant funding worth millions of dollars for a Brazilian sugar and ethanol maker. The deal is an example of how smaller firms can be considered new investment possibilities for the wealthy Islamic lenders of the Gulf region. The deal is brokered by Abu Dhabi Equity Partners and will ensure financial means for an unnamed chemical alcohol producer in the Brazilian state of Mato Grosso do Sul. This will be at the same time a three-month investment opportunity for the lending company.

Gassner's picture

Outlook & Review 2012/2013

Dear Reader,

Islamic finance had another great year. Many of its market segments progressed, like for example the Sukuk market gaining more maturity. Despite the ongoing debt crisis a good sign of hope and happiness.

Nevertheless we are - as an industry - still not satisfied with the achievements. Islamic finance shall grow stronger in terms of social impact and in terms of substance:

Hence, please allow me to re-iterate my call for participating in international initiatives beyond just our own industry to learn and spread knowledge and experience:

Calling Islamic financial institutions to become member of the United Nations Finance Initiative
http://www.islamicfinance.de/?q=node/811

Inshallah we see more Islamic financial institutions taking a lead in SRI, Social Impact Investing and other approaches while contributing with Islamic finance knowdledge to the conventional industry. The time is now; and there are signs that Malaysia aims for a lead:
http://www.islamicfinance.de/?q=node/4151

Building a Healthy & Sustainable Social Impact Bond Market: The Investor Landscape

Building a Healthy & Sustainable Social Impact Bond (SIB) Market is the name of new report by Godeke Consulting that was supported by the Rockeffeller Foundation. The aim of the report is to explore the landscape of potential SIB investors in order to clarify the ways in which a sustainable market can be built up. Beside that, the report provides a look at social and environmental conditions and current economical issues.

Kuwait's KFH sells properties worth $298m

Kuwait Finance House (KFH) made an announcement about the sale of 16 real estate assets worth KD84m ($298m). Thus, KFH reorganises its property portfolio. No specific locations of the properties released from its portfolio across North America, south East Asia, and Europe were made public. According to Anwar Al-Ghaith, CEO of KFH, the sale aims to ensure better returns for investors and depositors.

Gatehouse Bank acquires US industrial real estate portfolio

Gatehouse Bank's acquisition of a diverse industrial portfolio of 19 operationally critical properties all over the USA has been competed. The properties are leased to 16 tenants, whereby the remaining lease term is 14 years in average. The portfolio is stabilised at 100% occupancy. The acquisition worth $178 million was carried out in partnership with the Brennan Investment Group (BIG).

Crowdsourced Credit Rating Providers Join Forces

Despite the worldwide domination of a few credit rating agencies, two not-for-profit rating providers announced their alliance. The agencies are Wikirating and Public Sector Credit Solutions (PSCS). They both use crowdsourcing techniques, thus aiming to improve credit ratings. Wikirating employs a technology similar to that of Wikipedia in order to gather and aggregate information and views about credit quality for multiple categories of bonds. PSCS has provided an open source software tool which is used to calculates default probabilities for government bonds. It also has fully transparent sample models and data sets.

Report “Believers in the Boardroom. Religious Organisations and their Shareholder Engagement Practices” by 3IG

The practitioners report “Believers in the Boardroom. Religious Organisations and their Shareholder Engagement Practices” by 3IG is online. Please access the practitioners report by clicking on the following link :

http://issuu.com/3ignet.org/docs/3ig_rse_practitioners_report_final_2012...

The report also remains available as hard copy: http://www.3ignet.org/documents/OrderRSEresearchnow.pdf

Zakat's Potential Role in Accelerating Global Development Discussed at the United Nations

New York, November 16, 2012: International development leaders and experts highlighted the importance of Zakat in advancing global development at a forum titled "Linking Muslim Giving to the MDGs". The forum was co-hosted at the United Nations headquarters by the Organization of Islamic Cooperation (OIC), The World Congress of Muslim Philanthropists, and the UN Millennium Campaign.

"While some countries have made impressive gains in achieving Millennium Development Goals (MDGs), others are falling behind. The Muslim world is no exception. Faith emphasizes building communities, sharing wealth and upholding the rights of the poor and marginalized. Faith-based giving such as Zakat which amounts to billions of dollars needs to be spent in more strategic and effective way to accelerate development in OIC member countries” stated Ambassador Ufuk Gokcen, the permanent observer of OIC at the United Nations, in his address.

Gassner's picture

Debt to Equity in Microfinance

Dear Reader,

The issue of debt vs. equity is now going to be increasingly recognised - in microfinance - as I found out today on the cfi blog:

"Debt to Equity. The demand for equity and subordinated debt is huge and continuing to grow, mainly coming from mature MFIs. More MIVs are moving away from debt toward equity, being driven in part by a desire to be more involved in governance, to play a larger role in risk management, and because the regulators are requiring more capital. Also, fund investors increasingly want to know how much of a fund’s return is coming from debt versus equity. Some of the larger DFIs need to disburse large amount of funds, so they have to make debt investments, leaving an unmet demand for equity."

http://cfi-blog.org/2012/11/19/microfinances-new-normal/

An important food for thought beyond microfinance itself in my opinion.

Best regards,

Michael Saleh Gassner

Gassner's picture

Why the lack of profit/loss sharing?

Well, repeatedly we read and hear about the lack of profit/loss sharing (equity finance) in Islamic finance. Here my five cents about it:

1) Islamic commercial law, Fiqh Muamalat, per se has no preference of either permissible mode of finance, be it musharaka, ijara or murabaha whatsoever. All is halal. However, the call for modesty of debt in many hadith and the seriousness of being indebted upon death (withholding of death prayer) shows a call for a solid equity portion in business; let's call it a technical preference.

2) If we look up all debt financing modes (e.g.Murabaha, Ijara) there are remaining difficulties to finance wages, rents and installments on fresh debt. This is a true indicator for a required minimum amount of equity in a company.

3) Point 1) and 2) leads us to demand a sound debt/equity ratio.

Islamic finance job openings October 2012

IslamicFinance.de offers an overview about new job openings of October 2012 herewith - firms aiming to be included please send a job profile/hyperlink to newsdesk@islamicfinance.de - the full details of the advert has to be accessed by the hyperlink below the brief description:

Product Manager, Islamic Banking

Standard Chartered Bank - United Arab Emirates-SCB (United Arab Emirates)
Job Description
?Development of Islamic wealth products across CBMS, insurance and investment streams to create customer value proposition.
?Ensure successful implementation of the Islamic banking strategy across high value segment.
?Concentrated responsibility to work with the Priority/Wealth/Private/SME product/frontline teams and support functions to build on the current Islamic banking capabilities and to create seamless customer experience
?Act as a product specialist for RMs on client meetings to introduce and explain the Saadiq solutions to meet their needs
?Financial budgeting and business forecast. Evaluation of financial performance.

Call for Papers: THE NINTH INTERNATIONAL CONFERENCE ON ISLAMIC ECONOMICS AND FINANCE (ICIEF)

THE NINTH INTERNATIONAL CONFERENCE ON
ISLAMIC ECONOMICS AND FINANCE (ICIEF)
Growth, Equity and Stability: An Islamic Perspective
10-12 September 2013, Istanbul, TURKEY

The Ninth ICIEF at a Glance

Recovery from the global financial crisis and subsequent economic downturn remains fragile. Persistent risks to financial and economic development include sluggish growth in developed countries – which is now spilling over into developing economies as well; increasing income and wealth inequalities; and still-unrestored financial, economic and political stability in many regions. High poverty and unemployment rates, large macroeconomic imbalances, deteriorations in sovereign credibility, increasing food price volatility and food shortages, and lack of access to basic infrastructure further intensify and magnify these risks – particularly for the underprivileged segments of the world population. As a result, for many countries it has become even more challenging to achieve the Millennium Development Goals (MDGs) set by the United Nations.

Shari'a-Compliant Home Financing in the United States

Islamic Finance Project
Islamic Legal Studies Program
Harvard Law School

Shari'a-Compliant Home Financing in the United States

A panel discussion featuring

Yusuf Talal DeLorenzo
Shari'a Consultant, Malfa Inc. Dubai, United Arab Emirates

Panelists:
Shahab Ahmed (Moderator)
Custodian of the Two Holy Mosques, Visiting Associate Professor of Islamic Legal Studies, Harvard Law School

Thomas Gainor
Senior Vice President and General Counsel, Guidance Residential, LLC, Reston, Virginia

David Loundy
Chairman of the Board of Directors, Devon Bank, Chicago, Illinois

Intisar A. Raab
Visiting Associate Professor of Islamic Legal Studies, Harvard Law School

Monday, October 29, 2012, 4:00 - 7:00 p.m.
Austin Hall North, Harvard Law School

For more information, contact Islamic Finance Project at
617-496-2296 or 617-496-2297 or ifp@law.harvard.edu

S. Nazim Ali, Ph.D.
Director, Islamic Finance Project &

Syndicate content