Asia

#Malaysia's Public Sector Home Financing Board issues RM3.25b #sukuk

Malaysia's Public Sector Home Financing Board issued up to RM3.25 billion sukuk to finance housing loans to the public sector employees. The board is also known as Lembaga Pembiayaan Perumahan Sektor Awam (LPPSA). The LPPSA said the RM3.25 billion sukuk notes formed a part of its RM25 billion Islamic commercial papers programme, which is guaranteed by the Malaysian Government. The sukuk was issued in tranches of five-year to 30-year and was priced at 4.17% to 5.225% per annum across tenures. Lead managers include Affin Hwang Investment Bank, AmInvestment Bank, Bank Islam Malaysia, CIMB Investment Bank, Maybank Investment Bank, OCBC Bank and RHB Investment Bank. CIMB is also the facility agent while RHB Islamic is the Shariah adviser.

The government initiates a #coup at #Bangladesh’s biggest bank

On the 5th of January military intelligence operatives phoned the chairman, a vice-chairman and the managing director of Islami Bank Bangladesh and brought them to the agency’s headquarters in Dhaka. A few hours later the bank’s board selected their replacements. Islami Bank has been of interest to the government for its association with the Jamaat-e-Islami, Bangladesh’s biggest Islamist party. In recent months, companies with ties to S Alam Group have built stakes in the bank, although the group denies any role in this. The new chairman, Arastoo Khan, declined to comment on the changes at the bank. The shareholders from Saudi Arabia and Kuwait were kept in the dark about the boardroom coup and complained bitterly about it. The Islamic Development Bank (IDB) questioned the rationale behind the changes and pointed out that there was no proper recruitment process. The Bangladeshi government has assured foreign shareholders that it will not let politicians loot the bank.

#Malaysia Remains Biggest #Sukuk Market as Record Number of Global Corporates Tap Sukuk

Global sukuk market resumed positive strides in 2016 after three years of consecutive decline. The sukuk market also witnessed an important shift where corporate issuers dominated the market in 2016 with USD47.3 billion volume of issuance, representing a share of 63.2%. This is in contrast to historical trends where issuance was driven largely by sovereigns. Overall, sukuk issuer profile remained similar to historical trends. Malaysia continued to be the main driver for sukuk issuance, commanding a market share of 46.4% of total issuances, followed by Indonesia and the United Arab Emirates (UAE), accounting for 9.9% and 9.0% share. Elsewhere, Turkey recorded a notable rise in sukuk issuance at USD4.1 billion for the year, supported by a number sovereign issuances with maturity ranging from one to five years. The year 2016 also witnessed issuances from Senegal, Jordan, Ivory Coast and Kuwait.

MAVCAP set to hit $50m first close for Meranti Fund, Elixir-partnered Islamic #Fund

Malaysia Venture Capital Management (MAVCAP) plans to announce a $50 million first close for two of its funds that will be launched this year, Asean Growth Fund and Global Islamic Economy Fund. The combined size of the two vehicles will be about $450 million. MAVCAP CEO Jamaludin Bujang said the Asean Growth Fund is $200 million vehicle, which is jointly launched with China-based Gobi Partners. This vehicle will be termed Meranti and will focus on later stage funding for technology related companies in Malaysia and Southeast Asia. In fact, MAVCAP is weighing options for the Islamic fund that is looking to invest in Shariah compliant and Halal sectors. Apart from the Asean Growth Fund and the Islamic fund, MAVCAP is also working on a clean-tech fund that will invest in companies that help reduce environmental stress. Bujang said the clean-tech fund could have a targeted corpus of anywhere between $50-$100 million.

#Indonesia's GDP Growth Curtailed by High Non-Performing Loan Ratio

Indonesian banks are expected to be cautious boosting credit disbursement because the non-performing loan (NPL) ratio is currently high with the gross NPL ratio hovering above 3% since mid-2016. Banks are now more selective in terms of credit disbursement, but this undermines the pace of the nation's macroeconomic growth. Although Indonesia managed to end the five-year economic slowdown in 2016, it is still far away from Indonesian President Joko Widodo's ambitious 7% GDP growth pledge. In fact, he revised his projection for Indonesia's 2018 GDP growth to 5.6% from a previous projection of a 5.4 - 6.1%. Thus, it should basically be impossible to see a 7% growth rate by 2017.

Moody's: Shariah-compliant #investment accounts at #Malaysian banks to continue growing

According to Moody's Investors Service, the growth of shariah-compliant investment accounts at Malaysian banks will remain strong over the next three to five years. Moody's Vice President, Simon Chen, said Malaysian banks have strong incentives to promote the growth of such investment accounts because they provide capital benefits. He added that concerns also exist over the untested state of loss-sharing mechanisms in the accounts. The robust growth of shariah-compliant investment accounts in Malaysia began in July 2015 following the implementation of the Islamic Financial Services Act 2013. By February 2017, these accounts had grown to RM74.2 billion, or 13%, of total banking system liabilities. On the question of risk, Moody's said that a significant loss event to test the resilience of this regime has yet to occur.

Mizuho opens $300m Islamic #credit facility to Jeddah group

Mizuho Bank #Malaysia opened a $300 million credit facility to the Islamic Corporation for the Development of the Private Sector (ICD). The two-year deal will finance projects in the member countries of ICD. According to ICD Chief Executive Khaled Al Aboodi, the $300 million accounts for 24% of funding programs earmarked by ICD in 2017. He added that funds could be disbursed for hospitals in Gambia, manufacturing facilities in Tajikistan or trade finance in Maldives. For Mizuho Bank Malaysia, the deal marks its first cross-border bilateral Islamic facility based on the concept of Murabahah. The bank's deputy CEO, Shinichi Nishiyama, said lending to ICD will expose Mizuho Bank Malaysia indirectly to the markets in Islamic countries and they are looking forward to a long-term partnership with ICD.

#Malaysia’s Maybank Islamic looks to home markets to drive growth

Maybank Islamic is turning to its home markets for growth, in particularly Indonesia where it manages $2 billion worth of assets and is aiming to compete with domestic Islamic banks. According to CEO Mohamed Rafique Merican, the bank could grow beyond its core markets of Malaysia, Singapore and Indonesia, but expansion in other markets would be opportunistic. Indonesia remains a key market for the bank, after Malaysia which accounts for 90% of the bank's business. As part of the ASEAN banking integration framework (ABIF), Indonesia and Malaysia have agreed in August to give their banks greater access to each other's markets. The move would give Malaysia's Islamic banks a potential lead to tap into the world's biggest Muslim-majority country, and one that continues to restrict to foreign lenders.

New CEO for Social Islami Bank

Shahid Hossain joined Social Islami Bank (SIBL) as chief executive officer. The bank also promoted Tarik Morshed as its additional managing director. Prior to joining SIBL, Hossain had been serving Southeast Bank as managing director. He started his banking career as a probationary officer with National Bank in 1983. He completed his MSS in political science from Dhaka University in 1980. Prior to the promotion, Tarik Morshed had been serving SIBL as deputy managing director. He has been with SIBL since its inception in 1995 and holds a master's degree in management from Rajshahi University.

#Tawarruq - the 'new kid' in islamic banking

Islamic financial products have evolved from simple and straightforward structures to highly sophisticated instruments. Tawarruq, popularly known as commodity murabahah, has become a new phenomenon in the Malaysian Islamic banking system. This is particularly after the issuance of a 2012 Bank Negara Malaysia circular on bay’ inah (sale and buy-back), which substantially tightens the syariah requirements. Since then, the Malaysian Islamic banking system has started to actively use tawarruq as an alternative to bay’ inah. Nevertheless, its extensive use has raised several questions. The International Islamic Fiqh Academy held in the United Arab Emirates in 2009 resolved that the modern practice of tawarruq is impermissible. As such, the Malaysian regulators and syariah committees have to put certain parameters and limitations in the use of tawarruq.

College to draft Islamic finance #curriculum

A #Kenyan college yesterday signed a three-year memorandum of Understanding (MoU) with Malaysian training university to develop curriculum on Islamic Finance. Coast International College (CIC) also signed a letter of collaboration with the Inceif, the global University for Islamic Finance owned by the Central Bank of Malaysia. The MoU was signed by college principal Loise Gichuki, Inceif president and chief executive Daud Vicary Abdullah. The programme will offer Diploma in Islamic finance. The Malaysia University will provide curriculum, course materials and lectures related to Islamic jurisprudence, Islamic Law of contract, financial accounting and fundamentals of Islamic Banking.

#Malaysia's Maybank Islamic looks to home markets to drive growth

Maybank Islamic is turning to its home markets for growth, in particularly Indonesia where it manages $2 billion worth of assets and is aiming to compete with domestic Islamic banks. According to CEO Mohamed Rafique Merican, the bank could grow beyond its core markets of Malaysia, Singapore and Indonesia, but expansion in other markets would be opportunistic. Indonesia remains a key market for the bank, after Malaysia which accounts for 90% of the bank's business. As part of the ASEAN banking integration framework (ABIF), Indonesia and Malaysia have agreed in August to give their banks greater access to each other's markets. The move would give Malaysia's Islamic banks a potential lead to tap into the world's biggest Muslim-majority country, and one that continues to restrict to foreign lenders.

#Fintech could solve Sharia contracts' puzzles

According to panellists speaking at the Finnovasia 2017 Conference, Shariah contracts' greater regulatory complexity can be eased by fintech solutions. Raja Teh Maimunah, CEO of Aminvestment Bank in Kuala Lumpur, stressed that the complex nature of Sharia instruments requires bankers take a different approach. Raja and her bank had wanted to digitise their banking transaction processes by introducing a new type of contract for current and savings accounts. It was eventually addressed with a fintech solution developed by one of her staff. Dato’ Yasmin Mahmood, CEO of Malaysia Digital Economy Corporation, pointed out that the growth of Malaysia’s digital economy currently stands at 17.8% of the country’s total GDP of $296.3 billion, and is expected to meet or exceed the 18.2% target set by the government for 2020.

Maybank Islamic launches new products to boost deposit base

Maybank Islamic hopes to attract RM2 billion (USD453 million) in deposits – within a year – by launching two new financial products. The products are Foreign Currency Mudharabah-i (FCM-i) and the Profit Now Account-i (PNA-i). FCM-i is a short-term Islamic foreign currency term deposit account based on the principle of Mudharabah. Dividends on FCM-i are based on an agreed profit-sharing ratio which is agreed up-front. The actual dividend will then be calculated on this ratio and the amount payable will be known upon maturity of the investment. The minimum deposit for individual customer is equivalent to USD5,000; tenures range from one to 12 months.

#Takaful Ikhlas to introduce online platform by year-end

Takaful Ikhlas aims to introduce its online platform for basic term life insurance to encourage youths to obtain insurance coverage. Senior Vice-President, Wan Rosli Shaharuddin Wan Yaacob is optimistic the online platform will attract youths as they will be able to compare the products' features, policies, as well as pricing via the platform. He said Malaysians below 35 years old currently constituted the largest group in the country who have yet to be covered by any insurance company. According to Bank Negara Malaysia (BNM) Financial Stability and Payments Report 2016, Malaysia's overall insurance penetration remained flat, within the range of 54% to 56% over the last five years. The central bank had earlier set the penetration rate target at 75% by 2020. It specifies that standalone protection products must be available through direct channels from Jan 1, 2017, followed by critical illness and medical and health insurance/takaful products by Jan 1, 2018.

Maybank Islamic unveils Islamic #Private #Wealth Solution

Maybank Islamic launched a new account for its Islamic private wealth clientele. The new feature will provide high net worth (HNW) clients with comprehensive private banking services. The bank explained that the enhanced platform will allow HNW clients to view and monitor their various Islamic investment portfolios holistically, in one single statement. The recent Asia Pacific Wealth Report by Capgemini indicates that the greatest enthusiasm for putting portfolios to work for social gain comes from high net worth individuals in the emerging markets of Indonesia, followed closely by Malaysia. Maybank's Group Head of Community Financial Services, Datuk Lim Hong Tat, said that Maybank Islamic provides an avenue for HNW individuals to earn returns in a more socially-responsible manner.

CORRECTED-#Indonesian global #sukuk may be issued this week -minister

Indonesia's finance minister Sri Mulyani Indrawati announced the government plans to issue a global sukuk this week. Indrawati did not give further details on the planned issuance. An official has previously said the government will issue global sukuk in the first half of 2017. According to Thomson Reuters, Indonesia has given initial yield guidance of 3.75% for a five-year tranche of the U.S.-dollar sukuk and 4.5% for 10-year tranche.

Bhaimia named CEO of Asian Finance Bank

Asian Finance Bank (AFB) has appointed Khalid Mahmood Bhaimia as its new chief executive officer effective from March 21, 2017. Bhaimia has over 20 years of experience in the global Islamic banking industry. He previously served as the CEO of Unicorn International Islamic Bank and RHB Islamic Bank as well as Hong Leong Islamic Bank’s managing director. AFP is a full-fledged Islamic bank and is backed by a consortium of shareholders comprising Middle Eastern financial institutions.

#Malaysia Woos #FinTech Devs for Shariah-Compliant Islamic Finance

Malaysia’s proximity in the ASEAN region and its mix of urban, suburban and rural population makes it a suitable environment for testing and launching FinTech solutions for the global Islamic Finance market. Datuk Yasmin Mohamood, CEO of Malaysia Digital Economy Corp (MDEC), has opened the country’s doors for FinTech startups and companies. Yasmin was speaking at the Finnovasia 2017 Conference in Kuala Lampur and claimed Malaysia as a viable test-bed for FinTech companies. He added that an organized FinTech ecosystem will be developed with the support of Bank Negara Malaysia and the country’s Securities Commission. In August last year, Bitspark partnered Malaysia’s Vitaxel to bring remittance solutions over the bitcoin blockchain. Later in December, Malaysian non-profit Blockchain Embassy Asia established a steering committee toward educating organizations about blockchain technology.

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