IslamicFinance.de

The leading global Islamic Finance accounting regulator is introducing conditions for contracts that comply with religious laws, seeking to standardize an industry with $1 trillion in assets under management.
The Bahrain-based Accounting & Auditing Organization for Islamic Financial Institutions will for the first time provide a “Shariah-compliant way” for parties to enter and exit contracts, Mohamad Nedal Alchaar, secretary-general of the agency, in Manama.
While civil law already offers legal cover in disputes, counterparties want protection based on Shariah principles, according to Dawood Islamic Bank Ltd. in Karachi, Pakistan. Establishing a global standard would bolster confidence for sukuk investors, said Madzlan Mohamad Hussain, a partner at Zaid Ibrahim & Co., Malaysia’s biggest law firm.

Emirates Islamic Bank is in talks to acquire Dubai Bank and possibly Islamic mortgage lender, Amlak, Arabic Al-Ittihad has reported, citing unnamed sources. The move is in line with Dubai's efforts to integrate small and medium-sized banks into larger more competitive banking entities. Talks are in the initial stages for the acquisitions.

The Cabinet has recently allowed Al Rajhi Group to issue Islamic Sukkuk (bonds) to expand its investments in the Kingdom. The government requested the group to coordinate with the Iftaa Department and to sell the bonds to local banks in order to obtain the approval.
Al Rajhi group has previously asked the government to work on procedures for issuing Islamic sukuk in order to be able to finance the establishment of two factories for manufacturing glass and steel on the basis of Islamic Shari? principles.

Because of market developments and increasing competition which has led to product innovation and diversity, the Prudential Financial Policy Department of Bank Negara Malaysia has reviewed the regulatory framework for insurance and Takaful products "to further enhance consumer protection while according greater flexibility for insurers and Takaful operators to respond to changing market conditions, both in managing risks and enhancing their competitiveness".
The guidelines, stressed Bank Negara, which is also the insurance and Takaful regulator in Malaysia, aim to improve the time-to-market for insurance companies and Takaful operators to introduce new products; to promote sound risk management practices in managing and controlling product risk; and to further strengthen the duty of care owed to consumers in ensuring that products developed and marketed are appropriate to the needs, resources and financial capability of targeted consumer segments.

The current size of the Islamic finance of $1 trillion could be doubled by 2020. This potential can only be exploited through innovation, diversification and consolidation which will create sustained growth patterns, a top official at the Central Bank of Bahrain told.
The seminar titled Business Models in Islamic Finance: Challenges and Opportunities, was organised by the Islamic Financial Services Board (IFSB) and was sponsored by the Kuwait Finance House (KFH).
As a result, the Governor added, projections of spectacular future growth of the industry which rely on extrapolating the growth trends of the last five or ten years may not be the best guide to the future.

he asset management side of Islamic finance, which has been at a virtual standstill in the $1 trillion industry, is set to break out of its rut as demand rises for investment products catering to Muslim laws.
There are signs that investment managers are slowly moving to tap demand for Islamic products. Qatar First Investment Bank and Gulfmena Alternative Investments last week unveiled plans for a sharia-compliant asset management firm.
Islamic investment products are commonly perceived to underperform conventional asset classes due to restrictions on investment avenues and the overall conservatism of portfolios. But the MSCI World Islamic Index has managed to outperform the conventional MSCI World Index over the last 13 quarters due to its focus on low-debt companies and non-financial stocks.
The global financial crisis added risk aversion to the mix, with institutions becoming shy about investing in new funds.

The two-day Third Islamic Venture Capital and Private Equity Conference beginning Tuesday would act as a platform for venture capitalists and private equity investors to keep them updated with global market trends and Islamic alternative investments in the region.
This year's conference would focus on ways to develop a sustainable Islamic venture capital and private equity industry as well as analyse the vast opportunities ahead.
The conference will be opened by Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah.

YARIKAT Borcos Shipping Sdn Bhd, Malaysia’s second-largest provider of offshore support vessels, had the A1 rating on RM160 million of Islamic medium-term notes placed on rating watch with a negative outlook at RAM Rating Services Sdn Bhd.
This reflects a decline in daily charter rates and low utilization of its offshore support vessels. A1 is RAM’s fifth-highest investment grade.

Shareholders of Kuwait’s International Investment Group (IIG) voted on Wednesday to cut the troubled company’s capital by more than half to cover its losses.

Indonesia, the world’s most- populous Muslim nation, is reviving sales of Islamic bonds two months after consecutive auctions fell short of target because of concern over insufficient trading volume.
Southeast Asia’s largest economy, home to more than 192 million Muslims, is seeking to develop its Islamic finance industry to catch up with Malaysia, the world’s biggest sukuk market. Indonesia’s finance ministry is seeking to spur growth in the market after sales dropped 9 percent in the first four months of the year from 2009, government data show. The Religious Affairs Ministry, which manages money collected from Muslims to fund pilgrimages to Mecca, will buy 2 trillion rupiah of the debt in a private placement next month.

The developer of the planned Muslim community center and mosque near ground zero hopes to finance the bulk of the $140 million project using instruments developed to allow many Muslim investors to comply with religious prohibitions on interest.
Most of that core group, Mr. Gamal,the developer, expects, would be non-Muslim neighborhood residents and commuters. Muslims from around the region would make up a larger but less frequently visiting group — what he calls the “dinner and a date” crowd — many of them choosing the cheapest $375 family membership for cultural programs.
In sukuk construction projects, the investors own the real estate asset, and the developers lease it back; the investors’ profit on the rent is analogous to the yield on a bond. Some Islamic scholars do not accept the system, but it is widely used in places like Malaysia and Dubai.

Recent Western debate about the role of women in Islam may have centered on the veil, but from its early years, Islam was receptive to women in business and finance. And today, Malaysia is an example of how making money has little to do with gender in Islam.
Not only does Malaysia boast a female central bank governor devoted to helping Islamic finance grow, but Malaysia's Islamic institutions also boast women executives in top positions.
More surprising perhaps, Malaysia is also home to several woman scholars of Islamic law, or sharia, who provide companies with the approval they need to brand their business as compliant with Muslim principles that include a ban on interest.

Australian investment manager Hyperion Asset Management has launched an Islamic equity fund that will initially target Middle East investors seeking to benefit from Australia's economic growth potential.
Hyperion uses a proprietary process to manage a high-conviction portfolio made up of a limited set of stocks that meet strict selection criteria, for Shariah compliance and other business attributes, the company said in a statement.

Bank of London and The Middle East, the London based wholesale, Sharia'a compliant bank, today reported a healthy return to profitability for the first half of 2010.
BLME's results were spurred by the:
* strong performance by the Markets division, particularly the management of the Bank's investment portfolio and capital;
* continued top quartile performance of the US Dollar Income Fund;
* cash recoveries from assets that were subject to credit impairment provisions in 2009; and
* strengthening of the Corporate Banking team, resulting in a steady acceleration in earnings and improved contributions from the three financing areas: Property, Leasing and Trade Finance.

Accounting and Auditing Organization for Islamic Financial Institutions, the leading international organization that formulates and publishes accounting, auditing, ethics, governance, and Shari’a standards for the Islamic banking and finance industry, issued three new Shari'a standards, namely "Contemplation Option", "Defects Option" and "Honesty Option".
Dr. Alchaar pointed out that AAOIFIAAOIFI standards are adopted by more than 90% of Islamic banks around the world.

Indonesia's government will issue 2.364 trillion rupiah ($264.2 million) worth of sukuk in the fourth quarter of this year, a debt office official said on Tuesday.

Dubai aims to cash in on strong demand for high-yielding emerging market debt with its first foray since the Dubai World restructuring was announced.
Analysts said the emirate's dollar bond issue, weeks after its flagship conglomerate clinched a debt restructuring deal, was timed to take advantage of more favourable market conditions than at any time since the Dubai crisis broke.
Investor hunger for decent yields, particularly in emerging markets, may help make Dubai's return a success. The overall interest in this bond and potential oversubscription may boost market sentiment.

Malaysia Debt Ventures Bhd, a venture capital firm owned by the Ministry of Finance, plans to issue about RM500 million of Islamic bonds in its third sukuk sale next year to fund investments, chief executive officer Md. Zubir Ansori Yahaya said in Kuala Lumpur.

The International Real Estate Department Manager at Kuwait Finance House (KFH) Ali Al-Ghannam said that investing in the field of international real estate is one of the KFH’s fruitful fields of business, since many global markets were affected by the global economic crisis in various fields, such as credit, but the value of their real estate were not affected in general and continued to achieve rewarding revenues to their owners.
Al-Ghannam, who made the previous statements during his participation in the annual meeting of the Association of Foreign Investors in Real Estate (AFIRE) in Chicago, stated that KFH’s continuously growing international real estate portfolio manages assets worth $1.5 billion.

In November 2007 Islamic finance, which until then had been soaring on the back of a bullish economy and a climate of more liberal interpretation, hit its first weak point.
Sheikh?Muhammad?Taqi Usmani, head of the religious board at the Accounting and Auditing Organisation for ­Islamic Financial Institutions - the body that sets standards for Islamic finance products - declared that around 85 per cent of the sukuk in issuance broke key principles of Islam and were not sharia-­compliant.
But it is coming back. Islamic finance as a whole, of course, never really went away. Its ups and downs merely mirrored those of conventional finance, with some exceptions - shortly after Lehman Brothers went bust investors fled conventional funds for the perceived haven of sharia-compliant structures and all things Middle Eastern. Large restructurings, such as that of Dubai World subsidiary Nakheel (see box) and Kuwait Investment Dar, characterised the market and new-money deals were few and far between.