Central Asia

International Borrowers Take to Islamic Bond Market

Until recently the issuance of Islamic bonds, or sukuk, was confined to the Muslim world. But now a number of international borrowers are tapping the markets, including Nomura Holdings in Japan and Europe's first corporate borrower, International Innovative Technologies.
The ratings agencies Moody’s and Standard & Poor’s say they expect to see a rise in the number of sukuk issues by new players over the next 12 months, including issues by borrowers in Singapore, Australia, Luxembourg, Thailand, Hong Kong, France and Russia.
While the Islamic Financial Service Board and the accounting and auditing organization have defined standards for sukuk, defaults over the past year have shown that new guidelines must be set as problems arise, particularly as sukuk start to generate global attention.

Bahrain's Elaf applies for banking license to open in Malaysia

Elaf Bank, a closely held Islamic investment bank in Bahrain, has applied for a banking license in Malaysia.
The Southeast Asian nation plans to issue two more Islamic bank licenses, including one of a new lender that will be jointly established by institutions from Asia and the Middle East.
Bank Negara Malaysia already issued conventional licenses to five foreign banks in June, including National Bank of Abu Dhabi and Indonesia’s PT Bank Mandiri.
The bank would use Malaysia as regional hub, covering Singapore, Indonesia and Australia.
It would try to use this as an opportunity to converge differing interpretations of Islamic finance between Malaysia and the Middle East by getting Shariah boards to work closely.

Sukuk Roadblocks May Rise With National Shariah Boards: Islamic Finance

The plan to create national Shariah boards to oversee sukuk sales is drawing criticism from bankers and lawyers who say the groups would increase bureaucracy in the $1 trillion Islamic finance industry.
The Accounting & Auditing Organization for Islamic Financial Institutions, a leading global regulator, is in the final stages of a plan recommending governments appoint panels of scholars and experts at the national level to rule whether products comply with the religion’s tenets, Mohamad Nedal Alchaar, secretary-general of the Manama, Bahrain-based body, said in an interview in Kuala Lumpur on Oct. 26. The proposal will be submitted early next year.
The regulator says such a system will help clarify standards and bolster investor confidence in an industry whose assets are forecast by the Kuala Lumpur-based Islamic Financial Services Board to almost triple to $2.8 trillion by 2015. The changes risk adding bureaucratic hurdles and slowing approvals at a time when sales are down 19 percent this year, according to CIMB-Principal Islamic Asset Management Sdn. and Atlanta-based law firm King & Spalding LLP.

HP issues maiden US$100m sukuk

HEWLETT-PACKARD (HP), the world's largest technology company, has issued its maiden US$100 million (RM310 million) sukuk to part- finance the development and construction of its multi-million-dollar next generation data centre (NGDC) in Cyberjaya.
The company, via its Malaysian subsidiary HP Multimedia Sdn Bhd, and CIMB Islamic Bank Bhd signed an agreement to formalise the Islamic term financing facility agreement in Kuala Lumpur yesterday.
At the signing, CIMB Islamic was represented by group chief executive officer Datuk Seri Nazir Razak, while HP was represented by HP Enterprise Services senior vice president for Asia Pacific and Japan, Kevin Jones.
The loan will help finance the development of HP's first phase NGDC project, with an option to be extended to subsequent phases in due course.
Upon completion in 2016, the campus will stand as one of HP's four global network centres, alongside India, Mexico and Costa Rica.

Abu Dhabi Islamic Bank to sell 5-year benchmark Sukuk this week

Abu Dhabi Islamic Bank, or ADIB, the emirate’s largest Islamic lender by market value, is planning to sell five-year benchmark Islamic bonds, or sukuks, this week, according to people familiar with the matter.
Company officials, who have been on a series of investor meetings in Asia, Europe and the Middle East since Oct. 20, end their roadshow Tuesday. Benchmark-sized bond deals are those worth at least $500 million. The securities are expected to price later this week.

HSBC to launch Islamic banking services in full scale

HSBC Amanah, the Islamic banking window of banking giant HSBC, is planning to launch its Islamic banking services in full scale in Bangladesh, a visiting top official of HSBC said Tuesday.
With the re-launch, HSBC Amanah in Bangladesh will be the largest presence in South East Asia, the deputy CEO said. Currently HSBC Amanah is operating in the UK, Malaysia, Middle East countries, Indonesia and other countries.
HSBC Amanah products are rigorously audited and approved by HSBC central Shariah committee.

Australia Planning Tax Changes to Promote Sales of Sukuk: Islamic Finance

Australia plans to change laws to ensure Islamic finance products are taxed fairly as the government seeks to attract investors from the Middle East and Asia, paving the way for sukuk sales.
The national taxation board will hold talks next month in Sydney, Canberra and Melbourne on how to best ensure that Islamic finance transactions are treated the same as equivalent non-Islamic deals. The board noted this month that mortgages that comply with religious principles may lead to stamp duty being paid twice, as the financier buys the property and then sells it to his client. Under a conventional mortgage there is only one sale that attracts the duty.
Australia is looking to join countries from Egypt to South Korea in seeking to ease barriers to Shariah- compliant products and tap the industry’s $1 trillion in assets, which the Kuala Lumpur-based Islamic Financial Services Board predicts will reach $1.6 trillion by 2012.

Sukuk Entice Canada Issuing $2 Billion to Spread Funding: Islamic Finance

The growing demand for securities that meet Islamic religious principles may lead Canadian governments and companies to start issuing Shariah bonds.
HSBC Bank Canada may offer $500 million and three government-related borrowers from one Canadian province may issue $1.5 billion of sukuk, Omar Kalair, chief executive officer of Toronto-based UM Financial, said in an Oct. 14 interview. A “handful” of Canadian companies may sell C$1 billion ($980 million) of Islamic debt by 2013, said Daud Vicary Abdullah, global Islamic finance leader at Deloitte Corporate Advisory Services Sdn. in Kuala Lumpur.
Egypt, Nigeria, the Philippines and Thailand have announced plans to sell their first sukuk in the past three months, partly to tap Persian Gulf oil wealth.

GCC Islamic banking sector grows at 20% per annum representing 17% of banking system total assets, reveals KFH Research report

The report pointed out that Kuwait ranked first among the GCC countries in terms Islamic banks assets to total banking assets, while Saudi Arabia and the UAE have risen among the countries that promote Islamic finance products and services. It added that there are many opportunities still available for Islamic finance solutions in the region where real estate finance tops other areas of interest prevalent in the UAE and Saudi Arabia.
The existence of financial centers in Bahrain, Qatar and the UAE, as well as a number of Islamic finance organizations such as the Accounting and Auditing Organization for Islamic Financial Institutions, Liquidity Management Centre, and the International Islamic Financial Market will continue to attract new players to the region and further propel the Islamic banking industry to greater heights.

Over 90 percent HNWIs in the GCC don’t want retirement: Report

With high net worth individuals (HNWIs) in the GCC are seen as the most active in management their wealth during later life, over 90 percent reject the idea of getting retire, according to Barclays Wealth latest Insights report.
The report titled The Age Illusion: How the Wealthy are Redefining Their Retirement is the twelfth in the Barclays Wealth Insights series, shows that HNWIs in Saudi Arabia (92 percent), United Arab Emirates (91 percent) and Qatar (89 percent) illustrated the biggest desire amongst global respondents to keep working in later life. According to the findings of the report the retirement is being rejected by a new breed of wealthy worker, who want to carry on working for as long as they are able.

Pak, Afghanistan pushing Islamic banking for growth

Islamabad —Pakistan, Afghanistan and Senegal, among the world’s 50 poorest nations, are turning to Islamic banking to spur economic growth by encouraging people to take out loans and open savings accounts. Outstanding domestic bank lending accounted for 3.5 percent of Afghanistan’s gross domestic product in 2008, 25 percent in Senegal, 27 percent in Nigeria and 46 percent in Pakistan, according to data compiled by the World Bank. The rates compare with 224 percent in the U.S. and 115 percent in Malaysia, a global hub for finance that conforms with Shariah principles.
Developing Islamic nations have shunned banking in part because of the religion’s ban on interest, limiting access to funds for project financing and stunting business growth, according to the International Monetary Fund. Governments should improve regulations, products and institutions that comply with Shariah law to accelerate the industry’s development, Patrick Imam and Kangni Kpodar, economists at the IMF, said in a telephone interview from Washington on Sept. 14.

Sharia platform created

Allfunds Bank, the business-to-business fund platform, has launched an Islamic Services Unit to comply with Sharia principles. The company, jointly owned by the Santander and Intesa Sanpaolo groups, offers over 80 sharia-compliant funds from asset management firms based in Luxembourg, Ireland, the United Arab Emirates and Saudi Arabia.
The unit has a fatwa endorsed by the Sharia'h Board of Amanie Dubai, a specialist Islamic consultancy firm, making it the first sharia-compliant platform.
Allfunds said its clients would have direct access to the largest available range of Islamic funds and it would take further opportunities to expand the service, such as setting up a dedicated website for the sector.

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Islamic Finance Group on ResearchGATE, the largest social network for scientists!

ResearchGATE is the largest social network for academic research globally. Dedicated social profiles of researchers allow to enter academic careers, published articles in journals and books, announce fields of research for international exchange just to name a few of the features.

IslamicFinance.de took another effort to create a dedicated group and invite researchers globally to use this platform and foster research in Islamic finance. The last academic initiative taken was to sponsor and start a full fledged platform for the Islamic Finance WIKI, the online encyclopedia.

Researchers are invited to participate in these initiatives.

Please visit:
http://www.researchgate.net/group/Islamic_Finance/

H.E. Prof. Ekmeleddin Ihsanoglu Secretary General Of The OIC on Poverty Alleviation

Poverty is a complex issue and needs to be tackled on a range of fronts including, but not limited to, improving economic growth. Poverty remains one of the big challenges to socio-economic development of majority of developing countries, especially in Sub-Sahara Africa and South Asia. Besides, this phenomenon has brought about problems such as illiteracy, malnutrition, disease and even crime. Global food crisis further worsened the already precarious conditions of poor people in these countries.

To cope with the bane of poverty, the OIC has to reinvigorate its machinery for economic growth and cooperation among member countries through comprehensive mobilization of the resources, within and outside the OIC community. A new approach to economic cooperation was, therefore fashioned out to ensure that all stakeholders are sensitized on the need for the accelerated transformation of the economies of OIC Member-States and the welfare of their peoples.

Citigroup Plans More Sukuk Sales From Turkey After Kuveyt Turk Bond Issue

Citigroup plans to arrange more sales of Islamic bonds, or sukuk, from Turkey after managing a $100 million issue for Kuveyt Turk Katilim Bankasi AS, an executive at the company said. Citigroup and Liquidity Management House, a unit of Kuwait Finance House KSC which is the owner of Kuveyt Turk, acted as arrangers in Kuveyt Turk’s sukuk sales, the first in Turkey after regulators allowed companies to offer Islamic bonds in April.

Shariah Banks Targeted to Lift Senegal, Pakistan Poverty: Islamic Finance

Senegal, Pakistan and Afghanistan, among the world’s 50 poorest nations, are turning to Islamic banking to spur economic growth by encouraging people to take out loans and open savings accounts. Developing Islamic nations have shunned banking in part because of the religion’s ban on interest, limiting access to funds for project financing and stunting business growth, according to the International Monetary Fund. The concept of risk-sharing in Shariah banking that prohibits interest payments would be more useful in Muslim countries because their economies are less diversified, the IMF economists said.

Pakistan, Cagamas, Indonesia Plan Issuance: Islamic Bond Alert

The following borrowers are expected to sell Islamic bonds:

TURKEY: Citigroup Inc. plans to arrange more sales of Islamic bonds from Turkey after managing a $100 million issue for Kuveyt Turk Katilim Bankasi AS, said Hulusi Horozoglu, director of global Islamic banking at Citigroup.

PAKISTAN: The South Asian country plans to sell sukuk maturing in a year or less in the domestic market by the end of this month, according to an e-mailed statement from Syed Wasimuddin, a spokesman for State Bank of Pakistan, the nation’s central bank.

CAGAMAS BHD.: Malaysia’s national mortgage company plans to sell more Islamic bonds this month following a sale in August under its 5 billion ringgit ($1.6 billion) sukuk program, the Business Times reported, citing an unidentified person familiar with the proposal.

INDONESIA: plans to sell 2 trillion rupiah ($224 million) of Islamic bonds by private placement this year, said Rahmat Waluyanto, a director at the Ministry of Finance.

Islamic Corporation for Private Sector Development to provide assistance to Turkmenistan

Turkmenistan prepares to establish the first investment company jointly with the State Bank for Foreign Economic Affairs of Turkmenistan and the Islamic Corporation for Private Sector Development. As Turkmenistan's Vice Premier Tuvakmamed Japarov reported at a government meeting on September 17, the main task of the investment company will be to revitalize activities related to direct investments in Turkmenistan through equity capital of small and medium-sized businesses enterprise.

Islamic banks' profits down 17% in H1

Islamic banks in the UAE recorded a decline of around 17 per cent in its net earnings in the first half of 2010 despite a sharp rise in the profits of the Abu Dhabi Islamic Bank (ADIB). Individually, several national banks reported growth in their net income in the first half of 2010, including the government-controlled National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB). The UAE's largest bank, Emirates NBD, reported a 51 per cent fall in profits because of its exposure to Dubai World. Central Bank figures showed UAE banks are pushing ahead with a post-crisis provisioning drive because of their exposure to Dubai World, the domestic real estate sector and two Saudi financially troubled family businesses. According to a key Western financial institution, UIAE banks have emerged as more vulnerable to real estate downturns than those in other Gulf oil producers because of their massive lending for that sector.

Al Baraka Turk Participation obtains $240 million Islamic financing

Albaraka Türk Katilim Bankasi A.S. (Al Baraka Turk), a subsidiary-banking unit of Al Baraka Banking Group BSC (ABG), signed a $240 million syndicated Islamic financing in Istanbul. Twenty two GCC, European and international banks (both Islamic and conventional) participated in the syndication. The syndication was arranged and managed by Standard Chartered Bank, ABC Islamic Bank (Bahrain) and Noor Islamic Bank (Dubai). The funding deal comes as part of Al Baraka Turk's strategy to further expand and diversify its financial resources and further strengthen its name in the domestic, regional and global financial markets. Al Baraka Turk will use the proceeds of the deal towards the ongoing implementation process of a range of existing and newer products and services offered by it.

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