Asia needs to invest about $8 trillion in overall national infrastructure, the use of cross-border financing and investment through Islamic finance will help to widen the investor base and lower the cost of financing for well-structured investments, the Asian Development Bank said. In recent years, Islamic finance has been enjoying growth rates of 20 per cent a year, most of which comes from Asia. Increased activity is expected in Thailand, China, Bangladesh and India as well as more traditional market such as Malaysia, Indonesia and Pakistan. The conference on Islamic Finance for Asia, opening in Manila on Monday, aims to create greater awareness on the potentials and opportunities brought about by Islamic finance to the region.
IslamicFinance.de is still edited by myself, Michael Saleh Gassner. In the same time the website became part of the family's publishing house, Al Kitab.
Myself I moved to Geneva for professional reasons, working as Islamic private banker. IslamicFinance.de remains to be a private passion.
Venture Capital has often been regarded as the ideal tool for Islamic finance, particpating in profits and losses of innnovative companies.
Now a major assessment has been done by Cambridge Associates in terms of performance, comparing it to the wider stock market. Result: No outperformance. Considering the lack of liqudity it seems to be much less attractive to professional investors than thought.
The lack of success also is induced by lack of transparency and fee models taking away the eventual outperformance. This is for the US market of course. Experiences in less advanced markets could be better or even much worse.
It still has other benefits, as diversifying risk, promoting overall growth and eventuall fostering social benefits.
In order to protect the investor, proper disclosures must be integrated to grow this industry in a healty manner. Further the focus on impact investing will ensure that value is created and risk better managed. What impact investing means could be read here:
The European Union has lifted sanctions against Iran Insurance Company following defense presented by the corporation, its Managing Director Javad Sahamian said. The sanctions caused that letters of credit guaranteed by the company were refused by others, but after ease of sanctions the company can work actively in insuring LCs in areas such as freight. Sahamian said the corporation has managed to control sanctions considerably to prevent any great loss and pave the way for more growth.
Bank Islami Pakistan Limited has planned to issue rights shares up to Rs750 million, as the exemption granted by the State Bank of Pakistan (SBP) for minimum capital requirement (MCR) expired on March 31. The SBP had declined to extend the extension unless Bank Islami improves its equity position substantially. The board of the bank will consider the rights issue at the board meeting scheduled on October 31, where the price of the right shares will be decided. The SBP through a circular increased the MCR for banks up to Rs10 billion to be achieved in a phased manner by December 31. Moreover, the central bank had also advised the bank to submit concrete time bound capital plan by March 31, 2013 to comply with the future and prevailing regulatory capital requirements.
Bankers in Iran are hoping that new President Hasan Rouhani will reform the banking industry, which is saddled with dangerous levels of bad debts. A veteran of the Iranian banking sector said that at least 50 per cent of the financial institutions do not deserve to be saved. Over the past eight years both public and private banks have run up huge amounts of bad debt. These are now putting a heavy strain on the government's shrinking financial resources as it protects the most indebted players from bankruptcy. Bad debts in the banking system are estimated to average about 20 per cent, with big institutions Bank Saderat and Bank Melli in the worst positions. Interest rates on deposits will need to rise in order to combat inflation and absorb excess liquidity in the economy. Rates were raised in 2012 to 21 per cent for the same reason, but to little effect, and the cost of funding for banks is high.
Pakistani BankIslami more than offset the negative effect of discount rate cuts by an growth of 24 percent and 72 percent in its investments and financing, respectively. However, the costly fixed deposits drove up the bank’s mark-up expenses squeezing its spread ratio to 40 percent in 1H CY13 from 43 percent in the corresponding period of last year. Moreover, During 1H CY13, the non-performing loans (NPLs) swelled by 31 percent year on year. Resultantly, provisioning expenses mushroomed by more than four times in 1H CY13. Besides, the bank has been working aggressively to enhance its branch network which piled up bank’s non-mark-up expenses. Whether or not, BIPL enjoys the discount rate hikes will largely depend on how it works on is to improve its CASA (low-cost deposits) and curb its surging NPLs.
Abdonnaser Hemmati has been elected by the board of directors of Bank Melli Iran as the bank’s new governor, replacing Farshad Heidari. Heidari had been appointed as the governor of the bank after Mahmoud Reza Khavari, its former governor, fled to Canada after a $2.6 billion financial fraud case was uncovered in 2011. Economy minister Ali Tayyebnia is scheduled to officially install Hemmati at the post by Friday. Hemmati has served as the managing director of Sina Bank and the chairman of Iran’s Central Insurance Company.
Managing director of the Iran's Melli Bank, Farshad Heydari has been removed from his position by the Bank's Association. The embezzlement case originally started back in 2007 by Amir Mansour Arya Investment Company and progressed in 2010, after some Iranian major banks, including Bank Saderat and Bank Melli, issued loans for the company.
Islamic banking industry grew by nearly seven per cent during the second quarter of the calendar year 2013. The momentum in growth, however, started weakening due to increasing base, according to the Islamic Banking Bulletin of the State Bank of Pakistan. The report said the asset base of the industry reached Rs903 billion, registering year-on-year growth of 27pc, while deposits grew by 28pc to reach Rs771bn by the end of June 2013. Profit of the Islamic banking industry reached above Rs4.3bn by the end of June 2013, though lower compared to Rs5.9bn profit registered during June 2012, said the bulletin. During the quarter under review, non-performing financing (NPF) of Islamic banking industry witnessed a slight decline and was recorded Rs19.4bn compared to Rs19.5bn in the previous quarter.
In a setback for the United States’ attempts to isolate Iran, the General Court in Brussels threw out sanctions Friday on seven Iranian companies, including four banks, rejecting arguments that they were acting as front companies to bypass the punitive measures. The United States Treasury took the opposite tack on Friday, imposing restrictions on a network of six individuals and four businesses for links to oil sales. These actions represent a renewed crackdown to curb the use of front companies, financial institutions and businesspeople to conceal the direct involvement of the Iranian government and entities like the National Iranian Oil Company and the Naftiran Intertrade Company. European officials are expected to hold initial discussions on whether to appeal on Tuesday.
Iran's president Hasan Rouhani has reportedly appointed Valiollah Seif, a private banker, as the head of the country's central bank. Seif will replace outgoing central bank head Mahmoud Bahmani. Seif ran the private Karafarin bank in Iran. He also supports independence for the central bank and a floating rate for Iran's currency, the rial, against foreign currencies. Seif takes over the central bank as sanctions over Iran's disputed nuclear program have been putting heavy pressure on the country's economy for the past two years. Oil exports have been slashed in half and the rial has lost two-thirds of its value since late 2011. Inflation also has shot up in the country.
The British government is seeking to renew sanctions against Iran's Bank Mellat regardless of a court ruling branding the ban as unlawful. Britain's Treasury is now attempting to intervene in the European Union Council's appeal against a decision by the EU General Court in January to quash sanctions imposed against the Iranian bank. This comes after reports that Bank Mellat intends to make a legal claim of 500 million pounds against the UK government for loss of business caused by US-engineered illegal sanctions on Tehran between 2009 and 2013. Earlier on June, Britain’s Supreme Court also overturned a ruling against Bank Mellat over its alleged links to Tehran's nuclear energy program, saying the British government was wrong to have imposed sanctions on the bank.
The Islamic Development Bank recently allocated $32.6 million to stop children in Pakistan from suffering paralysis or death at the heads of polio. The disbursement was the first of the $227 million the IDB approved for polio eradication efforts in Pakistan. The disbursement was made through the WHO on August 3. The contribution will be used to help train and support more than 200,000 health workers and volunteers to immunize 33 million children in Pakistan with the oral polio vaccine. The money will also be used to improve immunization services for other vaccine-preventable diseases and to strengthen disease surveillance throughout Pakistan.The WHO expressed its appreciation to the IDB and the OIC as important partners in the growing global effort to eradicate polio.
Iran's Bank Mellat is claiming GBP500 million ($782 million) from the U.K. Treasury after a London court ruled against a British decision to sanction the bank. In June, the U.K.'s highest court ruled against sanctions that had been imposed on Bank Mellat as a result of its alleged links to Tehran's nuclear program. The London ruling follows a similar decision in favor of Bank Mellat at a European Union court. But it won't lead to an end to restrictions against the bank for now because EU sanctions remain in place on Mellat. The U.K. sanctioned Mellat in 2009, banning its operations in the country and freezing its assets after it was accused of facilitating Iran's nuclear program. The measure was expanded to the rest of the European Union the following year.
According to Mr. Darkhan Nurpeissov, Vice Chairman of the Agency regulating the Regional Financial Center of Almaty (RFCA), Almaty is to be transformed into a global center of Islamic finance by 2015-2020. By 2012-2015 it is planned to put in place infrastructure for the Islamic financial industry to turn Almaty into a full-fledged center of Islamic finance. Legal foundation has already been laid. Almaty is home to the first Islamic bank in Kazakhstan. A second Islamic bank is to enter the market shortly. Besides, an Islamic insurance company and a brokerage, a handful of consultancies and funds have been launched. However, according to Mr. Nurpeissov, the population is not fully aware of Islamic finance. Kazakhstan is going to take over the chairmanship of the Organization of the Islamic Conference (OIC) in June.
Pakistan will reportedly receive 250 million Euros from the Islamic Development Bank (IDB) in the ongoing month of August, which is part of 750 million Euros loan. Similarly, the country will also avail the trade facility of $150 million for import of fertilizer and Petroleum products this month. The Islamic Development Bank had agreed to the loan and the trade facility in a meeting between the President of the Islamic Development Bank, Dr. Ahmed Muhammad Ali, and Pakistan’s Finance Minister Senator Ishaq Dar in Jeddah last week. Pakistan will also receive $500 million from Asian Development Bank and $500 million from World Bank in the second half (January-June) of the ongoing financial year 2013-14. Moreover, Pakistan is expecting to receive $3.4 billion from IMF during the current financial year. The loans will help building the foreign exchange reserves, which are currently around $10.25 billion.
Cooperative Insurance Company is the first firm established in the form of a public joint stock cooperative in line with the general policies of Article 44 of Iran's Constitution, which seeks large-scale privatization, and promotion of cooperative sector. A majority of the shares of Cooperative Insurance Company belong to companies and associations affiliated to the cooperatives sector. Cooperative Insurance Company is to conduct insurance activities in the fields of life insurance and other types of insurance services under the supervision of the Central Insurance of Iran. The managing director of the company, Akbar Najafi, explained that the major goal of Cooperative Insurance Company is to address insurance needs and render services in the cooperatives sector. Since the cooperatives have been established with public assets, they need more financial and legal support compared to other sectors in order to materialize their goals.
The Islamic Development Bank (IDB) has agreed to extend a loan facility of 750 million euros to Pakistan. The first tranche of the loan will be released before mid of the current month. The IDB will also provide a trade facility of $150 million for import of fertiliser and petroleum products. Besides, the IDB president informed the finance minister that Islamic Development Bank was keen to work with Pakistan for the eradication of polio in the country. The President of Islamic Development Bank, Dr Ahmed Mohammad Ali, assured the finance minster Mohammad Ishaq Dar, of the full cooperation and support of IDB for Pakistan.
Burj Bank Limited was formerly known as Dawood Islamic Bank Limited (DIBL). The bank officially commenced operations in April 2007 and was renamed Burj Bank Ltd. in July 2011. Burj Bank has a diversified range of Shariah compliant funded and non-funded products and services aimed at facilitating both individual and corporate customers. Besides, the bank also offers investment and corporate advisory services. Burj Bank was quoted the best Islamic bank by world financial magazine in 2013. After incurring losses for three consecutive years since CY09, CY12 was the year when the bank made an after tax profit of Rs 84.6 million. In 2012, Burj Bank become a dominant player in fleet financing business and is regarded as a top player in this segment. Industry insiders strongly urge the development of an active Islamic money market via short-term sovereign instruments and secondary market via Islamic repo agreements.