Big Arab banks with money to spend are expanding across the Middle East in markets such as Egypt and Iraq, as they take advantage of a retreat from some areas by major international rivals. Since 2011, some global banks have downsized some of their businesses in the region to cut costs, help shore up capital and focus on their core markets, while competition from local banks has intensified. Meanwhile, UAE and Qatari banks have led the way in making some sizeable acquisitions and increasing their stakes in other lenders. In Egypt for example, Gulf banks are eyeing acquisitions because there is a lot of potential.
Pakistan's MCB Bank Ltd will set up a wholly owned Islamic banking subsidiary while dropping plans to take a stake in Islamic lender Burj Bank. Last month, MCB started due diligence on taking a 55 percent stake in unlisted Burj, which held assets worth 53.3 billion rupees ($547 million) as of December, but it said it would not proceed for commercial reasons. The move comes amid increased activity in Pakistan's Islamic banking sector, with regulators stepping up development efforts and lenders expanding operations. MCB currently operates the country's sixth-largest Islamic window with 28 branches. It will reportedly spin off its Islamic window into a separate subsidiary with 10 billion rupees in paid-up capital, using its existing Islamic banking branches to form the new entity.
Iran's Chief Auditor Nasser Seraj announced that there is no truth to rumours that a death sentence issued in the so-called $3-billion fraud case will be withdrawn. Seraj indicated that the authorities are continuing to trace the assets of Amir Khosravi, adding that the investigation is proceeding well. The case came to light in 2011, and 39 defendants were accused of using forced documents to obtain credit from banks to buy state-owned companies. Four people were sentenced to death for the charge of "corruption on earth" including Amir Khosravi, and others were sentenced to prison terms of up to 25 years. Mohammad Reza Khavari was the CEO of the country's largest bank, Melli Bank, and he remains a major suspect in this case, having fled to Canada as soon as the investigation became public.
After waging a legal battle with the regulator as well as conventional insurers for almost two years, Islamic insurance companies have finally agreed to an out-of-court settlement of the longstanding dispute over controversial Takaful Rules 2012. General and family Takaful companies will withdraw their constitutional petition against the SECP, 23 insurance companies and the federation of Pakistan within this week, thus allowing conventional insurers to run Shariah-compliant insurance business through parallel window operations. The SECP is said to have agreed to the Takaful players’ suggestion that conventional insurance companies should be required to maintain separate capital accounts for the two lines of business.
Pakistan looks set to end a year-long drought in sovereign sukuk issuance to support its goal of doubling Sharia-compliant banks' market share by 2020. The government may offer as much as Rs542 billion ($5.6 billion) of local-currency sukuk in 2014, including notes backed by a highway and an airport. That compares to one sale of Rs43 billion in 2013. Lenders including MCB Bank and National Bank of Pakistan, are converting branches to respond to rising demand for banking that complies with the religion's ban on interest, which now has a market share of 10 per cent. The Rs323 billion of sovereign sukuk outstanding is less than a third of the amount of Sharia-compliant bank assets.
Al Baraka Bank Pakistan Ltd is the lead advisor and arranger of Rs 3 billion first Musharaka based Islamic transaction to Zaver Petroleum Corporation Limited. The signing ceremony took place in Islamabad. Present at the occasion were Saddruddin Hashwani, Chairman Hashoo Group, CEO Al Baraka Pakistan, Shafqaat Ahmed and representatives of the Zaver Group, Al Baraka and member banks of the consortium; United Bank, Askari Bank, Bank of Punjab, Dubai Islamic Bank and Burj Bank. This is Al Baraka's first step in providing value added services to major players in the oil and gas sector and more such transactions are expected in the future.
Several borrowers plan to offer sukuk such as the Saudi Electricity Co. which has already started to arrange investor meetings. The Malaysian construction company IJM Corp plans to sell up to 3 billion ringgit ($910 million) of Islamic bonds. Moreover, the Omani Bank Muscat plans to set up a 500-million rial ($1.3 billion) sukuk program and sell up to 1 billion rials of Shariah-compliant debt in Saudi Arabia. Besides, Malaysia’s Maybank Islamic has reportedly set up a 10 billion ringgit Basel III sukuk program. On the other hand, U.A.E.’s First Gulf Banks planned 3.5 billion ringgit sukuk program was assigned a AAA rating by RAM Rating Services. Furthermore, the governments of Oman and Pakistan are considering selling sukuk this year, among others.
The State Bank of Pakistan (SBP) has allowed MCB Bank to commence due diligence of Burj Bank Limited for proposed acquisition of its 55 percent share. The management of MCB Bank disclosed to its shareholders that the central bank has given an approval to the bank for conducting a detailed due diligence of the bank to invest in new and existing shares along with additional investment by Islamic Corporation for Development of Private Sector. MCB Bank is conducting due diligence of Burj Bank Limited from March 18, 2014. Burj Bank is operating with 75 branches countrywide, but it is facing some financial complications and failed to meet SBP's minimum capital requirement of Rs 10 billion by end-2013.
Kuwait’s Noor Financial Investment Company said the proposed sale of its stake in Karachi-based Meezan Bank had been blocked by Pakistan’s central bank, which felt the prospective buyer had not met its standards for suitability. Little is known about the prospective buyer, identified only as Vision Financial Holdings Limited in a separate filing by Meezan Bank. Noor Financial said the prospective buyer would continue to seek approval from the regulator, with the offer set to expire on April 15, 2014. However, ownership of Meezan Bank may be a sensitive issue for regulators as they seek to develop Islamic banking in the country. Last December, Noor Financial said it planned to sell its 49.1% stake in Meezan for $190 million and expected to book a $24 million profit.
Pakistani lender Summit Bank Limited has inaugurated its first Islamic banking branch in Karachi and announced that it will transform all operations into Shariah mode in next three years. Hussain Lawai, President and CEO Summit Bank, said the bank's investors have injected Rs 1 billion fresh equity for Shariah-based operations. The management has decided to make efforts for conversion of branches from conventional to Islamic mode, instead of opening new branches. As per the roadmap in the first phase Summit Bank Islamic branches will be set up in four major cities - Karachi, Lahore, Faisalabad and Islamabad - during this year, he added. The bank set a target of 30 percent growth for Shariah business and as per its estimates it will be over 20 percent during this year.
Meezan Bank Limited was granted permission by the State Bank of Pakistan (SBP) to conduct due diligence of HSBC Pakistan’s operations. The management of Meezan Bank is reportedly in discussion with HSBC Bank Middle East Limited (HBME) for evaluating a possible transaction involving acquisition of the Pakistan operations of HBME. HSBC Pakistan was put on the block early 2012 and attracted interest from major banks. On June 30, 2012, the business to be sold had 10 branches and gross assets worth Rs60.06 billion (approximately $635 million). Interestingly, in November 2013, Vision Financial Holdings Limited had also shown interest in acquiring 49.11 percent or 492 million shares of Meezan Bank Limited. However, the two transactions are said to be completely unrelated.
Islamic banking industry in Pakistan has been growing at a fast pace ever since its re-launch in 2002 and now represents over 12 percent of overall banking industry with 19 Islamic banking institutions offering Islamic banking products and services through a network of over 1300 branches across the country. The State Bank pf Pakistan (SBP) has announced a five-year strategic plan for the Islamic Banking Industry (IBI) aimed to provide a roadmap to the industry for the next level of development. Moreover, SBP has decided to strictly monitor the performance of the Islamic Banking industry in order to ensure that they are operating according to Sharia. Besides, SBP is working on its major role to ensure the participation of every citizen in the financial system, through its Financial Inclusion Policy.
State Bank of Pakistan and other banks engaged in Islamic Banking have sought media support in mobilizing and inclusion of more people from all sections of the society in the source banking system, especially the agriculture, micro-finance and housing sectors.. In order to create awareness and better understanding among the media people, a two-day workshop on 'Islamic Banking' has been organised for them. The Director of SBP's Islamic Banking Department, Saleemullah, said the print and electronic media is the best tool for opinion making and mobilizing the people towards Islamic banking, Besides establishing riba-free economy, however, the corruption in the society must end. Otherwise, the poverty can not be eliminated.
The Director of the Islamic Banking Department of the State Bank of Pakistan (SBP), Saleem Ullah, has said that the mechanism for short-term liquidity instruments for Islamic banks is being evolved and the launch of these bonds is expected in the next six months. Currently, Islamic banks can only invest in three-year government ijara sukuk. Earlier, experts on Islamic banking and finance agreed the Islamic banks can invest in government activities and projects much like conventional banks but there is a need to create an underlying asset. Another expert said that while the industry has been partially successful in eliminating riba from banking transactions, it needs to introduce diversified products for those segments of the society, which want Islamic investment and financing.
The theme for this 2014 Summit is New Markets and Frontiers for Islamic Finance: Innovation and the Regulatory Perimeter.
Please refer to http://www.ifsb.org/preess_full.php?id=240&submit=more for the announcement of the 11th IFSB Summit.
For any queries regarding the Summit, please contact the secretariat:
- Participants' registration
Ms. Yazmin Aziz at email@example.com
Mrs. Ida Shafinaz Ab. Malek at firstname.lastname@example.org
- Sponsorship and Media
Ms. Rosmawatie Abdul Halim at email@example.com
INVITATION TO A RESEARCH INQUIRY
Anti-Terrorism Legislation and Impact in Cross Border Giving
The World Congress of Muslim Philanthropy’s Academy of Philanthropy is leading a research inquiry in collaboration with Cass Business School’s Centre for Charity Effectiveness. After London and Doha, the last of the three dialogues will take place in New York.
This concerns the barriers to giving for international development and relief that affect donors and recipients alike, in the light of continuing international agreements and practices enshrined in legislation. Our work is seeking to identify ways forward for international dialogues to best support and enhance accountable giving and its efficient flow between nations. The findings of the research will be reported to the WCMP’s biennial Global Donor’s Forum, to be held in Washington, DC from April 14-16, 2014.
Donors, nonprofit and development sector representatives, and financial institution executives are welcomed to participate in the dialogue and share their experiences and offer suggestions.
Tuesday, March 4, 2014 - 10.00 am to 4.00 pm
Organization of Islamic Cooperation (OIC) Observer Mission to the UN
Islamic Development Bank’s top officials have traveled to Tehran to sign the contract with the Iranian officials for the first part of the 3 billion-dollar loan they had agreed before. The first part of the loan will be paid to a few cities in the Southern Iranian province of Fars for implementing sewage projects. But there are other areas for which the 3-billion-dollar loan will be used. So far, the IDB has allocated loans to Iran in railway, water sources, environment, automotive and other sectors. With almost ten percent of the shares, Iran is the third major shareholder of the bank. The ratification of Iran's parliament to increase the countrie's share in IDB is pending.
The Islamic Development Bank (IDB) will allocate a 144 million euro loan for wastewater projects in the Iranian southern Fars province. For that purpose, the IDB and the Fars province's Water and Wastewater Company have signed a memorandum of understanding on the issue. The company will implement wastewater projects in the Darab, Fasa, Sepidan, Abadeh, Neiriz and Firouzabad cities of the province using the IDB`s loan. The IDB has already allocated some 800 million euros of loans in total for Iran's water and wastewater projects, in Mashhad city, Qom and Kashan, and Tehran among others. The IDB has paid more than 3 billion euros to Iran for implementing its projects so far, of which 70 percent were spent on dam building and water and wastewater projects of the energy ministry.
The Securities and Exchange Commission of Pakistan (SECP) has notified the Securities and Exchange Commission (micro-insurance) Rules, 2014, which will also regulate the micro-takaful business in the country. According to the rules, the word micro-insurance may be used interchangeably with the word micro-takaful; life micro-insurance with family micro-takaful; non-life micro-insurance with general micro-takaful; premium with contribution and insurer with operator. The commission has limited the sums insured under different concepts of micro-insurance. The SECP has also issued Code of Consumer Protection applicable on all insurers / operators in the business of micro-insurance / takaful. Moreover, the commission issued the Code of Conduct for Micro-insurance Agents applicable on all micro-insurance / takaful agents and their specified persons.
Pakistani Meezan Bank has launched Meezan Kafalah, a Shariah-compliant alternative to Bancassurance, in collaboration with takaful firm Pak Qatar Family Takaful Limited (PQFTL). Meezan Kafalah is a savings product through which customers can save money for their future plans. In addition, the customers also get Free Takaful coverage through PQFTL that in the case of the customer’s death during the savings period, the Takaful Partner will provide the funds needed for completing the savings. This new product, thus, offers a combination of saving, investment and protection. A differentiating feature of Meezan Kafalah is the accumulation of 100% cash value from day one of the investment with flexibility and ease of exit from the plan without any penalty or charges.