Central Asia

ICD takes the next step in development of Azerbaijan Islamic finance

The Islamic Corporation for the Development of the Private Sector (ICD) has signed a new agreement with Azerbaijani microfinance institution Vision Fund AzerCredit. The objective is to provide advisory services with the aim of developing a comprehensive Shari’ah-compliant microfinance solution for the country. VF AzerCredit's work emphasizes the provision of loans to small and micro entrepreneurs in rural areas, especially those remote regions which remain largely unbanked, through 45 outlets in 38 districts. With more than 80,000 borrowers and a portfolio of over $83 million, the group is a leader in the Azerbaijani microfinance field.

Jahangir Siddiqui & Co to invest Rs1.669 bn in Bank Islami Pakistan

The shareholders of Jahangir Siddiqui & Co Ltd, the flagship company of JS Group, in their general meeting held on February 2, have unanimously approved to invest up to Rs1.669 billion in the Bank Islami Pakistan Limited. On December 30, 2014, the Board of Directors of Bank Islami Pakistan Limited had approved to issue ordinary shares of Rs10/- each by way of rights to its members to raise the paid up capital of the bank by Rs4.320 billion.

Pakistan's Bank Islami to study purchase of KASB Bank

Bank Islami Pakistan has received regulatory approval to study the acquisition of KASB Bank Limited. An acquisition could see Karachi-based Bank Islami add 105 branches to its existing network of 213, while the transaction would require the conversion of KASB Bank's conventional financial products into sharia-compliant ones. In November, the central bank placed KASB Bank under a six-month moratorium as it struggled to meet capital adequacy requirements. Last week, Bank Islami's board of directors approved a plan to raise 3.5 billion rupees ($34.8 million) via subordinated Islamic bonds to fund its expansion strategy.

Bank Islami aims to raise Rs 3.5 billion via subordinated sukuk

Bank Islami Pakistan aims to raise Rs3.5 billion ($34.8 million) via subordinated sukuk. With Basel III global banking standards being introduced around the globe, several Islamic banks have issued such capital-boosting instruments, including those in Turkey, Malaysia, Saudi Arabia and the United Arab Emirates. Last week, Bank Islami’s board of directors approved a plan to raise Tier 2 capital in tranches of Rs500m to help fund its expansion, the Karachi-based lender said in a bourse filing.

Islamic financing offered by IBA is able to meet demand of Russian banks for alternative funding

According to Behnam Gurbanzadeh, IBA Islamic Finance Department Manager, the idea to establish the CIS Islamic Development Bank, proposed by IBA several years ago, has become attractive for their Russian colleagues. The interest of Russian banks for instruments like Islamic financing has suddenly increased. Russian banks have problems with funding and are actively looking for alternative sources of financing, Gurbanzadeh said. Last November he revived the idea of the CIS Islamic Development Bank and Russia together with Kazakhstan. IBA agreed to work on the establishment of a Working Group on Islamic financing under the CIS Financial and Banking Council.

Network expansion: Mobilink to raise $68.6m via sukuk

Pakistan Mobile Communications (Mobilink) plans to raise Rs6.9 billion ($68.6 million) via Islamic bonds this quarter. The sukuk will help fund the network expansion of Mobilink, a subsidiary of Global Telecom Holding, and majority-owned by Russia’s VimpelCom. The credit guarantee will be extended by Mauritius-based GuarantCo, a specialised financial guarantor, indirectly owned by the development agencies of Britain, Switzerland, Sweden and the Netherlands. Credit guarantees for sukuk are rare because of the profit-sharing nature of Islamic finance, but they could prove to be an important development, attracting a wider range of corporate and sovereign issuers to the Islamic bond market.

Azerbaijan bank to target UAE for $300m sukuk

International Bank of Azerbaijan (IBA) plans to target the UAE and other Gulf investors as it plans to issue $200-$300 million debut sukuk this year, its senior manager Behnam Gurbanzade said. He further said the bank would issue sukuk in the second half of this year in order to widen its credit policy, develop business and attract alternative sources of financing. The bank, 50.2 percent owned by the Ministry of Finance, holds 40 percent of banking assets in the country. In 2014, IBA raised $252 million through an Islamic syndicated loan from UAE-based Al Hilal Bank, Dubai Islamic Bank and Noor Bank.

Third phase of financial innovation fund to focus on Islamic financing

Pakistan's federal government on Friday launched the third round of Financial Innovation Challenge Fund designed to promote Islamic financing. The fund was launched with the assistance of the United Kingdom under the UKAid-sponsored Pakistan Financial Inclusion Programme being executed by the State Bank of Pakistan. The earlier two rounds focused on promoting innovative agricultural and rural financing in the country. Meanwhile, a steering committee constituted to promote Islamic banking has prepared an interim report and its recommendations will help in setting a roadmap and deciding a future course of action for providing an enabling environment for the growth of Islamic finance.

Burj-NBP deal on the cards?

Pakistan's banking sector enters 2015 promising more deal-making activities. State-run National Bank of Pakistan has expressed interest in potentially acquiring Burj Bank Ltd. NBP recently said it will conduct due diligence on Burj, and hoped to complete the exercise in a ‘short timeframe’. The Burj deal is being closely watched by the market, as it has so far failed to meet the central bank’s minimum capital requirement (MCR) of Rs10bn. In case the deal goes through, it remains to be seen if Burj would exist as a standalone Islamic bank, or if its operations will be merged with NBP’s Islamic banking section.

Dar reiterates government’s resolve to switch over to Islamic banking

Pakistan's Minister for Finance, Muhammad Ishaq Dar, Friday reiterated the government's resolve to switch over from conventional banking to Islamic banking and finance to enhance shariah compliant assets. Dar said that Pakistan has taken several steps to promote Islamic banking and finance in the country, such as issuing sukuk bonds in international markets as well as forming a steering committee which was actively working on the development of reliable database and human resource needed by the Islamic banking. The industry now constitutes over 10 percent of the country's financial system but needs trained human resource in order to realize the true market potential, he added.

Shariah-compliant: IGI Life Insurance to enter Takaful business

The board of directors of IGI Life Insurance has approved the commencement of family Takaful business in Pakistan. Total gross premiums of IGI Life amounted to over Rs1.8 billion at the end of the first nine months of 2014. In April last year, IGI Insurance acquired a 69.7% stake in American Life Insurance Company Pakistan (Alico) for Rs732 million. The establishment of the window family Takaful operation is accompanied with the allocation of Rs50 million for this purpose. In addition, Jubilee Life, EFU Life and Adamjee Life have also expressed their intention to establish Islamic window operations recently.

Possible spotlight on state sharia banks merger

A plan to merge state-owned sharia banks into one large lender is one of the Financial Services Authority’s main projects this year, as part of a broader commitment to consolidate the Indonesian overall banking industry. Chairman Muliaman Hadad said he had held talks with the State-Owned Enterprises Ministry regarding the consolidation and that they were currently developing a “mechanism” to integrate the three lenders and one business unit. The current three state-run sharia banks are Bank Mandiri’s Syariah Mandiri, Bank Rakyat Indonesia’s BRISyariah and Bank Negara Indonesia’s BNI Syariah and a sharia business unit under Bank Tabungan Negara.

Countries with very high religious diversity - including China - outpace world in economic growth

The Weekly Number's analysis of a new Pew Research Center report - a study based on methodology developed by Brian J. Grim - finds that the 12 countries identified in the study as having very high religious diversity each outpaced the world's economic growth between 2008 and 2012.

Full Report: http://www.pewforum.org/2014/04/04/global-religious-diversity/

Moratorium offered by Bank Islam for flood affected customers

Bank Islam Malaysia Bhd is offering a moratorium of up to six months for its financing products' monthly installment payments to flood-affected customers which include Personal Financing-i, Vehicle Financing-i and Home Financing-i. The "Prihatin Programme" aims to ease the financial burden during this emergency situation.

Pakistan’s Dollar Sukuk Extend Losses; Yield Highest Since Sale

Pakistan’s dollar-denominated Islamic bonds fell for a ninth straight day, pushing the yield up 2 bps to 7.48 percent, highest since debt sold in November. Pakistan issued $1b of the 6.75% notes last month in its first dollar sukuk offering since 2005; the sale was 5 times oversubscribed.

State Bank of Pakistan hires veteran Islamic finance specialist

The State Bank of Pakistan has added to its Islamic finance push with the hire of a well known market specialist. Yavar Moini, the former head of Islamic finance at Morgan Stanley, has joined SBP as a director in Islamic banking.

Corruption ranking

Last week Pakistan rejoiced at its ranking in the Corruption Perception Index (CPI) 2014 improved by a notch with a score of 29 out of 100 in a scale from 0 (perceived to be highly corrupt) to 100 (very clean) as per the report issued by Transparency International (TI). Denmark comes on top of the list with a score of 92 and North Korea and Somalia share last place scoring 8. The Corruption Perceptions Index (CPI) ranks countries and territories based on how corrupt their public sector is perceived to be. It's a composite index-a combination of polls- drawing on corruption - related data collected by a variety of selected institutions.

Pakistan sovereign sukuk signals Islamic finance shift

Pakistan's $1 billion sukuk offering was its first shariah-compliant deal since 2005. It signals that Muslim-majority countries will actively rely on Islamic finance markets for at least part of their fundraising going forward. The sovereign's five-year sukuk closely follows its $2 billion souvereign bond sold in April - its first foray into the foreign debt markets after a seven-year hiatus. But investors have anticipated a sukuk due to its strong domestic Islamic finance market. It demonstrates that the global Islamic finance markets have developed to the point that Muslim-majority countries can rely on it for their annual fundraising plans.

Pakistan receives $1bn sukuk payment

Pakistan has received $1 billion payment for its recent sukuk sale, a spokesman for the State Bank of Pakistan (SBP) has said. The government issued sukuk on Nov 27 to raise its foreign exchange reserves in line with International Monetary Fund’s demands. The government had initially planned to float $500 million worth of the Islamic bonds. But in the wake of high demand, which rose to $2.3bn, it decided to raise $1bn. The five-year sukuk were sold at a profit rate of 6.75 per cent. The country’s total liquid foreign exchange reserves declined to $12.993bn during the week ending November 28 compared to $13.219bn the previous week.

Islamic Development Bank presents Kyrgyzstan 5 mobile clinics

The Islamic Development Bank has presented Kyrgyzstan 5 mobile clinics, the Department of Information Policy of the President reported. Last Wednesday, President Almazbek Atambayev and IDB President Akkhmad Mohamed Ali Al Madani discussed the implementation of new projects in Kyrgyzstan. The IDB Director said that he will send a special mission to explore new joint strategic projects in the near future. Moreover, an agreement on donating Kyrgyzstan five mobile clinics designed to improve access to health services in remote areas of the country was signed during the meeting. Equipment cost is estimated at $10 million.

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