Central Asia

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.

AAOIFI membership for Kazakhstan bank

The National Bank of Kazakhstan, the central bank and financial services regulator, has taken up membership in Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The signing ceremony to commemorate the membership was held on December 2 at WIBC 2014. The agreement was signed by National Bank of Kazakhstan deputy governor Nurlan Kussainov and AAOIFI secretary-general Dr Hamed Hassan Merah. Dr Merah said the membership would allow AAOIFI to work more closely with the National Bank of Kazakhstan and the finance industry in the country to support continuing development of Islamic finance.

Minister urges Islamic Solidarity Fund to help remove poverty

Minister of Economic and Finance Ali Tayebnia called for cooperation of the Islamic Solidarity Fund to remove poverty and unemployment in OIC member states. He made the remarks in the 30th session of the OIC Standing Committee on Economic and Commercial Cooperation General Assembly held in Istanbul, Turkey on November 27. Tayebnia said that OIC member states are facing structural labor market challenges such as low rate of women economic participation, high rate of unemployment among young adults, low rate of efficiency and ability to compete and in this concern an initiative job creation could be as a solution.

Sukuk yields $1bn in international bond market

Pakistan raised $1 billion from the international Islamic bond market on Wednesday by selling its Sukuk papers at 6.75 per cent profit rate. The government received a subscription of $2.3bn, which was nearly five times the targeted amount. With the proceeds, the country’s foreign exchange reserves are estimated to touch $14.1bn on Dec 1. And after the disbursement of $1.1bn by the International Monetary Fund (IMF) expected in the second week next month, the country is set to cross the $15bn reserves barrier and will be eligible to benefit from the concessionary development lending window of the World Bank — International Bank for Reconstruction and Development.

Pakistan's Asia Insurance to enter takaful market

Lahore-based Asia Insurance Company Ltd will seek shareholder approval next week to offer takaful products.The company will seek approval to allocate 50 million rupees ($492,853) in capital to its takaful operation, the minimum capitalisation requirement. It will also seek to increase its authorised capital to 500 million rupees from 300 million currently. Asia Insurance joins a growing list of firms in offering sharia-compliant products including United Insurance Company and EFU insurance group. In May, Pakistani regulators introduced new takaful rules that allowed conventional firms to enter the sector. Regulators expect as many as half of all conventional insurers in Pakistan to eventually offer takaful products.

Moody's assigns (P)Caa1 to Pakistan's sovereign Sukuk

Moody's Investors Service has assigned a provisional (P) Caa1 senior unsecured rating to the proposed US dollar Trust Certificates to be issued by The Second Pakistan International Sukuk Company Limited, a special purpose vehicle established in Pakistan, by the Islamic Republic of Pakistan. Moody's Caa1 government bond rating and stable outlook on Pakistan reflects the country's large but moderating fiscal deficits as well as its stabilizing external liquidity position. It also factors in high susceptibility to event risk, both on the political front and in terms of economic vulnerabilities that could arise. The (P)Caa1 rating assigned to the trust certificates is at the same level as Pakistan's Caa1 issuer ratings.

SECP committed for developing Islamic financial sector

In order to develop a robust takaful sector, the Securities and Exchange Commission of Pakistan (SECP) has allowed M/s SPI Insurance Company Limited, formerly known as Saudi Pak Insurance Company Limited, to start window takaful operations. The initiative would help meet the risk mitigation needs of the masses and develop the Islamic financial sector, according to the SECP. Previously, two conventional insurance companies were allowed to transact takaful business through window operations. Currently, the SECP is processing one more application to start window takaful operations. The takaful sector in Pakistan has yet to go a long way in fulfilling the risk mitigation needs of the masses.

Islamic Development Bank to be established in CIS with Baku to become the regional Islamic financial center

Baku will become the regional Islamic financial center and has a potential to press internationally recognized centers. According to Behnam Gurbanzadeh, IBA (International Bank of Azerbaijan OJSC) Islamic Financing Department Manager, the idea to establish the CIS Islamic Development Bank proposed several years ago has become very attractive for the countries of the Commonwealth. In addition to Azerbaijan, Russia and Kazakhstan are very interested in establishing such a bank, Gurbanzadeh said. Today there are up to 700 million users of Islamic financial services in the world.

Islamic banking in Azerbaijan to be governed by new Banking Code

A package of amendments and additions to legislation in order to regulate the activities of Islamic banking in Azerbaijan will be introduced to the Central Bank of Azerbaijan in the first half of 2015.

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