Iranian businessman Mahafarid Amir Khosravi, convicted of masterminding a $2.6 billion banking scam, was hanged on Saturday in Tehran''s Evin prison. He was sentenced to death after being convicted of corruption on earth through bribery and money laundering. Revelations about the scandal swept Iran in 2011 when prosecutors uncovered a private umbrella group, led by Amir Khosravi and his brothers. Over the space of two years, Amir Mansour Aria Development Co bought 40 companies with forged letters of credit obtained from several major banks whose managers they had bribed. In addition to Amir Khosravi, three others have reportedly been sentenced to death.
A legal dispute between Pakistani insurance firms and regulators has been resolved after the country's five takaful firms had challenged the new takaful rules introduced in 2012. Under the agreement, insurers will have to allocate 50 million rupees ($506,100) in capital to their window operations, from no capitalisation requirement in the original rules. The takaful rules will be applicable after a three-month period and the regulator would also amend them to allow takaful firms to co-insure risks alongside conventional players, which the initial rules had forbidden. Takaful's share of the total insurance market is estimated at less than 3 percent. The regulator has now received five applications for takaful windows and expects as many as half of all conventional insurers to eventually apply for a licence.
14 Iranian banks are involved in the famous 2011 $3-billion embezzlement case. Iran's prosecutor general Gholam Hossein Mohseni Ejei said that state-run Bank Saderat and Bank Melli were the main banks involved in the case. The prosecutor general went on to say that seven MPs who were accused of involvement in the case acquitted due to lack of evidences. Thirty-nine persons were accused of involvement in the case, and several high-ranking officials including certain persons in judiciary, parliament and presidential administration were persecuted or arrested. In addition to death and life sentences, some defendants banned from government jobs.
Religious investors, in economic terms the third largest group to invest on the world’s stock markets, can post high placement profits and remain faithful to their religious creed. This is the message of the third biennial world report on religious investors, the only report of its kind.
The report highlights the profile of religious investors who respect this balance and thus can have a major influence on company ethics:
- Their principles of faith can serve as a road map for investment choices;
- By nature, these investors have a long-term view which is key to the notion of responsible investment;
- They can call on the support of what is often a worldwide community;
- They have set up networks that offer the chance to work together on stakeholder actions and therefore increase their impact.
Even though a certain number of religious organisations invest responsibly and use their role as shareholder-activists to promote change this sort of profile is far from the majority.
The Islamic Development Bank's (IDB) Board of Executive Directors has approved new fundings totalling $670.9 million for development projects in member and non-member countries. The Executive Directors approved $312.8 million to finance electricity projects in Egypt and Senegal; $110 million to fund the development of a major road in Uganda; $48 million to fund pearl preservation and economic revival projects in Bahrain; $44 million for an underwater communications cable in Bangladesh; and $12.4 million to finance fish farms in Mozambique. Moreover, the executive directors gave their approval for four donations for Muslim communities in non-member Bosnia-Herzegovina, Cambodia, India and Thailand while funds will also be channelled into development projects in Africa.
Pakistan's Minister for Finance Muhammad Ishaq Dar held a meeting with officials from Dubai Islamic Bank ( DIB ) in Dubai where they discussed prospects of another sukuk issuance and hiring an advisor for transparent sukuk transaction. Following the success of Euro Bond wherein Pakistan raised $2 billion from capital market recently, the minister said government intends to tap the sukuk market to increase its foreign exchange reserves. Pakistan plans to sell $1 billion dollar-denominated sukuk which will be marketed at the end of the third or in the fourth quarter of 2014. Dar said Pakistan government would soon release an advertisement in international and local press to hire financial advisor for sukuk transaction through a transparent and competitive process.
Iran's Bank Mellat filed an application for a judicial review against the UK Government in the Administrative Court on 16 April 2014. In its final ruling last June, the UK Supreme Court found that by imposing domestic sanctions against Bank Mellat, the UK Government acted both “unlawfully and irrationally”. Following the UK Supreme Court decision, Bank Mellat had asked the UK Government to withdraw its 2010 listing proposal to the EU Council. It was hoped that this may have been sufficient to convince the EU Council to give up on its own sanctions against the bank. However, the UK Government has refused to withdraw the proposal. The UK Government has also now applied for permission to intervene in support of the EU Council’s appeal against the first European Court decision.
A move by Iran to recover bad debts on behalf of banks has shed light on possible corrupt lending under the country’s previous president Mahmoud Ahmadinejad. President Hassan Rouhani’s administration, in power for nine months, says bad debt in the banking system has reached a “critical” level – 15.6 percent. The authorities this week have handed the names of 575 of the biggest defaulters to the judiciary to try and recover some of the $33 billion owed. The list has not released but some believe the bulk may have been borrowed by as few as 100 people and firms. The bad debt may hamper Rouhani’s plans to boost employment and raise living standards. However, analysts also see positives in the new openness on the debt problem and moves to fix it.
Pakistan plans to sell more than $1bn of Islamic bonds after its first overseas debt sale in seven years boosted reserves. The dollar-denominated notes will be marketed at the end of the third or in the fourth quarter of 2014, Finance Minister Ishaq Dar said. Investor interest will determine the size of the offering which will be “much more” than $1bn and managers are yet to be appointed, he added. Dar said he expects investors from the Middle East, South Asia, Europe and the US. A successful conclusion to review talks with the IMF – which began in Dubai this week and will probably end on May 10 – will hopefully result in good pricing on the debt, he added. The sale is part of Prime Minister Nawaz Sharif’s plan to attract investment and overhaul the economy to meet conditions on a $6.6bn IMF loan.
Deputy Governor, State Bank of Pakistan, Saeed Ahmed has said that the SBP has evolved a comprehensive five-year strategy to promote Islamic mode of banking in the country. The SBP would strive to get 20 percent market share during this period which is 10 percent at the moment, he added. Moreover, the SBP is in regular contact with the Institution of Business Administration (IBA) in Karachi for the establishment of Centre of Excellence on Islamic Banking. He said as soon as the first centre will be established, three more such centres would also be established in Lahore, Islamabad and Karachi respectively. Besides, a lot of attention is focused on solutions, which are not far from the Islamic financing where system allows fairness of return, sharing of risk and reducing income inequalities.
Pak-Qatar Takaful Group recorded a strong growth with a combined turnover of Rs5.5bn ($54m) for the year ended December 31, 2013. The Group made a profit of Rs74m ($0.7m) during the year. Pak-Qatar Takaful Group, which comprises of Family Takaful and General Takaful, reviewed and approved the financial statements of Pak-Qatar Family Takaful and Pak-Qatar General Takaful for the year during the group's board meeting held recently in Doha. The company's paid-up capital is in excess of Rs710m, with credit rating of 'A' (Stable Outlook) by JCR-VIS Credit Rating Co Ltd.Pak-Qatar Family is recipient of several domestic and international awards and nominations.
The Banking Regulation and Supervision Agency (BDDK) approved expansion requests from Bank Mellat last month in light of the U.S. and the UN Security Council loosening economic sanctions. Afterwards, applications from the Iranian banks Pasargad and Tejarat to set up shop in Turkey were approved by the Ministry of Foreign Affairs. Bank Mellat has operated in Turkey through its three branches in Izmir, Istanbul and Ankara. Turkey and Iran have reportedly come to an agreement allowing an increase in banking transactions between the two countries. Earlier this year, Turkish Prime Minister Recep Tayyip Erdogan made a visit to Iran aimed at strengthening economic ties between the neighboring countries.
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.