IslamicFinance.de

North Africa is moving towards the development of the Islamic financial industry as a response to the protests in several countries of the Arab world. Although there are some difficulties to overcome like low banking penetration and limited development of retail banking in general, there ist still potential for growth and progress. However, until a more stable political environment is provided, Shari'ah-compliant banking will be a niche market in North Africa.

Approximately US$10 million were stolen from the vault of the International Bank for Trade and Finance (IBTF) in Damascus on January 17. According to the bank's chief executive Sultan Al Zobi, the management only discovered the robbery on the following Sunday. He also added that a bank employee was believed to be involved in the raid. IBTF notified the authorities, an investigation is under way.

Syrian banks remove deposits from their branches in “hot spot” areas and transport the cash to their head offices in Damascus. However, a lot of money is going missing on the way due to robbery, theft and payoff to gangs. Moreover, Syria also faces fuel shortage and a power outage in Damascus after an attack on the main power line.

Banks in Syria are experiencing additional cull at board level which combines with the already difficult conditions facing a sector hit by sanctions, losses and robberies amid a deepening civil war. The changes are in the form of reported resignations, some of which deemed too close to the regime, are being asked to step down, thus helping to ease the pressure on financial institutions. Other directors have made a different decision and shed their holdings in a bid in order to ensure they are not marked in the future.

The increase in bank robberies and fraud cases in Syria deepens the country's state of trouble. Already there are alerts to the country's stock exchange about major robberies in separate filings by foreign-backed lenders. A robbery in Homsled to the loss of 75.2 million Syrian pounds (Dh4.12m) which is a huge sum compared with 200m pounds profit the bank made last year. Unfortunately, the frequency of such incidents only gets higher.

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The civil war in Syria epands to the capital, which is why banks experience some difficulties. Even though corporate lending and trade financing have almost stopped, banks still continues deposits and withdrawals. The higher inflation and weaker pound are possible to start a crisis, however, there is no immediate threat of collapse of the banking system.

Unrest in Syria is developing chaos at the country's banks, which posted bumper profits last year as a plunge in Syria's currency boosted foreign exchange gains, but will have big problems this year in the face of rapidly declining deposits and rising bad loans.
Inspite of this, the central bank has encouraged banks to keep up high foreign currency holdings as the country's foreign exchange reserves have depreciated since the political turmoil began.
At this point analysts question how many banks will survive as the uprising and Western sanctions have disabled Syria's economy and triggered capital flight, causing total bank deposits to drop by almost a third since the unrest began.

Four banks were chosen by Majid Al Futtaim (MAF) Holding to manage its first Islamic bond issuance programme. The four banks are: Dubai Islamic Bank, Abu Dhabi Islamic Bank, HSBC and Standard Chartered.
The proceeds are anticipated to fund expansion plans worth $2bn for malls and shopping centres in Lebanon, Egypt and Syria, alongside plans for a hypermarket in Erbil, Kurdistan.

Adnan Yousif, Chief Executive Officer of Al Baraka Banking Group and President of the Union of Arab Banks, declined suggestions of capital flight from Syria to Lebanon.
Adnan stated that the Union calls for Arab banks to always be cautious in terms of funding and liquidity.

Barwa Bank and National Petroleum Services Group (NPS) made an agreement to refinance an existing syndication and support its expansion and working capital. All this will be worth QR529m.
NPS group provides drilling and well services to customers in the oil, gas and petrochemical industries in the Middle East, North Africa, Far East, and Europe.
Its state-of-the-art equipment and sectorial services are embracing Qatar, Saudi Arabia, United Arab Emirates, Bahrain, Syria, Brunei, Malaysia, Singapore, Libya, and Iraq.

Takaful Emarat wants to launch new products and as a result it expects gross written premiums to surge to Dh65 million ($17.7 million) in 2011.
Ghassan Marrouche stated that the new savings products, combined with the expectation that medical insurance will become compulsory in the United Arab Emirates would help the rise of written premiums. He added that demand is already increasing for Islamic insurance, or takaful, products in markets such as India, Pakistan, Jordan and Syria.

Mohamad Nedal Alchaar, the head of the Accounting and Auditing Organisation for Islamic Financial Institutions, was appointed Syria’s Minister of Economy and Trade. This leads to his leaving the post at the regulator.
Syria, where Syrian President Bashar al-Assad’s Baath party has been in power since 1963, is the latest Middle Eastern country to be hit by a wave of uprisings that ousted longtime rulers in Egypt and Tunisia and sparked armed conflict in Libya.

Customers who are eager to be Sharia compliant are flocking to Islamic banks. Yet as Islamic lending boasts that it charges no interest, crunching the numbers churns out something of a surprise. Some Islamic mortgages charge more than already high interest-based traditional mortgages. You could even argue that an Islamic mortgage is, in some cases, so expensive it is akin to usury. And the terms are often less favourable.
Take the current murabaha rates in Syria and Lebanon. Murabaha is an Islamic equivalent to a mortgage or car loan. Instead of lending the customer money and charging interest, the bank purchases the asset and resells it for a profit to the customer. This profit is the murabaha rate.
Unlike, say, in the UK, there are no regulatory laws in Syria that require Islamic banks to quote their product in a way that is equivalent to an interest-based traditional mortgage to allow comparison shopping. The only way the average customer can convert murabaha to interest-based is with the help of a financial calculator and a professional.

Leading Islamic finance scholars are preparing the first global certification for Shariah experts, seeking to bolster the industry’s reputation and make it easier for banks to find qualified advisers. The International Shariah Research Academy for Islamic Finance in Kuala Lumpur will pick a board of regulators by year- end to issue permits for scholars qualified to sit on Shariah boards. The scholars decide whether financial products meet the religion’s precepts, including a ban on interest payments. Scholars are now required to have recognized university degrees before they can act as advisers to banks and companies. The council of scholars at the academy includes Sheikh Nizam Yaquby of Bahrain, Mohammad Daud Bakar of Malaysia and Abdul Sattar Abu Ghuddah of Syria. A centralized regulator for scholars will help increase investment because banks would save time in choosing experts to ensure products meet religious principles. The institution doesn’t plan to restrict scholars on the number of advisory panels they can join.

Bahrain's Gulf Finance House (GFH) said it was close to setting up a $326 million unit in Syria as the Islamic investment bank looks to boost revenues in a relatively untapped banking market.

The Constituent General Meeting of Al Baraka Bank Syria was held in Damascus on 16 December 2009 in the presence of the founding shareholders or their representatives and representatives from the Ministry of Economy and Commerce, Central Bank of Syria, the Commission for Securities and Financial Markets and other representatives of concerned public authorities and bodies.

The Islamic Development Bank and the Syrian government signed an agreement last week stating that the bank would provide a EUR 100 mn finance for the expansion of a power station in Syria.

Gulf News published based on Bloomberg 15 January an article regarding the governmental approval for Emirates Islamic Bank, Kuwait Syrian Holding, and two Saudi investors from the Al Rajhi family to partner with Bahrain-based Albaraka Banking Group, setting up Al Baraka Bank-Syria. The bank plans an IPO at the end of Q1 to sell 35 % according to Amir Assassa, a founding member of Albaraka Bank-Syria. Assassa said that Albaraka Banking Group will own 23 % in the Syrian bank, Syrian investors 16 %, Emirates Islamic 10 % and Kuwait Syrian Holding, which is partly owned by the Al Kharafi Group, 5 %, he said.