IBS Intelligence

IDB and the World Bank seeking to develop infrastructure through PPPs in the Gulf

The Islamic Development Bank (IDB) and the World Bank will engage in public-private partnerships (PPP) for infrastructure development projects. Representatives of both institutions met recently and discussed issues included in IDB’s report "Mobilising Islamic Finance for Infrastructure-Public Private Partnership". IDB spokesperson Dr. Abdul-Hakim Elwaer said these partnerships fall in line with the new development orientations of IDB member countries including Saudi Arabia, whose ambitious 2030 plan is targeting to increase the private sector’s contribution to the GDP from 40-60%. Elwaer added that Saudi Arabia is hoping to achieve these goals by seeking out PPPs and promoting the privatization of government entities.

Emirates airline selling #sukuk to raise $1 billion

Emirates airline has mandated eight banks to manage its latest sukuk sale. Among these banks are HSBC, Standard Chartered, Citigroup, BNP Paribas, Emirates NBD, Dubai Islamic Bank, Abu Dhabi Islamic Bank and Noor Bank. The issue will raise about $1 billion in the next few weeks. Emirates will be seeking funding from international bond markets as the US interest rates are expected to increase and with them borrowing costs as well. Emirates usually raises funding each year from diverse sources: commercial loans, operating leases and export credit agency backed facilities. In 2015, the Dubai-based firm sold a bond when it raised $913 million from a 10-year sukuk, guaranteed by the UK’s export-finance agency, to help pay for four Airbus A380-800s.

#Nigerian central bank aims to grow Islamic banking sector with new regulations

The Nigerian central bank is setting up two new financial instruments to provide liquidity support for non-interest financial institutions. The new regulatory measures are designed for the proliferation of sukuk and takaful. Among the banks in Nigeria, only Sterling Bank, Stanbic IBTC and Jaiz Bank offer Islamic services. Jaiz, the only fully-fledged Islamic lender on the list, opened its doors in 2012. The Nigerian central bank stipulated several conditions for offering Islamic finance in October. Non-interest lenders must have a liquidity problem to be able to access a new discount window, which will offer it at zero interest, though lenders must post collateral.

Dubai Islamic Bank plans African #expansion after planting #Kenyan roots

Dubai Islamic Bank (DIB) has plans to solidify its foundations in the East African Islamic banking sector. Chairman Mohammed Ibrahim Al Shaibani confirmed confirmed the information last weeek. DIB was granted permission to enter the market by the Central Bank of Kenya in May 2017. The regulator used the new entry to highlight Kenya’s growing status as a regional finance hub. Until the DIB entry, Kenya had only two full-fledged Islamic institutions: Gulf African Bank and First Community Bank. The country also has one takaful Islamic insurance firm, a Shari’ah-compliant mutual fund and two cooperatives. Kenya's treasury ministry recently unveiled new plans to make mainstream Islamic finance a major part of the country's growth strategy. Finance minister Henry Rotich said in March that the government would propose alterations to financial law and issue new regulations to facilitate Shari’ah finance.

News in brief: Islamic banking round-up

Seychelles-registered Bank of Muscat International Offshore (BMIO) is considering introducing Islamic finance to the 115-island country. The Al Salam Bank of Bahrain, which owns 50% of shares in BMIO, is talking with the Seychelles authorities about future plans following the recent approval of BMIO’s reorganisation. Details of the reorganisation are complex, but the governor of the Central Bank of Seychelles, Caroline Abel, says it took about 8 months for everything to complete. An Al Salam delegation was in the country in July to talk about making BMIO a Shari’ah-compliant bank.

Kuwait Finance House (KFH) believed to be seeking buyer for ITS

Kuwait-based International Turnkey Systems (ITS) appears to be for sale, with its parent, Kuwait Finance House (KFH), deciding it is no longer strategic. There have been number of discussions with main rival in the Islamic core banking systems sector, Path Solutions.

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