MICROCAPITAL BRIEF: Jordan’s Queen Noor, King Hussein Foundation Launch Sharia-Compliant Microfinance Institution Ethmar

Queen Noor of Jordan, the founder and chairperson of the King Hussein Foundation (KHF), recently announced the launch of Ethmar, a microfinance institution (MFI) that is compliant with Shariah. Queen Noor expressed the vision of Ethmar becoming an innovative model for economic empowerment similar to the other pioneering programs launched by the King Hussein Foundation. As of 2015, the foundation operates programs including the Jubilee Institute; the Information and Research Center; the National Center for Culture and Performing Arts and the National Music Conservatory.

IIRA reaffirms ratings of Jordan Islamic Bank for 2015

Ratings assigned to Jordan Islamic Bank derive strength from the institution’s strong franchise as the largest retail Islamic bank operating in the Hashemite Kingdom of Jordan. The bank’s financial risk profile is also healthy, with strong and improving asset quality indicators, sufficient profitability position, and sizable liquid reserves. Leverage indicators of the institution are at a comfortable level. Jordan’s macroeconomic environment, however, remains challenging against the backdrop of regional instability. The bank has been proactive in incorporating changes in the code of corporate governance for Islamic banks issued by the Central Bank of Jordan.

Jordan-based Al Baraka bank returns ‘‘suspicious’’ Libyan transfer ‘‘funding terrorism’’

The Tripoli-based Libyan Audit Bureau has confirmed that Jordan based Al Baraka bank has returned a transfer from Libya for being ‘‘suspicious’’ and for ‘‘funding terrorism’’. The transfer originating from the Central Bank of Libya (CBL) were intended to cover Libyan student scholarships in Jordan. The Audit Bureau revealed that it had, in cooperation with the Ministry of Higher Education and the CBL, opened an independent bank account for the Cultural Attaché at its Amman embassy specifically for scholarship funds. However, the Audit Bureau admitted that the Libyan embassy broke procedures and regulations and an agreement by using the funds on other spending rather than for student scholarships.

Jordan's first Islamic microfinance institution officially launched

HM Queen Noor Al Hussein officially launched Ethmar, Jordan’s first Shari’ah-compliant microfinance institution on 8 August. Ethmar is an affiliate of the King Hussein Foundation, which promotes social equity and economic empowerment in Jordan. Jordan News Agency Petra reported Ethmar Chairman Faris Sharaf as saying three Shari’ah-compliant products would be launched in collaboration with public and private organizations in the country.

Jordan Expected to Issue Debut Sukuk

Jordan said last month it was going to issue its first ever sovereign sukuk soon. The long anticipated issuance is expected to rake in some JD400 million to finance real estate projects. The sovereign issuance is expected to be a dinar-dominated offering. Though Jordan passed the Islamic Finance Sukuk Law in 2012, allowing both public and private entities to issue sukuk, it was only in April that the government vetted the Islamic Corporation for the Development of the Private Sector to support the country’s maiden security bonds issuance. Only one corporate sukuk had been issued in the Kingdom before: a seven-year JD85 million security launched by Al Rahji Cement in 2011.

Jordan plans first foray into Islamic bonds

Jordan will soon launch its first sovereign issue of Islamic bonds to finance real estate projects, Finance Minister Umayya Toukan said. Toukan did not give details on the size of the planned Islamic Sharia-compliant issuance, but informed sources indicated that the sovereign sukuk could raise around JD400 million. The source said the government may enter the Islamic financial market in the coming few weeks, adding that Islamic banks in Jordan enjoy liquidity in excess of JD1.4 billion. In April of this year, the government chose the Islamic Corporation for the Development of the Private Sector to support the country's debut for the planned domestic sukuk offering. The sukuk issuance will be a dinar-dominated offering.

Jordan chooses Islamic Development Bank arm to support debut dinar sukuk

Jordan chose the Islamic Corporation for the Development of the Private Sector (ICD), an arm of the Jeddah-based Islamic Development Bank, to support the country's debut sovereign issue of sukuk. The ICD will provide "transaction technical support" for the domestic issue of Jordanian dinar-denominated sukuk, which is expected this year. The sukuk will be used to absorb excess liquidity held by Jordan's Islamic banks, which is estimated to total 1.4 billion dinars ($2 billion). Khaled Al-Aboodi, chief executive of the ICD, said the issue would help to develop Jordan's capital market and provide an alternative to its Treasury bills for investment by Islamic banks.

Jordan's sukuk market looking set for take-off

The Islamic debt market in Jordan is set to capitalise on growing worldwide interest in sukuk after long-awaited regulations allowing banks to issue and buy the financial instrument have been put in place. Only one corporate sharia-compliant bond has been issued so far in Jordan, a seven-year, JD85 million ($119.8 million) security launched by Al Rahji Cement in 2011, while the government has yet to tap the market with an Islamic sovereign bond. However, the passage of the sukuk law and the government's request in June last year for assistance from the Japan International Cooperation Agency to launch an Islamic bond suggest Jordan is intent on entering the market in the near future.

Japan's JICA to start work on Jordan's debut sukuk

The Japan International Cooperation Agency (JICA) and the government of Jordan will begin work in the coming weeks on a debut issuance of Islamic bonds. In October, JICA signed an agreement with the Islamic Corporation for the Development of the Private Sector (ICD), to develop its Islamic finance capability. Jordan is JICA's first target. JICA and ICD will start their joint technical assistance to the country within a month, Tetsutaro Kon, director in charge of Middle East operations at JICA, said. The consultation would continue over the next six months and address details such as currency and tenor of the sukuk.

Egypt: New Dfid/Islamic Development Bank Initiative

Arab Women's Enterprise Fund (AWEF) aims to empower poor women, increasing their income and well-being and ultimately improving their livelihoods and growth opportunities. The programme will do this by increasing their participation in markets through working with market actors to encourage the adoption of new practices and also by addressing constraints in the enabling environment. AWEF is an 10 million pouns market development programme that will work in Egypt, Jordan and the Overseas Palestinian Territories (OPTs). DFID will work in partnership with the Islamic Development Bank (IDB) who will contribute an additional 10 million pounds in sharia-compliant concessionary finance through financial intermediaries.

Islamic International Rating Agency (IIRA) Reaffirms Shari'a Quality Rating of Jordan Islamic Bank (JIB)

Islamic International Rating Agency (IIRA) has reaffirmed its Shari'a Quality Rating of AA (SQR) assigned to Jordan Islamic Bank ( JIB ). This rating indicates JIB 's conformance to very high standards of Shari'a compliance in all aspects of Shari'a quality analysis. The bank is supervised by an eminent Shari'a Supervisory Board, which comprises both Jordanian residents for ease of access, and those present on the group's Unified SSB, for international reach. The SSB regularly reviews activities of the bank to ensure Shari'a compliance. Transparency of financial reporting vis-à-vis investment accounts and corporate governance disclosures are mainly in line with the recommended best practices by IFSB.

IIRA Reaffirms Ratings of Jordan Islamic Bank

Islamic International Rating Agency ( IIRA ) has reaffirmed the ratings of Jordan Islamic Bank ( JIB ) on the national scale at A+/A1 (jo) (Single A plus/A One). Ratings of JIB on the international scale have also been reaffirmed with the foreign currency rating at 'BB+/A3' (Double B Plus/A Three) and the local currency rating at 'BBB-/A3' (Triple B Minus /A Three). Outlook on the ratings is 'Stable'. Ratings are supported by JIB 's strong franchise and retail presence. Stability at Board and management level has reinforced the organizational culture and has allowed uninterrupted implementation of the bank's business strategy. Regional instability may however continue to be a significant challenge.

Al Baraka Bank plans subordinated sukuk in Jordan

Bahrain-based Al Baraka Banking Group is planning on issuing its first sukuk for its Jordanian unit later this year, chief executive Adnan Ahmed Yousif said. Jordan Islamic Bank is planning a 10-year local currency sukuk by year-end, said Yousif, without giving a size for the transaction. This would mirror deals by Al Baraka units in Pakistan and Turkey which have allowed them to boost regulatory capital as Basel III global banking standards are being phased in around the globe. In December, Jordan Islamic amended its articles of association to allow it to both issue and buy sukuk, as well as to establish special purpose vehicles for such transactions. Al Baraka is also planning a sukuk for its South African unit this year, said Yousif.

IIRA Reaffirms Fiduciary Ratings of Islamic Insurance Company

Islamic International Rating Agency (IIRA) has reaffirmed the Takaful Financial Strength (TFS) rating of The Islamic Insurance Company (TIIC) in Jordan at 'A' (Single A). Outlook on the assigned rating is 'Stable'. The fiduciary score has been reassessed in the range of '71-75', which indicates that protection factors are adequate. The assigned rating derives strength from TIIC 's franchise as a Shari'a compliant operator that builds on the reputation of its parent, Jordan Islamic Bank, and which forms part of the Al Baraka Banking Group. Established in 1996, the company has grown at a steady rate and presently commands a market share of about 4% in Jordan's overall insurance sector.

Jordan clears the way for Sukuk

On 24 July, under the auspices of the Prime Minister Dr Abdullah Ensour, Jordan officially inaugurated regulations for the issuance of Sukuk. The inauguration ceremony was organized by the Jordan Securities Commission ( JSC ) and followed its conclusion of the preparation of all legislation and instructions required by the Islamic Finance Sukuk Law No. 30/2012 and legislation governing the issuance process of Sukuk for all economic activities in both the public and private sectors alike. Available structures include Ijara, Mudaraba and Musharaka. The Central Bank of Jordan (CBJ) is a regular player in the bonds market. A clear signal to local financiers and corporates would be an Islamic issuance by the CBJ, now that the legal framework is in place.

Jordan introduces Islamic bond rules

Regulators in Jordan have introduced a set of long-awaited rules covering the structuring, issuance and trading of sukuk. Jordan is one of several Muslim-majority countries keen to develop their domestic Islamic finance sector and the government is studying a proposal to issue a sovereign sukuk, mirroring efforts by Egypt and Tunisia. The Kingdom has an established Islamic banking sector but sukuk have been slow to appear. Local company Al-Rajhi Cement has thus far been the only one to issue a sukuk, an 85 million dinar deal in 2011. Lawmakers passed legislation in 2012 allowing the government to issue sukuk but the sector has been held back by, among other things, legal limitations on the transfer of assets required to underpin such transactions.

Stakeholders hopeful Islamic sukuk will help revive economy

Jordan's Prime Minister Abdullah Ensour on Thursday acted as patron at a ceremony to launch a historic piece of legislation regulating the Islamic sukuk. The prime minister described the Islamic Sukuk Law as a milestone in Jordan's financial and economic history, noting that launching these items of legislation is the final step in building the pillars of finance compatible with Sharia. He also noted that the government will use sukuk to finance its productive projects, especially those in partnership with the private sector. The Jordan Securities Commission (JSC), Amman Stock Exchange (ASE) and the Securities Depository Centre are now ready to receive orders for issuing sukuk for the public and private sectors.

Flagship report on Arab food security to be presented at AFED seventh annual conference in Amman

The Arab Forum for Environment and Development (AFED) announced that its upcoming seventh annual conference will be held on 26-27 November 2014 at the Royal Convention Centre at Le Merdien in Amman. The theme will be food security options in Arab countries, based on a comprehensive report on the subject which AFED is preparing in cooperation with a group of experts at research and policy centers. The AFED Food Security report aims to provide an overview of the state of agricultural resources in Arab countries, and discuss the role of science and technology in enhancing water and food security. Experts are preparing case studies on vital issues such as virtual water trade in the GCC countries, marginal land productivity in the Badia of Jordan, and Morocco green plan, among many others.

ICD and EBRD sign MoU to support SMEs in Egypt, Jordan, Morocco and Tunisia

The European Bank for Reconstruction and Development (EBRD) and the Islamic Corporation for the Development of the Private Sector (ICD) have signed a Memorandum of Understanding developing joint collaboration to support SMEs in Egypt, Jordan, Morocco and Tunisia. Under the terms of the memorandum, the EBRD and the ICD will aim to establish a $120 million investment fund, to develop and to financially support SMEs across the southern and eastern Mediterranean region (SEMED). Various financing products will be used such as equity and quasi-equity.The two institutions will contribute to the SME Fund, as well as exploring additional institutional investors and donor streams in order to provide further SME financing and technical assistance required in the region.

Jordan Islamic Bank Q1 net profit up two per cent at $14.71 million

Jordan Islamic Bank (JIB) achieved $14.71 million in net profits in Q1 2014, compared to $14.68 million during Q1 2013. The bank’s assets reached about $5.079 billion compared to $4.968 billion by the end of 2013. Clients’ deposits reached about $4.581 billion compared to about $4.500 billion as of end-2013. Facilities and investments reached about $3.565 billion compared to $3.519 billion at end-2013. The non- performing finance (NPF) ratio reached about 4.34 per cent, its coverage ratio about 86 per cent. The bank enhanced its capital base by increasing its paid capital by distributing 20 per cent as free shares to shareholders in addition to distributing cash dividends to shareholders at 15 per cent for the year 2013.

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