IslamicFinance.de

The General Council for Islamic Banks and Financial Institutions (CIBAFI), a non-profit organisation, has traditionally focused on neighbouring countries, which form a core market for the industry. The Bahrain-based association now plans to expand beyond the Gulf, so that it can shape rules and practices in new markets as they grow. Addressing the lack of well-trained professionals in Islamic finance, CIBAFI plans to expand its training and certification programmes. The body also plans to hold forums in new markets for Islamic finance, including events in Morocco and Libya later this year. One of CIBAFI's key messages is that Islamic windows need to operate under clear rules to improve the perceptions of consumers. CIBAFI has 114 member institutions, including Egypt's Faisal Islamic Bank, Kuwait Finance House and Bahrain-based Al Baraka Banking Group.

Bahrain-based Venture Capital Bank reported a fifth consecutive quarter of profitable performance. The Islamic investment bank posted a net profit of $20.2 million on total revenue of $39.6m for the 15 months ended March 2013. For the quarter ended March this year, the profit was $1.7m and the revenue $5.08m. Total revenue increased 472 per cent on annualised basis to $39.6m for the 15-month period. Concurrently, total expenses decreased by 26pc on an annualised basis to $13.5m for the 15-month period as a result of cost reduction and organisational improvements. Shareholders' equity has grown by 9pc on an annualised basis to $199.2m as of March this year. The results affirm the bank's strategic focus on key sectors, such as healthcare, agribusiness, oil and gas and shipping and in the more economically and politically stable markets in the Mena region.

Al Baraka Islamic Bank is raising $200 million through trust certificates in a Sukuk Al Wakala issue which will mature in 2015. The 18-month sukuk is aimed at raising cash to help increase the bank's exposure to Sharia-compliant trade finance. The issue is being promoted through a private placement with participants able to invest a minimum of $100,000. The purchase price for the certificates is 100 per cent of their face amount, plus an amount equal to 2pc of the face amount of the certificates for an agency. The certificates will not be listed or admitted to trading on any stock exchanges or markets. The bank expects a profit return on the certificates of 6pc over the 18- month period.

Bahrain-based Islamic investment bank Gulf Finance House (GFH) reported a 50 per cent increase in net profit at $1.5 million for the first quarter this year. Total income for the period was at $11.1m. Income was primarily from fees from funds under management and a profit of $4.9m from repurchase of debts at discount. The bank's strategy of streamlined operations continued to bear results with a 30pc reduction in operating costs for the current quarter at $8.3m compared with $11.9m in first quarter of last year. GFH acting chief executive Hisham Al Rayes said GFH Capital undertook due diligence on a number of potential strategic investors for Leeds United FC and exit arrangements for Mega City Navi Mumbai focusing on profitable growth.

Arcapita Bank yesterday announced that a US court has approved the disclosure statement for the amended Chapter 11 plan of reorganisation. The court's decision relates to the adequacy of the disclosures in the disclosure statement about the company and the plan, and the process for voting on it. In early May, the plan will be submitted to creditors for a vote, and following this, presented to the US court for confirmation. A hearing to confirm the plan has been scheduled before the US court for June 11. The provisions of Chapter 11 allow the filing companies to continue to operate their businesses and manage their properties under the direction and control of their boards and management.

Arcapita Bank and its debtor affiliates have filed a first amended joint plan of reorganisation and a related disclosure statement in their Voluntary Chapter 11 cases in the US. The agreements implemented by the plan allow for the orderly sale of the portfolio investments at a time and price that maximises recoveries for both Arcapita's creditors and its investors. The plan avoids expensive litigation and facilitates a prompt emergence from bankruptcy. A hearing on approval of the proposed disclosure statement related to the amended plan is scheduled before the US Court on April 26. A confirmation hearing date has not yet been scheduled.

Bahraini lender Al Baraka Bank's Turkish unit plans to issue a $200 million, 10-year subordinated sukuk by the end of April or early May, the Bahraini bank's chief executive Adnan Ahmed Yousif said yesterday. Al Baraka Turk, which signed a $450m murabaha loan in September, has appointed BNP Paribas, Al Hilal Bank, Barwa Bank, Emirates NBD and Japan's Nomura for the Tier 2 sukuk.

The Arab League yesterday approved a Qatari proposal to set up a $1 billion fund for Arab East Jerusalem, which Palestinians want as the capital of an independent state under any peace deal with Israel. Qatar's Emir Shaikh Hamad bin Khalifa Al Thani, said his country will contribute $250 million to the fund which will be managed by the Islamic Development Bank. The Fund is to finance projects and programmes that will maintain the Arab and Islamic character of the city and reinforce the steadfastness of its people.

The Waqf Fund recently held a roundtable discussion themed, "Shariah and corporate governance issues in SPV governance," in Bahrain. The meeting was attended by a select group including lawyers, professional firms and Shariah scholars. Central Bank of Bahrain's Hana Al Murran made a presentation highlighting the regulatory and legal issues with special purpose vehicles (SPVs). Among others, the key issues highlighted were: mechanism to safeguard investors' interest, Shariah governance and compliance, mechanism and type of fee charged to investors, reporting frequency and transparency, and due diligence.

Seera Investment Bank yesterday reported a total income of more than $12 million for last year. Net profit for the year was approximately $7m. Chief executive Abdulla Janahi said Seera's existing investments continued to generate income for the bank, and income realised during the year was primarily from recurring revenues from these investments including lease rentals and investment and management fees. Market conditions remain challenging and a quick turnaround appears unlikely he added.

The Arab Petroleum Investments Corporation (Apicorp) has set up a $150 million fund aimed at leveraging growth opportunities in the petroleum product tanker charter market. It is the first investment fund to be established by Apicorp and also the first fund in the region aimed at a specific vessel category. The fund has acquired five medium range petroleum product tankers and these will be employed in the regional and international tanker market for five years to help meet the projected upsurge in demand for petroleum product carriers. The fund is co-managed by Tufton Oceanic.

Ithmaar Bank has formally concluded a merger with First Leasing Bank (FLB), which involved a swap of four Ithmaar Bank shares for each FLB share. The merger enhances Ithmaar's capital base as well as its capital adequacy ratios. It also improves Ithmaar shareholders' profile. According to Ithmaar Bank chief executive Mohammed Bucheerei, the merger will consolidate Ithmaar Bank's position as an Islamic retail bank and create powerful new synergies, improving efficiencies and reducing costs. The necessary procedures in co-ordination with the Bahrain Bourse to merge the registrar of FLB shareholders to the registrar of Ithmaar shareholders are expected to be completed shortly.

Gulf Finance House (GFH) yesterday reported a net profit of $10.03 million last year as compared to $0.38m in 2011. The profitability is attributed to profitable investments as well as significant restructuring, including the Leeds United football club investment and others. Operating profit before provisions for the year saw an increase of 140 per cent to $20.43m. Additionally, the bank saw a 31pc year-on-year reduction in operating costs mainly due to streamlined operations and reduced facilities. Moreover, GFH settled more than $100m of debt, which will now all mature gradually by 2018 and therefore the bank has been in a stronger liquidity position.

Bahrain-based Arcapita Bank is planning to liquidate its assets, and will not seek out new investors or investments, according to its reorganisation plan. Creditors will be given equity in two new companies that hold all the assets of Arcapita and several related companies. The proposal also envisions a new $550 million sukuk to be issued to the unsecured creditors. The reorganisation plan will be submitted to creditors for a vote and to the US court for confirmation.

Zain Saudi has extended the maturity of a nine billion riyal ($2.40bn) Islamic loan for another four weeks until February 27. The lending banks accorded to put back the maturity of the murabaha facility for the seventh time since it was agreed in July 2009. Zain Saudi said it would use the extension to conclude negotiations with lenders over a new long-term financing agreement, but also warned the existing facility could be further extended.

The merger between three Islamic banks based in Bahrain - Elaf Bank, Capital Management House and Capivest - has been successfully closed by Kuwait Finance House-Bahrain (KFH-Bahrain). The merger will enable a strengthened financial institution with a total equity reaching approximately $340 million. The total assets in excess will be $400m spanning the Middle East and North Africa (Mena), Europe and Asia. KFH-Bahrain played the role of transaction and lead adviser. The discussions and procedures started in late 2011 leading now to the creation of a robust merged entity which is more competitive in the field of global Islamic banking and investment industry.

According to a study by the National Bonds GCC Savings Index, about 90% of the people in a number of GCC countries feel they are not saving enough for their future. The percentage of people, who do not put away any money for future saving, is 71% of residents in Bahrain, Kuwait, Qatar and Oman, 74% in Saudi Arabia and 65% in the UAE. The study further shows that in Saudi Arabia 92% felt they were not saving enough. The percentages in the other countries involved in the study are 91% in Kuwait, 88% in Bahrain, 87% in the UAE, 85% in Oman, and 84% in Qatar.

The International Islamic Financial Market (IIFM) is progressing on a variety of Sharia products issued. This was made known at their 27th board meeting which was hosted by Kuwait Finance House - Bahrain in Manama. The mentioned products include Interbank Unrestricted Wakalah standards, Islamic Currency Hedging product standards and Collateralised (Rahn) Product Standard. Moreover, the board reached an agreement on the initiation of several new standards among which Ijarah sukuk standardisation as well as consultation on credit support arrangement concerning Islamic hedging.

The Arab Organisation for Social Responsibility has awarded Al Baraka Banking Group (ABG) for the best Arab Bank supporting social responsibility. The aim of the award is to encourage the role of public and private sectors, government and private institutions, in the area of social responsibility.

The next area Islamic finance sets as a goal to develop is wealth management. So far, Muslim high net worth individuals have very limited possibilities in terms of availability of suitable products and services. According to consumer banking global head of Standard Chartered Saadiq, Wasim Saifi, the Gulf region in particular has accumulated a lot of wealth in the conventional space. Provided that customers are offered a Sharia-compliant option that can provide them with a diversity of risk and manage it properly, their wealth would be able to move into the Islamic space.