October 28, 2014, Tue 09.00 - 16.45 h
At the first Liechtenstein Islamic finance conference, the Financial Market Authority (FMA) and the Propter Homines Chair for Banking and Securities Law at the University of Liechtenstein will examine the challenges to and opportunities for Islamic finance structures and sharia compliant financial intermediation for Liechtenstein. We believe that Liechtenstein’s expertise as a renowned private and family wealth centre with a strong preference for non-leveraged long-term investments, well-developed trust and foundation laws, as well as a competitive financial regulation may provide the starting point for offering services in the Islamic domain. We are delighted that experts in the field of Islamic finance and sustainability will assist us in answering the questions on how Liechtenstein may benefit from Islamic finance, and how Islamic investors and clients may benefit from Liechtenstein.
We would like to advise you of the coming Liechtenstein Islamic Finance Conference and would appreciate your participation. The conference concerning
Azerbaijani company Joint Leasing will conclude the first corporate Islamic leasing agreement next week. The company is considering the opportunity of attracting additional resources as part of the Islamic leasing project. At present, there is an opportunity to attract additional funds. In principle, leasing is a tool of Islamic finance. Ijara is among the tools used in Islamic finance.
Turkey’s stock exchange halted trading in Asya Katilim Bankasi AS (ASYAB) twice today, deepening concern about the Islamic lender that has lost almost half of its market value this week. Istanbul-based Bank Asya swung between losses and gains of as much as 11 percent before Borsa Istanbul halted trading, saying “abnormal” buy and sell orders warranted the decision. The stock resumed trading on Sept. 15 following a five-week suspension imposed on the heels of a failed takeover bid by Qatar Islamic Bank SAQ and amid speculation the government will seize the lender. It fell 48 percent in the three days through yesterday. The lender is “just trying to stay afloat,” Erdogan said today.
Improving asset quality and declining credit losses will add up to healthy third-quarter earnings for the region’s banks, says Standard & Poor’s. With the release of quarterly results coming soon, S&P predicted in a report yesterday that the banks will sustain their strong performance – and should continue to do so into 2016. The ratings agency said in a report yesterday that even though interest rates are low, the reductions in banks’ non-performing assets should offset the contraction in net interest margins. Besides, the many infrastructure projects planned in the Gulf should translate into sustained streams of corporate lending.
South African state-owned companies Eskom Holdings SOC Ltd. and Transnet SOC Ltd. are weighing Islamic bond sales after the government sold its first sukuk at a record-low cost. Eskom, the national power utility, said yesterday it will use the sovereign sale as a “barometer” for its own financing plans, while rail and ports operator Transnet has said it may access the market amid growing demand for Shariah-compliant debt. Al Baraka Bank is awaiting regulatory approval for a 300 million-rand ($29 million) issue next year. South Africa sold $500 million of Shariah-compliant bonds two days ago at a 3.9 percent profit rate. Yields on the bonds rose 10 basis points to 4 percent by 5:30 p.m. in Johannesburg yesterday.
Hassan Bashir, Founder of Takaful Insurance of Africa, says the Kenya-based company's products can bring possibilities to many and are not exclusively for people of the Muslim faith. Takaful Insurance of Africa started in Kenya, but opened an office in Somalia 6 months ago, as well as expressed interest in Uganda, Djibouti and Tanzania. Hassan Bashir believes that Islamic finance can bring possibilities to many people by helping them get employment and access to finance. With the company's index-based livestock takaful, pastoralists are continuously educated so that they understand that the cover is in line with their religious sensitivities and this is to sustain their livelihoods despite droughts. In the long run, this will solve the negative perceptions about Islamic finance.
The RHB Banking Group is keen to participate in more global sukuk issuance after making significant inroads in the market via its units, RHB Islamic Bank Bhd and RHB Investment Bank Bhd (RHBIB), in recent global transactions. Yesterday, RHBIB co-managed the Government of Hong Kong SAR of the People's Republic of China's inaugural US$1 billion sukuk issuance which also marks the world's first US dollar-denominated sukuk originated by a AAA-rated government. RHBIB meanwhile was lead manager cum underwriter to IDB Trust Services Ltd's recent 5-year US$1.5 billion sukuk issuance under its US$10 billion (RM32 billion) sukuk programme guaranteed by the Saudi based Islamic Development Bank.
Two of Malaysia’s 16 Islamic lenders now have female CEOs and three of the 11-member central bank Shariah Advisory Board are women, becoming role models for Prime Minister Najib Razak’s push to raise the female labor participation rate to 55 percent by 2015, from 52.4 percent now. The push, which mirrors similar efforts in Japan and South Korea, aims to widen the pool of available talent and help Malaysia maintain its position as the world’s preeminent center for Islamic finance. Only one Shariah bank in the Middle East has a female CEO. Besides, being open to female talent has allowed Malaysia to access a wider pool of Shariah scholars, an area where there is a shortage of experts.
The Islamic Development Bank is aiming to price a U.S. dollar-denominated sukuk of benchmark size and five years duration on Thursday, after releasing initial price guidance for the issue. The Jeddah-based institution is targeting pricing in the area of 15 basis points over midswaps. The IDB was due to wrap up a series of investor meetings on Wednesday after announcing last week it had chosen banks to arrange roadshows ahead of a potential deal. The AAA-rated IDB chose CIMB, Deutsche Bank, First Gulf Bank, GIB Capital, HSBC, Maybank, Natixis, National Bank of Abu Dhabi, and Standard Chartered as arrangers.
South Africa sold its first ever Shariah-compliant bonds at a record-low borrowing cost, opening the way for state-owned companies to tap a growing Muslim investor base. The $500 million of 5.75-year securities were priced with a coupon of 3.9 percent, at the bottom end of the range marketed to asset managers. Fifty-nine percent of investors participating in the deal were from the Middle East. The sale is likely to prompt more African nations and companies to follow. Eskom Holdings SOC Ltd., South Africa’s state-owned electricity company, and Transnet SOC Ltd., the ports and railways operator, have said they may tap the Islamic finance market. BNP Paribas SA, KFH Investment and Standard Bank Group Ltd. arranged the sale.
The Islamic International Rating Agency (IIRA) has reaffirmed the ratings of Bahrain-based ABC Islamic Bank at A+/A-1 on the national scale (long-term and short-term respectively), and A-/A-2 on the international scale with a 'Stable' outlook. The ratings agency said the overall fiduciary score of the bank has been assessed to be in the range of '76'“80' and indicates a well developed governance structure and strong fiduciary capacity, wherein rights of various stakeholders are well-protected. As the bank's business prospects continue to improve, enhancement in earnings is likely to be sustainable, the IIRA said. The bank's balance sheet has remained strong, sustained by sound capitalisation related indicators, it added.
Do?an Cans?zlar, former head of the Capital Markets Board (SPK), has warned, in light of claims that a number of Turkish banks are in difficulty, that a smear campaign orchestrated by President Recep Tayyip Erdo?an against Bank Asya could lead to a worse financial crisis than the one Turkey suffered back in 2001. At the beginning of the week, Erdo?an publicly threatened independent regulatory body, the Banking Regulation and Supervision Agency (BDDK), over its lack of action against Bank Asya, saying the agency must take a decision on the bank and follow through on it. The banking industry may be in worse shape than many think. On Tuesday Twitter user @fuatavni revealed the names of eight banks that he maintains are in financial difficulties.
The Islamic Corporation for the Development of the Private Sector ( ICD ) and Perbadanan Tabung Amanah Islam Brunei (Perbadanan TAIB), signed a memorandum of understanding to explore the launch of a Shariah- compliant leasing/Ijarah business in Brunei Darussalam. The Partnership plans a number of other COLLABORATIONS with the support of the Ijarah Management Company (IMC). Established in November 2011, IMC has successfully managed to set up and operate more than eight leasing companies globally including CIS, MENA and West Africa countries.
Islamic financial institutions (FIs) drove the Malaysian bond and sukuk markets in 1H 2014. With AmIslamic Bank paving the way with the issuance of the world's first Basel III-compliant Tier-2 Sukuk Murabahah in February, a host of RAM-rated Malaysian Islamic FIs - such as Maybank Islamic, Public Islamic Bank and Hong Leong Islamic Bank - have been tapping the domestic sukuk market for very competitively priced funding. Driven by this, the Malaysian bond market remained focused on Islamic finance in 1H 2014, with a strong showing in sukuk issuance- representing 73% of the overall corporate bond market in the same period - grossing RM42.2 billion of new issues.
Turkish participation bank Kuveyt Turk plans to issue sukuk in Malaysia aiming to raise as much as 2 billion ringgit ($625.3 million), its first foray into the Southeast Asian Islamic debt capital market. Kuveyt Turk, 62 percent owned by Kuwait Finance House , will sell the sukuk to qualified investors through its asset-leasing company, KT Kira Sertifikalari Varlik Kiralama. No timeframe was given for the deal. In July, Turkiye Finans became the first Turkish lender to issue ringgit-denominated sukuk in Malaysia when it raised 800 million ringgit ($252.2 million) from a 3 billion ringgit programme it set up in June. Moreover, in June, Bank of Tokyo-Mitsubishi UFJ set up a $500 million multi-currency sukuk programme in Malaysia.
Middle Eastern banks bought the vast majority of a debut $500 million sukuk issue by Goldman Sachs, a positive sign for other conventional banks hoping to tap the region’s liquidity by issuing Islamic debt. Goldman priced its five-year sukuk on Tuesday at a profit rate of 2.844 per cent, drawing about $1.5 billion of investor orders, after roadshows in Qatar and the United Arab Emirates. Middle East investors bought 87 per cent of the Goldman sukuk, while 11 per cent went to Europe and two per cent to Asian investors. Banks bought 77 per cent of the bonds, asset managers bought 22 per cent and private banks bought one per cent. Meanwhile, France’s Societe Generale and Japan’s Bank of Tokyo-Mitsubishi UFJ set up sukuk programmes in Malaysia, but have not issued yet.
Indonesia's financial services authority, Otoritas Jasa Keuangan (OJK) is preparing a five-year blueprint aimed at industry issues such as sector consolidation, a lack of scale and foreign ownership limits. OJK said it was now preparing draft regulations for Islamic pension funds, after Indonesia's national sharia council issued a ruling approving the overall concept in November last year. Under a "moderate" scenario, the OJK projects Islamic banking assets will grow by 14.4 percent in 2014, down from 24.2 percent in 2013 and 34 percent in 2012, although these figures would remain above those for conventional banks. The OJK said challenges faced by Islamic banks were mainly internal, rather than related to external pressures such as falling commodity prices or lower export demand.
A feud between Turkish President Recep Tayyip Erdogan and U.S.-based Islamic cleric Fethullah Gulen has made sukuk from Asya Katilim Bankasi AS (ASYAB) the worst-performing in the world. Debt from the Shariah-compliant lender known as Bank Asya has lost 29 percent this year, compared with an average 4.5 percent return for dollar-denominated sukuk globally. The government must be clear about what the “problem” with Bank Asya is and decide whether it will take over the lender or impose restrictions on it. The bank, whose shares resumed trading on Turkey’s bourse on Sept. 15 following the five-week long suspension, is planning to raise funds in a capital increase, it said yesterday. The stock slumped 42 percent this week to a record low of 72 kurus at 12:24 p.m. in Istanbul.
New rules issued by the United Arab Emirates' securities market regulator aim to develop local currency bond and sukuk markets in the Arab world's second biggest economy. In meetings with potential issuers and financial firms in Abu Dhabi and Dubai this week, the Securities and Commodities Authority (SCA) outlined rules designed to make it faster and cheaper for companies to issue conventional and Islamic bonds, and easier for investors to trade them. If successful, the project could help to reshape corporate financing in the UAE. At present, firms rely heavily on bank loans and to a lesser extent retained earnings; local currency bond issuance is minimal, and usually only the biggest companies can afford to issue bonds in the international market.
About four-fifths of Middle-Eastern businesses are seeking external finance, while three in five have previously offered equity in their business to external investors, according to a new KPMG International survey. The survey found that in Qatar, banks are willing to lend to family businesses; however, the report identifies that High Net Worth Individuals (HNWIs) are an untapped resource in the region. Survey results show that the top priorities of HNWIs and Family Owned Businesses align. However, it seems the biggest challenge to family businesses in the Middle East is the thorny issue of management interference. All Middle East respondents felt that HNWIs would get heavily involved in management decisions.