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Dana Gas Sukuk - Why Sharia compliance is NOT the point

Dear Reader,

Dana Gas Sukuk is still making headlines and continues to damage the Sukuk market.
A key question to be understood: Could a lack of Sharia compliance make the issuance unlawful?

Well this is the claim of the prospectus regarding the Sharia compliance:

\Quote
No assurance can be given as to Sharia rules

The Sharia advisory board of Dar Al-Sharia have confirmed that the Transaction Documents are, in their view, Sharia compliant. However, there can be no assurance that the Transaction Documents or the issue and trading of the Certificates will be deemed to be Sharia compliant by any other Sharia board or Sharia scholars. None of the Trustee, Dana Gas or the Delegate makes any representation as to the Sharia compliance of the Certificates and/or any trading thereof, and potential investors are reminded that, as with any Sharia views, differences in opinion are possible. Potential investors should obtain their own independent Sharia advice as to the compliance of the Transaction Documents and the issue and trading of the Certificates with Sharia principles.

Call for Papers- Sharing Economy of Islam beyond Islamic Finance, SASE 2017, Lyon, France, 29 June-1st July 2017

UPDATE:
Abstract/Paper Submission
Please note that colleagues should send 1,000 words abstract by FEBRUARY 3, 2017, which should provide a short background, aims of the paper, the methodology and method used, and the findings (or expected findings).

***SASE HAS EXTENDED THE DEADLINE TO 17TH FEBRUARY 2017***

https://www.dur.ac.uk/dcief/events/

Acceptance notifications will be sent by March 1, 2017.

Paper submissions and session proposals must be made through our online submission system; for additional information on how to submit, please follow the link:
https://sase.org/events/conference-submission-and-award-guidelines

Sharing Economy of Islam beyond Islamic Finance:
Re-constructing Collaborative and Disruptive Economy from Islamic Moral Economy Perspective

SASE Conference on ‘What's Next? Disruptive/Collaborative Economy or Business as Usual?’
Universite Claude Bernard, Lyon 1, France
29th June – 1st July 2017
https://sase.org/event/2017-lyon/#mini

Call for Papers:

#Merger set to create largest #takaful firm

The entire business of Solidarity General Takaful (SGT) is proposed to be transferred to Al Ahlia Insurance Company. The Central Bank of Bahrain (CBB) received separate applications from SGT and Al Ahlia. SGT has applied to transfer its business to Al Ahlia and be dissolved under article 66 of CBB Law. SGT, a subsidiary of Solidarity Group Holding, is aiming to consolidate its position through the merger. The combined entity, which would be named Solidarity Bahrain, will have a paid-up capital of BD11.2 million and an estimated 15% market share with 10 branches, making it the largest takaful company in the country. In order to facilitate the merger, Al Ahlia shareholders approved the conversion of the insurance licence from conventional to takaful. Last year, Solidarity acquired a majority stake in Bahrain Bourse (BHB)-listed Al Ahlia Insurance Company via an open offer in a deal worth BD10.7m. Officials had said then that Al Ahlia would continue to be listed on BHB.

Islamic finance industry hampered by global economic conditions

The Islamic Financial Services Board (IFSB) released its IFSB Industry Stability 2017 Report. It states that global economic volatilities, consistently low oil prices and reduced demand for credit are among the factors that currently weigh on the Islamic financial service industry. The study says that 2016 marked another year of slower growth amid adverse macro-economic conditions. They include adjustments in the value of global Islamic banking assets in US dollar terms on the back of exchange rate depreciations in countries such as Malaysia, Turkey and Indonesia, as well as the persistent lack of global standardisation, and lower liquidity and profitability compared to the conventional banking sector. According to the IFSB, the global size of the Islamic financial service industry has not changed much, with total Islamic finance assets just slightly increasing to $1.89tn from $1.88tn. Another factor that affected asset growth was the currency depreciation in Iran, the world’s largest Islamic finance jurisdiction in terms of assets.

PNB mulls introduction of Islamic shares for Maybank

Permodalan Nasional Bhd (PNB) is studying a potential issuance of Islamic shares (i-shares) by Malayan Banking (Maybank). PNB group chairman Tan Sri Abdul Wahid Omar said currently about 25% of the Maybank group’s earnings come from the syariah-compliant businesses, and proposed that 20% of the group’s shares can be designated as i-shares. The move to list i-shares would provide an extra boost to the Malaysian Islamic capital market, said Abdul Wahid. He added that there are currently only two listed syariah-compliant financial institutions in Malaysia, BIMB Holdings and Syarikat Takaful Malaysia. If the plan goes through, it will create RM20 billion worth of new syariah-compliant instruments, which is three times bigger than BIMB’s market capitalisation. Abdul Wahid added that the group is looking at three asset classes for further investments overseas, namely public equities, private equities and real estate.

Dana Gas bondholders could be liable for ‘unlawful’ #Sukuk

Holders of Dana Gas’s sukuk could be liable to repay the company excess on account profit payments. The company said it had sought legal advice on the matter. Advisers said that the terms of the Sukuk are not compliant with Shari’a principles and are unlawful under the laws of the United Arab Emirates (UAE). The company is now pursuing the litigation route to resolve the matter and is confident pursuant to independent legal advice of prevailing in its interpretation of the outcome.

Al Hilal Bank launches #child #safety campaign by distributing car seats to new families

Al Hilal Bank has distributed car seats for newborns at Danat Al Emarat Hospital for Women & Children in Abu Dhabi, as part of its new initiative for promoting child safety in the UAE. The Car Seat initiative forms part of the bank’s long-term Corporate Social Responsibility (CSR) programme. Alex Coelho, the CEO of Al Hilal Bank, said the Bank takes CSR very seriously and is proud to play a role in providing support to local families. Mohammed Ali Al Shorafa Al Hammadi, CEO & MD of United Eastern Medical Services (UEMedical) stressed on the importance of such campaigns in the UAE. Government led research found that the majority of parents still do not believe in the importance of car seats. An astonishing 34% saw no necessity to buy them, 28% do not know which seat to buy, while 15% believe that passengers holding children is safe enough. The new programme will be complemented by an extensive car seat awareness campaign on social media and across Al Hilal Bank branches, with the objective of reinforcing the importance of car safety for children.

#Saudi developer Jabal Omar to raise 4b riyals via #sukuk

Saudi Arabia’s Jabal Omar Development plans to raise 4 billion riyals (Dh3.91 billion or $1.06 billion) with local currency sukuk issues. Bank Al Bilad has been hired to arrange the fund-raising, but other banks are likely to have leading roles too. The developer’s flagship project, Jabal Omar, is within walking distance of the Holy Mosque in Makkah. It includes commercial malls, residential units and hotels over an area of 230,000 square metres. Saudi Arabia’s real estate sector was hit hard last year, with prices declining 8.7%, as a result of the government’s austerity measures after a slump in international oil prices. Jabal Omar missed in January last year the first repayment, worth 650 million riyals. It amended the terms of the loan in February 2016 to postpone the date, the first payment on the facility is now due in 2019 and the loan will mature in 2024. Jabal Omar has also borrowed 4 billion riyals in February 2015, then 8 billion riyals in September 2015. It is not clear whether the planned sukuk would be used as new funding or to refinance some of the company’s existing debt.

Tadhamon International Islamic Bank ratings affirmed

Capital Intelligence Ratings has affirmed the credit ratings of Tadhamon International Islamic Bank (TIIB), based in Sana'a, Yemen. The Bank’s Long- and Short-Term Foreign Currency Ratings (FCRs) are both maintained at 'C', reflecting the volatile operating environment and devastated economy. TIIB has confirmed to CI Ratings that it is not currently in default of any obligations. All ratings remain on a 'Negative' Outlook. The rating is supported by adequate liquidity. Real estate and other investments outside of Yemen represent around 40% of the balance sheet. The Support Rating is adjusted to '5' from '4' based on the low likelihood of support from shareholders and the authorities, and their ability to provide timely assistance.

Abu Dhabi Islamic Bank invests heavily in digital services

Abu Dhabi Islamic Bank (ADIB) plans to continue its current strategy based on prudence in risk management, coupled with innovation in customer experience and products. This approach is working: over the past two years, ADIB has attracted more than 100,000 new retail customers, taking its total to more than 950,000. In the first half of 2017, net profits rose more than 14.1% year-on-year to $307m. Total revenues reached $757m, up 4.1%. CEO Khamis Buharoon says the bank has now a balanced customer base, across Abu Dhabi, Dubai and the northern emirates, comprising UAE nationals, as well as Arab, Asian and Western expatriates. A number of new additions to ADIB’s range of retail and wholesale banking services are planned. According to Buharoon, ADIB's individual and corporate customer base will continue to grow and key factors remain digitisation and automation in branches.

Islamic finance and SRI share a lot of common ground

Socially responsible investment (SRI) and Islamic finance share significant common ground. Both spheres of investment demand the businesses chosen for investment are socially useful, not detrimental to humanity, and compliant with humanitarian ethics. SEDCO Capital has incorporated the Sharia-compliant investment approach with its responsible investment strategy and created the concept of prudent ethical investing (PEI). At the heart of PEI lie the environmental, social and governance criteria (ESG) that are integrated into financial analyses. SEDCO Capital is not only Sharia-compliant but also evaluates ESG aspects as part of its investment process. PEI is merging these two forces to embrace a more sustainable economic development model that is expected to attract non-Muslim SRI investors into the Islamic finance market.

ADGM and KPMG launch #FinTech Abu Dhabi Innovation Challenge

Abu Dhabi Global Market (ADGM) and KPMG have come together to launch the first FinTech Abu Dhabi Innovation Challenge on Oct. 22. The Innovation Challenge includes an intensive five-week program for innovative and mature start-ups to conceptualize and present market-ready solutions that address real business challenges in the Middle East, Africa and South Asia (MEASA) region. During the program, 10 finalist teams will work divided into six focus areas: Financial and Investment Management, Financial Inclusion, RegTech, Trade Finance, InsurTech and Private Capital Markets.The finalists will showcase their solutions at the FinTech Demo Day in Abu Dhabi to a panel of industry experts. Each finalist will benefit from mentoring sessions and fast-tracked consideration for admission to ADGM’s Regulatory Laboratory (RegLab) program. They will also win a $15,000 cash stipend to cover any costs associated with travel matters and accommodation.

WAIFEM, CBG commence regional #training on interest-free Islamic banking

The West African Institute for Financial and Economic Management (WAIFEM), in collaboration with the Central Bank of The Gambia (CBG) started a five-day regional course on interest-free Islamic banking. Director General of WAIFEM, Professor Akpan H. Ekpo, stated that the objective of the course is to provide a broad understanding of the rudiments of Islamic banking. In particular, it will provide clarity on the Shariah requirements and the avoidance of Riba in modern-day banking business. 1st deputy Governor of the CBG, Dr Saikou Jabbie, said the Gambian Government entered into partnership with the Islamic Development Bank to develop the necessary infrastructure for Islamic banking in the country. He noted that the Central Bank even developed an investible Islamic instrument called the Sukuk AL Salam in 2007. On his part, Professor Ekpo thanked the Central Bank and its staff for their support to WAIFEM and its activities. WAIFEM is rated as a centre of excellence in capacity building and training, and it caters for the capacity needs of the private sector.

How can Islamic finance benefit #Azerbaijan?

Islamic finance is still a nascent industry in Azerbaijan, even though the country’s large Muslim population indicates great potential demand for its services. The key hurdle that limits any meaningful expansion of Islamic finance in the country is the absence of a comprehensive regulatory framework. It is therefore important to develop a full-fledged legal framework that is specifically tailored for monitoring, guiding, and supervising the Islamic banking system. Islamic finance, as an ethical form of finance, can do an enormous amount of good. Islamic finance forges a closer link between real economic activity that creates value and financial activity that facilitates it. Islamic finance can attract investors from GCC and Asia to Azerbaijan. However, the country continues to face multiple challenges, such as a lack of public awareness and a talent shortage in Islamic finance. Still, favorable regulation remains the key to Islamic finance growth in Azerbaijan.

Shariah-compliant 1% interest on #studyloans ‘can’t be abolished’

Shamsul Anuar Nasarah, chairman of the National Higher Education Fund (PTPTN), says the 1% interest charged on study loans is not to make a profit, therefore it is not right to abolish it. In his view, the cost is minimum and is used to cover the staffing and administrative costs of those who are managing the accounts. Borrowers are charged between 1% and 3% interest, and additionally, their loan amount will increase if they fail to pay their instalments. After the agency's establishment, administrative costs had amounted to 4% a year. It was gradually reduced to 3% a year since January 1, 2004. Now, the interest is only 1% a year, beginning June 1, 2008. In 2017 PTPTN is expected to collect RM4 billion by the end of the year. Higher Education Minister Idris Jusoh said the target was achievable as the agency had collected RM3.4 billion last year, when its target was only RM2 billion.

Islamic Development Bank pledges continuous support to Polio Programme

Pakistan's Polio Eradication Senator Ayesha Raza Farooq said the country was highly indebted to the Islamic Development Bank (IDB) for its support and acknowledges the critical support of the bank for Polio eradication. The senator was talking to an IDB delegation visiting the National Emergency Operation Centre (NEOC). The IDB delegation was led by Dr Sadik Mohammad Teyeb, senior health specialist of the bank from Jeddah and Inamullah Khan, Country Representative of the Bank in Pakistan. The current epidemiology in the country is quite promising with only 3 Polio cases reported in 2017 compared to 14 reported by 7th August in 2016. The most significant progress has been made in the core reservoirs of Karachi and Khyber-Peshawar which have not reported any Polio case since January and February 2016.

ADIB recognised for CSR initiatives from UN Global Compact subsidiary

Abu Dhabi Islamic Bank (ADIB) has been awarded for its commitment to corporate social responsibility (CSR) from the regional CSR Network Consultancy, a member of the United Nations Global Compact initiative. The award was presented to Mohammed Al Fahim, Regional Head of Corporate Banking at ADIB. ADIB has a proven track record of CSR initiatives, including launching blood donation campaigns, sponsoring mass weddings and organising a range of activities during Ramadan. The bank adopted design principles aimed at minimising both energy and water inputs and waste outputs. In addition, ADIB Future’s Champions League was a recipient of the Gold Prize for the Best Sports CSR Initiative, and Bronze winner in the Youth Development Project of the Year at the 2017 Sports Industry Awards. ADIB also maintained its commitment to recruit, develop and promote local talent through its youth development programme.

Dana Gas #Sukuk: A red herring or cause for concern?

The recent move by Dana Gas to declare its approximately US$700 million of outstanding trust certificates unlawful has been a troubling development for the Islamic finance industry. Dana Gas has initiated proceedings in the UAE to declare the sukuk illegal and has secured a series of injunctions preventing enforcement by creditors, but the key question remains unanswered. That is whether non-compliance with Shari'a principles would have any bearing on the legal enforceability of these instruments. Any judgment in favour of Dana Gas could have wide ranging implications on the sukuk market. White & Case LLP argue that the concept of Shari'a-compliance should be treated as distinct from legal enforceability. Dar Al Sharia Legal & Financial Consultancy issued a pronouncement on the Shari'a-compliance of Dana Gas' sukuk at the time the sukuk were issued. Pronouncements of such nature are generally not open to retroactive invalidation as is being sought by Dana Gas.

Islamic finance sharpens its profile in Southeast Asia

#Malaysia’s eastern region Sarawak will host this year’s World Islamic Economic Forum (WIEF) from November 21 to 23. According to Sarawak’s Deputy Chief Minister Awang Tengah Ali Hasan, the state will use the forum as a platform to promote Islamic investment opportunities in various industries. He added that Sarawak was currently also undergoing a rural transformation programme and had designated 77,000 hectares of land for the development of a halal hub. The deputy minister said the WIEF will also focus on strengthening the partnership between Muslim and non-Muslim communities. The conference is expected to attract about 2,000 potential participants and representatives of various sectors. In another development, Islamic finance will soon make its foray into Cambodia, which is home to an estimated 300,000 Muslims. Two Malaysia-based Islamic financial institutions are expected to open their first branches by the end of the year and in 2018. Another recent highlight for Islamic finance was the Brunei Darussalam Islamic Investment Summit 2017 held on August 2 and 3.

#UAE Authorities Plan SMB #Crowdfunding Framework

United Arab Emirates (UAE) regulators are setting out to establish a framework to guide the small business (SMB) crowdfunding market. Reports noted that regulators are aiming to promote innovation and a broadening of small business activity. Equity crowdfunding is expected to provide $93 billion to small- and medium-sized enterprises by 2020, reports added. In the UAE, SMBs stand to gain significantly from that trend, as these businesses make up an estimated 85% of all UAE companies. In Dubai, that number is even higher, at nearly 95% of all businesses. Meanwhile, research from the Khalifa Fund for Enterprise Development found that as many as 70% of small business loan applications in the UAE are rejected by traditional banks. Ian Johnston, Chief Executive of the Dubai International Financial Services Authority (DFSA), said the DFSA was the first in the GCC region to formalize a tailored regime for loan and investment crowdfunding platforms, which represent an important source of financing for the SME sector.

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