IslamicFinance.de mission is to support the Islamic finance, banking and takaful industry with news abstracts, opinions, a free encyclopedia, a Twitter page and networking.
Gassner's picture

Turkish Lira

Dear Readers,

The dramatic fall of the Turkish lira leads to a lot of coverage in the international media. What are the underlying economic drivers of this fall in value?

All economies are suffering from too much debt on sovereign, corporate and consumer level due to the promotion of debt finance, by basle regulation and faulty tax incentives.

But: Turkey is special because its consumers are highly indebted buying a lot of consumerware on credit, and the corporates borrowed short term in foreign currencies way too much. The first contributes to a trade deficit and the second to vulnerability when the currency exchange rate of the Lira is dropping.

The corporate borrowing, is funded by so-called carry trades, where investors buy higher-yielding assets with funds borrowed in lower-interest-rate countries. This stabilises initially the Lira, but makes it vulnerable to withdrawal. Typically the desire to withdraw funds is calmed down by raising interest rates. Turkey was number one for this funding method and now is punished for taking such unreasonable risk. See an old article from 2016 about carry trade as investment opportunity:

Gassner's picture

Global Donors Forum September 10-12 London - early bird registation

Dear Reader,

As you probably know Global Donors Forum 2018 will be held in London from September 10-12 under the theme of "Building Resilient Ecosystems". The Forum will be co-hosted with the Cass Business School and City of London Corporation and its various activities of the Forum will take place at the British Museum, Mansion House and House of Lords.

I would be pleased to meet you on this occassion and if you have any questions please do not hesitate to contact me. I am member of the steering committee for the event.

The attached shows further details and please note the deadline for early bird registration, which is July 10th.

Best regards,

Michael Gassner

Use of Ripple as a Cross-Border Solution Confirmed by #Kuwait Finance House (KFH)

Kuwait Finance House (KFH) is establishing the first blockchain-powered transaction system in the country. A series of questions arose when the formation of this system was announced. KFH has itself confirmed that they are using Ripple’s cross-border solutions to complete the blockchain-based transaction. KFH also conveyed that they would soon be joining RippleNet, which they initially announced back in May. This would enable them to become an active part of the ever-growing blockchain technology ecosystem. While neighboring Saudi Arabia may have banned cryptocurrency trading, it is obvious that Kuwait welcomes the underlying technology of virtual currencies.

#Saudi’s Al Rajhi Bank says expat exodus could impact its remittance business

Al Rajhi Bank expects low-single digit loan growth for the rest of 2018 as it curtails its loans while economic reforms take shape. A plan to reduce reliance on expatriates to generate jobs for Saudis has seen the number of foreign workers fall by more than 700,000 since last year. Al Rajhi's CEO Steve Bertamini said the expatriate exodus might have some impact on its remittance business. The bank has already seen an overall rise in banking for women and car loans for women have begun to rise substantially from a low base. Bertamini said that their entry into the workforce will mean more demand for accounts, loans and saving products.

Abu Dhabi National #Takaful Co. PSC announces combined net profit of AED 48.6 million for H1 2018 achieving a growth of 19% in profit

Abu Dhabi National Takaful Co. PSC (ADNTC) released its financial results as at end of second quarter on 30 June 2018. The company announced a combined net profit of AED 48.6 million, achieving a growth of 19% compared to AED 41 million for the same period last year. The technical profit reached AED 60 million showing an increase of 9% compared to AED 55.2 and the underwriting profit reached AED 36.4 million showing an increase of 6% compared to AED 34.2 million for the same period last year. According to CEO Osama Abdel Raouf Abdeen, the underwriting profit of AED 36.4 million for the first half of 2018 is an indication of the company's credibility as the leading takaful operator in the region.

#Kuwait’s Warba Bank receives licence to conduct securities activities

Warba Bank has obtained licence from the Capital Market Authority (CMA) to engage in certain securities activities. The new licence allows the lender to conduct activities like investment portfolio manager, collective investment scheme manager as well as investment manager, subscription agent and custodian.

Prominent Turkish bankers, businesspeople see no macroeconomic reason for currency volatility

For Turkey's bankers and businesspeople it has been impossible to explain the high volatility in the exchange rate over the past few weeks. The fundamentals of the Turkish economy are solid and macroeconomic indicators fail to account for the recent slide in the Turkish lira, which dropped by more than 40% since the beginning of this year. These fluctuations are seen as manipulations on the Turkish lira and economy, as part of an economic war waged against Turkey by U.S. President Donald Trump. The U.S. dollar tumbled nearly 5% against the Turkish lira on Tuesday. European shares rebounded Tuesday as the Turkish currency firmed. The Central Bank introduced measures on the Turkish lira and the foreign exchange market (FX) liquidity management. The bank said it would provide all the liquidity needed by banks and closely monitor markets and prices, while raising collateral FX deposit limits for lenders' lira transactions from 7.2 billion euros ($8.2 billion) to 20 billion euros.

Creating footsteps in Kuwait’s Islamic banking sector

Kuwait Finance House (KFH) has embarked on a digital transformation journey. Kuwait and Bahrain have each launched their respective digital banking platforms and soon, Malaysia will have its own. By the end of 2018, a seamless digital customer experience is expected to be publicly available. In Malaysia the KFH is active in the infrastructure financing front, supporting the third light rail transport system (LRT 3) and the second Mass Rapid Transit (MRT 2) projects through the provision of Islamic financing facilities. The project is expected to benefit the local communities through the promotion of real estate developments around the proposed train stations. Furthermore, the project is expected to generate more than 2,000 jobs during the construction phase.

How Lombard Odier got into the Islamic investment space

Lombard Odier has launched a full suite of Shari’ah-compliant investment solutions. Arnaud Leclercq, Limited Partner at Lombard Odier Group, said the offering began as a bespoke creation for one client six years ago, it has grown from a $10 million to in the hundreds of millions, primarily for investors in the Middle East. The investments are a mix between Sukuk and equities. Equities are chosen using a combination of MSCI’s Islamic Index and Lombard Odier’s inhouse experts. The goal is to reach $1 billion in total Islamic investment the next three to five years. Lombard Odier plans to increase its presence in the Middle East, with an office in Abu Dhabi for the coming year currently in the planning stages and a partnership with a Saudi firm currently in the works.

Supporting Islamic #fintech’s growth

In this interview Ayman Sejiny, CEO of Ibdar Bank, talks about founding the Bahrain Fintech Bay. Bahrain Fintech Bay (BFB) is working to build a fintech ecosystem that will support industry growth and position Bahrain as a regional fintech hub. Sejiniy believes that the days of 'e-banking' are nearly over and the shift to mainstream digital finance is becoming a reality. Ibdar is an early adopter, transforming its organisation into a fully digitised Islamic Investment Firm for the Global Islamic Digital Economy (GIDE). Ibdar bank provides opportunities in aviation, real estate, Sukuk and investment funds. The bank is also expanding its services to include an array of Investment Advisory services.

Reconciling #cryptocurrency in Islamic finance

Over the last few years, the market capitalisation of cryptocurrencies has reached a near $400 billion with over 1500 currencies been created. Among them, bitcoin has been the most popular with a market capitalisation of over $150 billion. Currently, there are divergent opinions regarding the Islamic understanding of bitcoin among Shari’ah scholars. A section of Shari’ah scholars believe that bitcoin is purely speculative, while others believe that it is a digital asset and not money. There are also some who completely differ and opine that bitcoin is currency. According to Dr. Arindam Banerjee, Associate Professor at Amity University, at the current stage crypto is not suited as a means of exchange in Islamic banking and financial institutions.

Mortgages set to boost lending at #Saudi banking giant Al Rajhi

A jump in mortgages and a recovery in Saudi Arabia’s economy may help Al Rajhi Bank to reverse a decline in lending. According to CEO Steve Bertamini, higher government spending and faster economic growth amid higher oil prices should help the revival. Home loans have risen as much as 6% this year and there are 450,000 Saudis eligible to purchase a home under one of the government programs. Saudi Arabia’s new housing project announced in February includes an 18 billion riyal ($4.8 billion) loan-guarantee program to boost access to funding and 12.5 billion riyals to support down-payments. Al Rajhi Bank in July reported an 18% rise in second-quarter profit to 2.57 billion riyals. According to Bloomberg economists, Saudi Arabia’s economic expansion will accelerate to 1.6% this year from 0.9% in 2017.

#Saudi refinance firm mulls #Sukuk issuance to fund mortgage drive

The Saudi Real Estate Refinance Company (SRC) plans to begin issuing sukuk in late September or early October 2018. SRC aims to refinance 20% of Saudi Arabia's primary home loans market, which authorities hope to expand to SAR 500 billion by 2020. Currently Saudi Arabia’s primary home loans stands at SAR 290 billion. Fabrice Susini, CEO of Saudi Real Estate Refinance Company, said that the company will now begin issuing Sukuk to raise money, first in Saudi riyals but eventually in foreign currencies. The company was founded in 2017 by the Public Investment Fund (PIF) and has so far operated with financing from the sovereign wealth fund and short-term deals with banks.

AAOIFI adoption set to standardise #UAE Islamic finance

The Central Bank of the UAE announced that the country's Islamic finance industry will be required to comply with AAOIFI Shariah standards from September 1. Islamic finance products in the UAE have historically adhered to AAOIFI standards, but the formal move to adopt AAOIFI standards will benefit the Islamic finance industry not only in the UAE. According to Dar Al Sharia CEO Mian Nazir, this move will facilitate standardisation of the Islamic finance industry across markets. These regulations are expected to grow consumer confidence and benefit the sukuk market as well. Dar Al Sharia is holding workshops to help relevant stakeholders, from internal Shariah control committee members to lawyers, develop an understanding of AAOIFI’s Shariah standards.

Dana Gas issues new #sukuk, drawing earlier dispute to a close

Dana Gas has completed refinancing its $700 million sukuk which has been sized down to $530m. The issuance of the debt instrument had been completed and listed on the Euronext Dublin, previously known as the Irish Stock Exchange. Dana has paid $235m in redemptions, profit payments and early participation fees bringing an end to its long legal battle. Dana Gas CEO Patrick Allman-Ward said the new sukuk represented a fair consensual deal for all sukuk holders. The new sukuk will have a three-year life, maturing in October 2020, with a new profit rate of 4% per annum. Legal proceedings in courts in the UK and UAE have been brought to an end by all parties. Last month, Dana Gas received about $44m in dividends from Kurdistan Region of Iraq for the first half of the year and expected its output from operations there to rise by 25% in the third quarter.

Noor exits $6mln stake in #Pakistan’s Meezan Bank

Noor Financial Investment announced selling 9 million shares or 0.85% of its equity ownership in Meezan Bank, Pakistan's first and largest Islamic bank. The equity transaction is valued at $5.57 million or KWD 1.68 million. Following this exit transaction, Noor currently owns 39.53% equity in Meezan Bank. The financial impact of this transaction will be a profit of KWD 293,000 that will be registered in Noor's income statements of the third quarter of 2018, in addition to an increase of KWD 648,000 in the shareholders' equity rights. In mid-July, Noor announced selling 27.23 million shares or 2.56% of its equity in Meezan Bank at a value of $15.76 million or KWD 4.77 million.

Jaiz to commence disbursement of $20m SMEs #fund

The Managing Director of Jaiz Bank Hassan Usman has said the bank would soon begin the disbursement of the $20m facility for Small and Medium Enterprises (SMEs). The bank had in March signed the agreement with the Islamic Corporation for the Development of Private Sector to finance SMEs with $20m (N6.1bn). Usman said the bank would soon begin the disbursement, adding that the fund would be disbursed before the end of the year. He said the bank had commenced a five year strategic plan to provide better services to its customers. For example, the bank had increased its visibility in Lagos by opening more branches and plans to extend to other regions of the country as well.

#Pakistan likely to borrow $4bn loan from Islamic Development Bank: report

Pakistan plans to borrow over $4 billion from the Islamic Development Bank to bolster the country's low level of foreign currency reserves. A senior advisor in Islamabad said the paperwork is all in place. Finance minister-in-waiting Asad Umar has previously said that Pakistan must decide by the end of September if it would go to the International Monetary Fund (IMF) to bail out its economy. He reiterated his stance that Pakistan was examining other options as well as the IMF, including loans from friendly countries or remittances from overseas Pakistanis.

Saudi-based ITFC, Federated Investors to launch $300 mln trade finance #fund

The Saudi-based International Islamic Trade Finance Corp (ITFC) plans to launch a $300 million fund alongside U.S. fund manager Federated Investors. The sharia-compliant fund is expected to launch later this year and would invest in energy-related structured trade, supply chain financing and project finance assets of sovereign entities. The fund will be managed by ITFC with input from Federated Investors. The two firms have worked together on Islamic trade finance transactions since 2014.

Cagamas issues RM825m 1-year bond and #sukuk

The National Mortgage Corp of Malaysia (Cagamas) has issued a RM825 million 1-year bond and sukuk comprising RM800 million Conventional Medium Term Notes (CMTN) and RM25 million Islamic Medium Term Notes (IMTN). Proceeds will be used to fund the purchase of mortgage and Islamic home loans. With this move the aggregate primary issuance by Cagamas has reached RM9.3 billion for 2018, marking a 24% increase in the company's primary supply as compared to 2017's year-to-date total of RM7.5 billion. Cagamas CEO Datuk Chung Chee Leong said the CMTN issue was concluded via reopening of an existing bond tranche which marked the company's second reopening exercise for the year.

Syndicate content