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
Luxembourg is poised to test demand for Islamic bonds as the issuer of the lowest-yielding sovereign sukuk on record plans to become a regular borrower. The country has been “encouraged” by investor feedback and the market’s readiness and will begin working on its next sukuk, Finance Minister Pierre Gramegna said. Luxembourg sold 200 million euros ($254 million) of five-year Islamic bonds in September priced two basis points below midswaps. That compared with 10 basis points above the swaps for notes of similarly rated Islamic Development Bank. However, Luxembourg’s sukuk isn’t for everyone, least of all those looking for yields, an expert said. The reason why it’s so tight is because there are still Islamic investors that are looking for very conservative assets.
Mohammed Amin is Chairman of the Conservative Muslim Forum. He says that one particularly successful UK micro-policy is the country’s approach to Islamic finance. Gordon Brown and Ed Balls deserve credit for promoting Islamic finance and changes to UK tax law to facilitate it. Sadly, their efforts eventually ran out of steam in 2008, due to the combined effects of the global financial crisis and excessively frequent changes in the ministerial responsibility for the subject. Promoting Islamic finance as the government has done is clearly in the best interests of the economy and therefore of all British citizens and taxpayers. However, it is also good politics, since it should increase the Conservative party’s appeal to Muslim voters.
Malaysia's Prime Minister Najib Razak said that he backed the idea of creating a large stand-alone Islamic bank, in order to develop a global footprint for Islamic finance and position it as an alternative to conventional banking. A proposed merger between Malaysia's CIMB Group Holdings Bhd and two smaller peers would create a sharia-compliant bank with the financial clout and regional scope that has so far been absent in the industry. Such consolidation would be positive for Malaysia's banking sector, although the government will not press for a deal and will leave the decision entirely up to the shareholders, Razak said.
Bank Islam Brunei Darussalam (BIBD) is helping to arrange a benchmark-sized Islamic syndicated loan which it hopes to close later this year for a petrochemical project in the oil-rich sultanate. Currency and tenor are being finalised for the deal, said Javed Ahmad, BIBD's managing director. The new syndicated loan could open a much wider pipeline of deals in Brunei, which might be denominated in both local and foreign currencies, Ahmad said. Besides, in the medium term BIBD will consider establishing a regional footprint across Asia to enhance its growth prospects, with Malaysia and Indonesia offering the greatest opportunities, Ahmad said.
Turkey’s government has moved to expand Islamic banking by inviting public banks into the sector. Earlier this month, the largest state-run bank, Ziraat, received approval to establish an Islamic unit with $300 million in capital. Ziraat has nine months to establish the new bank. But a key question remains unanswered: Where will the capital come from? If Ziraat’s interest-based earnings are considered illicit, how is it going to establish the capital of an interest-free bank? To resolve the conundrum, the Treasury is reportedly planning to provide the required capital although it also operates on the basis of interest. Meanwhile, the government has already submitted a bill to parliament to clear legal hurdles in Vakifbank and Halkbank’s path to Islamic banking.
Under the sponsorship of Alinma Bank, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held its Shariah standards hearing session in Riyadh. Participating in the event were Shariah-finance professionals from Alinma Bank, AAOIFI and other financial and research institutions from Saudi Arabia and abroad. Attendees discussed, debated and made comments on draft policies related to deposit and repurchase agreements. The meeting was the first time AAOIFI held for its Shariah standards hearing session outside Bahrain, and the move to Saudi Arabia represented an attempt on AAOIFI’s part to expand its activities and cooperation.
Dubai Islamic Bank CEO Adnan Chilwan has no doubt that Dubai is well-poised to become the global capital of Islamic economy. The key sectors such as real estate, travel, tourism, hospitality, healthcare, and education are equally poised for future growth. Keeping this in mind, there's an overwhelming support from the government as the setting up of Dubai's Islamic Economic Development Center has just shown, he said. However, there are challenges like skill, efficiency and investor confidence. And most of these challenges can be overcome just by pure innovation, Chilwan believes. About Dubai Islamic Bank, he said that service and innovation are a very integral part of its strategy.
Nigeria's Jaiz Bank Plc has financed an executive aircraft as part of its programmes to venture into the aviation sub sector. The aircraft, which has been delivered to the customer, Aviation Resource Service Limited, was financed under the bank’s Ijarah wa iqtina. Under this model, the bank and the Aviation Resource Service Limited are co-owners of the aircraft based on a partnership arrangement whereby ownership is gradually transferred to the customer as it pays down. The general manager of Aviation Resource Service Limited, Tanko Yakubu, said that the company was a little bit skeptical at the initial stage of their discussion with Jaiz Bank but were proven wrong.
Qatar Islamic Bank (QIB) has introduced a child education plan, Walady. It is a long-term savings and investment plan coupled with Takaful protection for the parent, and offers a return on contributions depending on the fund’s performance. Upon maturity of the contract, the outstanding value of the participant’s investment account is paid in a lump sum to take care of the education needs of the child; in the case of the early death of the parent, the amount of life cover is paid upfront to the nominee as per the terms and conditions of the contract; and in the event of the parent’s total disability, regular contributions will be paid until maturity of the plan subject to satisfying the claim conditions. Walady was underwritten by Medgulf Takaful.
The role of Islamic endowments need to be further streamlined and redefined to unlock their true potential, experts said during a panel discussion on ‘Mobilising Capital from Waqf, Pension Funds and Unit Trusts’ at the the 10th World Islamic Economic Forum (WIEF) in Dubai. Abdullah M Al Fouzan, Founder and Chairman of the Investor for Securities Company in Saudi Arabia, called endowments 'a sleeping giant', which suffer from a state of negligence with annual returns at less than 3 per cent. He called for tapping the true potential of endowments through a structured and concerted effort. The panelists were unanimous on the role of Islamic endowments in driving social growth and urged to explore innovative, Shariah complaint ways to further build asset base and value.
The asset management arm of Malaysia's Malayan Banking Bhd has launched its first U.S. dollar-denominated mutual fund that invests in Islamic bonds. The new fund will invest partly in sukuk issued from Gulf countries. This is rare for Malaysian funds, because there is an abundant supply of local ringgit-denominated sukuk, but demand for dollar-denominated paper has been growing. The fund will initially be available to Malaysian investors only, although the firm plans to distribute the fund overseas as well, Nor' Azamin Salleh, chief executive of Maybank Asset Management Group Bhd, said.
There has been a surge in UAE's Islamic banking and capital market activities, but more government support at policy level could help speedy growth of the industry, said Hussain Al Qemzi, Group CEO, Noor Investment Group and CEO Noor Bank. Data suggests that Islamic banks’ asset growth is outstripping their conventional peers in the Gulf region especially in Saudi Arabia and Qatar due to government support. As the biggest borrowers, government entities in the Gulf need to push Islamic structures. Going forward, more Islamic issuances, especially by players who have already transacted conventional issuances, will provide greater depth to the market and confidence to investors who are yet to invest in Islamic instruments.
The Muslim world must focus on efforts to rediscover Islamic principles and promote regional cooperation in order to successfully overcome economic challenges, The Hon. Dato' Sri Mustapa Mohamed, Minister of International Trade and Industry, Malaysia, stated during a panel discussion on the opening day of the 10th World Islamic Economic Forum in Dubai yesterday. The minister added that Malaysia is ready to share its experiences in economic prosperity with other countries. The 10th World Islamic Economic Forum, which runs until Thursday, October 30, is being organised by the WIEF Foundation in collaboration with Dubai Chamber.
Jadwa Investment’s Head of Research, Dr. Fahad M. Alturki, and Saudi-US Trade Group President Richard Wilson spoke about the Saudi economy and investment in the Kingdom as well as the planned opening of the Saudi stock market to qualified foreign investors. Dr. Fahad said that the average growth in the Saudi economy is going well, with a growth rate of around six percent per annum on average. All the economic or macro indicators like interest rate, fiscal accounts and monetary policy, point to a very strong macro picture in the Saudi economy. However, there is difficulty for SMEs to access banking credit. He considers it a positive development to open the market, and allowing foreign investors’ access to bonds and Sukuk issued by local companies in domestic currency.
Leaders of global and regional institutions pledge political support and major new financial assistance for countries in the region, totaling more than $8 billion over the coming years. UN Secretary-General Ban Ki-moon, the World Bank Group (WBG) President, Jim Yong Kim, as well as the President of the Islamic Development Bank Group and high level representatives of the African Union Commission, the European Union, the African Development Bank, and Intergovernmental Agency for Development (IGAD) are combining forces to promote stability and development in the Horn of Africa. The initiative covers the eight countries in the Horn of Africa -- Djibouti, Eritrea, Ethiopia, Kenya, Somalia, South Sudan, Sudan, and Uganda.
Iranian banks gave 1,463 trillion rials (some $45.7 billion based on the exchange rate of US dollar at the free market) worth of loans in the first half of the current Iranian calendar year. However, a great portion of the bank's loans are bad loans. Iran's Melli Bank, Parsian Bank and Tejarat Bank have the highest amount of bad loans in Iran. Of the total 870 trillion rials (about $28 billion) in bad loans, Melli Bank's share is 130 trillion rials (about $4.2 billion), Parsian and Tejarat banks' shares is 110 trillion rials each (about $3.5 billion).
The third Turk-Arab Youth Congress started on Oct. 24 and was hosted by the Istanbul Youth Assembly Foreign Affairs Commission at the Istanbul Congress Center to create a platform for Turkish and Arab youth to discuss a vision for the region's future. A team of well-educated youth from around the world gathered at the three-day program titled "How to Lead the Future." Several sessions were held on the first day of the congress, discussing different issues of the region. On the second and third day, workshops were held under the subsidiary bodies of the congress and they published a final declaration with the remarks of the participants.
Economic strategist James Rickards, pointing to another collapse of the international monetary system will reveal to global financial experts in Dubai next month how new "rules of the game" will be written to prevent disaster. The American lawyer, economist, investment banker and author, says investors should not be surprised if another collapse happens soon, following previous breakdowns of the system in 1914, 1939 and 1971. His presentation will show what those new rules of the game might look like, and helps investors understand what they can do today in their portfolios to preserve wealth in the collapse and prosper in the new system. Rickards is one of the speakers at the ICA Conference taking place in Dubai from 6-9 November.
BIMB Holdings Bhd (BHB), which owns Bank Islam Bhd, is still keen to acquire a stake or even have a management control in Bank Syariah Indonesia as part of its expansion plan. Its group managing director and chief executive officer Johan Abdullah said the talks were still at a preliminary stage, and there was still no material development. Due to the regulatory uncertainty in Indonesia, Johan said that the group would engage the Indonesian authorities before making any decision to acquire a stake in the bank. At the firm's EGM, shareholders gave their nod to the proposed dividend reinvestment plan (DRP) that would provide shareholders with the option to elect to reinvest in whole or in part of their cash dividend with the new ordinary shares of RM1 each in BHB.