GCC

Dubai Islamic Bank board approves plan to acquire Noor Bank

Dubai Islamic Bank (DIB)’s board has approved its acquisition of lender Noor Bank to create one of the largest Islamic banks in the world with combined assets of nearly Dhs275bn. Following the completion of the deal, Noor Bank’s operations will be integrated and consolidated within DIB. The new size and scale will allow DIB to expedite its strategy to expand across the far east, sub-continent, and east Africa with Dubai as the hub. The UAE is seeing a wave of consolidations in the market as banks seek to increase capital due to slowing economic growth. Three of Abu Dhabi’s banks are currently in the midst of a merger. That follows the combination of National Bank of Abu Dhabi and First Gulf Bank in 2017 to create a lender with $175bn of assets.

KIB issues $300 million AT1 #sukuk

Kuwait International Bank’s (KIB) Chairman Sheikh Mohamed Jarrah Al Sabah announced the issuance of an AT1 Sukuk. On Wednesday 29 May 2019, KIB has successfully priced a $ 300 Million AT1 perpetual Sukuk that classifies under Tier 1 capital at an annual profit rate of 5.625%. KIB received an immense investor demand as evidenced by an oversubscription rate of over 15 times. This issuance has been arranged with efforts made by a group of participating parties including Citi and Standard Chartered who acted as Joint Global Coordinators. Dubai Islamic Bank, First Abu Dhabi Bank, KFH Capital and KAMCO acted as Joint Lead Managers and Bookrunners. Boubyan Bank acted as Co-Manager.

#Kuwait International Bank starts marketing $300mln #sukuk

Kuwait International Bank started marketing $300 million perpetual sukuk to boost its tier 1 capital, with a yield of around 6.25%. Perpetual bonds mimic some of the characteristics of equity because they lack a maturity date. Citigroup, Dubai Islamic Bank, First Abu Dhabi Bank, KAMCO Investment Co, KFH Capital Investment Company, and Standard Chartered Bank have been hired to lead the transaction.

#Qatar- QIIB stays focused on digitalisation, utilising #fintech: CEO

Qatar International Islamic Bank (QIIB) remains focused on digitalisation and utilising financial technology. Bank CEO Dr Abdulbasit Ahmad al-Shaibei sees fintech as the future of banking. QIIB cannot afford to miss out, so it is looking closely at the blockchain technology and ways to partner with fintech companies. The bank is investing significantly in the IT infrastructure and considers Cyber security a top priority. Al-Shaibei plans the opening of new branches at commercial malls across the nation as a natural response to the urban development and customer needs. QIIB is a major stakeholder in Umnia Bank in Morocco, where it has not rolled out all banking products, it is currently going through the regulatory procedures. Umnia Bank is a joint venture among QIIB, Credit immobilier et hotelier and the Moroccan Deposit and Management Fund.

VCBank buys majority stake in Caribou and Fuddruckers

Bahrain's Venture Capital Bank (VCBank) announced its acquisition of a significant stake in the Caribou Coffee and Fuddruckers Restaurant franchises in Bahrain. From its first outlet in Bahrain in 2007, Caribou has grown its network to 22 stores, and is ranked among the top three international coffee shop chains operating in the kingdom.

GCC Banking Sector to Witness Mergers Worth Nearly $1 Trillion

The GCC banking sector is undergoing major consolidation phase with 20 banks negotiating mergers and acquisitions with an estimated $1 trillion worth of assets. The UAE leads the pack with highest number of mergers both in terms of value and volume. Currently, six mergers and acquisitions are being negotiated or underway in the UAE banking worth sector worth $625.25 billion followed by two M&As in Saudi Arabia worth $256 billion and one each in Kuwait and Oman. According to Moody's Investors Service, the recent merger and acquisition drive will help the sector by easing overcapacity and boosting profitability. Moody's Senior Analyst Ashraf Madani says that slow growth and subdued credit demand in the region are the biggest drivers of consolidation.

SAMA fines 16 financial institutions for violating principles of responsible finance

The Saudi Arabian Monetary Authority (SAMA) has fined 16 financial institutions for violating principles of responsible finance and has instructed them to correct the violations. SAMA stated that the fines were imposed in order to implement principles of justice and transparency without providing details of the fines. The central bank fined some of the Kingdom’s major financial institutions such as Al-Rajhi Bank, Al-Ahli Bank, Saudi Fransi Bank as well as Al-Riyad Bank, Al-Jazira Bank and Dubai-based Emirates NBD Bank. SAMA said that the fines were imposed to ensure fairness and competitiveness of financiers.

Goldman Sachs brings forward claim linked to Saudi debt saga

Goldman Sachs has bought forward a claim against Bahrain’s TIBC whose default 10 years ago triggered the biggest financial crisis in Saudi Arabia. The Bahraini lender raised money in international markets, transferring the funds to now defaulted Saudi conglomerate Ahmad Hamad Algosaibi and Brothers (AHAB). After TIBC defaulted on a foreign exchange deal, AHAB collapsed along with another Saudi conglomerate Saad Group, leaving an estimated $22 billion in unpaid debts. TIBC, administered by the Central Bank of Bahrain, has a claim of around $3 billion against AHAB, while more than 60 banks that have lent money to TIBC remain unpaid.

Abu Dhabi bank delays instalments on personal financing in Ramadan

Abu Dhabi Islamic Bank (ADIB) revealed it would postpone a monthly instalment for its personal finance customers at no extra charge during the holy month of Ramadan. ADIB annually offers flexible payment to customers during Ramadan to meet their individual needs. Philip King, global head of Retail at ADIB, noted that customers eligible for the Ramadan payment postponement initiative would be informed by SMS, adding that the offer is valid for instalments due between 1 May and 31 May. However, customers are free whether to withdraw or maintain making instalment payments. Throughout the holy month, ADIB hosts Ramadan tents across the UAE that organise Iftars managed by the bank’s employees who have volunteered to be part of the initiative.

CBK rejects Warba Bank #merger with KMEFIC

In February, Kuwait’s Warba Bank announced the purchase of Ahli United Bank (AUB) and its subsidiary to acquire their collective 75.7% stake in Kuwait & Middle East Financial Investment Company (KMEFIC).
Warba Bank said that the Central Bank of Kuwait (CBK) has rejected its proposed acquisition of a controlling stake in KMEFIC. According to CBK, Warba Bank's acquisition of AUB’s stake in KMEFIC will not have a significant effect on the financial position of the lender. The purchase agreement came at a time when mergers and acquisitions in the Gulf’s financial sector are rising as lenders attempt to improve their financial standing through consolidation.

QIB launches #Takaful product for low-income workers

Qatar Islamic Bank (QIB) announced the launch of its affordable Takaful product for low-income workers called "Family Sheild - WPS". This low cost Takaful product can also be purchased by companies who want to give additional protection to their employees. The plan can be purchased by contributing QR10 per month or QR120 per annum and provides a cover of QR50,000 for death and QR100,000 in case of death due to accident. D. Anand, General Manager of Personal Banking Group at QIB, said the Family Shield WPS Takaful plan was designed for expatriate workers and can be easily purchased instanty over the counter without any medical tests. He added that QIB was well aware of the worker’s concern for their family’s well being in case of unseen events and wanted to provide them with an affordable and useful Takaful solution.

S&P: GCC Islamic Banks to Show Resilience in 2019,2020

According to S&P Global Ratings, Islamic banks of the Gulf Cooperation Council (GCC) are expected to show resilience over the next two years after weathering tough market conditions in 2018. Last year they expanded slower than conventional peers for the first time in five years. The growth forecast for Islamic banks for 2019-2020 is the same as what the rating agency is estimating for conventional lenders in the region. S&P Head of Islamic Finance Mohamed Damak forecasts a muted GCC economic growth over this period, despite some benefit from government spending and strategic initiatives such as national transformation plans and Dubai Expo 2020. However, with the transition to IFRS9/FAS 30, Islamic and conventional banks will even more closely align. Another trend is the significant increase in Islamic banks’ coverage ratios at end-2018, coupled with a stable cost of risk that is lower than conventional banks.

#UAE's Majid Al Futtaim markets green dollar #sukuk

UAE-based shopping mall operator Majid Al Futtaim is set to raise between $500 million and $650 million in green sukuk. The proceeds of the sukuk will back environmentally-friendly projects in areas such as renewable energy and sustainable water management. The price guidance for the deal, which has so far attracted around $2.7 billion in orders, subsequently went down to around 225-230 basis points over mid-swaps. HSBC and Standard Chartered have been hired as global coordinators for the planned deal, and they are working as bookrunners along with Abu Dhabi Islamic Bank, Dubai Islamic Bank, ENBD Capital, First Abu Dhabi Bank, and Gulf International Bank.

Abu Dhabi banks ADCB, UNB and Al Hilal complete three-way #merger

The Abu Dhabi Commercial Bank (ADCB) has completed its merger with Union National Bank (UNB) and the combined company has acquired Al Hilal Bank to create the third largest financial institution in the UAE. Following the merger with ADCB, UNB has been dissolved as a legal entity while its shares have been delisted.
The enlarged ADCB Group will provide services to more than a million customers. It will hold AED423bn ($115.16bn) in assets with a market share of 21% of retail loans as of 31 December 2018. The Government of Abu Dhabi owns 60.2% stake in the enlarged banking group. The integration of the three banks’ operations and customer experience will be fast tracked in a phased manner from the second half of 2019.

Who's Talking to Whom as Record #Merger Wave Shakes Up Gulf Banks

Bloomberg provides an overview of which lenders are in merger talks and where those conversations are at. Talks are underway in Abu Dhabi for a possible tie-up between Abu Dhabi Islamic Bank with First Abu Dhabi Bank, a merger that would create one of the Middle East’s largest lenders. Saudi Arabia’s biggest lender National Commercial Bank said at the end of 2018 that it’s starting initial talks with Riyad Bank. This deal would form the Gulf’s third-biggest lender. Dubai’s largest bank Emirates NBD is buying Turkey’s Denizbank for $2.8 billion. The three-way merger of Abu Dhabi Commercial Bank, Union National Bank and Al Hilal creates the fifth-biggest lender in the Gulf.

#UAE aim to become regional Islamic art and culture capital boosted by Jameel Prize’s first exhibition in Dubai

The UAE’s status as a centre for Islamic art and design was boosted this past week as Jameel Arts Centre opened the Jameel Prize 5 exhibition. First awarded in 2009, the Jameel Prize is a collaboration between London's Victoria & Albert Museum and Art Jameel. Worth 25,000 British pounds, it awards contemporary artists and designers inspired by Islamic tradition. In addition to the two joint prize winners, Iraqi artist Mehdi Moutashar and Bangladeshi architect Marina Tabassum, the prize exhibition in Dubai is also showing works by the six finalists. They are: Iranian artist Kamrooz Aram, Jordan and Dubai-based graphic designer and architect duo naqsh collective, Iraqi-born painter Hayv Kahraman, Bahraini fashion designer Hala Kaiksow, Moroccan multimedia artist Younes Rahmoun, and Pakistani painter Wardha Shabbir.

Dar Al Arkan set to redeem $400m Islamic bond

Saudi Arabia’s Dar Al Arkan Real Estate Development Company aims to redeem its $400-million sukuk by using internal cash reserves. The sukuk, listed on Irish Stock Exchange and Nasdaq Dubai, is set to mature on May 28, 2019. Over the last decade, Dar Al Arkan has issued nine international sukuks and post redemption of 2019 sukuk and Dar will continue to have $1 billion of sukuks. CEO Andy Raheja said that Dar Al Arkan had cash and cash equivalents near SR5 billion. Given the strong free cash flow conversion, the company sees no immediate need to issue any new Sukuks for the foreseeable future.

#Saudi Arabia's Al Rajhi Bank to boost mortgage #lending

Al Rajhi Bank aims to boost mortgage lending as more affordable housing comes on the market. CEO Steve Bertamini said the bank's mortgage book grew 27% year-on-year in 2018 and it is looking for double digit growth for the next two to three years. Al Rajhi, which has traditionally focused on consumer banking, has been expanding its exposure to the private sector. It also sees opportunities in project finance as public-private partnership contracts for water and renewable energy start to be awarded. Saudi Arabia's economy grew in the fourth quarter of last year at its fastest rate since early 2016 due to an expanding oil sector. Fourth-quarter gross domestic product grew by 3.59% from a year earlier.

Top ADCB executives appointed to lead Al Hilal Bank

Senior executives at Abu Dhabi Commercial Bank (ADCB) were appointed to top leadership positions at Al Hilal Bank, as it prepares to be acquired by ADCB. Alaa Eraiqat was announced on Sunday as the new chairman of Al Hilal Bank, while Amr Al Menhali was announced as the private bank’s new chief executive officer. The appointments come just 10 days before the three-way bank transaction, which will see ADCB merge with Union National Bank and then acquire Al Hilal. The three banks are set to merge on May 1. The new merged entity, which will retain the name ADCB, is expected to own Dh420 billion in assets, and have around one million customers.

INTERVIEW: Gulf banking consolidation 'long overdue' - Investcorp's co-CEO

According to the co-chief executive of Bahrain’s Investcorp, Rishi Kapoor, consolidation in the financial services industry in the region is long overdue. Consolidation in banking would build the scale required to increase investments in financial technology, as payment solutions are increasingly enabled by fintech. The banking sector in the Gulf Arab region is seen as overcrowded, an M&A deal among banks is currently either in the pipeline or has taken place within the past few months. Investcorp’s co-chief also expects more M&A in the region’s disorganised retail sector, particularly in Saudi Arabia. As for the sectors that offer attractive investment opportunities within the Gulf region, Kapoor favours the sectors related to privatisation, social infrastructure and domestic consumption.

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