In this interview HRH Prince Khaled bin Alwaleed bin Talal reveals the full story behind his investment firm’s jump into the Shari’ah space. He founded KBW Investments four years ago and launched in mid-January his newest company, ARADA, in partnership with Basma Group. KBW’s first movement in the Shari’ah-compliant investment space is called Crestmount Capital. Prince Khaled found the fairness of Islamic finance most appealing, the extensive work in preparation of launching Crestmount Capital with Amanie Advisors has been really educational. The projects that Crestmount Fund will invest in will be delivered by PietyTHP Developments, which is a joint venture between Piety and the property arm of Lembaga Tabung Haji of Malaysia. Crestmount Fund I, a Shari’ah-compliant real estate private equity fund, is structured as a Cayman Islands entity. It will fund five identified under-development residential projects in Sydney, Australia, through Shari'ah-compliant commodity Murabahah agreements.
Oman’s Capital Market Authority (CMA) has given provisional approval for two new sukuk issuances of an aggregate size of RO 300 million (around $780 million). CMA President Abdullah bin Salim al Salmi said the proposed issuances underscore the potential and appetite for sharia-compliant finance and investment in the Sultanate. He noted that as of end-June 2016, the value of the sharia-compliant capital market jumped to RO 3.91 billion ($10.16 billion), comprising sharia-compliant shares, investments and sukuk, versus RO 3.24 billion ($8.42 billion) a year earlier, representing an increase of 21.14%. Significant growth has also been witnessed in the Takaful market with premiums reaching RO 41.99 million as of end-2016, up from RO 38.77 million a year earlier, representing an increase of 9.2%.
The Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has issued a draft standard on murabaha to update guidance on the most common financing tool used by Islamic banks. AAOIFI is conducting a wide review of its standards to encourage convergence of industry practices and increase consumer appeal. The proposed standard would supercede two earlier ones on murabaha. It would also cover new areas such as the accounting treatment on the liability side of a murabaha transaction. AAOIFI is seeking industry feedback on the draft until the end of March, aiming to make the final version effective from January 2019.
The General Council for Islamic Banks and Financial Institutions (CIBAFI) and the Islamic Research and Training Institute (IRTI) are jointly organising the yearly meeting of the Directors of Operations and Investments of Islamic Financial Institutions (IFIs). The theme this year will be "Bringing Islamic Investment of IFIs to the Next Frontier" and is held between March 22-23 in Manama. Experts in Islamic Investments will gather to discuss the disruptive agendas of the Islamic investments and look into topics of Strategies in the Infrastructure and Project Finance; Private Banking Capabilities of IFIs; Direct Equity Investment of IFIs; Sustainability Criteria in Islamic Investment Framework among other significant topics.
Bank Nizwa in partnership with Islamic Finance News (IFN) successfully concluded the second ‘Islamic Finance News Forum’. Sharing his expertise in the IFN Debate was Bank Nizwa’s new CEO, Khalid Al Kayed, who discussed the challenges of standardization and increased regulation. The CEO also took part in the closed-door IFN Oman Dialogue session to openly discuss the benefits and concerns facing the Islamic Finance market. Other sessions at the forum looked into the legal and regulatory framework of Islamic Finance, the development of sustainable and efficient Islamic capital markets, capital market activity and economic development, and innovation in Islamic Finance.
Abu Dhabi Islamic Bank (ADIB) has issued a statement clarifying that the story issued by Reuters about a US dollar Sukuk issuance in the next few months is incorrect. Reuters had recently reported that ADIB is planning to make a US dollar-denominated Sukuk issue in May this year. ADIB said that it has no immediate plans to issue any Sukuk and this has been clarified in an official statement to Reuters.
Abu Dhabi Islamic Bank (ADIB) is considering to make a U.S. dollar-denominated sukuk issue over the next few months. The Islamic lender would join a number of Gulf Cooperation Council banks raising debt internationally through both Islamic and conventional bonds to improve their liquidity. Bahrain-based Gulf International Bank was the first regional lender to raise debt internationally this year with a $500 million bond sale in January. It was followed by a $1 billion sukuk sale by Dubai Islamic Bank, a $500 million conventional bond by Ahli Bank Qatar and a $500 million bond by the United Arab Emirates’ Bank of Sharjah.
The Dubai Financial Services Authority (DFSA) has published its new financial technology (fintech) consultation paper. The paper is the third in a series, setting out the DFSA’s approach to the regulation of pioneering fintech activities. The paper sets out the DFSA’s approach to FinTech firms that want to test innovative products and services in the Dubai International Financial Centre (DIFC). Firms meeting the qualifying criteria will receive a Financial Services Licence, referred to as an Innovation Testing Licence. The testing phase is a step towards the FinTech firm obtaining a full Financial Services Licence.
The Bahraini Gulf Finance House (GFH) would seek to get rid of its Tunisian project, the Tunis Financial Harbor. The project was to be one of the largest Bahraini investments in Tunisia, which would be worth 7.5 billion USD. Tunis Financial Harbor was initially designed to make Tunisia a regional financial hub, but eventually turned into a simple real estate program. GFH is currently seeking to pass the hand and to pass the project on to another investor. The cause would be the financial difficulties of the Bahraini group.
Saif Hadef Al Shamsi, Assistant Governor at the UAE Central Bank, has said that total Islamic banking assets in the UAE have increased to approximately Dh520 billion in the past few years. Al Shamsi added that Islamic banking’ assets account for around 20% of Dh2.6 trillion of the total assets of the state’s banks. The assistant governor pointed out that UAE Islamic banking institutions account for about 7% of the total assets of Islamic banking around the world. This approximately amounts to a total of $1.5 trillion (Dh5.5 trillion). He further explained that Islamic banking deposits increased by 42% over the past three years and that lending by Islamic banks increased by 54%.
According to Fitch Ratings, a slowdown in Islamic financing growth in the UAE will reveal a deterioration in banks' asset quality as portfolios season more quickly. This will start to become evident as banks report their 2016 results. Financing growth slowed in 2016 and a continuing slowdown in 2017 is expected. Demand for Islamic financing in the UAE has grown rapidly with increasing customer awareness and wider adoption of Shari'ah products, especially among retail customers. Growth of Islamic bank financing in 2016 was expected to have been significantly lower than in 2015, although still higher than that of conventional bank lending. Newer Islamic banks with smaller franchises are likely to be affected first by the slowdown. Those that have been established for longer are likely to be affected later, and to a lesser degree, given their stronger franchises.
Kuwait's Warba Bank announced the launch of a marketing campaign for sukuk to be issued with a total value of USD 250 million. Warba Bank's CEO Shaheen Hamad Al-Ghanim said the campaign targets investors in Kuwait and Gulf Cooperation Council (GCC) countries, in addition to global stock markets. Al-Ghanim explained that the bank signed a deal with an international advisor to a new strategy for 2021, which is based on improving the bank's operations and further enhancing the quality of assets and diversifying sources of income. He noted that Warba Bank has previously obtained approvals from the Central Bank of Kuwait and Capital Market Authority, while the General Assembly has authorized the board of directors to issue sukuk.
Barwa Bank Group said it will spare no effort to gain the largest possible share of financing infrastructure projects in the country. Barwa Bank chairman Sheikh Mohamed bin Hamad bin Jassim al-Thani said due to the national economy’s provision of promising opportunities, the bank will provide all possible support to the growth of the country’s economy. The group recorded strong growth in each of the financial position and profits, as net profit for 2016 rose to QR738.8mn and earnings per share reached QR2.49. The growth in the group’s business and the increase in its investment activities go in line with maintaining asset quality and risk management policies with total non-performing loans accounting for just 1.5% of the net financing portfolio.
Ajman Bank has signed a financing agreement with Saudi German Hospitals Group for the construction of Saudi German Hospital Ajman (SGH-Ajman). The planned hospital would be a 50- bed facility in the Emirate of Ajman. The total cost of the project is AED327.3 million, and the completion of all phases of the project and formal opening of the hospital is expected in 2018. The signing of the agreement was overseen by Mohamed Amiri, Chief Executive Officer of Ajman Bank, and Sobhi Batterjee, CEO and Chairman of the Saudi German Hospitals Group. Akram Khan, Vice President of Ajman Bank, said that the agreement includes providing a housing fund for hospital workers and a range of items within the framework of the agreement.
Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has launched a comprehensive report on "AAOIFI in 850 Days". The report provides concise details, including infographs, illustrations, and statistical figures, covering AAOIFI's developments in activities over the period from September 2014 to end of December 2016. Dr. Hamed Merah, AAOIFI's Secretary General, said that AAOIFI embarks on efforts to enhance transparency as key to effective communication. Meanwhile, AAOIFI's statute was amended, and a set of 7 by-laws, policies and procedures, charters were developed. These include launching of AAOFI's Shari'ah standards translation projects (for Russian, French, and Urdu languages), and publication of AAOIFI's standards in paper and digital formats including a mobile app for smart phones. The section on strategic relationships cover AAOIFI's ties with stakeholders, specifically development of ties with institutional members. The report highlighted AAOIFI's keenness to further solidify its relationship with central banks and regulatory and supervisory authorities.
Abu Dhabi Islamic Bank dismissed reports that it may merge with Al-Hilal Bank as consolidation takes hold in the emirate’s financial-services industry. Abu Dhabi is combining National Bank of Abu Dhabi and First Gulf Bank and two sovereign wealth funds as it seeks to cut costs and merge firms with overlapping assets. The next step could be a tie-up between ADIB with Al-Hilal and a combination of Abu Dhabi Commercial Bank and Union National Bank. Tirad Mahmoud said ADIB plans to stick to its core markets and strengthen its presence. He also said that mergers were a shareholder issue and there might be 'some pressure' on net interest margins this year. ADIB posted a 1% rise in 2016 net profit to Dh1.95 billion ($530 million) on Tuesday as provisions rose to Dh970 million from Dh820 million.
Qatar International Islamic Bank approves capital increase of a newly established morocco-based Umnia Bank to 600 million moroccan dirhams.
Sheikh Dr Khalid bin Thani bin Abdullah Al Thani, Chairman of Qatar International Islamic Bank (QIIB) inaugurated the bank’s new branch at the Mall of Qatar. CEO Abdulbasit Ahmad Al Shaibei said the bank is expected to start its operations in Morocco by the first quarter of 2017 with four branches. The lender had signed a joint venture agreement with the Moroccan Bank Credit Immobilier et Hotelier (CIH) for the establishment of a bank in Morocco in December 2015. Under the agreement, QIIB will have 40% stake in the proposed bank. The new QIIB branch is on the ground floor of the Mall of Qatar, considered to be one of the most important shopping destinations in the region.
Bahrain's Gulf Finance House (GFH) is distancing itself from its major Tunisian property project, Tunis Financial Harbour (TFH). GFH's local subsidiary, Tunis Bay Project Co is to drop out of the residential golf course project.
Saudi Arabia has sent a request for proposals (RFP) to banks for a planned U.S. dollar sukuk. The debt sale would be Saudi's second international bond offering, after the sovereign issued a debut $17.5 billion bond in October last year. Saudi Arabia is also expected to issue a conventional bond later this year. The kingdom's bond plans are part of its push towards a more diversified economy that is less reliant on oil exports. The RFP was issued at a busy time in the Gulf with other countries also planning to raise funds internationally to offset the impact of lower global oil prices. Bahrain launched a tap of its $1 billion 2028 bond on Tuesday, while Oman is expected to announce the launch of a new bond this week.