According to EY’s GCC Wealth and Asset Management Report 2016 'Global forces drive regional realities', the larger local banks in the GCC are approaching saturation in their home market and are starting to venture out to new markets such as Africa. George Triplow, EY's Wealth and Asset Management Leader says the UAE’s strong ties with African markets has encouraged a number of African businesses to use Dubai and the Dubai International Financial Center as an infrastructure hub. The regional retail wealth management sector faces the ongoing issue of lack of transparency and independence. According to Triplow, the key would be to provide lower costs, genuinely independent advice and technology-supported portfolio diversification with a focus on passive funds and exchange-traded funds, rather than complex structured products.
The initial public offering of the Eskan Bank Realty Income Trust (REIT) has opened today. The BD 14.4 million offering represents 72.9% of the Trust’s total size of BD 19.8 million, and has a target of 6.5% in net distributable income payable semi-annually. This Sharia-compliant offering is reserved for Bahraini and GCC nationals and is open to individual and institutional applicants. Securities & Investment Company (SICO) is the mandated lead manager, while Bahrain Islamic Bank (BisB) has been appointed as the receiving bank. According to Eskan Bank's General Manager Dr. Khalid Abdulla, the REIT enables investors to share in a diversified portfolio of properties, namely Segaya Plaza and Danaat Al Madina, offering diversification within the real estate sector. The properties currently have an occupancy rate of over 85%, and the Trust intends to increase its Sharia-compliant property portfolio.
Nasdaq Dubai and IdealRatings have launched a suite of indices tracking the performance of global Islamic bonds. The indices may serve as the underlying to future investment products including exchange-traded funds. To be eligible for inclusion in the indices, each bond must have a minimum size of at least $100m, a remaining time to maturity of at least three months, and must be approved by a Shariah accredited board. The Nasdaq Dubai IdealRatings Sukuk Index family comprises the Global Sukuk Index as well as several indices covering distinct segments of the market. They include investment grade issuances, issuances by sovereigns, issuances by corporates, issuances by financial institutions and Gulf Cooperation Council (GCC) issuances. As of 1 October 2016 the Global Sukuk Index has returned 3.1% year-to-date and 15.2% since the index’s base date of 1 November 2012.
The latest #Saudi Arabian survey conducted by Riyali Financial Literacy Program shows that more than 86% of the respondents have suffered from some form of financial distress. This high percentage sheds light on the importance of spreading financial awareness to manage a stable financial life. The survey also showed that most of the commitments that the participants failed to fulfill were finance installments (44%), followed by borrowing from friends and family (34%), and then credit card payments (22%). In addition to that, the survey highlighted another noticeable problem, which is the high debt burden ratio where monthly installments of 42% of the participants exceeded 60% of their monthly salary. In this regard, the Saudi Arabian Monetary Agency (SAMA) has set the limit at 33% for the monthly debt burden that a customer can afford, to be able to successfully pay off debts.
The Sukuk Conference organized by the Saudi Capital Market Authority (CMA) in collaboration with the World Bank will be held on Dec. 6, 2016. Government officials and representatives from the World Bank and the private sector will participate in the conference. The conference sessions will include topics such as: elements of sukuk markets, dynamics of sukuk markets, establishment of an effective environment for sukuk market, regulatory issues in the sukuk market and the role of debt markets in economic growth. The CMA aims to encourage the issuance of debt instruments and also to promote the economic development of the Kingdom within the 2030 Vision.
Noor Bank closed an AED 850 million Syndicated Islamic Financing Facility for Ajman Bank. The two-year Shari’a compliant facility shall be utilised towards Ajman Bank’s future growth plans. Noor Bank was mandated for the second time to act as Lead Arranger. Dubai Islamic Bank, First Gulf Bank, Sharjah Islamic Bank, The Arab Investment Company and Warba Bank joined the deal as Mandated Lead Arrangers, while National Bank of Bahrain participated as an Arranger. Commenting on the facility, Noor Bank's CEO Hussain Al Qemzi said that this syndication was testament to Noor Bank's service quality and the relationship amongst the two institutions. He expressed his gratitude to Ajman Bank and all the partner banks who helped to close the transaction.
Gulf Islamic Investments (GII), a UAE based Islamic financial services company, announced the closing of US.$145 million fund raising for Apttus, a Silicon valley based software company. The funds will be used to complete the Quote-to-Cash customer process and the Procure-to-Pay supplier process. This is the fourth company out of Silicon Valley for which GII has raised funds for in the last 2 years, bringing the total amount raised to $350 million. GII further confirms a continuing partnership with Apttus to lend strong support to the company’s business development and market penetration in the GCC region. According to GII Founding Partner, Mohammed Alhassan, Apttus provides a golden opportunity at the level of business model and also in terms of achieving satisfying returns.
Many Muslims contacted me in the last years with one single repeating question: Are CFD and/or Binary Options halal meaning permissible in Islam? There are indeed forex brokers offering so called Islamic accounts avoiding outright interest. But still: A contract of difference does not involve the ownership of any underlying (currency, stocks etc.) hence money against money is exchanged in different amounts - this is the most simple test for the prohibited Riba. Any Muslim receiving such offers should therefore insist of receiving the Fatwa and if not provided leave out.
The intention on those trading activities everyone can ask himself; mostly it will be akin to gambling and this on top of the fact that the trading activity itself is a zero sum game; meaning what one wins another looses, which rules out again to participate in such business. It does not do any better that aside from luck the outcome is influenced by know how - the same is true for classical money games as Poker or Backgammon. Still nobody would classify Poker therefore as halal.
The international sukuk market received a major boost when Saudi Finance Minister Ibrahim Al Assaf confirmed that the kingdom’s public debt issuance programme will not be limited to conventional bonds and that sukuk will play an important role. The global sukuk market had a flat year in 2015, impacted by the slump in the price of crude oil and other commodities. The signs are of a rebound this year, with sukuk issuances already reaching US$50 billion in the first four months of the year. The Saudi announcement augurs well for the sukuk market next year. The Saudi Finance Ministry had also stressed that the kingdom plans to raise US$120 billion from the international markets by 2020. Saudi bankers expect a debut Saudi sovereign sukuk early next year and stress the need for a well-structured public borrowing policy in the international market.
Etihad Airways plans to issue a debut US dollar-denominated benchmark sukuk and will soon meet investors to determine its size, maturity and interest rate. Investors said the sukuk could be as large as $1 billion. HSBC, JP Morgan, National Bank of Abu Dhabi, Abu Dhabi Islamic Bank, Dubai Islamic Bank and First Gulf Bank are the deal underwriters, according to an investor presentation dated Nov. 3. The airline, whose credit is rated A by Fitch, reported total revenues of about $9 billion in 2015. At the end of last year it had 121 aircrafts and it plans to take delivery of a further 188 by 2026.
Bank AlJazira (BAJ) has announced an ambitious expansion plan. BAJ currently operates 40 Fawri remittance centers and plans to open several new branches across the Kingdom of Saudi Arabia. The Bank's Senior Vice President Sami Hamad Al-Rajhi said Fawri has a vast overseas network of payout locations in more than 200 countries and will continue to expand. He pointed out that money can be sent through Fawri to all major countries like India, Philippines and Pakistan, which are the three top remittance recipient countries, and Bangladesh, Egypt, Sri Lanka, Indonesia, Yemen, Turkey, Jordan, Morocco and many more countries around the globe. In addition, Fawri offers buying and selling of bank notes, namely for dollar and euro currencies. Fawri will be able to deal in all major currencies in the near future.
Financing portfolio of Alizz Islamic Bank (AIB) reached OMR275.9 million in the third quarter of 2016, registering a growth of 62.4%, compared to the same period last year. Deposits grew by OMR123.4 million from the same period last year representing a growth of 84.7% and net operating income grew by 57.2% from the same period last year to reach OMR6.7million. Due to the increase in income, cost controls and monitoring of financing quality, the net loss of the bank reduced by 19.1% to reach OMR3.4 million. According to CEO Salaam Al Shaksy, the bank achieved stable growth, while maintaining a strong asset quality. Alizz Islamic Bank is one of the first specialised Islamic banks in Oman, that has consolidated its presence within a short period of time.
Dubai Green Economy Partnership (Dubai GEP) has signed an agreement with Emirates Islamic to provide easy financing options for consumers in Dubai to purchase green products on the Green Deal website. The agreement was signed on the sidelines of the World Green Economy Summit (WGES) recently. According to Faisal Aqil, Deputy CEO at Emirates Islamic, the bank will offer flexible financing schemes at competitive rates. He expects that a convenient financing option will be a huge incentive for the higher uptake of products from the Green Deal platform. The Green Deal site features products that can improve sustainability in day to day life, which include technologies for Energy Efficiency, Solar Energy, Energy Auditing, Water Efficiency and Thermal Control.
Organised jointly by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the Central Bank of Bahrain (CBB) and the World Bank Group, the 11th AAOIFI-World Bank Conference has started on Monday. CBB Governor Rasheed Al Maraj said in his keynote address that the CBB would introduce a set of new regulations for the Islamic Financial Industry. He added that the industry also needs to invest in the training of the human capital in addition to working on succession planning. Participants discussed the challenges, opportunities and development of Islamic finance in the changing economic climate. The main take away of the day was about the future prospects, innovation, differentiation between the capitalism and the Islamic finance as a whole.
Dubai International Financial Centre (DIFC) is home to the first Equity Crowdfunding platform in the region, Eureeca. It is the first multi-regulated global Equity Crowdfunding platform and has over 12,000 investors from 42 countries. It enables entrepreneurs and high growth businesses to raise much needed expansion capital and create new partnerships for growth. The platform's co-founder Chris Thomas said Eureeca creates a corridor of investment opportunities between Europe, the Middle East and Southeast Asia. It recently raised $400,000 in 12 days on its self-funding campaign with the funds being used to fuel Eureeca’s international growth plans and continued development of their product offering.
Warba Bank has received approval from the central bank of Kuwait to issue up to $250 million of sukuk. The bank will take a final decision on the issuance and its timing after obtaining remaining regulatory approvals. The funding would be used to boost Warba's Tier 1 capital. Warba Bank is an Islamic lender established in 2010.
Bahrain-based Al Baraka Banking Group plans to expand its network in Pakistan following its merger with Burj Bank. CEO Adnan Ahmad Youssef said the Group's strategy in the Pakistani market was built on expansion in all Pakistani cities. Burj Bank’s 74 branches will be added to those of Al Baraka Bank (Pakistan) to form a network of 224 branches. Al Baraka Bank (Pakistan) aims to increase the number to 300 branches in the next four years. The merger is expected to take effect from the last quarter of this year, and the Bahraini bank will be the major shareholder in the merged institution. Al Baraka Banking Group is also setting up in Morocco after the North African nation introduced legislation allowing Islamic banks into the domestic market. With this entry the Group completes its network in almost all Arab Maghreb countries.
Abu Dhabi government-owned Al Hilal Bank has recently appointed Craig Bell as chief financial officer. Bell previously worked in New Zealand, Britain, Costa Rica, Hong Kong and Saudi Arabia, Al Hilal said. According to his LinkedIn profile, his previous post was chief financial officer at Saudi British Bank.
Emirates REIT, one of the UAE’s first regulated Shari'ah compliant Real Estate Investment Trusts listed on Nasdaq Dubai, saw a 13% increase in total portfolio value. The total portfolio value stood at $742 million, a year-over-year increase of $85 million, making it the largest Shari’ah compliant REIT globally. The total property income for the nine months also increased 22% to $36.3 million. The net asset value increased to $1.60 per share, or $480.7 million. CEO Sylvain Vieujot thanked the UAE’s leaders who established a stable financial ecosystem with solid laws and regulations that have allowed the United Arab Emirates to become a world leader in Islamic finance.
According to Finance Minister Ibrahim al-Assaf, Saudi Arabia may follow its first international debt issuance with an Islamic bond sale. The size of future borrowing hasn’t been determined, but it will not be limited to bonds. Assaf said that part of it will be by the way of sukuk, but he didn’t specify whether the sukuk sale would be local or global. Saudi Arabia raised $17.5 billion this month in the biggest-ever foreign bond from an emerging-market nation. The kingdom is seeking to finance a budget deficit that ballooned to about 15 per cent of economic output last year.