Dubai has announced it is in advanced discussions to set up the Shari'a compliant Emirates Trade Bank which will specialise in international trade and commodity financing. Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and chairman of the Executive Council, has nominated a founding committee for the establishment of the bank. Emirates Trade Bank will be the first of its kind global Shari’a compliant bank exclusively offering integrated trade solutions, through mobilising the infrastructure and logistics ecosystem of the UAE. Sami Al Qamzi, vice chairman of the Dubai Islamic Economy Development Centre (DIEDC), said the Emirates Trade Bank is set to reap synergies from Dubai's strategic positioning. On Tuesday, Sheikh Hamdan said Dubai is set to launch ambitious projects as part of a plan to transform the city into the capital of the Islamic economy by 2021.
The recent announcement of Abu Dhabi Islamic Bank (ADIB) to enter the #fintech era through a partnership with a digital-only bank is a good example how the times in the banking industry are changing. ADIB partnered with Fidor Bank to launch what it calls the GCC’s first 'community based digital bank', targeting the region’s 'millennials', or 'Generation Y', who are looking for digital banking offerings matching their life- and working style needs. Tirad al-Mahmoud, CEO of ADIB, said the bank's proposition would allow users to completely change the way they bank and manage their finances using digital technology to serve all their banking needs. For every financial transaction there are new digital services in development and the Islamic finance industry will have to follow suit. According to EY consultancy, it is not enough for Islamic banks to introduce new digital channels, they must completely reinvent their customer processes to offer technology-enabled, simple end-to-end experiences.
Nasdaq Dubai and IdealRatings has announced the launch of benchmark indices that track the performance of global Sukuk, in order to provide investors with new data to make informed trading decisions. The data includes daily movements in price and total return, with monthly updates on yield and other key indicators. It tracks a universe of more than 1,800 Sukuk globally, with eligibility criteria including a minimum issue size of 100 million US dollars. The Global Sukuk Index covers all currencies and has five sub-indices. The sub-indices reflect distinct segments of the market, which are: investment grade issuances, issuances by sovereigns, issuances by corporates, issuances by financial institutions and GCC issuances. According to Hamed Ali, CEO of Nasdaq Dubai, the indices add a valuable new stream of information to investors’ existing trading tools.
Emirates Islamic (EI) plans to complete a Dh1.5 billion ($408 million) fund-raising from existing shareholders by early December. Chief executive Jamal Bin Ghalaita said EI was not expecting a pick up in the banking market until the second half of 2017 at the earliest, once an upswing in oil prices happens. EI announced plans for the rights issue on Thursday, saying it would increase its paid up share capital to Dh5.43 billion from Dh3.93 billion. EI, which has recorded falling net profits for the past three quarters, is due to report third-quarter results later this month. Bin Ghalaita said the outlook remained uncertain. He added that EI planned no further job losses after some cuts mainly within the department servicing small and medium-sized enterprises.
According to the findings of Emirates Islamic’s second Islamic Banking Index, there has been an increasing public acceptance and demand for Islamic banking in the UAE. Chief executive of Emirates Islamic, Jamal Bin Ghalaita, said 51% of banking consumers had at least one Islamic product, demonstrating that the efforts by Islamic banks to improve their customer outreach were paying off. As far as perception is concerned, Islamic banks’ trustworthiness rose 42% among Muslim consumers compared to 37% in 2015. Among the non-Muslim population, there was a sizable increase in the number of non-Muslim consumers willing to consider subscribing to an Islamic banking product. The survey also highlights the key challenges for Islamic banks. For a second consecutive year, Islamic banks lag behind conventional banks in technology, innovation and customer service.
#Bahrain's Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa has met with the new President of the Islamic Development Bank (IDB) Group, Dr. Bandar Hajjar. The meeting was held on the sidelines of the minister's participation in the annual meetings of the Boards of Governors of the IMF and the World Bank Group held in Washington. Ways to broaden the close cooperation between the two sides were discussed. The minister praised the IDB's distinguished standing, which plays a vital role in promoting the development movements in Arab and Islamic countries.
The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) plans to finalize several new standards by the end of the year. Bahrain-based AAOIFI has published a draft sharia standard for gold-based products with a one month consultation period ending on Nov. 9. AAOIFI's sharia board also discussed work on a new sharia standard covering credit cards, while a final draft of a sharia standard covering liability of investment managers would be issued during its next meeting. Standards for murabaha, sukuk and ijara are also underway with a working group expected to finalize them by the end of the year. A revision of the existing standard on sukuk will cover issues including the asset-backed and asset-based nature of sukuk, capital boosting instruments, beneficial ownership and non-viability clauses.
Vice President and Prime Minister of the #UAE, Sheikh Mohammed bin Rashid Al Maktoum said that the Islamic Economic system offers a real opportunity for economic, commercial and financial growth. He added that the Islamic Economic system has been tested by various international financial institutions and the UAE has started reaping the benefits of this system. Crown Prince of Dubai Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum said Dubai is set to launch ambitious projects as part of a plan to transform the city into the capital of the Islamic Economy by 2021. Sheikh Hamdan made these remarks ahead of the start of the third Global Islamic Economy Summit in Dubai. He expressed his hope that the Summit would also discuss how Islamic Economy instruments can stimulate the development of the private and public sectors.
Al Rajhi Capital has announced the closing of a private placement subscription for the Al Rajhi European Real Estate Fund after raising SR581 million ($155 million) in equity. The five-year closed-ended fund will invest in income generating properties, such as warehouses occupied by solid tenants with long-term leases. The main geographic focus of the fund will be Western Europe. Gaurav Shah, CEO of Al Rajhi Capital, said that this fund marked the commencement of the global expansion of the company's real estate investment platform. Al Rajhi Capital has managed over $1 billion in transactions across the logistics and community retail space and recently successfully exited a $360 million fund focused on investing in KSA and UAE logistics.
SEDCO Capital announced the acquisition of seven real estate assets over the past 19 months, bolstering the firm’s realty portfolio in Saudi Arabia. The purchased assets include the Hyper Panda retail in Dammam, Olya School in Riyadh, Dar Al Baraa School in Riyadh, an Extra Store in Dammam, Alhamra Plaza retail strip outlet in Riyadh and Irgah Plaza retail strip outlet in Riyadh. The acquisitions collectively total SR473 million in purchase price for approximately 88,000 sqm of built up area. According to Hasan Al-Jabri, CEO of SEDCO Capital, the total assets under management reach the $5.2 billion mark and clearly show clients' confidence in SEDCO.
Creditors of Kuwait's debt-laden Investment Dar are forming a team to restructure 813 million dinars ($2.7 billion) in debt. Saudi Arabia's Al Rajhi Bank, the Islamic investment company's largest creditor, is taking charge of forming the committee, which will be responsible for representing the roughly 70 to 80 creditors in negotiations with Investment Dar. Any deal remains complicated by a rise in the number of legal cases against Investment Dar. Another complication is that Investment Dar has been in legal dispute with Commercial Bank of Kuwait over part of its nearly 20% stake in Kuwait's Boubyan Bank, which is one of the assets it aims to hand over to creditors.
Fitch Ratings has affirmed GFH Financial Group’s (GFH) Short-term Issuer Default Rating (IDR) at "B" and revised its outlook upward from stable to Positive with a Long-term IDR at "B-". The positive outlook reflects the steps GFH’s management have taken to strengthen its balance sheet by paying down debt, reshaping the business model with focus on income-generating investments, and consequent improvement of profitability. GFH said it believes that this upward revision of the outlook is the result of its new strategy and in developing new recurring steams of income through income yielding investments.
Noor Bank has committed its support to the art and design exhibition at the Global Islamic Economy Summit (GIES 2016). GIES 2016 is scheduled between 11-12 October at the Madinat Jumeirah Hotel in Dubai and is under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum. The summit is anticipated to convene more than 2,000 policymakers to discuss key developments of the Islamic economy sector. Speaking on the bank’s participation in GIES 2016, Hussain Al Qemzi, CEO of Noor Bank, said that this event deeply resonated with Noor Bank’s core values. Noor Bank is looking forward to showcasing the exhibition which features signature art works of this year’s emerging artists alongside established names in the field.
The third Global Islamic Economy Summit (GIES) to be held in Dubai on October 11 and 12 will set a special focus on the utilisation of Islamic funds for social and entrepreneurial development. One plenary session will deal with the issue of Islamic charity funds or trusts (waqf) created by philanthropic giving in Muslim communities which remain an underused social development instrument. These funds contain significant assets, estimated by some to exceed a value of $500bn annually. Waqf can not only be used in its traditional, real estate-related form, but also in movable form of cash, potentially creating wide-reaching opportunities for social investment. Abdul Aziz al-Ghurair, chairman of Dubai-based Al Ghurair Foundation for Education, said the concept was about harnessing the abundance of underutilised capital for social development.
Abu Dhabi Islamic Bank (ADIB) has partnered with Fidor Bank to launch the region’s first 'community based digital bank'. The new platform is designed to fit the lifestyle of millennial consumers also known as Generation Y. Fidor Bank is Europe’s original digital challenger bank. The bank centres around an online community, where users can exchange financial advice and also help co-create banking products. According to CEO of ADIB, Tirad Al Mahmoud, the new platform will allow users to completely change the way they bank and manage their finances using digital technology to serve all their banking needs. The 'new digital bank' will be available for existing and new customers to sign up to in the upcoming months.
Abu Dhabi Islamic Bank has cut more than 200 jobs over the past three months. The cuts were made mostly in the retail business and about 100 people were dismissed last month. Abu Dhabi Islamic Bank joins other lenders in the U.A.E. that have cut jobs to adjust to slower economic growth after oil prices halved over the past two years. Union National Bank dismissed about 50 people in August, while Emirates NBD, the nation’s biggest bank, reduced its workforce by more than 250 people at its small and medium enterprise and Islamic lending businesses in April.
Amid challenging economic conditions, the Islamic banking sector in Oman achieved significant growth since its start in 2012. The total assets of Islamic banks and windows combined, amounted to RO 2.7 billion as at the end of July 2016 which constituted about 8.5% of the total banking system assets. According to Khalid Howladar, Global Head of Islamic Finance at Moody’s, the growth has been a result of the Omani government’s strategy that has allowed conventional banks to offer Islamic services. Howladar addted that the growth is driven by strong retail demand and proactive government legislation. Across the GCC the Islamic banking sectors have been experiencing growth in their respective market shares with the lone exception of Kuwait.
Saudi Arabia’s central bank has asked local banks to reschedule consumer loans after the government cut bonuses and other financial perks for public sector workers. The cabinet announced this week that it would slash ministers’ salaries by 20% and reduce a range of allowances for public employees. In addition, the government said it would base salary payments on the Western calendar rather than the Islamic calendar; since the latter is about 11 days shorter. This is expected to reduce income further. Banks are currently negotiating with the central bank to be allowed to deduct up to 40% of customers’ salary payments to service their consumer loans, instead of the 33% currently permitted. If the central bank declines, banks will discuss raising interest rates on the loans.
Diyar Al Muharraq has announced the signing of a Murabaha contract worth $366 million with a consortium of banks including Al Salam Bank-Bahrain, Kuwait Finance House, Bank of Bahrain and Kuwait and Al Baraka Islamic Bank. The participating banks will part fund the Deerat Al Oyoun Social Housing project; total costs are estimated at $700 million. Diyar Al Muharraq will bear the responsibility for financing and constructing all units of Deerat Al Oyoun as well as the initial infrastructure and public utilities. The anticipated date for the project’s first phase completion is February 2018. Al Salam Bank Deputy Group CEO Anwar Murad commented on the agreement being a milestone in terms of organizing a project of this magnitude, stressing the cooperation between Islamic and conventional banks in the region.
Bahrain's central bank has proposed new governance rules that would require Islamic banks to conduct external sharia audits of their operations, representing a shift away from the long-held practice of self-regulation. Islamic banks in the Gulf have traditionally used in-house boards of Islamic scholars to determine whether religious principles are being obeyed. Some scholars argue that this decentralised approach allows more flexibility and diversity in Islamic finance. Bahrain's central bank said that a public consultation period for its draft rules would close on Oct. 16. These provisions could place Bahrain among the strictest jurisdictions for sharia scholars.