Noor Islamic Bank (Noor) is targeting Dhs5bn of lending to small and medium enterprises (SMEs) over the next five years with the launch of Noor Trade. This Shari'a compliant banking service is specifically tailored for SMEs that contribute significantly to the UAE's trade flows. In support of its Noor Trade strategy, Noor has opened its first dedicated trade branch in Almas Tower, home of the Dubai Multi Commodities Centre (DMCC), in Jumeirah Lake Towers (JLT). A second similar branch is scheduled to open in Deira, in July. Under the Noor Trade brand, clients will have access to fully Shari'a compliant financial services, including cash management, trade, and working capital solutions, along with consumer, treasury and takaful products packaged at preferential rates based on eligibility criteria.
During the past year, there have been a number of cross-regional sukuk, mostly by Gulf issuers tapping Malaysia's highly liquid market. However, sukuk structures are not standardised, and some Gulf-based sharia scholars have objected to certain structures used in Asia, a region which has proven to be more flexible in its transactions. Sukuk issuance in the Middle East outside of the Gulf is also becoming more attractive, notably Turkey, which was recently elevated to investment grade credit status and is bidding to develop an Islamic finance industry. Growth in cross-border Islamic bond issues points to greater convergence in the industry, opening the door to a much wider pool of investors.
Kuwait's Boubyan Bank (BOUBYAN.KW) has sold a debt that was owed by an investment bank for 2.4 million Kuwaiti dinars ($8.38 million). Boubyan, which is an Islamic lender 58.33% owned by National Bank of Kuwait, said that it sold the debt to an international bank, without naming it. It added that it had previously set up provisions to fully cover this debt in keeping with the instructions of the country's central bank.
The Dushanbe Business Forum 2013, which took place in Tajikistan, showcased the country as a promising investment destination and focused on the best practices of Islamic banking and leasing. The event aimed to strengthen the economic ties between the Tajikistan and OIC countries by attracting investment into Tajikistan. According to Shayne Heffernan, Tajikistan is one of the most promising emerging markets. As for its outcome, the Dushanbe Business Forum 2013 created linkages and business relations between Tajikistan and the private sector community in OIC and CIS countries, gave opportunity for local participants to discuss business collaboration with potential shareholders and addressed the prospects of developing and introducing Islamic banking and financial tools.
KFH-Research issued a report stating that participation banks (Islamic banks) in Turkey form 5.2% of banking assets and will reach 10% by 2018, since those banks surpass the rest of the banking sector and have steady financing growth over 20% per year. The report noted that KFH-Turkey is first in deposits, and that participation banks are highly demanded and offer a wide array of products. There are currently four participation banks in Turkey, which are Albaraka Turk, Kuveyt Turk, Turkiye Finans, and Bank Asya. The low penetration rate of participation banking should ensure that its significant growth will continue over the coming years. Continuous measures and initiatives taken by the Turkish government as well as the large Muslim population will drive the participation banking sector to grow in the longer term.
Crowell & Moring's Cairo office has advised the Abu Dhabi Islamic Bank-Egypt in connection with an Islamic finance facility extended to Maridive and Oil Services SAE. Abu Dhabi Islamic Bank- Egypt was the Initial Mandated Lead Arranger and the global coordinator in the deal, coordinating the financing with several Banks. The deal is the first Islamic Ijara structure syndication to take place in the Egyptian market, valued at $150 million. As legal counsel to the initial mandated lead arranger, Crowell & Moring advised the facility providers (the banks) on the structuring and documentation of the transaction.
Guidance Investments (GI) has launched a RM150 million Shariah-compliant investment fund for equipment leasing for the Saudi Arabian market in partnership with Lembaga Tabung Haji (TH). This Tabung Haji acted as the capital provider, while the US-based ATEL Capital Group, the equipment leasing company is to provide the machineries for the Saudi market. TH CIO Abd Kadir Sahlan said that his company has committed a total of RM150 million in the private equity fund in support of ATEL in this venture. The funds will be disbursed in phases over the next two to three years, depending on the deployment of the portfolio in the Saudi market. At the same time, Guidance Investments has formally launched its operations in Malaysia with the opening of its headquarters in Kuala Lumpur.
The Islamic Development Bank (IDB) has called for the creation of a global sharia advisory board that can offer greater uniformity for the Islamic finance industry. A centralised format to the supervision of sharia-compliant banking products is gaining favour across the globe, as regulators seek to standardise industry practices and improve consumer perceptions. IDB president Ahmad Mohamed Ali said that IDB and IFSB (Islamic Financial Services Board) should study ways for creating globally acceptable references for the industry. This could include striving for the concept of a globally accepted sharia committee or body, which would be able to assist all Islamic financial institutions and bring them in line with a uniform standard. A global sharia board would also allow the industry to address low penetration rates in majority Muslim countries.
Thomson Reuters has launched an Islamic Finance Development Indicator in collaboration with the Islamic Corporation for the Development of the Private Sector (ICD), the private sector development arm of the Islamic Development Bank (IDB). The indicator is a numerical measure representing the overall health and growth of the Islamic finance industry worldwide. It measures five key components quantitative development, governance, social responsibility, knowledge and awareness. Therefore, the Islamic Finance Development Indicator is a unbiased and reliable multi-dimensional barometer of the development of the Islamic finance industry.
AlHuda Center of Islamic banking and economics (CIBE) Initiated a Islamic Microfinance research study for Yemen Microfinance Network (YMN) in Yemen. This study will be conducted in Yemen's capital Sana'a including Taiz, Adan and Almoukla, so that the Islamic Microfinance products can be examined broadly and further Islamic Microfinance products can be developed with the compatibility of the existing structure. The share of Islamic Microfinance in Yemen's Microfinance sector is approximately 90% and the remaining 10% are also converting their portfolio into Islamic Microfinance. The increased outreach of the Microfinance sector is expected to help eradicate poverty.
'My Savings' is a new initiative announced by the Government of Dubai in collaboration with National Bonds Corporation. During the introductory session on the goals and mechanism of the initiative, National Bonds elaborated on the benefits and advantages of the employee savings programme. The presentation was attended by senior officials,human resource directors and employees from Dubai Public Prosecution who confirmed their support for the initiative. Dubai Public Prosecution employees who opt to participate in the Shari'a compliant 'My Savings' programme will specify a fixed amount to be set aside from their salaries every month as part of their savings and Takaful plan with National Bonds Corporation. Moreover, the initiative also offers employees a 10% discount on Takaful family coverage programmes, as well access to free consultations pertaining to income management and financial planning.
Islamic Development Bank (IDB) president Dr Ahmad Mohamed Ali Al Madani suggested four key areas for the Islamic Financial Services Board (IFSB) to focus on durich his keynote address at the 10th IFSB Summit in Kuala Lumpur. These include the creation of a conducive enabling environmen, adoption of IFSB and AAOIFI standards by all stakeholders, shortage of qualified manpower and financial inclusion through Islamic microfinance, supported by Zakat and Awqaf. In this context, IDB hopes for more collaborative opportunities with IFSB. Meanwhile, Sheikh Abdulla Saoud Al-Thani, chairman of IFSB 2013, highlighted some of the challenges that lie ahead in the Islamic financial service industry like the under-penetrated Takaful industry.
Ensuring the provision of financial services to the poor can address the challenge of poverty alleviation. A large portion of the poor population, however, is excluded from formal financial services. Although access to Islamic microfinance is critical to growth and prosperity in many countries it is provided only by a small number of providers covering less than 1% of the total microfinance outreach. Sustainability of Islamic microfinance institutions (MFIs) is also an emerging challenge. Moreover, Islamic MFIs tend to predominantly use murabaha (cost-plus credit sale) and qard hassan (interest free loans). These products have implications related to sustainability and outreach of MFIs as the cost can be higher in the former and the latter does not generate any return. Innovative solutions are needed to develop more comprehensive and efficient instruments which build on sustainable business models and product diversity.
Tamkeen and Family Bank announced the launch of 'Mantoojati', a joint initiative aimed at enhancing the growth and sustainability of productive families in Bahrain. Through "Mantoojati", the beneficiaries will receive support to set up kiosks in selected shopping malls around the kingdom to market their products and services to a wider customer base. The support will be around BD6000 per applicant and will cover the cost of renting and setting up a booth. This will be complemented by the advisory services already provided to the beneficiaries by Tamkeen and Family Bank. According to Dr. Atef Elshabrawy, CEO of Family Bank, the programme seeks to encourage and motivate local and home-made goods and crafts, which the bank supports through funding and guidance.
Dubai recently announced that its latest aspiration was to become the leading Islamic business hub in the world. Under the umbrella of Islamic finance, the emirate is hoping to provide the best facilities for Islamic finance instruments, Islamic insurance, the halal food industry and Islamic trade and quality-management standards. Dubai has numerous advantages as an Islamic finance hub, like its existing strong business and financial infrastructure as well as an established regulatory framework and political and socio-economic stability. Moreover, the emirate plans to set up a central Shariah board to supervise all Islamic financial products used in Dubai. However, the emirate needs to integrate a Shariah- compliant business framework with the already established conventional framework. Furthermore, Dubai also faces rivalry from the other GCC nations.
The board of BIMB Holdings Bhd is set to deliberate on Dubai Financial Group LLC's (DFG) sale of a 30% stake in Bank Islam Malaysia Bhd. BIMB's group managing director and CEO Johan Abdullah said that there is no official agreement yet, and that the board is going to discuss this by the end of the month. He added that the sale must have value proposition and earnings accretion for shareholders of the company as a whole. Bank Negara Malaysia (BNM) gave BIMB Holdings until June 30, 2013 to complete its negotiations to buy DFG's 30% stake in Bank Islam Malaysia. Therefore, the parties must ensure the negotiations are completed within this deadline.
In an effort to foster hope and stability among Yemen’s por, Al-Amal Microfinance Bank is working to introduce a range of Sharia-compliant microfinance products aimed at reaching the unbanked. However, demand for Islamic financial products can far exceed the capacity of existing microfinance institutions to provide them. That’s why institutions like Al-Amal are often forced to limit their suite of Sharia-compliant products to one or more products that are relatively simple to administer and offer a clear return. In Al-Amal’s case, the signature Islamic product is murabaha. The mark-up ranges between 14.5% (for purchases more than $5,000) and 24% (for purchases below $5,000). Further development of Al-Amal’s murabaha offering and the introduction of other Sharia-compliant products, will hinge on the bank’s ability to reach Yemen’s rural poor, who represent some 80 percent of the country’s population
It is often claimed that Islamic finance is not only for Muslims, sending the message that the market potential of Islamic finance is far greater than just the global population of Muslims. However, Shari'ah compliance as the constitutive element of Islamic finance is in itself rather irrelevant for non?Muslims. It could be macro?systemic or micro?commercial or ethical implications of the observance of Islamic law which make it appealing to non?Muslims. If it is not 'systemic superiority' that will attract non?Muslims, then it could be the pricing of Islamic products or their quality that the customers see as individual benefit for themselves. The responsible investing movement is a great opportunity for Islamic finance, but also a great challenge at the same time.
The President of the Islamic Development Bank Group, Dr Ahmad Mohamed Ali has stressed that the IDB would cooperate with the Government of Somalia in a bid to rebuild and consolidate the public finance institutions through various methods such as staff training and transfer of knowledge and technology from IDB member countries. He also said that the IDB would assist the Government in the fields of Islamic banking and finance and improve legislation on investment so that the private sector can play its role in economic and social development. IDB's future activities in Somalia would be geared toward building government institutions, restoring basic services and improving infrastructure he added.
A consortium of Gulf-based banks has announced the successful closing of a $230.5 million and a euros 115.3 million syndicated dual-currency Murabaha financing facility for Turkish Bank Asya. Launched at $225 million, the facility was oversubscribed to close at $382 million equivalent with participation from 28 banks from across the globe. The facility carries a profit rate of 125 bppa over the relevant benchmark. The proceeds from the facility will be used by Bank Asya to expand its financing activities in Turkey. ABC Islamic Bank, Barwa Bank, Emirates NBD Capital, National Bank of Abu Dhabi, Noor Islamic Bank and Standard Chartered Bank were the Initial Mandated Lead Arrangers and also the Bookrunners for the deal.