The Investment Corporation of Dubai (ICD) has completed the issuance of a US$1 billion 10-year sukuk. The $1billion sukuk will be listed on the Nasdaq Dubai exchange and is the first to be issued from the region in 2017 and the second for ICD since 2014. International investor participation was robust with 26% of the issuance subscribed by investors based in the United Kingdom and Europe and 15% by investors based in Asia. Regional investor participation consisted of 58% of the total subscription with the remaining 1% of the investors based around the rest of the world. CEO Mohammed Al Shaibani said the issuance proves the ICD’s ability to provide a stable foundation that supports the ongoing success of Dubai.
Saudi companies willing to become public holding firms have slowed down the process, following a drop in prices of new companies listed in local share markets dealings. The forbearance of Saudi companies affected the region’s market. Saudi share market concluded the first week sessions with a slight drop and it closed at 6,212 points amid USD613.3 million (SAR2.3 billion) monetary liquidity, which is considered the least in five years. Saudi Arabian Monetary Agency (SAMA) continued its positive movements to enhance performance of local insurance companies.
The United Nations Children’s Emergency Fund (UNICEF) has revealed the urgent need to provide humanitarian aid to 8 million of Syria’s children, who are suffering from the ravaging civil war. The aid is estimated to be around $800 million and according to UNICEF there are more than 14 million children in war zones in the MENA region. Furthermore, there are around 10 million Yemeni children who are in need for urgent humanitarian aid. UNICEF spokesperson Juliette Touma pointed out that Saudi Arabia has donated $30 million to aid Yemeni children, but there is still a $60 million shortage of humanitarian funding.
Two of the largest Russian banks will soon incorporate Islamic banking rules into their line of work. The proposal was made by Rustam Minnikhanov, President of Tatarstan and banks are displaying real interest. Minnikhanov pointed out that should the two banks incorporate the new system of transactions, Russia would be forced to revise a score of fiscal laws and regulations. Sberbank's First Deputy Chairman, Maxim Poletaev, said the bank plans several pilot transactions in autumn 2016 in the Republic of Tatarstan.
On the eve of an international anti-corruption summit the International Monetary Fund has warned of the rising costs of corruption on the world economy. The cost is estimated around $1.5 to $2 trillion, roughly 2% of global GDP. IMF Managing Director Christine Lagarde said the indirect costs may be even more substantial and debilitating, leading to low growth and greater income inequality.
Leaders of the World Bank, United Nations, and Islamic Development Bank Group pledged to work closely together in the region. They recently launched the new financing initiative to support the MENA region aimed at uniting the international community to face the region’s immense challenges, including flow of refugees, and to launch of the process of growth, recovery and reconstruction. This approach aims at completing the massive humanitarian effort through strengthening the capacities of individuals and local communities. The plan needs forming broad alliances as the objectives of the new strategy and the resources necessary to achieve them exceeds the capacity of any single organization.
Bahraini authorities will discuss with the U.S. Treasury the international banks’ reluctance to deal with Banks in Bahrain and the Gulf because of tight U.S. regulation, Bahrain’s central bank governor Rasheed Mohammed al-Maraj said. The fact that many international banks have curtailed their correspondent services with regional and local banks has affected a wide sector of the population, especially the expatriates, he added. According to Maraj, officials in Bahrain, had met U.S. Treasury officials last November and scheduled another meeting on the issue in April. The U.S. regulations imposed on Bahrain, one of the Gulf’s financial centers, are part of a tougher regime introduced since the financial crisis, include scrutiny of potential tax avoidance and anti-money laundering rules.
The Deputy Director of the Middle East and Central Asia Department (MCD) at the International Monetary Fund (IMF) Adnan Mazarei said that it is necessary to establish a minimum level of security in Syria before the IMF and international institutions can evaluate its economic needs. In an interview, Mazarei said that the Fund estimates the urgent humanitarian needs and costs, the costs of reconstruction and contributes to the reconstruction of the institutions that were destroyed. He also said that the removal of sanctions on Iran will have a positive effect by allowing the country to produce and export more oil, it has also regained access to its international reserves which will also allow greater investment, and all of these things will encourage growth.
The Vice President of the World Bank for the Middle East and North Africa Hafez Ghanem confirmed that the World Bank aims to give $20 billion to the Middle East to help ease the Syrian crisis within the next five years. The figure is three times what the World Bank has spent up until now, and Ghanem added that his institution has given $4.9 billion to the Middle East and North Africa since July last year and most of this went to Iraq, Egypt, Jordan and, to a lesser extent, Lebanon. The increase had already started before the Syria crisis, when $1.6 billion was given to the region every 12 months. With regards to the monitoring of loans, Ghanem said that the World Bank helps the government design a project and provides technical assistance. Then a team of experts supervises it every six months.
Saudi Arabia is considering offering shares in the largest oil company in the world, Saudi Aramco, in an initial public offering (IPO) which may mean that assets of about 3.63 trillion US dollars will be accessible to citizens and investors. Saudi Aramco yesterday confirmed that it had been considering various options to provide the opportunity to a large segment of investors via an IPO in the finance market. The company said in a statement that it is studying two scenarios to present its shares for an IPO; the first is to sell an appropriate share of its assets directly, and the second is to offer a package of major projects for the IPO in several sectors, particularly the refining and chemicals sector. In addition to this, Aramco could sell about 5% of its assets which amounts to about 181.5 billion dollars in the stock market.
The World Bank’s Corporate Secretary Mahmoud Mohieldin expects that gulf oil exporting countries will be affected by the decline in oil prices, welcoming reform measures taken by these countries which include general monetary policies and diversification of income sources. Dr. Mohieldin said that there are golden opportunities in the year of 2016 in light of the declining prices of both mineral products and agricultural goods. The golden opportunity for Arab countries is to take advantage of those declining prices to develop domains of construction and agricultural, alongside other sustainment projects of renewable energy, thus diversifying income sources and endorsing economic reform, growth and stability.
The expanding reach of Islamic finance promises to carry a number of potential benefits. For example, Islamic financial institutions are less exposed to crisis because of their risk-sharing features. Another advantage is that Islamic finance can attract a large number of people into the banking system who have previously refrained for religious reasons. But while growing in scope, there are challenges for the industry to develop in a safe and sound manner. The IMF examined some of these issues in a recently published Staff Discussion Note, trying to understand under what circumstances the potential of Islamic Finance can be realized.
The successful roll-out so far of a new “smart card” system to distribute subsidized bread has been a major achievement for Egypt’s government, saving money while earning praise from families who no longer have to wake early to fight for loaves. While the government still has a long way to go to roll out the new system countrywide, success so far marks an important civilian achievement for the president. The cards have so far been introduced in 17 of Egypt’s 29 provinces and consumption in those areas is already down between 15 to 35 percent. However, there are still worries whether the new smart card system is air-tight enough to squeeze out middlemen working the black market.
The launch of the first online bank in Saudi Arabia will be announced on Friday evening. Manama-based Gulf International Bank will be launching the new bank, which will reportedly be an “online-only” service, with customers making deposits and transfers online and checks to be deposited via self-service machines at branches to be opened across the Kingdom. Customers will meet with an employee from the bank only once, when they register for a new account. The service will be open to individuals only. Despite having relatively low penetration rates for Internet banking, the Gulf region has great potential to assimilate new online banking services due to the high Internet penetration rates.
Baraka Khan, a 23-year-old Cambridge University student, has launched a project to build Europe’s first ecologically friendly mosque in the British city of Cambridge. The Cambridge Mosque, which will hold 1,000 worshipers, will be almost entirely reliant on green energy, with an almost-zero carbon footprint. The mosque building will be naturally lit all year round using large skylights integrated into the building’s design, and it will boast a green roof as well as an air-source heat pump for regulating temperature. The man who will design the building is award-winning architect Marks Barfield, who is also responsible for the iconic London Eye. He says he is aiming to merge traditional Islamic architectural motifs with those of the European Gothic style in order to bring the two cultures together.
Gulf emirate Sharjah launched its first sovereign sukuk on Wednesday, a 10-year, 750-million-US-dollar Islamic bond with a 3.764 percent yield. Following a press conference in Sharjah on Wednesday to announce the issue, the government said the bond had been more than 10 times oversubscribed, drawing in 7.85 billion dollars in orders from 250 investors. Regional investors accounted for 50 percent of these, with British investors accounting for 20 percent, other European investors 11 percent, and those from Asia 14 percent. The bond was originally priced at 100 basis points over midswaps, but this was later tightened to 120 points in response to the high demand, before the government finally decided on 110 points. The bond will now be traded on the Nasdaq Dubai exchange and the Irish Stock Exchange.
Gulf countries will be the engine driving the growth of the global sukuk market, according to a report released on Monday by the Dubai Chamber of Commerce and Industry. The report, which is based on data from the UK Islamic Finance Secretariat (UKIFS) and the Malaysia International Islamic Financial Center (MIFC), expected sukuk to play an important role over the next decade in securing funds for a substantial line-up of new projects in GCC countries, particularly in Dubai. The GCC and Malaysia are the traditional hubs for the issuance of sukuk. But the report sees other countries also playing major roles in the spread of the asset class, with emerging Islamic finance markets such as Tunisia, Mauritania, Senegal and Oman having the potential to become major sukuk hubs in the future, it said.
The Council of Saudi Chambers has launched a series of awards for businesswomen with the main objectives to support and encourage Saudi businesswomen to take a more prominent role in the Kingdom’s economy. The awards will highlight achievements in three categories: ‘Leading Young Businesswoman,’ ‘Leading Businesswoman,’ and ‘Productive Families.’ The nominations will be submitted electronically and that no preference will be given to particular geographic regions within the Kingdom. The jury will not include members of the Council, however, in order to ensure the awards are unbiased. Nominations for the awards will closed on September 10. Results will be announced in 2015 to coincide with the Second National Forum.
Private investors from Gulf Arab countries plan to establish the first full-fledged Islamic bank headquartered in the euro zone. The investors aim to launch the venture, named Eurisbank, in Luxembourg during the last quarter of 2014. With initial capital of EUR 60 million, the bank would offer retail, corporate and private banking services, and would open branches in Paris, Brussels, the Netherlands and Frankfurt. In addition to the royal family from the UAE, Eurisbank will be owned by a bank from a country in the GCC and other private investors. The founders of the bank plan to apply for a license in January and expect to obtain regulatory approvals by April.
The Malaysia-based International Islamic Liquidity Management Corp (IILM) has issued its USD 490 million debut sukuk. The three-month Islamic bonds, denominated in US dollars, were fully subscribed. The IILM sukuk received a high A-1 credit rating from Standard & Poor’s, and the IILM has said it plans to increase its issuance eventually to as much as USD 3 billion. The sukuk, priced at 30 basis points over the London Interbank Offered Rate, was auctioned off to seven institutions from around the world. These primary dealers will now be responsible for selling the sukuk on to other Islamic banks and institutions in an effort to create an active market in the instruments.