Bahrain

Asset management industry ‘set for growth’

#Bahrain’s assets management industry is set to see continued strong growth in the next five years. Central Bank of Bahrain supervisor Abdulrahman Al Baker said this positive trend can be attributed to the rapid expansion and increasing sophistication of the GCC financial markets. Other factors include the enchanced regulation on asset management and capital markets, the growing wealth of high net worth individuals, as well as the steady economic growth in the region.

Al Salam Bank names group chief executive

Al Salam Bank-Bahrain (ASBB) has appointed Rafik Nayed as chief executive of the group following regulatory approvals. According to ASBB chairman Khaleefa Butti Al Muhairi, Rafik Nayed has a proven international track record in banking and finance as well as the necessary expertise needed for this position.

As #Sukuk Disputes Simmer, Islamic Scholars Ponder Legal Risks

Senior scholars in Islamic finance are exploring ways to prevent legal disputes with new rules aiming to clarify responsibilities. The discussions are part of the annual sharia conference of the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). AAOIFI has developed a comprehensive sharia standard for sukuk that is being finalised, with work underway on three accounting standards and a governance standard. According to Said Bouheraoua, director of the Malaysia-based International Sharia Research Academy for Islamic finance, Dana Gas and other cases highlight the potential need to legislate work of scholars and penalties for breaches. At present, only the central bank of Malaysia has stipulated such fines, although this requires proving breaches occurred in 'bad faith' making penalties difficult to apply.

Ebdaa Bank backs #microfinance proposal for GCC charity projects

Ebdaa Bank has agreed to a proposal to microfinance charity projects to achieve their objectives to support low-income families. Ebdaa Bank CEO Dr Waleed Al Ghazawi welcomed officials from Almajdouie Group and stressed the need for the GCC to adopt microfinance due to its benefit for charity donations. The Almajdouie Group is visiting Bahrain to share ideas about their sustainable charity projects. The group’s new project is called "Basta", which has already launched six booths in Saudi Arabia, distributed in Dammam and Al Khobar. The project aims to support kiosks to develop their projects.

Islamic Scholars Debate Validity of #Cryptocurrencies

The world's top Islamic finance scholars are scrutinizing the validity of cryptocurrencies. The discussions are part of the annual sharia conference of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) being held in Bahrain this week. The key question for scholars is whether cryptocurrencies fall under the so-called "ribawi" category, which includes commodities like gold and silver. AAOIFI primarily issues accounting and sharia standards for Islamic finance institutions, but there is no current indication on cryptocurrencies. Scholar deliberations, however, could clarify what types of cryptocurrencies are religiously acceptable and influence future product development.

Coincidental documents reveal Iranian Guard smuggled billions via Bahraini bank

Iranian owners of a Bahraini bank complained about Bahrain to an international arbitration court in the Netherlands. Bahrain responded with documents proving that $7 billion was smuggled through suspicious accounts with the consent and knowledge of the bank’s management. Future Bank was closed in 2015, but documents prove Iran’s secret assistance in evading international sanctions and smuggling billions of dollars over more than a decade. Bahraini officials criticized Future Bank for allowing the cleric Isa Qassim to make cash deposits totaling millions of dollars over several years, and directing some of the money to a charity linked to terrorism. Audits revealed then that in hundreds of cases, bank transfers were accompanied by specific instructions to avoid references to Iran or Iranian banking codes.

#Bahrain Counts on #Fintech, #Saudi Ties to Revive Indebted Economy

Bahrain FinTech Bay is part of the kingdom's drive to revive its reputation as the Middle East's top banking and business center. After the plunge of oil prices in 2014, state revenues fell, credit ratings fell and debt soared. Large debts still pose a risk as interest rates rise, but Bahrain is starting to see initial signs of recovery. PayTabs, a Saudi company specializing in online payment solutions, will set up a base in Bahrain FinTech Bay in May. Tap Payments, a mobile payment company founded in Kuwait, moved to Fintech Bay last month. CEO Ali Abulhasan said Bahrain had regulatory advantages when compared to other Gulf Cooperation Countries. Foreign investment from 71 companies was $733 million last year, up from $281 million and 40 companies in 2016. This contributed to an average annual GDP growth of more than 3.5%. Central bank governor Rasheed Mohammed al-Maraj said that growth could accelerate further, as strong oil prices have bounced to around $65 a barrel from below $50 in mid-2017.

GFH joins as a founding partner in #Bahrain’s #fintech hub

GFH Financial Group said its recent partnership with Bahrain Fintech Bay (BFB) as a founding partner will drive innovation and create opportunities for growth. The partnership reflects GFH’s strategy to strengthen the integration of Fintech in the region. According to GFH Financial Group's CEO Hisham Alrayes, GFH provides new entrants access to a sophisticated network and gives advice on how to reach regional and international capital and markets.

#Bahrain Islamic Bank partners up with the largest dedicated #FinTech hub in the MENA region

Bahrain Islamic Bank (BISB) has announced its partnership with the Bahrain FinTech Bay (BFB). As the first dedicated FinTech hub and corporate incubator in the Middle East and Africa region, it will be located in the Arcapita building overlooking Bahrain Bay. The venue comprises state-of-the-art facilities, co-working spaces and a variety of other shared infrastructure. BISB CEO Hassan Amin Jarrar said that with the strong support provided by the Government and the Central Bank of Bahrain Bahrain FinTech Bay would further strengthen the Kingdom’s financial position. Bahrain FinTech Bay aims to develop and accelerate financial technology in the region by creating a platform to fuel the growth of the industry.

#Bahraini bank plans aggressive #expansion in #Pakistan

Bahrain-based Ithmaar Bank plans to add more than 100 branches in Pakistan this year through its subsidiary Faysal Bank. Ithmaar's deputy CEO Abdul Hakeem al-Mutawa says banking penetration is less than 20% in Pakistan, so there are good opportunities to grow. Ithmaar Bank's parent company, Ithmaar Holding, listed recently on the Dubai Financial Market. Al-Mutawa believes the company is well established now to approach the capital markets and the bank has no imminent plans to raise funds through a bond or loan. Ithmaar Holding is also exploring the sale of its 25.4% stake in Bahrain's BBK, which has operations in Bahrain, Kuwait, India and Dubai. Al-Mutawa declined to comment on the timeframe for the disposal of the BBK stake.

Islamic #FinTech in 2018

2018 may prove to be a pivotal year for Islamic finance stakeholders and their approach to FinTech. Potential areas where FinTech is likely to have an impact on Islamic finance are remittances, takaful, investment advisory services and online trading. Commentators see FinTech as an opportunity to provide genuine Islamic-compliant alternatives to the traditional banking model. In December 2017, KFH Bahrain, Al Baraka Banking Group and Bahrain Development Bank announced the establishment of a company dedicated to research and development in the Islamic-compliant FinTech sector. Operated by the Bahraini bank consortium, ALGO Bahrain will open in February 2018 and will be the largest dedicated FinTech hub in the Middle East and Africa. Bahrain FinTech Bay is operated by Singapore-based fintech incubator FinTech Consortium.

Head of Islamic finance body AAOIFI resigns

The head of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has resigned. Hamed Hassan Merah presented his resignation after more than three years and the board of trustees accepted it. As a complex organisation with 200 institutional members from across 45 countries, the AAOIFI had been slow to respond to issues relating to conflicts of interest and product standardisation. Under Merah, the AAOIFI tackled such issues head on, launching a review of its accounting, auditing and sharia standards. In November, Merah said AAOIFI would now prioritize wider adoption of its standards by engaging national regulators in key markets, including Turkey and Malaysia. Saudi Arabia’s central bank joined AAOIFI as an institutional member in October 2017.

#Bahrain-headquartered investment firm buys controlling stake in Mentor-based MC Sign

Bahrains's Arcapita has acquired 75% interest in Mentor-based signage and lighting services firm MC Sign. The deal is worth more than $100 million. Atif A. Abdulmalik, Arcapita's CEO, said the company was well positioned to acquire market share in a highly fragmented industry that is dominated by locally-focused, sub-scale service providers. Arcapita's investment in MC Sign reflects the firm's global presence, with offices in Bahrain, Atlanta, London and Singapore. The investment firm has been active in the Middle East too. In October 2017, the firm partnered with Bahrain's sovereign wealth fund Mumtalakat to acquire 90% stake in Abu Dhabi's NAS United Healthcare Services. This was preceded by another deal through which Arcapita acquired logistics assets worth $150 million in Dubai.

Islamic #FinTech in 2018

2018 may prove to be a pivotal year for Islamic finance stakeholders and their approach to developments in FinTech. Potential areas for FinTech are remittances, insurance, investment advisory services and online trading. In the coming years, demand from consumers is expected to give rise to the faster adoption of these technologies. Instead of mirroring conventional financial products, commentators see the opportunity to provide genuine Islamic-compliant alternatives to the traditional banking model. In December 2017, KFH Bahrain, Al Baraka Banking Group and Bahrain Development Bank announced the establishment of ALGO Bahrain. It will be dedicated to research and development in the Islamic-compliant FinTech sector. In addition, the largest FinTech hub in the Middle East and Africa will open in February 2018. The new hub named Bahrain FinTech Bay is operated by Singapore-based fintech incubator FinTech Consortium.

Ibdar Bank: Islamic #fintech will foster a culture of change

In this interview Ayman Sejiny, CEO of Ibdar Bank, speaks about the future of Islamic finance. Ayman Sejiny believes that fintech is going to be one of the biggest drivers of change in the new Islamic banking era. Fintech initiatives will not only improve existing customer’s banking experience, but also have the potential to bring the two billion financially-excluded individuals into the banking system. Malaysia, Indonesia, the UAE and Bahrain, driven by an influx of start-ups in the crowdfunding and payment space, have already positioned themselves to lead the field. They started to formally regulate crowdfunding and implement sandboxes or special fintech licencing schemes. These markets should therefore see huge growth in crowdfunding, P2P and payments platforms and even an increase in the use of AI in the form of robo-advisers. The UK and even the US will also see more investment in fintech startups to meet the demand for Shari’ah products in these markets. Ibdar Bank has set out a comprehensive plan for the engagement with fintech service providers.

Ratings scheme planned for #Islamic #endowments

Islamic institutions in Bahrain and Malaysia are developing a ratings scheme for Islamic endowments, or awqaf. The Bahrain-based Islamic International Rating Agency and the Malaysia-based International Institute of Islamic Waqf (IIIW) hope that greater accountability in the management of awqaf can help integrate them into Islamic financial markets. This could mobilize idle assets which are estimated to be valued between $100 billion and $1 trillion across the globe. Awqaf operate social projects such as hospitals, mosques and schools with donations received from Muslims. Most Awqaf do not disclose financial figures, but their underperformance is believed to be considerable since they have traditionally been run by administrators rather than investment managers.

#Bahrain to launch compulsory risk regime for Islamic banks

The Central Bank of Bahrain (CBB) will publish a consultation on a proposed risk assessment framework for Islamic banks in the first quarter of 2018. Khalid Hamad Abdul-Rahman Hamad, director of banking supervision at CBB, said the bank was planning to issue a very detailed risk management toolkit to improve risk management practices taken by Islamic banks. Under the proposed new rules, banks are required to have proper reserves, be it profit equalisation reserves or investment risk reserves. Whenever banks are investing, they must have a pre-plan regarding how much of bank assets will be funded by unrestricted investment accounts and how much will be invested from funds.

Islamic banks brace to re-engineer itself to address customer needs in digital era

The World Islamic Banking Conference (WIBC) is taking place on December 4th, 5th and 6th, in the kingdom of Bahrain. The theme for WIBC 2017 is Drivers of Economic Growth & Risks: Policymakers & Regulators. WIBC is expected to draw participation from over 1,300 global industry leaders, policy makers, innovators and stakeholders, all focused on navigating through the complexities of the global financial system. CEO of Path Solutions, Mohammed Kateeb, said the Islamic finance industry was going through drastic changes as a consequence of evolving customer behavior, channel proliferation and the digitization of operations. He underlined the importance of recognizing common challenges and opportunities facing the industry at large.

Gulf Finance House begins new #land #acquisition drive

Even though its Tunis Financial Harbour (TFH) mega-project has barely got off the ground, Bahrain's Gulf Finance House (GFH) is already looking to acquire adjacent land.

Islamic banks in #Bahrain urged to fully comply with new standards

Islamic banks in Bahrain have until June-end next year to fully comply with new standards mandated by Central Bank of Bahrain (CBB). According to CBB executive director for banking supervision Khalid Hamad, the new Islamic banking legislation, where independent external scrutiny is a mandatory requirement, will promote corporate governance and compliance with Basel III norms. Hamad said the CBB was also preparing comprehensive and detailed risk management legislation. According to him, Islamic investment banking needs to develop a sustainable business model as well as more mergers for a clear competitive advantage. To enhance governance and performance, Islamic banks are required to obtain a credit rating. The industry also needs to work on building the capacity of board members, senior management and officials, particularly those in risk management, through qualifications and training.

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