Manama Bahrain

Rethink structure of sukuk says key study

It seems that islamic bonds are not perceived as positively as conventional debt markets.
That was the message from LAU assistant professor of finance Dr Rima Turk Ariss, who was speaking on the sidelines of the fourth Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) conference at the Crowne Plaza.

Gulf Islamic finance expertise boosted with Bahrain launch of IFAAS Advisory Services

IFAAS (Islamic Finance Advisory & Assurance Services) announced the opening of its Gulf office in Manama, Bahrain. The new office is located in Manama's prestigious Bahrain Financial Harbour.
IFAAS' arrival in Bahrain is a real enhancement to the regional financial industry and Bahrain's position as an Islamic finance hub. According to the Bahrain Economic Development Board, Bahrain is widely recognised as the global leader in Islamic finance.

GFH planning to raise $500m in fresh funds

Bahrain-based Gulf Finance House (GFH) plans to reduce its capital and raise up to $500 million in fresh funds to plug the holes a regional property crunch cut into its balance sheet.
The Islamic investment house said in August it would hold a shareholder's meeting in October to approve plans to raise up to $300m through a murabaha, an Islamic equity-linked money market instrument.
GFH is one of the Bahraini investment houses that relied on fees charged on investor money raised for private equity and property projects, a market that collapsed when the global financial crisis triggered a regional property crash in 2008.
It posted a $728m loss for 2009 and has since struggled to pay back its debt as it failed to sell down illiquid property assets and find a new business model.
It narrowly escaped default in February when it reached a last-minute deal with lender to roll over a $300m loan and now needs to find fresh fund to finish the property projects it started from Morocco to India.

Islamic finance thriving on strong asset quality

The crucial strength of Islamic finance over conventional systems in the economic crisis was asset quality.
Islamic principles meant that Islamic finance was not involved in investing in low-quality assets that lacked transparency, according to Professor Simon Archer.
Mr Archer said the industry needs these instruments to provide it with liquidity but it must be wary of how these accounts are structured because there is a danger that if you get too close to conventional financial bonds then you are no longer Sharia-compliant.
He said that at present there are not enough high-quality investment instruments to provide liquidity and that means institutions have to keep high levels of cash which affects profitability.

Islamic finance industry launches derivatives standard

A template for an over-the-counter Islamic derivative contract was launched on Monday, offering a channel for the emerging industry to better hedge itself against risks.

Islamic derivatives standard to launch soon

The launch of the first template for an over-the-counter Islamic derivative contract is "imminent" and will encourage more companies to hedge their risks, an executive at a bank involved in its creation told Reuters on Tuesday. The contract, which is expected to pave the way for quicker and cheaper Islamic risk management and more frequent cross-currency transactions, was initially due to be launched a year ago.

Key Islamic finance standards published

Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the international standard-setting organisation for Islamic finance, has published its new standards publications. It is entitled Sharia Standards 2010 and Accounting, Auditing, and Governance Standards 2010. The Sharia Standards 2010 publication contains 41 Sharia standards including 11 new standards.

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