Gulf News

Dana Gas describes UK court decisions on #sukuk as favourable

Dana Gas described decisions by the High Court of Justice in London as favourable, as the company seeks to restructure $700 million of outstanding sukuk. On July 5 the High Court upheld an injunction blocking holders of the bonds from enforcing claims related to the securities against Dana. The court ordered Dana to cancel an injunction in a court in Sharjah and to seek a stay of proceedings there. The company remains keen to engage with sukuk holders and reach an agreement on a consensual basis, which is not prevented by the injunctions in place.

#Kuwait’s Islamic finance sector on strong growth trajectory, IMF says

According to a recent study by the International Monetary Fund (IMF), Kuwait’s Islamic financial services sector is growing rapidly, with Islamic banking emerging as the most developed component of the industry. Islamic banks’ market share increased rapidly between 2005 and 2010 and has since then stabilised at around 38%. Kuwait’s Islamic banking sector includes systemically important banks. The largest Islamic bank in Kuwait accounts for 23% of total banking system assets, over 70% of the Islamic banking assets. The capital adequacy ratio and Tier-1 capital remain above 15%. The IMF report notes that the economic diversification effort could help drive further growth in Kuwait’s Islamic banking industry.

Financial sustainability imperative to supporting Awqafs

Waqf or the plural, Awqaf, provides funding towards initiatives that promote social and community welfare. Due to various reasons, Waqf had gradually become less popular, but it has now re-emerged as a beneficial force of good within society. In the UAE, a General Waqf Authority for Islamic Affairs and Endowments has been set up by government to coordinate Waqf institutions. The future growth of Awqafs require them to be managed in a sustainable way, that is to run them as modern financial institutions. A lot of Awqaf organisations in the UAE invest in properties and some have surplus liquidity. As a result, today Awqafs are also tapping the capital markets and there are various initiatives to issue Sukuks backed by Waqf land for mosques, schools and orphanages.

Dana Gas receives partial payment of $50m from #Egypt

Dana Gas has received an initial payment of $50 million (Dh184 million) from the Egyptian government as partial payment of its outstanding receivables. This payment represents 18% of Dana Gas Egypt’s total overdue receivables of $283 billion (Dh1.038 billion) as of the end of first quarter 2017. Dana Gas, which pumps most of its gas at fields in Egypt and Iraq, is seeking to recover payments from both countries for overdue bills. The company was owed $1 billion from Egypt and the self-governed Kurdish region in northern Iraq. CEO Patrick Allman-Ward had previously said that the company will not make any new investments in Egypt due to delay in receiving payments. In the first quarter 2017, Dana Gas reported gross revenues of $118 million and net profit of $11 million. Overall group production was 69,900 barrels of oil equivalent per day, 16% higher compared to first quarter of 2016.

Middle East WEF to focus on building jobs for young people

The World Economic Forum’s Middle East and North Africa meeting takes place this year at the Dead Sea in Jordan. The meeting’s formal programme has the theme: Enabling a Generational Transformation, and is based on three interrelated pillars: two long term and one urgent. The first long term pillar focuses on how to enable innovation and youth empowerment by using new technologies like bio-tech, nano-tech and artificial intelligence. These new technologies will continue to develop, so training people in these areas will be a long-term solution in creating new jobs for young people. The second pillar is about finding a framework for an inclusive economic transformation. The third and more urgent pillar is the search for how to best cope with the vast humanitarian crisis in the region. The common thread in all three strands is an optimism that anarchy and sectarian chaos can be defeated.

No big surge in bank #mergers expected in the #GCC

According to analysts, GCC’s banking sector is not expected to see a big surge in mergers and acquisitions. National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) in the UAE recently merged to create the largest bank in the UAE. Masraf Al Rayan, International Bank of Qatar and Barwa Bank are in the due diligence phase of a planned three-way merger that would create the largest Islamic bank in Qatar. Saudi British Bank and Alawwal Bank are discussing a potential merger that would create the third-largest bank in Saudi Arabia. Despite market conditions and numerous rumours, a big surge in mergers is unlikely due to structural impediments. Some countries have only a small number of local banks, which limits competition. This means that profitability has remained solid despite the macroeconomic pressures. Thus, there is no compelling reason for a big number of regional banks to rush into merger deals.

#Takaful industry reports double-digit growth in the #GCC

According to the Global Takaful Report 2017, the Takaful industry has grown in double digits across the Gulf Cooperation Council (GCC) in recent years. Between 2012 and 2015 the GCC markets grew by a compounded annual growth rate (CAGR) of 18%. While South East Asia reported a negative growth of 4% due to currency depreciation, Africa reported a CAGR of 19% during the same period. According to Safder Jaffer, Consulting Actuary at Milliman, Saudi Arabia is the largest Takaful market with a gross written contribution (GWC) of $9.7 billion (Dh35.62 billion) in 2015. The Saudi market is dominated by general insurance with limited life insurance business. GCC markets continue to dominate general takaful whereas South East Asia continues to dominate life takaful. In the GCC, family takaful achieved a record growth of 34% in 2015. Global takaful GWC is estimated at $14.9 billion as at the close of 2015. There is strong growth in overall global takaful market in the range of 13 to 14% each year. The split of the family and general takaful market in 2015 is approximately 17% and 83% respectively.

Positive outlook for Islamic #REITs in the region

With the continuous growth of Islamic banking in the GCC, products such as Islamic Real Estate Investment Trusts (I-REITs) have started to emerge. Al Mahrab Tower REIT was the first private I-REIT in Kuwait in 2007. Following that, Dubai launched its first I-REIT (Emirates REIT) in 2010 and Bahrain listed its first public I-REIT (Eskan REIT) in 2017. Emirates NBD has also recently listed ENBD REIT and due to strong demand the offer was oversubscribed. Firms responded to this growing demand, including IdealRatings, which launched its first Sharia-compliant REIT index in 2015. While the future of I-REITs may seem positive, there are many challenges that lie ahead. It is important for asset management firms to devise efficient and logical I-REIT investment methodologies. This needs to be supplemented by sound ethical principles to ensure the sustainable growth of I-REITs in the region.

#Al #Hilal #Bank appoints new #CEO

Al Hilal Bank announced appointment of Alex Coelho as new chief executive officer.
With more than two decades of experience in the global financial industry, he will be responsible for reinforcing the Al Hilal Bank’s position as a leading Islamic bank in the UAE and Kazakhstan.
In the past, Coelho had leadership roles between the Middle East and New York, and co-led global financial institutions coverage in the US, Canada, Latin America, Asia and Europe, according to a statement.

#GCC sovereigns to lead emerging market #bond issues in #2017

GCC is expected to account for about 31% of sovereign bond issuances from emerging markets this year. The expected 2017 sovereign issues will be distributed among GCC, Eastern Europe Middle East Africa and Latin America, according to forecasts by Bank of America Merrill Lynch.
Issues from the GCC has been increasing rapidly mainly due to low oil prices, with some new issuers in 2016, and analysts expect the 2017 issuance to continue to be high. Among those, Kuwait inaugurated the external sovereign debt market with $8 billion (Dh29.3 billion) to finance a budget deficit resulting from low oil prices. Sovereign issuance for 2017 is forecast to be 6% higher compared to the previous year. In 2016, sovereigns issued $135 billion, mainly from Latin America, while corporates issued about $300 billion, mainly from Asia. Analysts expect gross sovereign external issuance to come in at $144bn in 2017.

#Turkish treasury says mandates three banks for #sukuk issue

Turkish treasury mandated the Dubai Islamic Bank, HSBC, and Standard Chartered to explore opportunities for a possible sukuk issue. A series of investor meetings will be organised in the UAE on March 28, 2017. Meanwhile, the country’s monetary authority raised its highest interest rate while leaving all of the other rates unchanged. The lira rallied as the move was seen paving for they way for tighter policy and serving as insurance against bouts of currency weakness.

#GCC #insurers’ gross premiums set to grow despite slowing economies

The insurance sector across the GCC is expected to report growth in gross premiums on continued growth in infrastructure investment and favourable regulatory changes. S&P Global Ratings analyst Emir Mujkic said gross premiums will increase in 2017 by around 30% in Kuwait, and by up to 10% in the other three markets. GDP growth will range between 1.5% for Kuwait and about 3.5% for Qatar. The Saudi Arabian Monetary Authority (SAMA) is expected to support the efforts of the traffic police to ensure drivers of illegally uninsured vehicles to buy motor coverage. There are currently 2.5 million Saudi nationals working in the private sector that are not covered by their employers’ group medical schemes.During 2017, the authorities will seek to prompt private employers to provide medical cover for all their staff.

QInvest’s income-generating #Ijara #fund oversubscribed

#Qatar’s QInvest has successfully launched its QInvest SQN Income Fund. It aims to pay out a net yield of 7% per annum on a monthly basis and has a targeted IRR of between 8-9%, with a tenure of 5 years. The Fund invests in the leasing and financing of business-essential, long-life, revenue producing equipment across developed markets. Industries include health care, manufacturing and agriculture. QInvest plans to launch another fund in the same series later this year. QInvest CEO Tamim Hamad Al Kawari said the new fund provides investors with concentrated portfolios with means of diversification and risk mitigation. It provides attractive returns and a regular income distribution, all within a relatively conservative investment profile.

#UAE Islamic banking assets reach Dh520b

Saif Hadef Al Shamsi, Assistant Governor at the UAE Central Bank, has said that total Islamic banking assets in the UAE have increased to approximately Dh520 billion in the past few years. Al Shamsi added that Islamic banking’ assets account for around 20% of Dh2.6 trillion of the total assets of the state’s banks. The assistant governor pointed out that UAE Islamic banking institutions account for about 7% of the total assets of Islamic banking around the world. This approximately amounts to a total of $1.5 trillion (Dh5.5 trillion). He further explained that Islamic banking deposits increased by 42% over the past three years and that lending by Islamic banks increased by 54%.

ADIB dismisses Al-Hilal #merger talk as ‘rumour’

Abu Dhabi Islamic Bank dismissed reports that it may merge with Al-Hilal Bank as consolidation takes hold in the emirate’s financial-services industry. Abu Dhabi is combining National Bank of Abu Dhabi and First Gulf Bank and two sovereign wealth funds as it seeks to cut costs and merge firms with overlapping assets. The next step could be a tie-up between ADIB with Al-Hilal and a combination of Abu Dhabi Commercial Bank and Union National Bank. Tirad Mahmoud said ADIB plans to stick to its core markets and strengthen its presence. He also said that mergers were a shareholder issue and there might be 'some pressure' on net interest margins this year. ADIB posted a 1% rise in 2016 net profit to Dh1.95 billion ($530 million) on Tuesday as provisions rose to Dh970 million from Dh820 million.

#Sukuk issuance in 2017 to remain robust-Fitch

Fitch Ratings said it expects sukuk issuance in 2017 to continue at the same pace like last year. Sukuk issuance in core markets rose by 26% in 2016 and maintained its share of capital markets funding despite large conventional bond issues by Saudi Arabia, Abu Dhabi and Qatar. New sukuk issuance with a maturity over 18 months from the core markets of the Gulf Cooperation Council (GCC) region, Malaysia, Indonesia, Turkey and Pakistan rose to $40 billion in 2016 from about $32 billion a year earlier. In 2016 10 key markets issued sovereign sukuk and other sovereigns in the GCC region have indicated they could issue sukuk, or a mix, in the future. Sovereigns and supranationals are likely to remain the dominant issuers, but bank issuance may also rise in some markets, driven by issuance to meet regulatory capital requirements.

#Saudi #Arabia said to #consider #sale of #Islamic #bonds next quarter

Saudi Arabia has met with banks to discuss the potential sale of Sharia-compliant bonds in the first quarter to help plug its budget deficit, according to five people familiar with the matter. The country is considering selling sukuk, or Islamic bonds, with different maturities to the five-, 10- and 30-year debt it sold in October, one of the people said, asking not to be identified as the information is private. This could include tenors of seven and 16 years, the person said. No final decisions on the size or timing have been made.

#Qatari bank trio in talks for potential $44 b #merger

Qatari banks Masraf Al Rayan, Barwa Bank and International Bank of Qatar have begun initial talks for a potential merger. This deal would create the Gulf state's second-largest bank and it would have assets worth more than 160 billion riyals ($44 billion). If the deal goes ahead, it would be a rare example of consolidation among banks in the Gulf, which have previously been reluctant to tie up. The previously lavish state spending is now being trimmed to adjust to lower oil prices and the argument for consolidation is now more compelling. Though negotiations have begun, there is no guarantee any agreement will be reached. The proposed merger of Rayan, Barwa and IBQ depends on financial and legal due diligence, as well as securing approvals from regulatory authorities and shareholders of all three banks.

Safe innovation in #Islamic #Banking

According to Noor Bank's CEO Hussain Al Qemzi, Islamic banks need to understand that they need to provide efficient and transparent services to their clients. Just being Sharia compliant cannot make a product less transparent and more expensive to access. Technology remains an important driver for innovation. Islamic banks that only look at product development and not product delivery or customer acquisition, will risk being left behind. There is a need to continue product development. Variable return products need to be developed and propagated in the market. According to Al Qemzi, it is important to refute traditional sayings that Sharia compliance limits innovation. Sharia principles reject prohibited practices but do not reject innovation. Progressive Islamic education is a key area, the Islamic banking curricula have to be developed so that they combine financial sciences with other economic sciences.

Building a #partnership between Islamic and traditional finance

According to Abdulla Mohammed Al Awar, CEO of Dubai Islamic Economy Development Centre (DIEDC), leveraging the opportunities that Islamic banking and finance instruments represent is now more critical than ever before. DIEDC has identified a five-pronged approach to achieve this. First, Islamic economy has to be treated as one organic ecosystem that transcends borders and special interests. Second, a partnership is needed between Islamic and traditional finance to develop real projects in which both can work as stakeholders. It is also important to look for new strategic partners, not excluding countries that are experiencing internal conflicts. Such partnerships should be a true reflection of mutual interests. Islamic financial institutions have to factor in inclusive development and social impact as key priorities.

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