Gulf News

Ajman Bank starts transactions on Nasdaq Dubai Murabaha platform

Nasdaq Dubai said on Monday Ajman Bank has begun transacting on the its Murabaha Platform, which facilitates the provision of streamlined Sharia-compliant financing services. Ajman Bank’s initial activity on the platform has enabled it to meet the needs of customers throughout the country, the bourse said in a statement. Since it was officially launched in April 2014, the Nasdaq Dubai Murabaha platform has completed a total of more than Dh46.5 billion of transactions and is playing a growing role in Dubai’s expansion as the global capital of the Islamic Economy.

Insurance regulation gains traction in GCC

While the Takaful industry across the GCC is experiencing strong progress, development of a supervisory framework varies substantially between the constituent countries. The UAE, Bahrain and Oman — and the autonomous financial hubs of DIFC and QFC — have introduced regulations specifically for the Takaful market. Kuwait and Qatar (outside the QFC), do not have an explicit rule book for governing the market. Saudi Arabia has a common legislation applicable to both conventional and Takaful companies. The Kingdom prescribes the cooperative model for all insurance companies, which has a few variations from the Takaful model followed in other parts of the world.

Hong Kong Sharia finance goals elusive as second sukuk readied

The Hong Kong Monetary Authority announced plans this week to sell $1 billion (Dh3.67 billion) of five-year sukuk, the same size and tenor as its debut issue in September that drew $4.7 billion of bids. Those notes last yielded 2.06 per cent, almost the same as the rate at issue and about twice the level of the government’s similar-maturity non-Islamic securities. While the city government’s AAA- rating will ensure demand, Hong Kong is unlikely to host any corporate offers in the next one to two years as sukuk is seen as an “exotic instrument”. The main objectives of Hong Kong selling sukuk are to demonstrate that the legal framework for issuance in the city is widely accepted internationally and to attract more issuers and investors to the local market.

Credit insurance: Al Hilal, Euler Hermes sign distribution deal

Al Hilal Takaful, the insurance subsidiary of Al Hilal Bank, signed a distribution agreement in Abu Dhabi with Euler Hermes, a trade credit insurance company. The collaboration is expected to position Al Hilal to deliver better credit insurance solutions, and secure a stronger position in the takaful market. It will also allow Euler Hermes to enhance its presence in Abu Dhabi. The partnership allows Al Hilal Bank’s Abu Dhabi customers access to a range of trade credit insurance solutions for business-to-business trade receivables offered by Euler Hermes.

Bahrain Islamic Bank to hire Standard Chartered’s Bahrain CEO

It was reported that Standard Chartered PLC’s Chief Executive Officer for Bahrain, Hassan Jarrar, is leaving to head Bahrain Islamic Bank BSC. Standard Chartered confirmed his departure. Jarrar served as CEO of its Bahrain unit since November 2011, and was earlier the head of origination and client coverage for the lender’s wholesale banking unit in the UAE. Jarrar’s departure comes amid a shake-up in top management at the London-based lender after profit slumped. Chairman John Peace, CEO Peter Sands, Asia head Jaspal Bindra and Viswanathan Shankar, head of Europe, Middle East, Africa and Americas, are all leaving the bank.

Sharjah Islamic Bank plans dollar-based sukuk

Sharjah Islamic Bank plans to launch a dollar based sukuk, and will hold meetings with fixed income investors on March 5. The bank plans to meet investors in Asia and Europe, it said in a statement on the Abu Dhabi Securities Exchange. Abu Dhabi Islamic Bank, Dubai Islamic Bank, Emirates NBD Capital, and HSBC will act as be arranging meetings on SIB’s behalf.

Call for Arab world 'Marshall Plan' at Davos 2015

A call for a 'Marshall Plan' in the Arab world was made at the start of the 2015 World Economic Forum in Davos. One speaker outlined his idea to have a fund to invest in large and small economic projects across the Arab world. The investment would come from Arab sources. There's tons of capital in the area, he said. Several other attendees agreed that such a fund can go ahead without the political stability. However, there are also dangers in the region, like having no change for decades and suddenly dramatic change. The long tradition of strong men and weak states has led to the hollowing out of the nation state and these issues are now coming to the fall.

Flydubai lists $500 million sukuk on Nasdaq Dubai

Nasdaq Dubai said on Wednesday flydubai listed its $500 million (Dh1.8 billion) sukuk on its exchange. This is the 18th Sukuk to have listed on Nasdaq Dubai since the beginning of 2014. The emirate is one of the three largest venues in the world for Sukuk listings, with current nominal value on its two exchanges totalling $24.05 billion. The sukuk saw a geographic distribution of 64 per cent to Middle East accounts, 25 per cent to European accounts, 7 per cent to Asia, and 4 per cent to US offshore.

Dubai’s DIFC Investments sets final guidance on $700m sukuk

DIFC Investments, the investment arm of Dubai’s financial free zone, has set final guidance for a $700 million (Dh2.57 billion) 10-year sukuk in the range of 185 to 190 basis points (bps) over midswaps on Tuesday, according to lead arrangers. Pricing has tightened with investor orders topping $3 billion, lead arrangers said. Earlier on Tuesday, the sukuk had been marked at 195 bps plus or minus 5 bps over midswaps. On Monday, it was marked initially at the very low 200s over the same benchmark. Dubai Islamic Bank, Emirates NBD, Noor Bank and Standard Chartered are arranging the sale.

Kuwait Finance House’s September net profit falls 10 per cent

Kuwait Finance House (KFH) said its net profit fell 10.2 per cent in the third quarter to September. It fell to 35.5 million Kuwaiti dinars in the third quarter compared to 39.2 million in the same quarter last year. Total assets jumped to 17.1 billion dinars in the third quarter as against 14.7 billion dinars in the same period last year. The company’s financing income, which contributed to 76 per cent of its revenues, jumped the most by 35 per cent to 185 million dinars. However, investment income fell by 66 per cent to 24 million dinars. Total deposits reached 10.9 billion Kuwaiti dinars, up 7.5 per cent compared to December 2013. Chairman Hamad Al-Marzouq said that the achieved results come amid major changes taking place in the bank.

DIFC introduces new fund to target wealthy investors

The Dubai International Financial Centre has launched the Qualified Investor Fund (QIF) targeting wealthy investors. It requires a registration process of 48 hours. QIFs offer a short time to market solution for asset managers. The DIFC houses over 400 regulated entities and over a 1,000 companies with over 80 firms managing assets and over 2,000 funds marketed from the DIFC.

Family businesses offer strategic investment opportunities for Middle East HNWIs

Nearly 60 per cent of the world’s family-run businesses are struggling to find external finance to fund investment with 58 per cent of family businesses currently seeking external financing to fund their investment plans, according to KPMG. Despite family businesses creating more than 70 per cent of the global GDP, many say they find their fund-raising options limited and finding the right strategic investment partner can pose a challenge. KPMG has identified one possibly underutilised route for investment with the involvement of high-net-worth individuals (HNWIs), many of whom have family business experience as well as significant investment capital. According to the Survey, the top priorities of HNWIs and family owned businesses align, meaning that family businesses and HNWIs could prove to be highly compatible partners.

Islamic Development Bank set to raise $1.5b sukuk

Jeddah-based Islamic Development Bank set the size of its five-year sukuk issue at $1.5 billion while tightening the pricing to the low end of its previous guidance. Final pricing was given at a spread of 10 basis points over mid-swaps; previous guidance was in the range of 10 to 12 bps, and initial price thoughts were 15 bps. The order books were approaching $2 billion. Books closed at 1000 GMT on Thursday. The AAA-rated IDB had mandated CIMB, Deutsche Bank, First Gulf Bank, GIB Capital, HSBC, Maybank, Natixis, National Bank of Abu Dhabi, and Standard Chartered Bank as joint bookrunners to arrange the sukuk sale. The IDB is looking to increase its issuance of sukuk, partly to raise its profile among international investors and to secure similar pricing levels to other development banks.

Empower secures $127.8m loan from Dubai Islamic Bank

Empower, the district cooling company, has secured a $127.8 million (Dh469.4 million) loan from Dubai Islamic Bank (DIB). The loan facility, to be paid back over half yearly instalments over five years, will be used to fund Empower’s district cooling area in Dubai’s Business Bay area. Empower said that the loan is a cost-effective measure to sustain company growth. The loan is the first Islamic financing facility taken out by Empower.

Global takaful contribution expected to reach $20b by 2017

GCC’s gross takaful contribution is estimated to reach around $8.9 billion (Dh32.6 billion) in 2014 from an estimated $7.9 billion in 2013, according to the Ernst &Young report, Global Takaful Insights 2014. The report forecasts a continued double-digit growth momentum of the global takaful market of approximately 14 per cent from 2013 to 2016 and expects the industry to reach $20 billion by 2017. Saudi Arabia will likely remain the core market of Islamic insurance business. According to EY, among the GCC countries, competition, operational issues and the lack of qualified talent continue to be impediments. The industry needs to re-examine its strategies, operations and regulations in order to gear itself up for further growth and a sustainable ecosystem.

SMEs offer huge opportunities for Islamic banks

As more and more conventional banks are now discovering, the Small and Medium Enterprise (SME) sector provides a huge opportunity for increasing profitability and diversifying risks. Less well known is that a large number of SMEs, especially in the Middle East and North Africa (Mena) region, would prefer to deal with Islamic banks rather than conventional ones. These SMEs are often unable to access banking services, since few Islamic banks have stepped up to the challenge of catering to their needs. Once Islamic banks have put in place the requisite infrastructure and capabilities, there is little doubt that the SME sector will be able to provide them with a profitable and sustainable revenue stream.

GFH acquires Texas properties worth $75m

Gulf Finance House has announced the acquisition of two multi-family residential properties in Houston, Texas, as part of the Diversified US Residential Portfolio, which the bank has recently agreed to acquire. The properties — located in Houston, and Atlanta — have an overall occupancy of 94 per cent, and nearly 1,300 apartments. They have been selected due to their proximity to the large infrastructure assets in the cities, and are expected to benefit from the economic recovery in the US. The total size of the assets is $75 million (Dh275.4 million).

Kuwait’s Burgan Bank to meet investors ahead of potential Tier 1 bond

Kuwait’s Burgan Bank has chosen banks to arrange meetings with investors ahead of a potential issue of a capital-boosting bond. The lender will hold roadshows in Asia, the United Arab Emirates and Europe from Sept. 4, with a bond issue that enhances the bank’s Tier 1 capital ratio to follow, subject to market conditions. Should the US dollar-denominated bond issue happen, it will have a perpetual lifespan and be of benchmark size. Burgan Bank’s chief executive, Eduardo Eguren, said in March that the lender wanted to raise its capital before the end of the year to help it comply with Basel III guidelines, with perpetual bonds a potential route. The investor meetings will be arranged by HSBC as global coordinator and Citi, JPMorgan and National Bank of Abu Dhabi as lead managers.

Azerbaijan’s IBA plans stand-alone Islamic banking unit

International Bank of Azerbaijan (IBA), 50.2% owned by Ministry of Finance, is preparing to launch a separate sharia-compliant banking unit as the former Soviet state prepares an Islamic banking law slated for next spring. A stand-alone unit would allow IBA to more than quadruple its Islamic financing business in the country. IBA has thus far extended $180 million of Islamic financing in the country; after legislation is passed, this could increase to as much as $750 million within a year. IBA also wants to create a strong domestic Islamic banking platform for use with its subsidiaries in Russia, Georgia and Qatar. IBA has hired Bahrain-based consultancy Shariyah Review Bureau to help in the design of several projects.

Post crisis Islamic banks must revise business model

Six years after the economic crisis there is still much cynicism and anger directed at the conventional banks. People across the globe have a hunger for a more ethical, transparent and robust financial system. This has opened a window of opportunity for Islamic banks to emerge as a values-driven alternative to conventional banks. However, Islamic Bank deposits are minuscule compared to those held by conventional banks. Few can dispute that the lack of standardisation has held back Islamic finance. But there is a far more fundamental issue that today’s Islamic banks need to address: Catching up with new trends. Unless Islamic banks clearly define their differences from conventional banks, in moral and value terms, and are easily understood by Muslims and non-Muslims, the promise that Islamic banking can offer the world a better way of banking will have no more substance than a mirage in the desert.

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