IslamicFinance.de

Regional groupings are building blocks for a pan-Islamic economic integration, according to Prof. Ekmeleddin Ihsanoglu, Secretary-General of the Organization of the Islamic Conference.
A source at the OIC headquarters here informed Khaleej Times on Thursday that addressing the Twenty-Sixth Session of the Standing Committee for Economic and Commercial Cooperation of the OIC (COMCEC) in Istanbul, urged OIC member states to consider supporting the numerous capacity-building programmes undertaken by the various OIC institutions as this will certainly pave the way for aligning national trade policies to enhance intra-OIC cooperation in the domain of trade.
The source said that the meeting discussed the implementation of the OIC Ten Year Programme of Action, which was approved at the 3rd extra-ordinary OIC summit held in Makkah in 2005, within the context of the on-going economic activities, programmes and projects for promoting rapid socio-economic development in the OIC countries.

Standard and Poor's Ratings Services has lowered its counterparty credit and insurer financial strength ratings on First Takaful Insurance Co. to 'BB+' from 'BBB-'. The Kuwait-based insurance company's ratings were removed from CreditWatch. Outlook is stable. "The outlook is stable because we believe that First Takaful will be able to prevent further weakening of its capitalization and operating performance within the next 12 months," said Standard & Poor's credit analyst Wolfgang Rief.

The Private Financial Services Department Manager at Kuwait Finance House (KFH) Talal Al-Nesf announced that KFH's local real estate portfolio 2 achieved high returns that resulted in the distribution of 6% annual profit.
He added that the portfolio that has a capital of KD60m began operating in July and distributes quarterly profits, such as groups of investment and commercial real estate in Kuwait; noting that such results reveal the success of KFH's policy to focus on quality assets that yield high returns. He stated that each investment project is carefully studied to achieve high returns with minimal risks.
Moreover, he revealed in a press statement that KFH is in the final stages of the process of selling real estate of KFH's real estate fund in Turkey with over 12% of capital profit.

Customers who are eager to be Sharia compliant are flocking to Islamic banks. Yet as Islamic lending boasts that it charges no interest, crunching the numbers churns out something of a surprise. Some Islamic mortgages charge more than already high interest-based traditional mortgages. You could even argue that an Islamic mortgage is, in some cases, so expensive it is akin to usury. And the terms are often less favourable.
Take the current murabaha rates in Syria and Lebanon. Murabaha is an Islamic equivalent to a mortgage or car loan. Instead of lending the customer money and charging interest, the bank purchases the asset and resells it for a profit to the customer. This profit is the murabaha rate.
Unlike, say, in the UK, there are no regulatory laws in Syria that require Islamic banks to quote their product in a way that is equivalent to an interest-based traditional mortgage to allow comparison shopping. The only way the average customer can convert murabaha to interest-based is with the help of a financial calculator and a professional.

Shariah-complaint microfinance cooperatives are making inroads in rural Kerala much to the relief of the poor and needy and the most interesting feature of it is that the bad debt is almost nil, according to a paper presented at the International Conference on Islamic Finance: Products, Institutions and Regulators that concluded here recently.
According to Mohammed Palath, a researcher in economics at the Kannur University in northern Kerala who made a presentation on the role of these collectives called nidhis have proved the best tool for poverty alleviation and financial inclusion.
Kerala has the highest number of interest-free funds which has now crossed 500 in number. These institutions lend money charging no interest, ranging from Rs 500 to Rs 25000, and without collateral securities. The borrowers pledge gold or personal securities undertaken by others.

Although efforts have been made over the past twenty years to bring Islamic banking into India — a country that has more Muslims than Pakistan — as yet the Reserve Bank of India and its master, the Union Finance Ministry, has not given permission for the same. The reason is simple. Across the financial establishment in India, the influence of US and EU financial interests is overpowering.
Several senior civil servants have their close relatives working in such institutions, and therefore accept the advice given by them. Certainly, banks in foreign countries will not want the Indian government to clear the way for the establishment of Islamic banking centres, for that may result in funds flowing from Zurich, London, Frankfurt and New York (all major “Islamic” banking locations) to Mumbai or Kochi. Acting on cue, the monetary and finance authorities in India have continued to block access to Islamic banking avenues, thereby denying millions of observant Muslims in India a chance to keep their assets in safety.

Standard & Poor's Ratings Services said today it lowered its counterparty credit and insurer financial strength ratings on Kuwait-based First Takaful Insurance Co. to 'BB+' from 'BBB-'.
At the same time, the ratings were removed from CreditWatch, where they were initially placed with negative implications on May 12, 2010. The outlook is stable.
Although takaful insurance appears to represent a promising niche in the Kuwaiti market, competition seems to have become extremely fierce, especially owing to the large number of takaful participants in recent years.
The risks of this scenario are intensified by what we see as reduced insurance opportunities.
Renewed pressure on the ratings may occur if the company's performance appears insufficient to maintain earnings and capitalization at levels supportive of the current ratings. Conversely, we could see positive ratings momentum if the company is able to manage a return to a more robust financial and business profile over the next 12 months.

From Dow Jones: Indonesia raised IDR2 trillion ($224 million) from a private placement of non-tradable Islamic debt, or sukuk, the Finance Ministry said Thursday.
The ministry sold the four-year sukuk at a yield of 7.13% to the Haj Fund, managed by the Ministry of Religious Affairs.

International insurers seeking a bigger share of the potentially lucrative Gulf market need to adapt quickly to regulatory changes and tap into growth areas like Islamic finance or risk being muscled out of consolidation.
The overall Middle Eastern insurance sector lags mature markets but its enormous growth potential has already attracted global heavyweights such as AXA and Allianz.
However, the sector's regulatory framework is transforming rapidly and some multinationals remain cautious in developing their Islamic product offering, giving domestic competitors such as Abu Dhabi National Insurance Company, Saudi's Tawuniya and Qatar Insurance Company the chance to build a dominant position.
Foreign insurers have discovered the region in recent years, lured by its large population and the untapped potential, but with 180 firms jostling for space in the market, they need to get their acts together.

HSBC Holdings Plc, the second-largest underwriter of Islamic bonds, plans to start its first Shariah- compliant exchange traded funds in the Persian Gulf, a region that is struggling to lure international investors.
ETFs may help local markets attract some of the $49.4 billion that EPFR Global says poured into emerging market stock funds this year. Restrictions on foreign participation in Gulf markets range from bans to caps on ownership. Investors have sidestepped most countries in the Middle East and North Africa during a recent surge in capital inflows to emerging markets because of debt restructurings.
The funds will give overseas investors greater access to the region’s markets, Razi Fakih, deputy chief executive officer of HSBC’s Islamic unit in Dubai, said in a telephone interview Oct. 5. National Bank of Abu Dhabi PJSC started the Gulf’s first non-Shariah compliant ETF in March, followed by Falcom Financial Services’ Islamic fund in Saudi Arabia that month.

Award-winning Shariah product developer and advisor, Shariah Capital, announced today that Shaykh Yusuf Talal DeLorenzo, internationally-renowned Shariah scholar, Chief Shariah Officer and Board Member of Shariah Capital, has relocated to the Dubai office in order to lead the Company's growing Gulf initiatives.
In addition to assuming responsibilities for Shariah Capital's Dubai's office, Shaykh Yusuf has been named the General Manager of Dubai Shariah Asset Management (DSAM), Shariah Capital's joint venture company with the Dubai government's Dubai Commodity Asset Management (DCAM), a wholly-owned subsidiary of the Dubai Multi Commodities Centre.

Indonesia's finance ministry said the average weighted yield for its five-year sukuk was 7.18862 percent in an auction on Tuesday, down 68 basis points from a previous auction in July.

For many, banking is perceived as a very serious and regulated domain that easily dismisses emotional concepts such as humor as a sign of carelessness and irresponsibility. For some, Islamic banking is perceived as an even more serious and dry subject. As Qatar's newest Islamic banking group, Barwa Bank decided to change this perception by running a major campaign in Doha - a campaign designed to make you think again and smile.

The 26 percent slowdown in Malaysia’s local-currency Islamic bond sales this year may get a boost in 2011 from the country’s 10-year development plan.
Pengurusan Aset Air Bhd., a government-owned agency that oversees the water services industry, may sell bonds next year to finance acquisitions, while the eastern state of Sarawak will need to fund the takeover of hydroelectric plants, according to RAM Rating Services Bhd. in Kuala Lumpur.
Prime Minister Najib Razak is seeking to increase spending in the next decade to bolster growth in Southeast Asia’s third- largest economy.

Al Rajhi Capital, the investment-banking subsidiary of Al Rajhi Bank and a leading asset manager in the Kingdom of Saudi Arabia, announced the launch of the Al Rajhi Saudi Equity Fund, a Specialized Investment Fund (SIF) established under Luxembourg law.
Al Rajhi Capital Company is the independent, wholly owned investment subsidiary of Al Rajhi Bank, the world's largest Islamic bank and the largest commercial bank in the GCC region in terms of market capitalization.

Nine member countries have been approved to receive financing. They are Indonesia, Uzbekistan, Bangladesh, Pakistan, Sudan, Turkmenistan, Gambia, Mauritania and Albania.
The financing includes technical assistance in the form of grants for development projects in Benin, Chad, Togo, the GCC and grants and concessional loans for Sudan.
The approved financing also includes health and educational projects directed towards communities in non-member countries including Congo, Fiji, India and South Africa.

Fitch Ratings has revised the Rating Watch on UAE-based Tamweel's Long-term Issuer Default Ratings (IDR), Short-term IDR, Support Rating and Support Rating Floor to 'Positive' (RWP) from 'Evolving' (RWE). The move follows the acquisition by Dubai Islamic Bank of a majority stake in the Shari'ah-compliant mortgage lender. The rating agency also affirmed Tamweel's 'E' Individual Rating, reflecting its weak standalone risk profile.

Qatar Islamic Bank said last week following a report from Zawya Dow Jones that it would kick off a global investor roadshow on Sept. 24 in Asia ahead of a planned sukuk. The roadshow began in Asia and then moved to the Middle East and Europe this week.
HSBC Bank Middle East, QInvest and Credit Suisse are advising QIB on the deal.
The chunky order book signals strong demand among investors, who are scrambling to get exposure to the oil-rich Gulf. Qatar, the wealthy gas-rich Arab state, has seen a string of bond issuances this year, including a $3.5 billion offering from the property arm of its sovereign wealth fund earlier in the summer, as the country tries to deepen its capital markets and create a yield curve.

Fozia Amanulla has grown accustomed to the pressures of negotiating multi-million-ringgit deals during her career in Islamic finance.
At a meeting with a client in Saudi Arabia, where men and women are commonly segregated in public life, she was the only woman in the building -- a fact reinforced by the absence of any toilets for women.
Fozia, one of the first women to lead an Islamic bank in Malaysia, has had no shortage of reminders that her industry -- in which investments are made according to Islamic principles -- is a male-dominated one.
But the number of female faces is multiplying.
Jamelah was appointed managing director of RHB Islamic Bank in Malaysia in 2007 and is believed to have been the first woman in the world to head an Islamic bank.
Linda Eagle, president of the Edcomm Group Banker's Academy, a consulting firm based in New York, said that while branches for women only had existed in Saudi Arabia for decades, such branches had opened in Dubai and Iraq in recent years.

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.