Central Asia

#Kuwait's Noor Financial to divest stake in #Pakistan's largest Islamic bank

Noor Financial Investment Company will divest a portion of its 49% stake in Pakistan's Meezan Bank. The company is in preliminary discussions with foreign institutional investors for a proposed divestment of 9.59% of the total issued and paid up capital of Meezan. Noor has been mulling a sale since at least 2013. Meezan Bank is Pakistan’s fastest growing bank, it posted a profit in each year of operation and its net profits grew 13.5% in 2017 to $93 million. Noor’s stake in the bank was valued at $375 million in 2017.

#Kazakhstan's financial hub adds Islamic arbitration capabilities

Kazakhstan's financial hub, the International Arbitration Centre (IAC) is adding specialists in Islamic law to its dispute resolution services. The IAC provides mediation and arbitration services as an alternative to traditional court litigation. The IAC is an independent body launched to complement the Astana International Financial Center (AIFC), an economic zone aimed at developing the republic's financial sector. IAC Chairman Barbara Dohmann said that Islamic finance is now part of everyday business dealings across the region, so the ability to handle civil and commercial disputes in Islamic finance has become very important.

#Afghanistan enlists faith-based banks to aid financial inclusion

Afghanistan hopes its first Islamic bank will attract more customers and improve access to financial services in the country. The central bank granted its first Islamic license last month and is now developing wealth management products and new digital banking services. There are currently six banks that offer sharia compliant products through so-called Islamic windows and their conversion would require setting up an internal sharia board and having a clean bill of health. The latter may be a challenge for some because of difficulties in converting impaired loans into Islamic equivalents. The government is also working on legislation that would allow for the issuance of sukuk, although such plans are still at a preliminary stage.

Banking #Merger Imminent

The planned merger of three Iranian lenders will take place in the coming days. The three banks are: Mehr Eqtesad Bank, Samen Credit Institution, and Ansar Bank. Samen and Mehr Eqtesad are currently branded by the Central Bank of Iran (CBI) as "awaiting license". Farshad Heydari, CBI’s deputy for supervision, had already announced in March that Mehr Eqtesad and Samen would be acquired by Ansar Bank. The planned consolidation would be a watershed event in reducing the influence of shadow banks and making the Iranian banking system more efficient.

Munich Re reinsures life portfolio for Iranian insurer Mellat

German reinsurer Munich Re has entered into an agreement with Iranian insurer Mellat Insurance and will cover Mellat's entire life insurance portfolio. For smaller insurers operating in emerging economies it is vital to have access to reinsurance capacity, in order to offset the risks they are assuming and maintain solvency strength. Iran’s Saman Insurance became the first insurer in the country to purchase life reinsurance from a foreign player after the removal of international sanctions in 2016, signing a deal with Munich Re in 2017.

SECP registers Al Hilal as first Shariah advisory company in #Pakistan

The Securities & Exchange Commission of Pakistan (SECP) has registered Al Hilal Shariah Advisors as the first Shariah Advisory company in Pakistan. Al Hilal aims at converting the conventional interest-based economy to the Islamic financial system under the guidance of Shariah Scholars and financial experts. Al Hilal Shariah Advisors provides Shariah Advisory, Shariah audit and training services in the field of Islamic Finance. It is also active in the field of halal food certification. Al Hilal CFA Faraz Younus Bandukda said they were proud to be the first Shariah Advisory Company in Pakistan and hopeful that more companies would now implement Shariah regulations.

First full-fledged Islamic bank approved in #Afghanistan

Afghanistan’s central bank has granted a license to the Islamic Bank of Afghanistan (IBA). IBA Chief Financial Officer Faizan Ahmed said the bank had completed the conversion of its balance sheet. It plans to introduce wealth management products and launch new digital banking services in the coming months. Afghanistan’s banking sector is small, but Islamic finance is seen as an important feature that could help attract more people into the financial system. IBA estimates that only 5.7% of the population has dealings with the banking sector and the majority of the country in unbanked. Islamic banking has been offered in Afghanistan by a handful of firms through so-called Islamic windows, but there have been no full-fledged Islamic banks so far. Lenders with Islamic windows include Afghan United Bank, Ghazanfar Bank and Afghanistan International Bank.

Will #Iran’s banking sector collapse?

Financial experts are warning that Iran’s banking sector is at risk of a collapse due to toxic assets. It is no secret that over the past decade all Iranian banks were negatively affected by sanctions, internal mismanagement and corruption. Another disturbing factor in the financial sector has been the presence of unlicensed financial institutions. Government interference has led to the accumulation of tens of billions of dollars of bad debts that will continue to put pressure on the balance sheets of Iranian banks for some time to come. Besides the high ratio of nonperforming loans, Iranian banks have a high portion of overvalued and illiquid assets on their balance sheets that need to be adjusted. Now several Iranian banks are following government instructions and have started to sell their noncore assets. The Central Bank of Iran (CBI) will have no choice but to push for bank mergers and also to impose and implement tough regulations on the country’s banks in order to prevent a deeper crisis.

Three major banks are up for sale. Who will buy them?

For the first time in #Pakistani history, three perfectly healthy and viable banks are simultaneously up for sale. They are Bank Alfalah (BAFL), Meezan Bank (MEBL), and Faysal Bank (FABL). The Gulf Arab investors who initially put up the capital to create these banks have held their positions profitably for decades and are now looking for a suitable exit opportunity. The potential foreign acquirers of these banks would be the most interesting ones, since they are likely to be large foreign financial institutions, extending their presence into the Pakistani market. The most interested potential acquirers, however, are the domestic players, only some of whom have a history of previously owning and operating financial institutions.

Sharia #standards notified

The Securities and Exchange Commission of Pakistan (SECP) has notified seven more Sharia standards of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The general public is kindly asked to give their feedback for the adoption of these standards and bring harmonisation and standardisation in the business practices of Islamic financial institutions.

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.

Call for Good Practices on Islamic Finance and Impact Investing Activities

Click here to apply http://bit.ly/2tN5RAZ

Purpose of this call is to invite private and public sector to share their good practices on
•Islamic finance funded impact investments and dedicated vehicles
•impact investment vehicles in the OIC region
•Islamic social finance vehicles

for the mapping study that is being carried out under the Global Islamic Finance and Impact Investing Platform (GIFIIP). The selected cases will be analysed by the research team managed by IICPSD and IRTI. Subsequently the good practices, information on vehicles and further findings will be published as part of the study.

Investment Focus

Govt plans ministry’s division for Islamic finance industry

The Pakistani government is mulling a dedicated division at the finance ministry to deal with Islamic finance. The Prime Minister's Finance adviser, Miftah Ismail said the committee would be set up for the promotion of Islamic banking in Pakistan. He also said that the country is set to achieve a six percent economic growth in the current fiscal year. Deputy Governor Jameel Ahmad at State Bank of Pakistan (SBP) said Islamic finance industry needs to expand its product menu with special focus to reach out to the unserved sectors and regions. Ahmad said development of all components of Islamic finance industry is imperative to achieve inclusive economic development.

Spearheading innovation in Islamic banking

In this interview, Zahid Parekh, General Manager of Habib Bank Limited (HBL), speaks about the evolution and future of Islamic banking. In his view, Islamic banking has evolved as a natural phenomenon in Pakistan. HBL's initial focus was to bring in the faith-based customers and as a second step, to target the sceptics through personalised awareness campaigns. These initiatives have made a difference in changing mindsets and expanding the customer base. HBL has a wide banking portfolio and is looking to introduce a new Shariah-compliant mortgage solution in the forthcoming months. HBL has been a frontrunner in FinTech, it established the Innovation and Financial Inclusion Department almost two years ago, with the sole purpose of digitising banking processes. The concept of FinTech is still new in Pakistan, but Parekh believes it will be a game-changer not only for the Islamic banking sector, but for the overall banking sector as well.

DIEDC to collaborate with #Turkmenistan bank

The Dubai Islamic Economy Development Centre (DIEDC) signed a Memorandum of Understanding (MoU) with The State Bank for Foreign Economic Affairs of Turkmenistan (TFEB) to exchange knowledge, experience and best practices in Islamic economy. The MoU was signed by Sultan Bin Saeed Al Mansouri, UAE Minister of Economy and chairman of DIEDC, and Rahimberdy J. Jepbarov, chairman of TFEB. The centre aims to organise workshops and training courses and share professional research. In addition, the two parties have set up a joint committee to oversee the collaboration. Al Mansouri said this partnership between DIEDC and TFEB would strengthen synergies between the two countries. He further highlighted sukuk as an effective tool to finance projects in infrastructure, education and health care, as well as in other vital sectors of the economy.

#Kazakhstan eyes sovereign #Sukuk, central Sharia board

Kazakhstan plans to issue sukuk in the coming months as part of its efforts to develop Islamic finance in the country. Alibek Nurbekov, head of the Islamic finance at the Astana International Financial Center (AIFC), said the final legislative changes to allow issuance of sovereign sukuk were nearly complete. Issuance of sovereign sukuk is planned in the first half of 2018 in total up to $300 million dollars. The sale would follow sukuk issued by the Development Bank of Kazakhstan in 2012, a deal that raised 240 million ringgit ($61.51 million) via the Malaysian market. Nurbekov added that a central sharia board would be established in the first half of the year, while rules covering Islamic insurers and a fund for Islamic endowments are also planned.

New Form of Islamic Bond Makes Debut at Iran Fara Bourse

The Iranian government issued 30 trillion rials (about $670 million) worth of Manfa’ah sukuk at the over-the-counter exchange Iran Fara Bourse. The 42-month bonds, bearing a maximum of 20.1% annual interest, will be backed by 51 trillion rials ($1.13 billion) of government revenues. Each Manfa’ah sukuk is priced at 1 million rials ($22.2).

NAB arrests Modaraba corruption case accused

#Pakistan's National Accountability Bureau (NAB) has arrested Yasir Aziz accused in a Modaraba corruption case. The accused acted as finance secretary of M/S Elixir Group and signed the modaraba contracts issued by his brother Shahid Aziz. The public accuses Yasir Aziz of taking the investment and aiding his brother to misappropriate the money. Yasir Aziz also tried to sell the properties owned by the accused Shahid Aziz. NAB Director General Irfan Naeem Mangi confirmed that Yasir Aziz was arrested and assured that the NAB was committed to eradicate corruption from the country.

Ahmed Shuja Kidwai appointed CEO Al Baraka Bank

Ahmed Shuja Kidwai has been appointed as the new CEO of Al Baraka Bank (Pakistan). Kidwai replaces Shafqaat Ahmed, who led the bank for 25 years. Al Baraka Chairman Khalid Rashid Al Zayani thanked Shafqaat wishing him well in his future life and welcomed Ahmed Shuja Kidwai as the new Chief Executive Officer of the bank. Ahmed Shuja Kidwai has a diversified international banking experience of over forty years, he played a pivotal role in consolidating and establishing the bank's position especially in Karachi.

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