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Casablanca Finance City welcomes international businesses that have been flocking to Morocco to take advantage of its cheap labour, skilled work force and proximity to sub-Saharan Africa. Amid the uprisings that characterised the Arab Spring, Morocco remained relatively stable. Political and social stability continued after 2010, while the neighbour countries struggled. Adding to Morocco’s allure is the introduction of formal Islamic financial products, officially labelled participatory finance in the country. In 2017 authorities issued five participatory banking licences to Moroccan banks and three to international banks. As Morocco continues to roll out participatory financial products and services slowly and cautiously, the sector will remain a niche.
The Central Bank of Jordan (CBJ) the second sukuk issuance on behalf of the National Electric Power Company (NEPCO) at a total value of JD75 million, 4.1% returns and a five-year maturity period. The bank reported that demand on the sukuk was 2.73 times the value of the issue, having received orders for JD205 million-worth bonds. The CBJ said the high turnout underlines the increasing demand on the financing tools compatible with the Islamic Law, which have been lacking in the local market during past decades. The bank said the success of this issuance was a result of the continuous coordination of the Finance Ministry, the CBJ, NEPCO, the Jordan Securities Commission and the Central Sharia Oversight Commission.
Bank Al-Maghrib and the Islamic Financial Services Board (IFSB) co-organized a regional workshop entitled "Facilitating Implementation of IFSB Standards" in Rabat. The workshop focused on 3 standards for participatory banking: IFSB-15 "Revised Capital Adequacy Standard" on Prudential Capital and Solvency Standards, IFSB-16 "Revised Guidance on Key Elements in the Supervisory Process" on Supervision Standards, and GN-6 "Quantitative Measures for Liquidity Risk Management" on prudential liquidity standards. This event is part of the measures taken by Bank Al-Maghrib to finalize the regulatory framework governing participatory banking activities in Morocco.
Morocco's central bank has approved the use of five types of Islamic banking transactions. This means a final regulatory nod for the country to launch an Islamic finance industry. The central bank has recently set up a central sharia board to oversee the sector. The five approved transactions include murabaha, musharaka, ijara, mudaraba and salam. The central bank also set regulations for conventional banks to open windows selling Islamic products. It had given regulatory approval to three major Moroccan banks to open Islamic subsidiaries: Attijariwafa Bank, BMCE of Africa and Banque Centrale Populaire, as well as to smaller lenders Credit Agricole and Credit Immobilier et Hotelier. Subsidiaries of Societe Generale of France, Credit du Maroc and BMCI have also won permission to sell Islamic products.
In partnership with the Moroccan Crédit Immobilier et Hotelier bank (CIH), Qatar International Islamic Bank (QIIB) will launch Umnia Bank, a joint Islamic financial institution. Licensing for the Umnia Bank had already been issued by the Central Bank of Morocco. According to QIIB chairman Sheikh Dr Khalid bin Thani bin Abdullah al-Thani, QIIB is now closer to formally launching the activities of Umnia Bank. He expressed his happiness to reach this stage and stated that Umnia Bank looks to be the best Islamic bank in Morocco. He added that QIIB is determined to contribute to the growth of the Moroccan economy.
The Bahraini Gulf Finance House (GFH) would seek to get rid of its Tunisian project, the Tunis Financial Harbor. The project was to be one of the largest Bahraini investments in Tunisia, which would be worth 7.5 billion USD. Tunis Financial Harbor was initially designed to make Tunisia a regional financial hub, but eventually turned into a simple real estate program. GFH is currently seeking to pass the hand and to pass the project on to another investor. The cause would be the financial difficulties of the Bahraini group.
Algeria plans to raise money from an interest-free local bond in order to offset the huge fall in its energy earnings. The North African OPEC member has already cut public spending, introduced new taxes and reduced government subsidies on fuel. Finance Minister Hadji Baba Ammi said the new bond would not bear interest, which may help attract a greater number of Algerian buyers. The minister said bondholders would receive a share in projects that the issue would finance as an incentive. The government launched its first local bond last April, but it was harshly criticised by the religious community. While neighbours Morocco and Tunisia are developing laws for Islamic finance, Islamic banks and sukuk bonds, Algeria still has no legal framework for such operations.
The first act of business by the Turkish Sovereign Wealth Fund (SWF) will be the issuance of securities, while it will also focus on Islamic finance products in securitization. The fund will contact local and foreign investors for securitization over the next few months. Even though the Treasury announced that the transferred asset size was approximately worth $160 billion with an equity size of $35 billion last Friday, an endeavor is currently underway concerning the valuation and auditing of the transferred assets by the fund. According to a Turkish daily, Dünya, the fund is exploring various types of instrument models, especially in Islamic finance. For this reason, the issuance of sukuk is a major focus of the agenda for the fund.
During the Arab-Africa Trade Bridges forum held in Rabat, bank president Bandar Al-Hajjar spoke about the strategic ties between Morocco and the Islamic Development Bank (IDB). Al-Hajjar noted that Morocco has received a total of USD 7.6 billion from the IDB since its establishment in 1974 and currently the bank is carrying out a number of projects estimated at USD 1.2 billion. Al-Hajjar also praised Morocco’s efforts towards renewable energy, saying that there is a bilateral cooperation between the IDB and Morocco to share Moroccan experiments in this field with Sub-Saharan countries. The IDB has supplied Morocco with several loans over the past few years. In 2014, the IDB amounted to MAD 1.8 billion to Morocco in order to carry out drinking water supply projects, as well as the olive sector for small farmers. The IDB has also embarked on signing agreement with partners to invest in Morocco. In 2014, it signed a joint agreement with Kuwait Investment Authority (KIA) to invest in the Moroccan private sector.
Turkish participation bank Kuveyt Turk has received regulatory approval to raise 2 billion lira ($555.8 million) via sukuk, as it expands its domestic footprint while winding-down its Dubai unit. Kuveyt Turk, 62% owned by Kuwait Finance House , would sell the lira-denominated sukuk to qualified investors through its asset-leasing company, KT Kira Sertifikalari Varlik Kiralama, according to a regulatory filing. No timeframe or tenor were given for a potential deal. New funding could help the bank's plans to expand its branch network to 400 offices this year from a current 385. The bank increased its net profit by 22% and total assets by 15% in 2016. In December, however, the bank said it would terminate all activities of its wholly-owned subsidiary in Dubai, as it had not established a commercial advantage. It will continue to service the Gulf region via its branch in Bahrain, while concentrating on its operations in Turkey and Germany.
Sheikh Dr Khalid bin Thani bin Abdullah Al Thani, Chairman of Qatar International Islamic Bank (QIIB) inaugurated the bank’s new branch at the Mall of Qatar. CEO Abdulbasit Ahmad Al Shaibei said the bank is expected to start its operations in Morocco by the first quarter of 2017 with four branches. The lender had signed a joint venture agreement with the Moroccan Bank Credit Immobilier et Hotelier (CIH) for the establishment of a bank in Morocco in December 2015. Under the agreement, QIIB will have 40% stake in the proposed bank. The new QIIB branch is on the ground floor of the Mall of Qatar, considered to be one of the most important shopping destinations in the region.
Bahrain's Gulf Finance House (GFH) is distancing itself from its major Tunisian property project, Tunis Financial Harbour (TFH). GFH's local subsidiary, Tunis Bay Project Co is to drop out of the residential golf course project.
Halic Leasing is expanding its sharia-compliant business portfolio to tap demand from small businesses. This is a sign that Turkey's Islamic finance market is growing beyond traditional banking services. According to Halic's General Manager Gokcen Sahin, the company is building a portfolio of leased assets and is targeting new business of around $25 million by the end of the year. Halic also aims to attract further investments from Islamic mutual funds while expanding into construction equipment later this year. The plans come after the firm's new shareholders injected fresh capital at the end of last year and set up a sharia committee to ensure its products conform to Islamic principles. Gokcen Sahid added that with a good quality portfolio, Halic may also consider raising funds via sukuk in the future.
A Turkish court indictment ruled that some 5,000 academics have deposited cash in Bank Asya after an order from U.S.-based Islamic preacher Fethullah Gülen. After the July 2016 coup attempt Bank Asya was seized by the state over its links to the Fethullahist Terrorist Organization (FETÖ). The prosecutor of the case decided 15 years in prison for a total of 83 academics, of whom 21 are currently arrested. Some 33 of the suspects were alleged users of ByLock, an encrypted smartphone app that came to prominence after it revealed Gülenists used it to plan the coup. According to the indictment, the Gülen movement sent messages to senior members of the group on social media, ordering them to deposit cash in Bank Asya.
Turkey's privately-owned Aktif Bank has received regulatory approval to sell up to $120 million via sukuk. Turkey has seen steady issuance of sukuk from the government and the country's Islamic banks, but corporate issuance remains rare. Aktif Bank will sell the sukuk through its asset leasing company, Aktif Bank Sukuk Varlk Kiralama. Companies can sell sukuk directly by setting up their own asset leasing companies, but the process can be onerous for smaller firms. The government has previously granted tax exemptions for lease-based sukuk, but in August it extended those incentives to all other types of sukuk contracts.
The goal of this event is to strengthen boards of directors of microfinance institutions in the Middle East and North Africa (MENA) region. The case studies include topics such as governance, risk management, client centricity, sustainable growth and operating in challenging environments. This event is organized by Calmeadow, the Center for Financial Inclusion (CFI) and Sanabel. Calmeadow is a Canada-based NGO with 30 years of experience in financial inclusion and corporate governance initiatives. CFI brings eight years of experience in risk management and governance. Sanabel is a microfinance network with 90 members which serve a total of approximately 1.6 million clients in 13 Arab countries.
The Bahrain-based Al Baraka Banking Group (ABG) has obtained the approval of the Bank Al Maghrib (the central bank of Morocco) to establish a new bank in Morocco. The Group is now represented in all countries in the Maghreb. The Group now owns banking subsidiaries in Algeria, Tunisia, Libya and Morocco, as well as the African continent in Egypt, Sudan and South Africa. The Group has already obtained the approval of the Central Bank of Bahrain to establish the Morocco bank and will carry the name of Al Baraka Bank Morocco. The new bank will be under the management of Al Baraka Banking Group and will operate within its network of subsidiary banking units, which are currently located in 15 countries and in turn own more than 700 branches.
Five Islamic banks are set to open in Morocco after Bank Al-Maghrib, the country’s Central Bank, approved five applications. A further three banks have been given permission to sell Islamic products. A Shari’ah committee which will govern all Islamic finance activities will also be established. The five banks are: CIH Bank in partnership with Qatar International Islamic Bank; BMCE Bank of Africa jointly with the Saudi/Bahraini group Dalla Al Baraka; Banque Centrale Populaire with the Saudi group Guidance; and Crédit Agricole du Maroc in partnership with the Islamic Corporation for the Development of the Private Sector (ICD). Attijariwafa Bank is currently in talks about a future partnership. Banque Marocaine du Commerce et de l’Industrie, Crédit du Maroc and Société Générale have all been given the green light to sell Islamic products.
Middle Eastern syndicate and real estate asset management platforms are emerging as major and increasing sources of outbound capital from the region with new figures showing an increase in volumes.
“Typically, they exist to pool equity from multiple private and medium-size institutional investors to real estate assets on a deal-by-deal basis,” said Fadi Moussalli head of JLL’s International Capital Group, MENA. “In the first three quarters of 2016 the volume has already reached $5.1bn and we expect the end-year figure to reach around 7bn.”