The Church of Scotland and Islamic Finance Council UK are meeting at a private round table in the British Parliament. As part of the interfaith initiative for a more socially responsible financial system, faith leaders, parliamentarians and finance practitioners gather to agree a shared values framework. The joint venture was launched earlier this year in response to the systemic failure and non-sustainability of the current financial model. The event is the second in a series of three workshops. The first reviewed the theological and philosophical underpinnings of Christianity and Islam in order to identify commonalities. At the second workshop the shared values framework will be reviewed and refined before participants explore the practical obstacles to realising ethical finance. Omar Shaikh of the Islamic Finance Council UK said that bringing the debate to the heart of London sends a strong international message that faith communities can work together for the greater good of society.
The British government has announced that it has removed Bank Saderat Iran (BSI) from its list of sanctioned entities. The decision to delist the bank was in line with the amended regulations by the European Union regarding the lifting of sanctions against Iran. The regulations required the sanctions against the BSI to be maintained until 22 October 2016. Britain has previously lifted sanctions against three other Iranian banks. In January, the Bank of England announced that it had reactivated the licenses of Melli Bank, Persia International Bank and Bank Sepah International. This followed the implementation of a nuclear deal between Iran and the P5+1 group of countries. Iran agreed to restrict certain aspects of its nuclear energy activities in return for measures by the P5+1 to remove certain economic sanctions imposed against the country.
Cobalt Insurance and Capita Managing Agency have received approval from Lloyd’s of London to launch the first Sharia-compliant syndicate of the specialist insurance market. Once it gets full approval, the new Lloyd’s business will be named Cobalt Syndicate 1438, which is the Islamic calendar’s number for the year 2017. Cobalt founder Richard Bishop said the aim of the syndicate was to look to underwrite new business from emerging markets and working with others in Lloyd’s to extend their participation in those markets. Cobalt will start underwriting in the first quarter of 2017 with initial focus on developing a property and specialty-focused book of commercial business from emerging markets in the Middle East, North Africa and Asian regions.
According to leading expert on Islamic Finance, Mehmet Asutay, Brexit may have some effect on real estate investments in the UK but London will continue to remain the centre for Islamic investments. Asutay noted that if Islamic finance continues to invest in real estate in the UK, they might find another hub in Europe rather than the UK. He said that having a large amount of liquidity, the Gulf region has contributed to expansion of Islamic financing and he called for expansion of Islamic financing in other developing countries. Professor Asutay said that in Europe, the UK and Luxembourg have been developing strategies to become important centres for Islamic finance. But the UK is also aiming to become an important centre for teaching and learning Islamic Economics and Finance.
deVere Mortgages and Al Rayan Bank have announced that they have entered into a strategic partnership to offer Sharia-compliant mortgage alternatives. The alliance follows deVere Mortgages’ reporting of an average 55% increase in mortgage enquiries since the UK’s EU referendum, with the majority of these applications from people living in Qatar, the United Arab Emirates, Saudi Arabia, Kuwait, Bahrain, and Oman. Mike Coady, Managing Director of deVere Mortgages said the tie-up with Al Rayan Bank would add real value to their core market, which is Muslim and non-Muslim buyers based overseas who are looking to purchase property in Britain. Sultan Choudhury, CEO of Al Rayan Bank added that deVere Mortgages would help to reach an even wider group of people who are looking for ethical, Sharia compliant home and property finance.
Sarajevo's stock exchange launched an Islamic index, a first for the Balkans region. Director of the Sarajevo stock exchange, Tarik Kurbegovic, said the SASX-BBI Index includes 25 Bosnian firms which respect Islamic teaching and was set up in cooperation with Bosnia Bank International (BBI), founded by Gulf countries. BBI director Amer Bukvic said that with this index investment in Bosnia by Gulf countries would grow in a significant way during the next three to five years. In the last few years, Gulf businessmen have invested significantly in tourist and residential real estate in Sarajevo and the surrounding region. The goal of the Islamic index is to direct new investment towards the sectors of agriculture, tourism, metallurgic industry and energy.
The UK Peer to Peer Finance Association (P2PFA) has released a commissioned study on the economics of the peer to peer lending market in the UK. The study focused specifically on the eight-member platforms of the P2PFA which collectively comprise over 75% of the UK market. Reinder van Dijk, Partner at Oxera consulting, called peer to peer lending a 'real innovation' bringing benefits to both borrowers and investors. According to the report, P2P lending has created additional competition and choice in the market for loans and investment. P2P lending provides new options for retail investors, opening up access to risk-and-return from an asset class of consumer and business loans with net returns of between 4% & 8%. P2P lending does not create systemic risk, P2PFA member platforms provide a level of transparency which empowers investors.
Le #Luxembourg a misé sur la finance islamique comme outil de diversification, mais les investisseurs se font encore attendre. Basé sur les règles de la charia et assez complexe, ce modèle fait pour l’instant du sur-place. Le Luxembourg a espéré, depuis plusieurs années, l’implantation d’une banque islamique sur son sol. Selon Eleanor de Rosmorduc, responsable du dossier pour Luxembourg for Finance (LFF), si le Luxembourg n’abrite pas de banque islamique, c’est avant tout parce qu’il n’y existe pas la population musulmane suffisante pour lui permettre d’exister. La principale difficulté pour le secteur au Grand-Duché, c’est surtout que les acteurs qui pourraient alimenter ce secteur ne sont pas basés au Luxembourg, mais au Moyen-Orient et en Asie. C’est cependant en train de changer.
Lawyers have warned that failure to prevent economic crime could lead to more senior individuals being prosecuted for misconduct. The UK government's proposed legislation could lead to deferred prosecution agreements with the Serious Fraud Office. The involved companies would potentially give evidence against individuals implicated in misconduct. According to Judith Seddon, partner at Clifford Chance, the corporate criminal liability will provide for an additional serious consequence of failing to satisfy existing requirements for anti-money laundering and financial crime prevention.
A Dubai-based subsidiary of Islamic investment bank GFH Financial Group has sold its remaining 18 % stake in English football club Leeds United, ending nearly 4 years of Middle Eastern involvement in the club. GFH Capital sold the stake to Eleonora Sport, operated by Italian businessman Massimo Cellino. Eleonora now owns 100 % of the club, Leeds United said.
GFH bought Leeds United in December 2012 but within months began looking for new investment in the club, and in 2014 Cellino bought a majority stake in it. GFH Financial did not reveal the price at which it sold its remaining stake but said the deal would reflect positively on its financials and liquidity for 2016. Crippled during the global credit crisis in 2008, GFH Financial went through several debt restructurings but has resumed expanding in the financial services sector. In August it signed a memorandum of understanding to buy most of Bahrain's Bank Al Khair.
Switching from conventional ‘Western’ financial practices to Islamic banking gives distinct advantages to banks, with the change improving the liquidity and value of stocks. Researchers at the Universities of Birmingham and Brighton studied a merger that took place in Bahrain, between an Islamic bank and a conventional bank in the wake of financial crises that rocked the world between 2007 and 2009.
Their study showed that the 2009 acquisition of Bahrain Saudi Bank by the Islamic institution Al Salam Bank Bahrain (ASBB) prompted a significant increase in the liquidity of ASBB after adopting an Islamic banking system. Published in the Journal of International Financial Markets, Institutions and Money, the study looks at how the amalgamated bank operated after the merger, concluding that Islamic banking offered the institution significant advantages.
Bosna Bank International announced its first-half net profit jumped to 3.2 million marka ($1.8 million/1.6 million euro) from 1.4 million marka in the same period last year. The lender's net interest income increased 31.5% to 10.9 million marka through June, while net fee and commission income rose 12.9% to 5.1 million marka. The bank's total assets stood at 768.7 million marka at the end of June.
There is little escape from the volatility that the Brexit vote has wreaked. Islamic banks' partiality for UK real estate could be particularly painful if property prices fall, as they are predicted to, by as much as 10%. Islamic banks' overreliance on the property sector is well documented, and Britain has long been a favourite destination for real estate investment. The biggest issue facing the UK financial services sector is whether institutions will retain their passporting rights. There is much at stake for Britain too. Islamic finance plays a significant role in infrastructure development in the UK, from The Shard to the Olympic Village. Over 6500 homes are currently being financed by a GBP 700 million investment by Gatehouse Bank. The UK cannot afford to lose this funding, especially when investment from Europe dries up.
Investors from the Islamic financial world could be the answer to Italy’s problems in the wake of the Brexit. On a recent conference in Italy, participants said this would require legislative changes to follow Islamic principles. A working group at the Lower House’s financial commission is looking into the matter. Participants also suggested issuing State bonds following the rules of Islamic finance. Under the proposal, the assets would consist of State-owned real estate, bought and re-sold by a company set up for the purpose, whose participating shares would be bought by investors.
IFC & ISRA Thematic Workshop 2016, in association with K&L Gates
Wednesday, 26 October 2016, 9:30 a.m. - 3:00 p.m.
The Islamic Finance Council UK (IFC) and the International Shari’ah Research Academy for Islamic Finance (ISRA), in association wih K&L Gates invite you to an event addressing the Shari’ah governance model. The event will include the UK launch of the IFC and ISRA External Shari’ah Audit Report 2016.
Location: K&L Gates, One New Change (Watling Street entrance), London
Presenters: Jonathan Lawrence
Sponsors: K&L Gates, IFC, ISRA
9.30am - Registration and breakfast
10.00am - Morning sessions
12.00pm - Networking lunch
1.00pm - Afternoon sessions
3.00pm - Event concludes
The event will cover several key themes including:
How the current Shari’ah governance model works; its gaps and limitations
Examining the role of scholars alongside areas of potential conflict and impairment
The role of external Shari’ah audit
Regulatory differences in approach – is there a ‘best practice’?
in September 2016:
In the growing area of Islamic microfinance, a diverse skillset is required. Professionals have to be knowledgeable in traditional retail banking, in the ethics of Islamic finance and in the relevant compliance and regulation issues. In order to provide you with the necessary skills and know-how to become a well-rounded Islamic microfinance professional, we have designed the certification course ‘Certified Expert in Islamic Microfinance’. This e-learning course was jointly developed by a team of experts from the Frankfurt School of Finance and Management, Islamic Relief Worldwide, and the Islamic Relief Academy. This combination of expertise provides you with the opportunity to have a rich learning experience based on the broad knowledge of diverse, highly qualified professionals.
This 6-month certification course is designed to be a part-time training, offering you the flexibility to follow your own schedule and the ability to combine daily work with your professional development.
The "Certified Expert in Islamic Microfinance" was funded with UK aid from the UK government.
Swiss insurer Zurich Insurance Company has bought MAA Takaful (MAAT) from MAA Group and Solidarity Group Holding to expand its insurance and takaful business in Malaysia. Zurich Insurance Malaysia CEO Philip Smith said the company will be able to provide a wide range of insurance and takaful solutions across multiple customer segments, supported by the technical and servicing expertise in the wider Zurich Group. The acquisition cost RM525 mn and about RM400 mn was paid at the closing of the transaction. The remaining amount will be paid on the third anniversary after the closing.
In 2008 the #Qatar owned Project Blue entered into an arrangement to acquire the former Chelsea Barracks in West London from the Ministry of Defence for £959 million. Monies were advanced by Masraf al Rayan Bank using an ijara arrangement for the transaction. Now the Court of Appeal has found that the Revenue and Customs authority should have sought Stamp Duty Land Tax from the bank rather than the purchaser, but was apparently out of time to raise such an assessment. Eventually, the machinery in the Finance Act 2003 was not up to the task of ensuring an ijara was treated for tax purposes in the same way as any other transaction. As the adoption of Islamic Finance instruments increases, British tribunals, courts and regulators will need to understand the structures more clearly.
On a pure investment basis, London has a transparent property market. Property tenure is clear cut and underpinned by the legal system. There has long been a trend for overseas buyers to purchase homes or investment properties in central London. Over the past few years, Russian and Asian buyers have become more active, but the interest from the Middle East has never waned. While the Qatar Investment Authority (QIA) Wealth Fund has been diversifying its portfolio away from Europe, it still has at least $7 billion directly invested in equities traded on the London Stock Exchange, in which it also holds a 10.3% stake.
The small European nation of Luxembourg is expected to threaten and take over London’s role as European hub for Islamic finance in a post-Brexit world. The big hit the UK is suffering politically and economically by the June 23 "Leave" vote will result in years of uncertainty and the risk of thousands of job cuts or relocations to mainland Europe. Over the past years Islamic finance has gained a strong foothold in London which served as a gateway for Arab investors to Europe. Now that the UK voted to quit the European Union, an exodus of investors is expected as they fear tighter regulations and higher taxes looming.
As an alternative, Luxembourg has shown readiness for innovation and will continue to improve its competitiveness. Luxembourg was the first European country that joined the International Islamic Liquidity Management Corp (IILM). In September 2014, Luxembourg also issued the first sovereign sukuk in the eurozone and is soon expected to host its first fully-fledged Islamic bank on its territory.