As the referendum on whether to leave or remain in the European Union looms in the UK, voices are getting louder, particularly in the country’s financial industry that it would not necessarily be a good idea to vote for a Brexit. Since the weight of the UK in the global financial market is substantial – the financial sector of the City of London has a 20% share in the global market for trading foreign securities and a sizeable part of it depends on the UK’s access to the internal EU market – such a strong position would be certainly threatened.
This could have serious impact on the growing role of Islamic finance in Europe which is entrenched in the UK and from there makes its way into the continent. Since the 1990s, when the first mortgages in the UK were set up in line with Shariah law, the country has aggregated the most advanced experience in Shariah-compliant finance in the Western world. Corporate sukuk followed a decade later, and in 2014, the UK became the first country in the EU to issue some sovereign sukuk and listed them on the London stock exchange. From then on, Islamic finance steadily entered the rest of Europe.
Issuance of Sukuk is up all around the world, up on last year, due to current economic factors and the goodwill for the instrument among global investors
The good news on the Sukuk front is continuing. The proportion of Sukuk bond issuance hit a record in the first quarter of 2016 in the main markets for this form of finance, said Fitch Ratings. According to Fitch’s data, there is a clear upwards trend in use of Shari'ah-compliant borrowing as more countries create legal frameworks to support issuance and as issuers try to attract a broader investor base, including Islamic finance investors.
Total new Sukuk issuance in the Gulf Cooperation Council, Malaysia, Indonesia, Turkey, Singapore and Pakistan was around $11.1 billion in the first quarter of 2016, with a maturity of 18 months. Issuance was up 22% from the fourth quarter of 2015 and 21% from a year earlier, while non-Sukuk bond issuance of $17.1 billion was down 23% quarter on quarter and 45% year on year. Sukuk represented 39.3% of total bond and Sukuk issuance in these countries during the quarter—the highest proportion in the past eight years.
Church and Business Leaders Respond to Pope Francis' Call to Make Wealth Work for the Poor
At the invitation of the Pontifical Council for Justice and Peace and Catholic Relief Services, impact investing experts and Catholic leaders from around the world will convene in Rome to explore how the Catholic Church and other faith-based institutions can harness the power of impact capital to attain and sustain their social mission.
These institutions, at an early stage in their social enterprise journey, will interact with and learn from successful social entrepreneurs, along with thought leaders from the sector. They will develop strategies, form partnerships and lay the foundation for catalyzing private investment to serve the poor and vulnerable. Celebrating the Extraordinary Year of Mercy established by Pope Francis, the conference is titled Making the Year of Mercy a Year of Impact for the Poor.
The conference begins on June 26, 2016 and is sponsored by Omidyar Network and the Mendoza College of Business at the University of Notre Dame. It ends on June 28.
The bidding process for Asya Katilim Bankasi A.S. - with a June 23 deadline - will end uncertainty over the future of the bank, but creditors face either its successful sale or its liquidation, says Moody's Investors Service in a report published today.
Bank Asya's creditors face two outcomes -- either a transfer of ownership to a successful bidder or the bank is liquidated and its banking license withdrawn," says Irakli Pipia, a VP - Senior Credit Officer at Moody's.
Moody's notes that the bidding process is nevertheless a positivedevelopment for creditors, as it provides a potential upside scenario.In the event of a winning bid by a new owner committed to recapitalizingthe bank, the rating agency would expect a rapid recovery in its credit profile.
"An acquisition of Bank Asya by a well-established player is likely to restore customer confidence in the bank and turn around the outflow of deposits," explains Mr. Pipia. "However, the likelihood of such an outcome is impossible to assess given the limited information about potential interest from bidders."
The important role of the Republic of Turkey in the global Islamic finance industry as well as its distinct standing both at the official and popular levels, the steady growth both of Islamic banks and financial institutions operating there, in addition to the parallel evolution of its regulatory and supervisory framework, the AAOIFI has been keen to strengthen professional and technical ties with this country. This was translated into an official visit by AAOIFI to a number of banking regulatory and supervisory bodies as well as a number of Islamic banks and financial institutions, professional entities and academic institutions.
From Canada, CI Financial, Manulife Financial, Royal Bank of Canada and Sun Life Financial are also included in the Hall of Shame. Jointly, these Canadian financial institutions invested US$565 million in cluster munitions producers between June 2012 and April 2016.
The report by Dutch peace organisation PAX was released today in Ottawa, together with the Cluster Munition Coalition and Mines Action Canada, to put pressure on Canada and other governments to put an end to these investments.
“It is an absolute outrage that financial institutions are investing billions into companies that produce weapons which are banned under international law”, says Suzanne Oosterwijk, author of the PAX report. “Canada has also banned these weapons. It is time for financial institutions to stop disregarding the international norm with these explosive investments into producers of illegal weapons that maim and kill civilians.”
London Stock Exchange welcomes ICD to mark the listing of its MTN Programme and inaugural $300 million five year Sukuk. ICD will use the proceeds of the Sukuk to support investments in private sector projects. The MTN program, which is a Wakala structure, will serve as ICD’s main funding platform for regular issuance of Sukuk. HSBC was the arranger for the MTN Program and the syndicate group for the Sukuk included 13 international and regional banks.
Home financing resembling Islamic finance structures is becoming popular to solve the housing affordability crisis in Western countries. Housing cooperatives began using profit-and-risk-sharing schemes modelled after ijara or musharaka to help home buyers purchase properties. In the UK the idea based on the Islamic contract of ijara came up in 2015. The rent-to-own scheme was proposed by the Liberal Democrats party and involves an Islamic bank or another intermediary, who purchases the property for a customer. In Canada various cooperative frameworks are providing home financing loans to members of their cooperatives in a Shariah-compliant manner. In the US the Ijara Community Development provides Shariah-compliant home financing for both US clients and customers in Canada.
Authorities in #Switzerland and #Singapore took action against Swiss private bank BSI for failing to prevent money laundering and bribery related to its dealings with Malaysian development fund 1MDB. Switzerland's Attorney General opened criminal proceedings against the bank. The country's Financial Market Supervisory Authority ordered BSI to pay back 95 mn Swiss franks Swiss Bank Is Charged Over ($96 mn). Singapore’s central bank revoked BSI’s banking license there and fined it 13.3 mn Singapore dollars ($9.7 mn). The cross-border investigation related to 1MDB involves at least seven countries.
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Where UK based students are led to take Islamic finance masters' degrees as a route to an Islamic finance career, mis-selling may be taking place. In world rankings, many UK universities rank relatively highly, and such a UK degree can enhance the promotion prospects of foreign students in their home country. However, many UK origin students are persuaded to take a master's degree in Islamic finance immediately after graduating. Unfortunately, the number of available positions in Islamic finance in the UK is very limited. Also UK Islamic financial institutions are too small to train people, and typically only hire experienced Islamic bankers.
Sharia student loans will be set up for the first time in Britain as part of a drive to boost the number of young Muslims applying to university. The government vowed to tackle the issue by creating a Takaful model, which is Sharia-compliant. Although no interest would be charged, the government said that repayments would be structured so that the total paid back would be the same as that paid by a student with a regular loan.
Gatehouse Bank’s head of real estate David Swan has left the company.
Zurich Insurance is set to take full ownership of Malaysia's MAA Takaful after the deal received regulatory approval, giving Europe's fifth-biggest insurer a foothold in the world's second largest Islamic insurance market. MAA Group said it had received central bank approval for the sale, a deal which was first proposed in November of last year. No size for the transaction was given. MAA Takaful held 1.2 billion ringgit ($306.7 million) worth of assets as of June 2015, a 5 percent increase from a year earlier.
According to the fourth annual BNP Paribas Individual Philanthropy Index by Forbes Insights, the United States remains the leader globally in personal philanthropy. Europe comes in as a close second, followed by Asia, with the Middle East achieving the sharpest increase in philanthropic giving. Almost all countries were focused on Health as the top area of philanthropic giving (United States at 60%), while Asia as a region chose Environment.
KT Bank AG, a subsidiary of Kuveyt Türk Katilim Bankasi A.S., is the first Islamic bank in the Eurozone. CEO Kemal Ozan said his bank has officially established a previously unknown business model in this region. As location for the registered office he chose Germany where only 5% of the German Muslim population adheres to Islamic banking. When this is measured against the number of more than four million Muslims in Germany, a huge growth potential can be anticipated. The economic exchange between Germany and the Gulf region opens new opportunities for the mid-tier segment with regard to sales markets, and for Europe as a recipient for Arabic investors. In this respect KT Bank AG wants to serve as a bridge between Germany and the MENA region.
Paris is wooing potential Qatari investors to be the part of a huge infrastructure development project, 'Greater Paris', to which the government of France has already committed €50bn. Chiara Corazzara, Managing Director of the Greater Paris Investment Agency said the state-sponsored investment in infrastructures is designed to trigger €80bn private investment and the response that they get from Qatari investors is really encouraging.
L'agence 570 easi, pionnière en finance islamique en France vient de proposer une nouvelle offre de crédit halal permettant au client d’effectuer un achat immobilier sans avoir à contracter un emprunt portant un intérêt, selon le principe murabaha. L'offre actuelle est désormais disponible sur 20 ans, un crédit inédit en France. Le Conseil de la fatwa de l’Union des Organisation Islamique de France (UOIF) avait émis un avis juridique dans lequel il exemptait sous conditions, au nom du concept de nécessité, l’emprunteur musulman de l’interdiction de recourir au prêt bancaire à intérêt lorsque l’investissement vise l’achat d’une résidence principale.
The Bank of England has fined Qatar Islamic Bank’s UK, a subsidiary of Qatar Islamic Bank, for failings in reporting its financial resources to the regulator in 2011 and 2012. The Bank’s Prudential Regulatory Authority (PRA) imposed a fine of 1.385 million pounds ($1.95 million) on QIB for failing to undertake a regular assessment of its capital. Guy Priestley, QIB UK’s interim chief executive, said the problems identified by the PRA have been remedied.
Turkey's cabinet has approved Murat Cetinkaya as the next central bank head, giving some initial relief to investors who had feared a battle between Erdogan, who equates high interest rates with treason, and Prime Minister Ahmet Davutoglu's more orthodox economic team. Despite the initial relief in markets, the 40-year-old Cetinkaya remains something of an unknown quantity, lacking the experience of his predecessor, Erdem Basci, an engineer turned economics Ph.D. whose term as governor expires next week. The new Central bank governor must now convince investors that he can tame inflation while resisting political pressure to cut rates.