Financial Institutions

#Malaysia's MBSB agrees to buy Asian Finance Bank for $152 mln

Malaysia Building Society Bhd (MBSB) plans to acquire Asian Finance Bank (AFB) from its foreign shareholders for 645 million ringgit ($152.5 million). Malaysia Building Society agreed with AFB's shareholders to pay 396.9 million ringgit in cash and the issuance of 225.5 million new shares at 1.10 ringgit per share. The deal values AFB at 1.3 times book value, MBSB said. MBSB has sought to become a full-fledged bank in the last few years. In 2014 a three-way merger deal with CIMB Group Holdings and RHB Bank was planned, but the plan fell through in early 2015. Talks with Bank Muamalat Malaysia Bhd in the last quarter of 2015 also collapsed.

Ibdar: Pioneering a Fully Digitised Islamic Investment Bank

Ibdar Bank is directing its FinTech strategies to position the bank as a fully-digitised Islamic investment bank. The Bank has USD277 million in paid up capital and a geographical reach that spans the GCC and Middle East North Africa Turkey (MENAT) region. The Bank also transacts in Southeast Asia and select developed markets. Ibdar Bank has significant expertise in areas including aviation, infrastructure, maritime, oil & gas, and real estate. According to CEO Ayman Sejiny, Ibdar has set out a comprehensive plan in 2018 for its engagement with global Fintech service providers. In the first phase, the bank is set to digitise its operations internally, the second phase will focus on implementing its service offerings in response to the needs of a Global Islamic Digitised Economy (GIDE). Sejiny added that the Central Bank of Bahrain has taken decisive steps towards a FinTech supportive environment in order to facilitate the growth of the sector.

Dubai Islamic Bank #Pakistan, Shahnawaz Ltd sign strategic alliance

Dubai Islamic Bank (DIB) and Shahnawaz have entered into a strategic alliance agreement. Shahnawaz is the authorized general distributor of Mercedes-Benz in Pakistan. This initiative will help in establishing Dubai Islamic Bank Pakistan as the preferred financial services partner for Mercedes-Benz in the country. The signing ceremony was held in Karachi in the presence of M Naeem, CEO of Shahnawaz, Naseem Shaikh, General Manager of Shahnawaz and Junaid Ahmed, CEO of Dubai Islamic Bank Pakistan. Junaid Ahmed said this alliance enables the bank's high net worth clientele to achieve their dream of driving their own state-of-the-art Mercedes.

#Pakistan's Islamic banks show its conventional peers how it's done

While still quite new in Pakistan, Islamic banking is moving ahead in all segments of their operations. The network of Islamic banking institutions (IBIs) has expanded. Now it consists of 21 IBIs, five full-fledged Islamic banks and 16 conventional banks having stand-alone Islamic banking branches. IBIs have expanded their branch network to 2,320 branches. The number of Islamic banking windows, operated by conventional banks, is now at 1,255. Islamic banks' assets in overall banking assets were 11.6% at the end of June. Their asset base increased by Rs150 billion, or 8%, during the quarter to stand at Rs2,035 billion. The market share of IBIs in the overall banking industry was recorded at 11.6% and deposits 13.7% at end-June 2017.

Social Islami Bank faces ‘hostile’ takeover

After the top level management of Islami Bank Bangladesh Ltd (IBBL) was removed in January, a similar series of drastic changes takes place in Social Islami Bank Ltd (SIBL). SIBL Chairman Rezaul Haque and Executive Committee Chairman Md Anisul Hoque were replaced by Prof Anwarul Azim Arif and Belal Ahmed. The Managing Director of SIBL, Shahid Hossain, has also stepped down and been replaced by Quazi Osman Ali. The decision to remove the top three of the senior management and the announcement on their replacements was made at a closed door meeting of the bank’s board of directors. The changes are allegedly being backed by Chittagong-based S Alam Group that bought up shares of both banks prior to the takeover.

Thomson Reuters Provides Shariah-Compliant Deal #Application to Alinma Bank

Thomson Reuters will provide Alinma Bank with a Shariah-compliant application. It will fully automate deal workflow for Shariah-compliant financial transactions. The application provides a real-time view of Shariah-compliant deals, through an automated online system that minimizes the process of tracking transactions. Alinma Head of Treasury, Abdullah Al Zahrani, said that he was pleased to be the first bank in Saudi Arabia to partner with Thomson Reuters to bring innovative solutions to the Shariah-compliant banking. Nadim Najjar, Managing Director for MENA at Thomson Reuters, said this innovative application would automate the validation process and offer a seamless digital solution for the industry.

#Algeria: Three public banks to start offering Islamic finance services before the end of 2017

In Algeria, three public lending institutions will start offering Islamic finance services before the end of the year. They are the Banque de l’agriculture et du développement Rural (BADR), the Caisse Nationale d’Epargne et de Prévoyance (CNEP) and the Banque de Développement Local (BDL). Currently, in Algeria only Al Baraka Bank and Salam Bank are allowed to offer participative finance products to their clients. They are in fact competing in this sector with private lenders that offer both traditional and Islamic banking services. Boualem Djebbar, president of Algerian banks and financial institutions’ association, said a democratization of Islamic finance by 2018 should be expected in the country.

The ‘flexible’ Shariah practice of Islamic banking in #Bangladesh

Islamic banking in Bangladesh is taking shape rapidly with partial practice of Shariah. Islamic banking was first introduced in Bangladesh in 1983 by foreign investors from Saudi Arabia and Kuwait. Currently, eight full-fledged Islamic banks are operating with 1,068 branches in the country. Moreover, 19 Islamic banking branches of nine commercial banks and 25 Islamic banking windows of eight commercial banks are also providing Islamic financial services. According to Md Yasin Ali, professor of Bangladesh Institute of Bank Management (BIBM), most of the Islamic Banks in Bangladesh are not Shariah compliant. Currently, there is no proper regulatory framework for strict monitoring of Islamic banking. The Islamic banks in Bangladesh have been facing excess liquidity problem, which is depriving them of being financiers in public projects.

AAOIFI, ACCA sign MoU

The Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and the Association of the Chartered Certified Accountants (ACCA) signed a landmark Memorandum of Understanding (MoU) in Bahrain. The MoU aims at enhancing the cooperation between the specialized professional accounting fellowship issued by AAOIFI, Certified Islamic Professional Accountant (CIPA) and the international professional fellowship ACCA. According to Farhan Noor, AAOIFI's Head of Professional Development, the new CIPA now requires the candidates to pass four module exams and fulfill a one-year practical experience requirement. By this agreement, ACCA qualified accountants can now get exemptions from half of the CIPA program to acquire the prestigious CIPA Fellowship. The MoU also includes cooperation in different areas such as research, events and continuous development.

SIBL wants to invest $2mllion in overseas private equity fund

#Bangladesh-based Social Islami Bank Limited (SIBL) plans to invest $2 million in a real estate-based private equity fund managed by the Islamic Development Bank (IDB). The bank plans to buy 200 shares of Awqaf Properties Investment Fund (APIF) for $10,000 each. A 2% stake in the fund will be enough to give SIBL a seat on the APIF board. SIBL claimed that participating in the APIF equity would benefit it in various ways. It would optimise the facilities delivered to Awqaf customers and enhance the returns to investors. According to SIBL managing director Shahid Hossain, SIBL will get 90% of net income per certificate apart from yearly dividend. The secretary of Financial Institutions Division, Eunusur Rahman, said they would place a proposal before the Cabinet committee on Economic Affairs to allow local companies invest abroad after discussions with the Finance Minister.

Dagong and IIRA maintain the Ratings of Al Baraka Banking Group and revise the Outlook Upwards

Dagong Global Credit Rating and Islamic International Rating Agency (IIRA) have jointly maintained the ratings of AlBaraka Banking Group (ABG) at BBB+/A3. At the same time, IIRA has re-affirmed the national scale ratings of ABG at A+/A2. Outlook on the assigned ratings has been revised to 'stable' from 'negative' indicating the macroeconomic and political stability in ABG’s core countries. ABG operates through a globally diversified franchise spread across 11 jurisdictions in Europe, Africa and Asia. ABG’s ratings derive strength from the recent tier 1 Sukuk issuance this year. While the Group’s subsidiaries are individually governed by their supervisors, the Group maintains close coordination and oversight. Furthermore, Bahrain's institutional framework for Islamic banks ensures adherence to a strong framework for Shari'ah governance.

Warba Bank heads towards innovation breakthrough in Islamic banking sector

#Kuwait's Warba Bank announced its financial results for the first nine months of 2017. Net profits increased by 442% reaching KD 4.752 m compared to KD 877 K for the same period last year. The increase in the Bank’s total revenues was driven by strong performance of all business units. The total revenues reached KD 42.66 million at an increase of 63% compared to the first nine months of 2016. Moreover, the operating revenues increased by 70%, amounting to KD 26.800 million by the end of September 2017 compared to KD 15.741 million for the same period of 2016. Warba Bank's CEO Shaheen Hamad Al-Ghanem said that the Bank has successfully accomplished a number of deals most notably a strategic financing deal in the aviation sector in Kuwait. Warba Bank also participated in Sharia -complaint co-financing for the Ziraat Participation Bank of Turkey amounting $236 million. The Bank also participated in arranging the $400 million Sukuk issuance of the Dubai-based Miraas Holding for Real Estate Development.

New release of IFSB’s Prudential Database from 17 countries shows improved #Islamic #banking #performance

The Islamic Financial Services Board (IFSB) has announced new country-level data on growth of the Islamic banking systems for Q4 of 2016 and Q1 of 2017 from 17 IFSB member jurisdictions. IFSB Secretary-General Zahid ur Rehman Khokher said the IFSB’s Prudential and Structural Islamic Financial Indicators (PSIFIs) database project has reached 14 quarters, and that it would soon be extending to four new jurisdictions. He added that the IFSB also plans to release sector level balance sheets of entire jurisdictions for the Islamic banking market starting next year. The PSIFI project currently compiles data from 17 member countries: Afghanistan, Bahrain, Bangladesh, Brunei, Egypt, Indonesia, Iran, Jordan, Kuwait, Malaysia, Nigeria, Oman, Pakistan, Saudi Arabia, Sudan, Turkey, and the United Arab Emirates. The IFSB is now in the process of collecting Islamic banking data from these new contributors: Qatar Central Bank, Bank of England, Central Bank of Lebanon and Palestine Monetary Authority.

Al Rajhi Bank eyes Asean #expansion

Al Rajhi Bank #Malaysia outgoing chairman Datuk Seri Dr Nik Norzrul said his successor would continue with the plan to expand the bank’s operation, targeting neighbouring markets like Singapore and Indonesia. Nik Norzrul has been with Al Rajhi Bank since the bank established its wholly-owned subsidiary in Malaysia in 2006. He has been a board member of Al Rajhi Bank Malaysia since 2006 and its chairman since 2015. Today the bank has assets worth a total of RM9bil, compared with RM291mil in 2006. In the retail segment, the bank continues to see growth in the demand for current account/savings account services. In the corporate segment, Nik Norzrul said Al Rajhi Bank Malaysia was working on strengthening its presence targeting owner-led enterprises as well as SMEs.

MIDEAST #DEBT-#Qataris hold non-deal bond roadshows as rift drags on -sources

Qatari banks have met investors in Europe and Asia to gauge their interest in potential U.S. dollar bond issues. Access to international debt markets has become problematic since the diplomatic crisis has erupted. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties with Qatar, accusing it of supporting terrorism. Cross-border deposits accounted for about a quarter of Qatar's total deposits, so banks started to look for alternative funding. Al Khalij Commercial Bank, Doha Bank, Qatar International Islamic Bank and QNB have all met investors in recent weeks. Feedback was positive, but investors also made clear that issuers would have to pay premiums in order to attract sufficient demand. According to an international portfolio manager, the premium that Qatari banks would have to pay is about 30-40 basis points. A second fund manager said Qatari banks would have to pay up not only because of the increased political risk, but also because of general market conditions in the region.

NAB to investigate #merger of KASB bank into BankIslami

#Pakistan's National Accountability Bureau (NAB) initiated an inquiry into the alleged misuse of authority by SBP officials at the amalgamation of KASB Bank into BankIslami. According to the State Bank of Pakistan (SBP), a smear campaign was run in the media against them. SBP added that the onesided views presented in the media led to misjudgment about the authority of SBP as a guardian of the financial sector. All stakeholders of the defunct KASB Bank were well aware of the poor financial conditions of the bank. The State Bank gave ample time to the sponsors of KASB Bank to inject further capital into the bank. Besides capital shortfall, the bank and its sponsors engaged in fraudulent practices and were siphoning off more than Rs 3 billion from the bank. SBP stated that none of its officials misused authority nor were involved in any kind of corrupt practices.

IBs want property lending rule scrapped

Investment banks (IBs) want Bank Negara Malaysia to withdraw the property lending guideline, which was introduced in 1997. It stipulates that a bank’s credit facilities should not exceed 20% of its total outstanding loan base. Compliance with this requirement is calculated on a quarterly basis. For IBs, the guideline mainly affects their underwriting business. They think the guideline is outdated, especially since there are already other macroprudential measures introduced by Bank Negara in recent years. The Malaysian Investment Banking Association (MIBA) had highlighted the issues affecting the industry to Bank Negara. It is understood that the central bank is currently reviewing the guideline.

Abu Dhabi Islamic Bank says its ramping up spending on digital technologies

Abu Dhabi Islamic Bank (ADIB) is planning to spend significant financial resources on digital technology this year. The lender is not rushing to downsize its branch network, as clients continue to value human interaction. According to Phil King, head of retail banking at ADIB, the bank is also planning to open three to five branches across the UAE next year. King noted that while mobile banking transactions at ADIB rose 49% in the first half of the year, there was a 10% drop in visits made by customers to the bank’s branches in the same period. He added that new branches would be smaller in size, ranging between 35 to 70 square meters versus the larger ones of the past. As a result of the bank’s increase in consumer lending, ADIB’s retail staff has grown 7% so far this year to 247 employees compared to a year-earlier period. ADIB's second-quarter net profit rose 8.7%, beating analyst forecast, thanks to a drop in provisions, gains in income from credit cards and other fee products.

An #Iranian Bank Has Invested over 26 million Dollars on #Startups

Iranian banks have decided to get more engaged with the country’s startup scene. According to Alireza Daliri, Deputy Director of Iran’s Vice-Presidency for Science and Technology, Bank Melli Iran has invested around over 26 million dollars in the country’s startup market. Daliri added that the Vice-Presidency had offered the banks to either establish their own accelerators or invest on large successful and on-going projects. Eventually, the banks decided to go with the latter. Daliri added that the Vice-Presidency has started negotiations with a number of Iranian banks such as Saderat, Sepah, Export Development Bank, Tourism Bank, Post Bank and Refah, but it is difficult to persuade them. Iran’s startup scene has witnessed exponential growth in the recent years. The number of knowledge-based firms in the country has increased from 52 in March 2014 to 2732 until October 2016, but lack of funding is still a major issue.

#Islamic #banks and #Takaful sectors likely to witness more #mergers

The merger of National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) in the UAE last year had triggered a number of unconfirmed reports of bank mergers across the GCC. However, most of these reports were denied by bank managements. While bankers and analysts say the time is ripe for more bank mergers, they expect more merger deals to happen in the Islamic banking and Takaful industry. A proposed merger of Kuwait Finance House and Ahli United Bank is expected to result in second biggest Islamic Bank in the GCC after Al Rajhi Bank. The merger of Qatari banks Masraf Al Rayan, Barwa Bank and International Bank of Qatar is progressing and is expected to complete by end of the year. Some countries have only a small number of local banks, which limits competition. This means that profitability has remained solid and is therefore less likely to be a driver for M&A. Another stumbling block is the ownership structure of GCC banks, well established local private shareholders often control sizeable stakes and foreign banks only hold minority stakes.

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