Financial Institutions

Fidor to provide digital backbone for ADIB

Abu Dhabi Islamic Bank (ADIB) has partnered with Fidor Bank to launch the region’s first 'community based digital bank'. The new platform is designed to fit the lifestyle of millennial consumers also known as Generation Y. Fidor Bank is Europe’s original digital challenger bank. The bank centres around an online community, where users can exchange financial advice and also help co-create banking products. According to CEO of ADIB, Tirad Al Mahmoud, the new platform will allow users to completely change the way they bank and manage their finances using digital technology to serve all their banking needs. The 'new digital bank' will be available for existing and new customers to sign up to in the upcoming months.

Abu Dhabi Islamic Bank Said to Cut More Than 200 Jobs in #U.A.E.

Abu Dhabi Islamic Bank has cut more than 200 jobs over the past three months. The cuts were made mostly in the retail business and about 100 people were dismissed last month. Abu Dhabi Islamic Bank joins other lenders in the U.A.E. that have cut jobs to adjust to slower economic growth after oil prices halved over the past two years. Union National Bank dismissed about 50 people in August, while Emirates NBD, the nation’s biggest bank, reduced its workforce by more than 250 people at its small and medium enterprise and Islamic lending businesses in April.

#Saudi asks banks to reschedule consumer loans

Saudi Arabia’s central bank has asked local banks to reschedule consumer loans after the government cut bonuses and other financial perks for public sector workers. The cabinet announced this week that it would slash ministers’ salaries by 20% and reduce a range of allowances for public employees. In addition, the government said it would base salary payments on the Western calendar rather than the Islamic calendar; since the latter is about 11 days shorter. This is expected to reduce income further. Banks are currently negotiating with the central bank to be allowed to deduct up to 40% of customers’ salary payments to service their consumer loans, instead of the 33% currently permitted. If the central bank declines, banks will discuss raising interest rates on the loans.

#Bahrain to require external sharia auditors for Islamic banks

Bahrain's central bank has proposed new governance rules that would require Islamic banks to conduct external sharia audits of their operations, representing a shift away from the long-held practice of self-regulation. Islamic banks in the Gulf have traditionally used in-house boards of Islamic scholars to determine whether religious principles are being obeyed. Some scholars argue that this decentralised approach allows more flexibility and diversity in Islamic finance. Bahrain's central bank said that a public consultation period for its draft rules would close on Oct. 16. These provisions could place Bahrain among the strictest jurisdictions for sharia scholars.

#Saudi banks’ liquidity comfortable in spite of outflows, says Fitch

According to a recent Fitch Ratings report, major Saudi banks continue to report liquidity coverage ratios (LCRs) above 100% despite a 30% outflow of government-related deposits. The banks’ ability to withstand such a shock demonstrates that their liquidity positions are resilient. The Saudi Arabian Monetary Agency (SAMA) released $5.3 billion (20 billion Saudi riyals) of government-related deposits into the banking sector yesterday. According to Fitch Ratings, Saudi banks will continue to adopt careful liquidity management strategies in order to protect their LCRs from falling below current levels.

Kuwait Finance House strengthens its #Malaysia operations and supports local Halal industry

Kuwait Finance House-Malaysia (KFH-Malaysia) is taking steps towards expanding its operations in Sarawak on top of the two existing branches at present. CEO David Power reinstated KFH's commitment to grow and expand after paying a courtesy call on Chief Minister Datuk Patinggi Tan Sri Adenan Satem. He added that there were 15 branches throughout Malaysia since its establishment in 2006, two of them in Sarawak. He noted they were evaluating the performance of the two existing branches first and consider to set up another branch. KFH Malaysia is looking forward to stronger business ties in the state in the long term to provide Islamic financial services and products to the people of Sarawak.

Leasing leader SKL invests in Islamic Finance for strategic growth

#Kazakhstan based SK Leasing (SKL) announced that it has engaged Shariyah Review Bureau (SRB) to help the company achieve Shari'a Compliance in its business activities. Managing director Duman Nurbayev said SKL is going to be the first leasing company in Kazakhstan to be fully converted into Sharia compliant activities. Also, they are planning to be the first company in the CIS region which will provide a wide range of Islamic Financial products and services. SKL finances projects in the real economy sector for renovation, modernization and expansion of fixed assets. SKL has 3 domestic offices and approximately 240 clients. Its regional network includes representations in Almaty, Astana and Atyrau.

#GCC banks to stay under pressure until 2017 on commodity gloom: S&P Global

According to S&P Global Ratings, banks in the Gulf Cooperation Council countries will remain under pressure for the remainder of 2016 and 2017. The operating environments in these emerging markets are suffering from the effects of low commodity prices and weakening local currencies outside the GCC. S&P thinks that not only will banks' loan growth decline, but profitability will also drop. On a positive note, S&P thinks that the deterioration will be largely controlled and that banks have the capacity to absorb the negative impacts thanks to their strong asset quality, good profitability, and strong capitalisation.

State fund probes 1.6 mln Bank Asya accounts for Gülen links

Turkey’s Saving Deposits Insurance Fund (TMSF) has probed more than 1.6 mn bank accounts because a number of public institutions wanted to learn whether any of their employees had an account with Bank Asya. The bank was linked to the controversial Gülen movement, which was believed to be the mastermind behind the failed July 15 coup attempt. In line with these probes, some 700,000 people have been searched since the end of 2013. When suspending public officials after the failed coup attempt, one of the main criteria under consideration was whether they were a Bank Asya customer and if they had made financially suspicious banking transactions. Turkish regulators canceled the banking license of Islamic lender Bank Asya on July 24.

#GCC’s Islamic banks have stronger liquidity profiles

Retail-focused Islamic banks in GCC countries have strong liquidity coverage ratios (LCRs) due to their large base of core retail customer deposits and low reliance on market-sensitive wholesale funding. According to Moody’s, retail deposits in 2015 comprised around 67% of Islamic banks’ customer deposits for the three GCC countries, compared to 40 for conventional banks. Islamic banks in GCC countries have become systemically important and continue to increase their market penetration, outpacing conventional banks. Sustained lower oil prices continue to reduce the flow of deposits and could lead to a gradual weakening of the LCR metrics for both Islamic and conventional banks.

Interview with Mr. Khairul Kamarudin, Deputy CEO of Bank Islam

In this interview deputy CEO of Bank Islam in Malaysia, Khairul Kamarudin, talks about the challenges Bank Islam had to face during the years. The bank had heavy losses in 2005 and 2006 and had to manage the misconceptions of the public as well. Today, Bank Islam’s customers have grown to more than 5 million. The bank was one of the four founding Islamic banks to form a consortium that launched the Investment Account Platform (IAP) in 2015. The IAP platform facilitates direct investment by investors into viable ventures of their choice. Bank Islam is involved in several social projects and foundations, like the Projek Bantuan Rumah (Housing Aid Project) and Promoting Intelligence, Nurturing Talent and Advocating Responsibility (PINTAR) Foundation.

Musharika, Modaraba and Wakalah: three modes of Islamic financing given exemption from Kibor

The State Bank of Pakistan (SBP) announced exemption from KIBOR as benchmark rate for Participatory (Musharika & Modaraba) and Wakalah-based products. For this exemption Islamic Banking Institutions (IBIs) will be required to ensure some conditions. IBIs will take adequate measures to mitigate equity investment risk in participatory mode based products. In addition, for Modaraba and Musharika based products, IBIs will ensure compliance with minimum Shariah requirements and AAOIFI Shariah Standard No 12 and No 13 as adopted by the SBP. For Wakalah-based products, IBIs will be required to use Arabic version of AAOIFI Shariah Standard No 23 on Agency as guideline in consultation with their Shariah Board.

Merger of Al Baraka Bank #Pakistan with Burj Bank Under the Name Al Baraka Pakistan with Total Assets in Excess of US$ 1.1 billion

Al Baraka Bank (Pakistan) Ltd (ABPL) and Burj Bank Ltd (BBL) will soon merge into a single Islamic Bank in Pakistan under the name Al Baraka Bank (Pakistan) Ltd. Al Baraka Islamic Bank-Bahrain will remain major shareholder subsequent to this merger. All 74 BBL branches will be converted into ABPL branches and the combined network of the merged entity will become 224 branches in over 100 cities across Pakistan. The total asset base of ABPL will cross US$ 1.1 billion. Adnan Ahmed Yousif, Chairman of ABPL said the amalgamated entity would be in a position to offer varied financial products and services.

KFH #Malaysia appoints David Power as its CEO

Kuwait Finance House (KFH Malaysia) has appointed David Power as its new chief executive officer (CEO). Power, who has been Kuwait Finance House (KFHK) group chief retail and private banking officer since 2014, is now replacing Ahmed S. Al Kharji. KFH Malaysia had also appointed Nor Azzam Abdul Jalil as its deputy CEO and chief (consumer banking) effective June 1, and David Wee Kim Peng as chief operating officer, effective April 1. KFH Malaysia was established on Aug 8, 2005.

Bahrain Islamic Bank plans £166m sale of non-core assets

Bahrain Islamic Bank is seeking to sell about 82m dinars (£166m) of unproductive assets such as land and shares as part of a five-year plan to boost growth. The lender sold 14m dinars-worth of these assets in the first half and plans the sale of a similar amount in the remainder of the year. S&P Global Ratings downgraded Bahrain in February because its vulnerability to slumping oil prices has increased since 2009. Fitch Ratings expects Bahrain’s general government debt to rise to almost 80% of GDP this year, from 62% in 2015. According to CEO Hassan Jarrar, Bahrain Islamic Bank plans to boost revenue by 20 to 25% annually, achieve a return on equity of 15% to 16% and cut its cost-to-income ratio to mid-40% from 60% over two years.

Moody’s upgrades #ratings of Masraf Al Rayan

Moody’s has upgraded Masraf Al Rayan’s long term issuer ratings to A1 from A2. Counterparty Risk Assessment is changed to Aa3 from A1. The outlook on the long-term ratings has changed to stable from positive. The upgrade of Masraf Al Rayan’s ratings reflects continued business diversification as a result of growth and profitability of the UK subsidiary. Moody's expects these diversification trends to continue as the bank’s UK subsidiary grows further. The rating agency also expects that Masraf Al Rayan will maintain strong capital ratios, as healthy internal capital generation supports the needs of future asset growth.

Emirates NBD's Islamic arm cuts over 100 jobs - sources

Emirates Islamic, the sharia-compliant arm of Dubai's largest bank Emirates NBD (ENBD), has laid off more than 100 people to adjust to a cooler economy. Growth in much of the United Arab Emirates (UAE) has slowed this year because of low oil prices. Earlier this year, Emirates Islamic cut around 200 jobs. Most of the latest jobs to go were in the department servicing small and medium-sized enterprises (SMEs). Chief Executive Shayne Nelson said the bank continued to focus on cost control. The bank had already made cuts in April when it made around 100 people redundant from its subsidiary Emirates Money to save costs. National Bank of Ras Al Khaimah said in January it would cut up to 250 jobs, while Abu Dhabi-based First Gulf Bank and the UAE operations of HSBC have reduced their headcounts since late 2015.

Sharjah Islamic Bank plans benchmark dollar #sukuk issue

Sharjah Islamic Bank will begin investor meetings on Aug. 29 for a potential benchmark U.S. dollar-denominated sukuk issue. The meetings will be held in Asia and Europe and the issue would be subject to market conditions. Bank ABC, Dubai Islamic Bank, Emirates NBD Capital, HSBC, KFH Capital, Maybank, Noor Bank, QNB Capital and Standard Chartered will arrange the meetings.

Islamic Development Bank opens Nigeria office

The Islamic Development Bank (IDB) Group formally opened its Nigeria Country Gateway Office in Abuja. The new office has the mission to focus its services on health, agriculture, infrastructure, small and medium-scale enterprise and regional integration. IDB President Ahmad Ali said the group’s presence in Nigeria would strengthen socio-economic, technical and commercial cooperation between the bank and member countries in Africa. He added that this was important with the completion of the last portion of Trans Saharan Road linking Algiers in North Africa and Lagos. The Minister of Finance, Kemi Adeosun urged the IDB to support Nigeria’s effort to reconstruct the North East part of Nigeria devastated by years of militancy by insurgent group, Boko Haram.

Bosna Bank International H1 net profit more than doubles

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.

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