Luxembourg

Le piège de la complexité

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.

#Luxembourg set to take over London’s Islamic finance hub position in Europe

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.

An interview with the Eurozone’s first Islamic bank

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.

BCCI case: The Luxembourg Court of Appeal refuses to reopen the liquidation proceedings

On 2 March 2016, the Luxembourg Court of Appeal has denied an appeal filed by Dr. Adil Elias, Faisal Islamic Bank of Egypt and a handful of other creditors of BCCI against a judgment previously rendered by the Luxembourg Commercial Court, which had refused to reopen the liquidation proceedings of Bank of Credit and Commerce International S.A. (“BCCI S.A.”) and BCCI Holdings (Luxembourg) S.A. (“BCCI Holdings”). Back in July 1991, the Luxembourg, English and Cayman Islands regulators undertook a joint action to close down the operations of the BCCI banking group, and in all three jurisdictions, joint liquidators were appointed to deal with one of the largest bankruptcies of a banking institution ever.

Franklin Templeton to set up syariah funds in KL

The world's second-largest asset manager by market value plans to attract some of the US$376 billion (S$528 billion) parked in Malaysian bank deposits by setting up global Islamic stock and bond funds next year.
Franklin Templeton Investments, which has more than US$801 billion in assets, will seek approval from the regulator to start at least two syariah-compliant funds to serve as offshoots from the three it has in Luxembourg, country head Sandeep Singh said in an interview in the Malaysian capital last week.
That would complement similar investment options available from CIMB- Principal Asset Management and RHB Islamic International Asset Management.
The new funds will widen choices for Malaysians looking to diversify after this year's 17 % plunge in the ringgit and a political scandal hurt confidence. A looming US interest rate increase has already prompted global investors to offload twice as many stocks in the South-east Asian nation as they did for all of last year as well as to cut bond holdings.

QInvest, Luxembourg host workshop to focus on Shariah finance themes

Luxembourg for Finance and QInvest are hosting an Islamic finance workshop next week in the European country to debate some of the pressing themes in the Shariah finance industry.
The event, which will be held November 24, will bring together investment fund professionals, bankers, corporate houses and industry practitioners to discuss sukuk issuance and ways of promoting the Shariah bond market as well as the emergence of Islamic high yield financing as an alternative.
The workshop will have presentations from several senior officials of QInvest as Hani Ibrahim, head of Debt Capital Markets; Alexander Armstrong, head of Financial Institutions and Structured Finance; and Dr Ataf Ahmed, head of Asset Management.
They will be joined by Luxembourg and international panellists, including the chief executive of Luxembourg Stock Exchange.

QInvest net profit up 69 percent in third quarter

QInvest, Qatar’s leading investment group and one of the most prominent Islamic financial institutions globally, yesterday announced that its net profit for the third quarter grew 69 % to $33.8m while revenues jumped 37 % to $78.7m.

“We are very encouraged by our performance during the third quarter of 2015. With our commitment to drive growth and innovation across the business, we have continued to source new opportunities, strengthen our brand and deliver positive returns. Whilst we expect on-going market volatility and economic challenges to remain present, we are confident on the outlook for the business. We have an exciting active pipeline of deal flow and a unique market position to leverage investment opportunities across the GCC region and selected markets in Europe, Asia and the US” said Tamim Hamad Al Kawari, CEO of QInvest.

Islamic finance gains traction in search for alternative models

Islamic financing is gaining traction even among non-Muslim countries in a bid to use sustainable and equitable form of alternative models, the Malaysian Prime Minister said on Tuesday. London issued its second Islamic sukuk after its first bond issue was oversubscribed 14 times. In addition to London, Luxembourg and South Africa, Hong Kong has also issued sovereign sukuks.
“Ever since the global financial crisis in 2007-08 there has been a sharp demand for alternative economic and business model that reduces the level of speculation as conventional model that has inherent weakness,” Najib Razak told journalists. “Over-leveraging is believed to have been the root cause of the disaster — but again, that is prohibited in Islamic finance. As a result, Islamic banks remained strongly capitalised and resilient against financial market volatility, while continuing to contribute positively to equitable and sustainable growth,” he said.

Luxembourg plans new sukuk in '16

The Grand Duchy of Luxembourg is keen to issue another sukuk next year following the success of the QInvest-assisted, first euro-denominated sovereign sukuk issued in September 2014, Finance Minister Pierre Gramegna said. He attended a roundtable discussion in Doha, focussing on strategic co-operation between the two countries in the field of international finance, among others. According to Gramegna, the seminar focused on Luxembourg as a diversified financial centre for private and institutional investors from the Middle East, as well as a leading Islamic finance centre in Europe. He noted that economic ties between the two countries led to a number of Qatari investments in the Grand Duchy.

Dubai-Luxembourg firm launches Islamic factoring for SMEs

Tawreeq Holdings, an investment group based in Dubai and Luxembourg, has launched an Islamic trade receivables financing platform catering to the Gulf region's small businesses, with plans to tap the capital markets to fund the venture. The firm's CEO Haitham Al Refaie said the concept aims to give smaller firms a funding alternative to bank loans. Besides start-up capital from regional investors, the firm plans to raise additional funds, he added without giving monetary figures. Tawreeq's platform provides sharia-compliant factoring by connecting corporates, suppliers and investors to securitise trade receivables.

Tawreeq launches Shari'ah Compliant Supply Chain Finance Platform

Tawreeq, an independent Dubai/Luxembourg based group, has launched a supply chain finance platform targeting SME’s. The company led a development process to devise a Shari'ah-compliant workflow for supply chain finance. At its core is an IT platform that connects all elements under a single, cloud-based system that allows global reach and service. Tawreeq tackles challenges faced by SMEs through cash-flow tools known as factoring and reverse factoring. Tawreeq has worked closely with Amanie Advisors to ensure Shari'ah compliance and certification of its products and processes.

Luxembourg Bond Plan to Test Islamic Shariah Cash Depth

Luxembourg is poised to test demand for Islamic bonds as the issuer of the lowest-yielding sovereign sukuk on record plans to become a regular borrower. The country has been “encouraged” by investor feedback and the market’s readiness and will begin working on its next sukuk, Finance Minister Pierre Gramegna said. Luxembourg sold 200 million euros ($254 million) of five-year Islamic bonds in September priced two basis points below midswaps. That compared with 10 basis points above the swaps for notes of similarly rated Islamic Development Bank. However, Luxembourg’s sukuk isn’t for everyone, least of all those looking for yields, an expert said. The reason why it’s so tight is because there are still Islamic investors that are looking for very conservative assets.

Reasons for Islamic financial products are populare outside the Muslim world

There are many reasons that Islamic financial products are popular outside the Muslim world. Britain became the first non-Muslim country to issue sukuk, the Hong Kong Monetary Authority made an issuance, and the governments of Luxembourg and South Africa will follow suit later this year. Last month Goldman Sachs issued an Islamic bond, and before the end of the year, Bank of Tokyo-Mitsubishi and Société Générale, a French bank will probably do the same. All of these entities want to get a piece of the $2 trillion Islamic finance market.

Luxemburg debut sukuk sees strong demand

According to the finance minister, Luxembourg has issued its first 200 million euro ($254 million) five-year Islamic bond, distributed across 29 accounts, although the market favours dollar-denomineted sukuk. Nevertheless the country thereby becomes the first AAA-rated government to issue euro-denominated sukuk, or Islamic bonds, following London, Hong Kong and South Africa. Luxembourg hired HSBC, BNP Paribas, Banque Internationale à Luxembourg and Qatar-based QInvest to arrange its sukuk.

Eurozone to get its first Islamic bank

A consortium comprising a reputable bank, royal families, and a group of leading businessmen in the GCC, has announced that an agreement to set up the first Islamic bank in the eurozone has now been concluded.
Eurisbank will have a start-up capital totalling Euro 60m, branches in Paris, Brussels, The Netherlands and Frankfurt are planned. Set to be headquartered in Luxembourg, the founders, promoters and Deloitte have concluded a meeting with the CSSF (Luxembourg's Supervisory Authority), which has welcomed the idea. Deloitte has completed a feasibility study for the bank, which is said to demonstrate high return on investment, taking advantage of being the first of its kind to operate from the eurozone countries.

Luxembourg Plans Investor Meetings to Market Debut Sukuk

Luxembourg will start meeting investors in the next two months to drum up support for a debut sale of shariah compliant bonds. The country, which has an AAA credit rating at Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, is planning to become the second non-Muslim nation to issue a sovereign Islamic bond after the U.K. raised 200 million pounds ($335 million) in June. Ministry of Finance officials will meet investors in Europe, the Middle East, and Asia from the end of September to promote the proposed sale. The ministry is planning to use three government buildings as assets in the deal.

Luxembourg Sukuk bill passes into law

On 9 July 2014, the Luxembourg Parliament approved draft law 6631 on a sale and buy-back transaction of real estate assets necessary to issue an Islamic finance bond. By obtaining parliamentary approval, the Ministry of Finance has now paved the way to the issuance of the Sukuk transaction, marking a milestone in the development of Islamic finance in the Grand-Duchy of Luxembourg. This approval in Parliament underlines the political will to diversify and develop alternative markets within the financial services industry, according to a statement of the Luxembourg Ministry of Finance.

RPT-Fitch Upgrades ATLANTICLUX's IFS to 'BBB+'; Outlook Stable

Fitch Ratings has upgraded Luxembourg-based ATLANTICLUX Lebensversicherung S.A.'s (ATL) Insurer Financial Strength (IFS) rating to 'BBB+' from 'BBB'. Moreover, its Long-term Issuer Default Rating (IDR) was upgraded to 'BBB' from 'BBB-'. The Outlook is Stable. At the same time Fitch has upgraded ATL's SQ ReVita Value of Business In-Force transaction and its Salam III Sukuk (Islamic bond) programme to 'BBB' from 'BBB-'. The upgrade reflects ATL's track record of strong profitability, low investment risk and its strong capital position. However, these positive rating factors are partly offset by ATL's dependence on unit-linked products and its fairly small size.

Battle for Shar’ia Money

Such is the hype of activity about Shari’a-compliant product at the moment that even The Grand Duchy of Luxembourg has now moved a step closer towards the issuance of a debut sukuk. The government presented a draft bill to parliament that could get deal going, proposing the issuance of a €200m-equivalent sovereign sukuk denominated. Euros or US-Dollars, both are welcome. Additionally, the Luxembourg government has also identified three real estate assets to underpin the transaction.

FWU Group successfully issues the second tranche of $100 million Sukuk Al-Wakala program

The Sukuk has been assigned an investment grade credit rating of BBB- by Fitch and is being issued in amortizing tranches, each with a term of five years, and an average life of approximately 2.5 years. Distributions will be made quarterly to investors on a fully amortising basis, with a profit rate of seven per cent per annum. The first tranche of the program, for $20 million closed in October 2013, and was oversubscribed. The transaction was structured to fund the operations of one of FWU’s five main subsidiaries, Atlanticlux Lebensversicherung S.A. (ATL), Luxembourg. The lead arranger and bookrunner for this issuance, EIIB-Rasmala, comprises the AIM-listed European Islamic Investment Bank Plc and Rasmala Group.

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