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Michael Saleh Gassner
The successful closure and signing of a US$ 230,500,000 and EUR 115,300,000 Syndicated Dual-Currency Murabaha Financing Facility for Asya Kat?l?m Bankas? A.?. (Bank Asya) was announced by its Initial Mandated Lead Arrangers and its Bookrunners. The Facility was signed on 30 April 2013 and a commemorative event was being held to mark the occasion. Launched at US$ 225 Million, the Facility was oversubscribed to close at US$ 382 Million equivalent with participation from 28 banks from across the globe. It carries a profit rate of 125 bppa over the relevant benchmark. Bank Asya will use the proceeds to expand its financing activities in Turkey.
Bahrain-based Islamic investment bank, Gulf Finance House (GFH) has secured approvals from 32 syndicates for the restructuring of WestLB Murabaha facility. GFH also obtained approval from its sukuk holders to restructure its outstanding debt amounting to $105m. All debts are expected to mature in 2018 and provide a two-year grace period for the principal repayment amount.
Dubai Multi Commodities Centre (DMCC) has announced the inaugural Commodity Murabaha transaction on its DMCC Tradeflow platform. The transaction took place between Noor Islamic Bank and Commercial Bank of Dubai, marking the official launch of the DMCC Tradeflow Islamic product portfolio. According to Ahmed Bin Sulayem, Executive Chairman, DMCC, the DMCC Tradeflow pioneered the use of an electronic central registry of commodity ownership in Dubai. The commodities available on DMCC Tradeflow include oil products, foodstuffs and base metals and if required these goods can be inspected easily by Shari’ah scholars.
Egypt's Principal Bank for Development and Agricultural Credit (PBDAC) is launching sharia-compliant retail banking services this month to meet increasing demand in rural areas. According to Abdel Rahman Al Kafrawi, head of Islamic transactions at PBDAC, the bank will offer retail finance at 18 Islamic branches through murabaha and musharaka structures. The new Islamic services cover areas including purchases of durable goods and agricultural equipment, the setting up of clinics and medical laboratories, and the financing of education fees. PBDAC launches its new services with a portfolio of 50 million pounds ($7.5 million), that can be raised to 100 million next June based on demand.
Al Jazeera Finance (AJF) has signed a $95m (QR345.8m) 3-year dual currency Murabaha facility with a syndicate of banks from the GCC. QInvest acted as sole bookrunner and structuring adviser to AJF. Qatar Islamic Bank took the Mandate Lead Arranger (MLA) role and is also acting as the Investment Agent. Ahli United Bank, First Gulf Bank UAE and QInvest were the Lead Arrangers. According to Amer Al Jabri, Chief Executive Officer of AJF, the agreement is an important stepping stone towards diversifying AJF's funding sources, and reaching out to a wider group of banking relationships.
As a global leader in the field of Islamic finance, Malaysia boasts with state-of-the-art infrastructure and unparalleled government support. The development of Commodity Murabaha (CM) transactions on Bursa Malaysia under its Bursa Suq Al Sila’ enabled the country to try to snatch away the business of liquidity management by Islamic banks from the London Metal Exchange (LME). Bursa Malaysia’s Suq Al Sila’ is a representation of trading in commodities with complete irrelevance of commodities to the intended outcome. This exceeds simple exchange of cash between two participating banks.
Islamic finance had another great year. Many of its market segments progressed, like for example the Sukuk market gaining more maturity. Despite the ongoing debt crisis a good sign of hope and happiness.
Nevertheless we are - as an industry - still not satisfied with the achievements. Islamic finance shall grow stronger in terms of social impact and in terms of substance:
Hence, please allow me to re-iterate my call for participating in international initiatives beyond just our own industry to learn and spread knowledge and experience:
Calling Islamic financial institutions to become member of the United Nations Finance Initiative
Inshallah we see more Islamic financial institutions taking a lead in SRI, Social Impact Investing and other approaches while contributing with Islamic finance knowdledge to the conventional industry. The time is now; and there are signs that Malaysia aims for a lead:
Islamic interbank lending is changing its sympathies from Murabaha contracts to Wakala. This is considered to be a stronger Sharia-compliant process. The International Islamic Financial Market (IIFM) is working on the establishment of standardized agreements in the use of Wakala contracts. Since Murabaha have come under increasing criticism from Sharia scholars as compliant instruments, Wakala is pointed out as a suitable alternative.
An Islamic financing facility worth $500m was signed between Qatar Telecom (Qtel) and Qatar Islamic Bank (QIB). The bank plays the role of Sole Mandated Lead Arranger and Investment Agent for the deal. The financing is structured as an 18 month Shariah-compliant "Revolving Murabaha". According to Chief Executive Officer of the Qtel Group - Dr Nasser Marafih - the deal will make the relationship between Qtel and QIB stronger. Ahmad Meshari, Acting Chief Executive Officer of QIB, added that the financing facility enables further avenues of collaboration between the two companies.
Al Ramz Securities' leading role in local industry has again been reaffirmed by the introduction of the Islamic Margin Trading service, which is first for the country. The pattern of the service is similar to that of the ‘Murabaha’ type of Shariah-compliant ‘cost-plus’ financing. Using its Islamic Margin Trading scheme, the company purchases Islamic-compliant shares specifically agreed upon with the client and, after that, resells them in accordance with the Murabaha sharing concept. The payment mode is to be chosen in advance.
The German language book on Islamic finance by the Editor of IslamicFinance.de and Dr Wackerbeck from Booz Consultants is now translated to Chinese.
Please find the biographical information below:
Authors: Michael Gassner / Philipp Wackerbeck
Title: Islamic Finance – Islam-gerechte Finanzanlagen und
ISBN number: 978-7-5139-0217-5
PUBLISHER: Beijing - Democracy and Construction Press
Pre-Publication Date: 2012.7
Full biographical details: http://db.lib.bua.edu.cn/asord/asorditem.php?asord_marc_no=0001344540
Book review about the German language original: http://www.rpi-virtuell.net/workspace/24686AD5-936C-476D-9EA0-65E2968590...
Well, repeatedly we read and hear about the lack of profit/loss sharing (equity finance) in Islamic finance. Here my five cents about it:
1) Islamic commercial law, Fiqh Muamalat, per se has no preference of either permissible mode of finance, be it musharaka, ijara or murabaha whatsoever. All is halal. However, the call for modesty of debt in many hadith and the seriousness of being indebted upon death (withholding of death prayer) shows a call for a solid equity portion in business; let's call it a technical preference.
2) If we look up all debt financing modes (e.g.Murabaha, Ijara) there are remaining difficulties to finance wages, rents and installments on fresh debt. This is a true indicator for a required minimum amount of equity in a company.
3) Point 1) and 2) leads us to demand a sound debt/equity ratio.
IslamicFinance.de offers an overview about new job openings of October 2012 herewith - firms aiming to be included please send a job profile/hyperlink to email@example.com - the full details of the advert has to be accessed by the hyperlink below the brief description:
Product Manager, Islamic Banking
Standard Chartered Bank - United Arab Emirates-SCB (United Arab Emirates)
?Development of Islamic wealth products across CBMS, insurance and investment streams to create customer value proposition.
?Ensure successful implementation of the Islamic banking strategy across high value segment.
?Concentrated responsibility to work with the Priority/Wealth/Private/SME product/frontline teams and support functions to build on the current Islamic banking capabilities and to create seamless customer experience
?Act as a product specialist for RMs on client meetings to introduce and explain the Saadiq solutions to meet their needs
?Financial budgeting and business forecast. Evaluation of financial performance.
The industry's first Islamic Euro Nostro Account has recently been launched by Standard Chartered Bank. It will allow Islamic banks across the world to earn profits on their account balances, respecting the general rules of Murabaha. Bank Alfalah Limited from Pakistan was the first bank which has signed an agreement with Standard Chartered Bank.
In an announcement on Wednesday, Bank of London and The Middle East plc (BLME) informed about a significant senior secured transaction with Greenergy Biofuels Limited. BLME is the lead arranger and the main shareholders with equal stakes are BLME and a bank basedin Qatar. The facility is secured against the assets of a biodiesel plant located in Immingham, Humberside, UK.
Arcapita Islamic investment bank, which finds itselb in Chapter 11 bankrupcty, plans a new financial move. It will make a $1.9m Murabaha financing with a profit rate of 15% possible. The money will flow into District Cooling - a joint venture with Dalkia Utilities Company serving for district cooling and other services to three developments in Bahrain and Abu Dhabi. The financing is supposed to play the role of a bridge. Meanwhile Arcapita and District Cooling are occupied to renegotiate a concession agreement with Abu Dhabi’s Tourism Development & Investment Company (TDIC).
Istanbul Real Estate Investment Trust Is REIT signed a Murabaha facility worth $50 million in a syndicate with a number of GCC banks. The facility has a two-years tenor and a profit rate of LIBOR +250 bps. Playing different roles, banks included in the syndicate are Qatar Islamic Bank, Barwa Bank, First Gulf Bank, and Mashreq Bank. Sole Bookrunner and Structuring Advisor to Is REIT was QInvest .
Development Bank of Kazakhstan has lately decided to swap their 240 million-ringgit sukuk (five-year murabaha Islamic note) to U.S. dollars. The Astana-based bank already sold debt denominated in the Malaysian currency in July of this year, in order to prepare the dollar swap that comes due in August 2017.
IslamicFinance.de is privately funded for many years. Now, for the first time, you have the possibility to make a contribution, from one Dollar upwards!
The technical details, and the money transfer via paypal is organised by Kapipal a new online fundraising tool:
On the blog I gave some more thoughts about Islamic finance media for those interested: http://www.islamicfinance.de/?q=node/3454
Please also note: The fundraising action has a deadline, so act today, not tomorrow and tell your friends about it!
All donors who will leave a message will be listed in the article, which follows after closure of the fundraising period.
I am happy to meet you in person either on 19th March in Milano (http://www.islamicfinance.de/?q=node/3396) or on 10th May in Frankfurt (http://www.islamicfinance.de/?q=BAFINII) at the respective Islamic finance conference.
Wa at Taufiq min Allah, all the best,
Michael Saleh Gassner