Bloomberg

Religion Meets Profit Generation in a Slew of New Faith-Based ETFs

Wahed Invest launched its first exchange-traded fund in the U.S. in July 2019. In June 2020, money manager Global X filed to launch a bond fund aligned to Catholic values. The surge in religious ETF offerings has come alongside the boom in responsible investing, often referred to by the shorthand ESG, for environmental, social, and governance. Global assets in ETFs under the ESG category have almost doubled in the past year, now reaching more than $110 billion. Wahed FTSE USA Shariah ETF tracks an index compiled by the FTSE Russell, which works with a board of experts that determines each company is compliant. Wahed’s ETF has seen inflows of about $35 million since its July 2019 launch.

When Religion Tangles With Tax Law: Things to Consider (Podcast)

In this podcast Sam Brunson, professor at Loyola University Chicago School of Law, talks about accommodating religious practice with United States Tax Law. In his book, 'God and the IRS', he lays out a three-question framework when considering tax exceptions based on religious practice. The first is: Does an individual’s religion cause them to act in a tax disadvantaged way. The second is: If it does, what kind of accommodation would put them in a similar after-tax position as someone without the religious constraints. And third, it asks whether there’s an extrinsic reason not to grant the accommodation. The book tries to provide a basis for deciding when an accommodation makes sense and when an accommodation doesn’t make sense.

Who's Talking to Whom as Record #Merger Wave Shakes Up Gulf Banks

Bloomberg provides an overview of which lenders are in merger talks and where those conversations are at. Talks are underway in Abu Dhabi for a possible tie-up between Abu Dhabi Islamic Bank with First Abu Dhabi Bank, a merger that would create one of the Middle East’s largest lenders. Saudi Arabia’s biggest lender National Commercial Bank said at the end of 2018 that it’s starting initial talks with Riyad Bank. This deal would form the Gulf’s third-biggest lender. Dubai’s largest bank Emirates NBD is buying Turkey’s Denizbank for $2.8 billion. The three-way merger of Abu Dhabi Commercial Bank, Union National Bank and Al Hilal creates the fifth-biggest lender in the Gulf.

ADIB's Riad Sees Strong Uptick in #Sukuk Activity in Second Half

In this interview Amir Riad, head of corporate finance at Abu Dhabi Islamic Bank (ADIB) talks about the UAE's economy and the lender's sukuk business. Riad sees a positive traction as the oil price is stabilising and the capital markets are deepening. ADIB has just announced the issuance of a new tier 1 sukuk, which replaces the bank's issuance in 2012. He expects a strong sukuk activity in the second half for the whole GCC region.

#Qatari Banks May Reveal Merger Plan as Soon as This Week

Barwa Bank and International Bank of Qatar (IBQ) may announce plans to merge as early as this week. Combining Barwa and IBQ would partially salvage a proposed three-way merger with Masraf Al Rayan that was abandoned in June after 18 months of talks. That consolidation would have created the country’s largest Shariah-compliant bank and the Middle East’s third-biggest Islamic lender with more than 178 billion riyals ($49 billion) of assets. The smaller merger will create a lender with about 82 billion riyals in assets, the sixth-largest in the country. Each bank was valued around $1.8 billion in two separate share sales in 2014.

New #Egypt Finance Chief Looks to #Sukuk for Funds

Egypt is considering tapping the international sukuk market in the coming fiscal year, as it looks to diversify funding sources. The issuance would mark a revival of a plan shelved since 2013 when the government issued the law to pave the way for the country’s first Islamic bond. Finance Minister Mohamed Maait said that the ministry has yet to discuss how much it wants to raise from conventional bond sales in the coming fiscal year. The focus is shifting toward long term borrowing. The government is also planning on launching the first offerings of stakes in public sector companies in July or August. The initial stakes are expected to raise between 15 billion and 18 billion pounds.

Spreading Islamic Banking in #Uganda, One Sermon at a Time

Ugandan investors are set to start a fully fledged Islamic institute called Midsoc Bank. Its promoter, Haruna Sebaggala, says it may start operations in six months, depending on licensing and funds. Midsoc Bank aims to target the unbanked population of the country, including both Muslims and non-Muslims. Currently, only 40% of 19 million potential customers have bank accounts. About 14% of Uganda’s 41.5 million population are Muslim. The nation’s largest banks such as Stanbic Bank Uganda and Standard Chartered Bank Uganda haven’t committed to Islamic banking. So far only Tropical Bank has confirmed it will offer Islamic products. Tropical Bank plans to initially run a dedicated department before establishing a subsidiary.

Dubai State Holding Firm Is Said to Seek $1 Billion #Refinancing

Investment Corporation of Dubai (ICD) is seeking to raise a $1 billion loan to refinance its existing debt. The state-owned holding company aims to raise a five-year loan to partly repay a $2.55 billion facility that matures in June. ICD owns stakes in some of Dubai’s biggest companies including Emirates, Emaar Properties and Emirates NBD. The company raised the loan in 2013 and it includes a $875 million facility and a 6.15 billion dirham ($1.7 billion) portion. HSBC Holdings, Citigroup, Standard Chartered, Emirates NBD and Dubai Islamic Bank were among lenders that provided the original loan.

Dana Gas #Sukuk Talks Stall as It Seeks 15% Discount on Buyback

Talks to resolve a dispute between Dana Gas and its sukuk holders broke down after the company proposed a 15% cut on some of the debt. The United Arab Emirates-based energy company suggested buying back about $200 million at 85 cents to the dollar, and rolling over the rest into new securities with a profit rate of 4%. In June, Dana Gas announced it no longer considers its sukuk compliant with Shariah standards. It has since missed profit payments in July and didn’t repay two $350 million mudarabah bonds due Oct. 31. Dana applied to set aside a Nov. 17 judgment that went against it because the company couldn’t participate in the trial. If its application is unsuccessful, Dana Gas will appeal against the judgment. If the appeal is successful, the issue will be reheard by the English High Court over a three-day period from Jan. 30.

#Saudi Regulator Urges Consolidation in Crowded #Insurance Sector

Saudi Arabia’s insurance industry needs more consolidation and foreign input to help create solid companies. According to Ahmed Alkholifey, governor of the Saudi Arabian Monetary Authority (SAMA), there are some small firms which are incapable of surviving in the market in their current condition. There are 33 insurance firms listed on the country’s stock exchange with a combined market value of $11.1 billion. The governor said two foreign firms would soon increase their stakes in Saudi insurance companies, but did not mention names. Banque Saudi Fransi sold an 18.5% stake in Allianz Saudi Fransi Cooperative Insurance to Allianz Europe BV. In June, Al-Ahlia Insurance started non-binding talks with Gulf Union on a proposed merger. An agreement is expected to be reached by the first half of 2018.

#Saudi Arabia's Largest Bank Said to Hire #Investment Banking Head

Sameer Nawaz has been appointed head of investment banking at Saudi Arabia’s Al Rajhi Capital. Nawaz will be responsible for building an investment banking team at the securities division of Al Rajhi Bank. Previously, he was co-head of investment banking at Saudi Fransi Capital. Usman Sikander, who was co-head of investment banking at Saudi Fransi Capital with Nawaz, will become head of investment banking. Banks are hiring in Riyadh in anticipation of a boom in fees as the government ramps up efforts to wean the economy off oil. Elyas Algaseer, Mitsubishi UFJ Financial Group's co-head said that the bank was looking to hire in Saudi Arabia in expectation that privatizations in the country could exceed $350 billion in about five years.

Alinma Bank's CEO on Growth Strategy, #Sukuk Issuance

In this interview Abdulmohsen Al-Fares, CEO of Alinma Bank, discusses the growth in the company's balance sheet, credit growth, their Sukuk issuance and competition from other banks. Alinma Bank has maintained its growth pace and Al-Fares is optimistic about the upcoming Saudi Arabian government sukuk. It is an opportunity not only for companies and banks, but also for the secondary markets. Timing and size of the sukuk has not been decided yet. In his opinion, competition from other banks will not affect Alinma Bank, as they will compete only in very small segments, not in retail. He added that the stand-off with Qatar would not have a negative impact on the Saudi economy, as the kingdom's economy is strong and the economic relationship with Qatar is small in size.

KFH Said in Talks for #Bahrain Ahli United Bank, Kuwait Unit

Kuwait Finance House is in talks to buy Bahrain’s Ahli United Bank in a deal that would create one of the Middle East’s largest Islamic lenders with $85 billion of assets. However, there is no guarantee that a deal will take place and final agreements haven’t been reached yet. Lower oil prices are forcing Gulf lenders to consolidate for scale. Abu Dhabi lenders National Bank of Abu Dhabi and First Gulf Bank recently merged to create a regional powerhouse with $175 billion of assets. Qatar’s Masraf Al Rayan is planning to combine with unlisted Barwa Bank and International Bank of Qatar to create the country’s largest Islamic lender. Ahli United in Bahrain declined to comment. KFH shares have lost 0.6% so far this year, giving the lender a market value of $9.3 billion. Ahli United shares have jumped 16% so far this year, giving it a $5.57 billion market capitalization.

#Kuwait's Noor to Weigh Stake Sale of #Pakistan's Meezan Bank

#Kuwait’s Noor Financial Investment is considering the sale of its 49% stake in Pakistan’s largest Islamic lender Meezan Bank. The stake has a market value of about $396 million at the current market price, according to data compiled by Bloomberg. Noor Financial hired advisers to assess opportunities, but it has not tasked the consultants with either increasing or decreasing its stake in Meezan Bank. Shares in Noor Financial gained 5.9% by 12:30 p.m. in Safat, Kuwait, the highest since April 16. Meezan advanced 3.6% in Karachi trading to a record high.

#Aramco Plans to Raise #$3 #Billion in #Sukuk Sale

Saudi Aramco has plans that would raise 11.25 billion riyals (3 billion US-Dollar) from its debut Islamic bond. That would boost the size of the sale because of investor demand. King & Spalding Partner Rizwan Kanji weighs in on "Bloomberg Markets: Middle East."

Saudi Aramco to Price Islamic #Bond in $10 Billion Debt Push

Saudi Arabian Oil Co (Aramco) set final pricing for its debut Islamic bond as the company presses ahead with plans to raise $10 billion in debt. Aramco is selling debt with a seven year tenure in a private placement at 25 basis points over the country’s interbank offered rate. The oil giant is selling debt ahead of an initial public offering in 2018 as the country’s finance ministry plans to cut taxation on the company. The cut will boost Aramco’s net income by 300%, putting per-barrel income in a range similar to that of international oil companies. Aramco’s sukuk follows Saudi Arabia’s $17.5 billion bond issue in October, which was the state’s debut international debt sale. Saudi Arabia is also said to be planning a sale of riyal-denominated Islamic bonds to local institutions to help boost the country’s Islamic bond market.

JPMorgan, HSBC, Citigroup Said to Be Hired on #Saudi Dollar #Sukuk

Saudi Arabia hired Citigroup, JPMorgan Chase and HSBC as global coordinators on its international Islamic bond sale. The kingdom also picked Deutsche Bank and BNP Paribas among others as lead managers for the sale. The sukuk could come as soon as this month. Saudi secretary-general of the Finance Committee, Mohammad Al Tuwaijri, announced in December the kingdom's plans to raise between $10 billion and $15 billion from international bond markets in 2017 and sell about 70 billion riyals locally. The world’s biggest oil exporter is considering international and domestic debt issues to help finance its budget deficit.

Alinma Bank CEO: Infrastructure, Low Oil Driving Lending

#Saudi-based Alinma Bank’s chief executive officer, Abdul Mohsen Al Fares discusses the bank's earnings and lending growth. Alinma Bank achieved a new record in the last quarter. Growth drivers include the infrastructure projects that started two years ago and will take other three of five years to complete. In terms of net interest margins, Al Fares believes that the recovery will come gradually. As interest rate is rising, the margin will also go up. Alinma Bank has expansion plans for 2017, it currently has 164 branches across the kingdom and it plans to open 12 new branches this year.

HSBC Said to Advise #Saudi Pension Fund on Financial Hub Sale

The local unit of HSBC Holdings is advising Saudi Arabia’s Public Pension Agency on the sale of its struggling financial hub to the country’s sovereign wealth fund. The Public Investment Fund is offering to acquire the Riyadh district for less than the pension fund’s 30 billion riyals ($8 billion) investment. The wealth fund is being advised by JPMorgan Chase, but a deal hasn’t been reached yet. The King Abdullah Financial District (KAFD) is about 70% complete and is failing to attract its target clientele, banks, auditors and lawyers. The sale is meant to rehabilitate the 1.6 million square-meter district which includes over 70 buildings. The district will become a special economic zone with looser visa rules and direct links to Riyadh airport as part of plans to restructure the development.

#China Islamic Bond Push Renews as Global-Focused #Funds Quadruple

China plans its first dollar sukuk issuance to tap a four-fold increase in Chinese funds that can invest in bonds overseas. Sichuan Development Financial Leasing plans to sell $300 million of Islamic bonds via Singapore-based special purpose vehicle, Silk Routes Capital. According to investment manager Hasif Murad, the predominant interest for this issuance will remain from yield-hungry domestic Chinese investors. Silk Routes Capital hired Standard Chartered, CIMB Group Holdings, Bank of China and Bank of China International to help to arrange investor meetings. In a sign that the traditional Silk Road is coming back to life, Chinese companies are building roads, railways and ports along the route to the Middle East, Africa and Europe.

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