Islamic Banking

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#Brexit suspense casts shadow over #UK as an Islamic finance hub

Uncertainty over the UK’s future status as a financial hub after leaving the European Union (EU) is already casting a shadow over London’s Islamic finance sector. It is estimated that London would lose at least 10,000 banking jobs and 20,000 roles in financial services as clients move €1.8tn of assets out of the UK. The banking exodus would also hit the Islamic finance sector in London, which is the largest globally in a non-Muslim jurisdiction. London currently hosts more than 15 large banks that operate Islamic finance windows and dozens of related service providers. A banking lobbying group has already urged the UK government to introduce post-Brexit laws that make sure that demand for Islamic finance services does not diminish. As long as the UK gives no clear direction whether and how it would excel as a financial hub, competitors will continue positioning themselves as alternative locations. Within the EU, Luxembourg and Dublin, and partly Frankfurt, have good chances to take on roles as Islamic finance hubs for Islamic finance institutions with business in the EU.

MSM okays 35 Sharia compliant firms

Muscat Securities Market (MSM) adopted a list of Sharia compliant companies for the second quarter of 2017. The list of companies includes 35 public shareholding companies: Al Saffa Food, Al Anwar Ceramic Tiles, Al Izz Islamic Bank, Al Jazeera Services, Al Kamil Power, Al Madina Takaful, Al Maha Ceramics, Bank Nizwa, Computer Stationery Industry, Dhofar Beverages and Food Stuff, Gulf International Chemicals, Gulf Mushrooms Products, Gulf Quarries, Majan Glass, Muscat Gases, Muscat Thread Mills, National Biscuit Industries, National Real Estate Development, Oman Cables Industry, Oman Cement, Oman Fisheries, Oman Flour Mills, Oman International Marketing, Oman Packaging, Oman Refreshments, Omani Telecommunications, Ooredoo, Port Services Corporation, Raysut Cement, Salalah Port Services, Shell Oman Marketing, Takaful Oman Insurance, United Power, and Voltamp Energy. The list is reviewed every three months by adding standards-compliant companies and eliminating those that lost their eligibility.

Silk Bank to grow in Islamic banking

#Pakistan's Silk Bank plans to expand its Islamic banking business amid growing demand for Shariah-compliant financial products in the country. The State Bank of Pakistan has given approval to the bank for opening of 20 Islamic and 15 conventional branches this year. Silk Bank CEO Shaukat Tarin said the bank was going to reduce the size of corporate banking, but increase consumer and SME segments. The bank’s consumer banking portfolio continued to grow, while its non-performing loans fell by Rs10 billion in January-June 2017. The bank also made its commitment to revive the mortgage business in the current low interest rate environment. Shuja Alvi, head of investment at Silk Bank, said the bank continued to make heavy investments. Since acquisition, the sponsors have invested Rs430 billion in the bank through multiple funding.

Deposits of Islamic banks grow 10pc

The State Bank of #Pakistan (SBP) issued the Islamic Banking Bulletin for April-June. It reveals that deposits of the Islamic banking industry increased by Rs156 billion or 10% quarter-on-quarter to Rs1,720bn. Deposits of the overall banking industry grew 6.5% over the same period. The share of Islamic banks’ deposits in overall banking industry’s deposits increased to 13.7% at the end of June from 13.2% a quarter ago. This growth helped Islamic banks improve their asset base. The share of Islamic banks’ assets in overall banking assets was 11.6pc at the end of June. Investments also improved thanks to sukuk worth Rs71bn that the government issued in June. Net investments of the Islamic banking industry increased Rs48bn or 9.9% in April-June to Rs537bn. SME financing increased to 3.2% and the share of agricultural financing stood at 0.4% at the end of June.

Hong Leong Islamic lends RM350m to TERAJU

Hong Leong Islamic Bank (HLISB) has pledged RM350 million for the Bumiputera Agenda Steering Unit (TERAJU) via its new Bumiputera companies programme. Of that amount, RM225 million will go to working capital and the balance for asset acquisition. The programme aims to increase Bumiputera SME's participation in the Malaysian economy by enabling small medium enterprises (SMEs) to scale up and compete in the open market. HLISB chief executive officer Jasani Abdullah said the bank targets to provide financing facilities to between 20 and 30 companies annually. He pointed out HLISB would be focusing on industries such as construction and infrastructure, telecommunications, agriculture, manufacturing and green technology sectors. Meanwhile, TERAJU chief executive officer Datuk Husni Salleh said HLISB's participation would assist Bumiputera participants to expand locally and overseas.

Conditions Conducive for Islamic Finance Expansion in #Morocco- Al Baraka Bank

Bahrain’s Al Baraka Bank deems that the regulatory framework in Morocco is conducive for the launch of an Islamic finance venture. The Bank’s Chief Executive, Adnan Ahmed Yousif said Al Baraka targets the expanding Islamic finance in Morocco in effort to diversify assets and revenues in Africa. Morocco is attractive for Islamic banks because of a competitive landscape that is free from large western lenders. Yousif added that reforms were being considered, but complete tax neutrality towards Islamic finance contracts was still needed. Bahrain’s Al Baraka group forged a partnership with Morocco’s BMCE Bank of Africa to create AL Baraka Maroc, which aims at creating a network of 25 agencies in Morocco.

Six #Islamic #banks collaborate to develop #waqf #fund

Six Malaysian Islamic banks have agreed to jointly develop a waqf fund which focuses on projects in four areas — economic empowerment, education, health and investment.
The banks are namely: Affin Islamic Bank Bhd, Bank Islam Malaysia Bhd, Bank Muamalat Malaysia Bhd, Bank Kerjasama Rakyat Malaysia Bhd (Bank Rakyat), Maybank Islamic Bhd and RHB Islamic Bank Bhd . They have signed a Waqf Fund Strategic Collaboration Agreement.

Rise of #Islamic #finance meets #human #capital #gap

The strongly growing popularity of Islamic banking and Islamic finance and its increasing global spread has led to a considerable undersupply of talent in this sector. Both the Middle East and Southeast Asia, but also new regions currently adapting to the alternative finance system such as in Africa and Central Asia are effected.

Estimations are that there is a shortfall of between 8,000 and 10,000 in main Islamic finance fields in Gulf Cooperation Council countries alone, plus more in peripheral sectors such as law and regulatory affairs, financial technology, insurance and others. Altogether, as the industry continues to grow, at least 56,000 people will be needed to serve the Islamic financial sector in the coming years, according to the Finance Accreditation Agency of Malaysia.
“Islamic banking assets in six core markets – Qatar, Indonesia, Saudi Arabia, Malaysia, the UAE and Turkey – are estimated to reach a combined asset volume of $1.8tn by 2019,” says Dr. Amat Taap Manshor, the FAA’s CEO. “But the human capital meant to support the industry is still in its infancy, and shortages will be felt most acutely in the capital market sector,” he added.

#PNB expanding #Islamic #finance agenda: Wahid Omar

Permodalan Nasional BHD is pushing for much bigger Islamic financial activities in order to turn Malaysia into a centre of global Islamic banking. In an interview to mark his one-year stint in the country’s largest unit trust fund, group chairman Tan Sri Abdul Wahid Omar explains how PNB and its strategic companies will intensify efforts to boost syariah-based investment and financing products.
Regarding the Islamic finance agenda being so important to PNB it was asked, if it is tied to the government’s objective of making Malaysia the Islamic financial hub of the world.
Mr. Tan Sri Abdul Wahid Omar answered: „Indeed, if you look at the aspirations of our unitholders, they want syariah-compliant unit trust funds. I think this was why back in 2008, there was a fatwa that investments made in Amanah Saham Nasional Bhd were permissible. This fatwa was issued at the national level and 10 states adopted the fatwa, excluding Selangor and Penang. Over the past year, we had been engaging with the Selangor Mufti Department and based on those engagements, they revised their fatwa positively. So starting from April, investments in ASNB funds are “harus”.

#Turkish participation banks' #profit #soars 36 pct in first half

The Participation banks achieved a profit of approx. $223.29 million in the first half of 2017 with an increase of 36 % compared to the same period the year before. According to information put together by the non-consolidated financial statements of Albaraka Türk, Kuveyt Türk, Türkiye Finans Participation Bank, Vak?f Participation and Ziraat Participation, the total assets of participation banks increased by 7.7 % compared to the end of last year, exceeding $41.52 billion. In the first half, the net profit of the sector increased by 36 %.
Among the participation banks, Kuveyt Türk achieved the highest net profit in the first half, followed by Türkiye Finans Participation Bank, Albaraka Türk, Ziraat Participation and Vak?f Participation. By the end of June, Kuveyt Türk was the leader of the sector, followed by Türkiye Finans Participation Bank and Albaraka Turk.
Speaking to Anadolu Agency regarding the first half results and expectations of the participation banks, Melik?ah Utku, chairman of the Participation Banks' Association of Turkey (PBAT), stressed that the participation banking sector is in a significant development process and has serious potential in Turkey.

The #continuing allure of #Islamic #finance

The total Islamic finance industry was estimated at around $ 1.9 trillion in assets for the year end of 2016, and it pales into insignificance compared with traditional finance. However of special interest is the growing popularity of Islamic finance from both the Muslim and non-Muslim financial institutions and investors. Islamic assets are very much concentrated in the banking sector which holds $1.5 trillion in total, with the Islamic bonds or sukuks worth $320 billion, and investment funds and insurance or so called takaful worth $56 billion and $25 billion respectively.
The majority are purchase and sale or murabaha and leasing or ijara transactions. Some major Gulf companies are turning to the sukuk market to raise funds, with Saudi Aramco and the Government of Saudi Arabia both successfully launching sukuk tranches which were heavily oversubscribed.

#Master in Islamic Finance

The Islamic Corporation for the Development of the Private Sector (ICD) in collaboration with IE Business School offers a training program for the development of executives across the Islamic finance industry. The Master in Islamic Finance program has a blended format, combining on-site periods in Spain and Saudi Arabia with dynamic, interactive online modules to minimize the time away from work. The length of the training is 13 months and intake starts in October 2017. Throughout the program, participants will obtain practical knowledge of high-level financial tools, develop practical Islamic Finance technical skills and acquire leadership skills. Upon program completion participants receive a University Private Degree from IE Business School and IE Universidad. IE Business School is a school within IE Universidad, which is a University officially accredited by the Spanish education authorities.

DFSA pens Hong Kong #fintech innovation deal

The Dubai Financial Services Authority (DFSA) and Hong Kong’s Securities and Futures Commission (SFC) have signed an agreement to cooperate on Fintech innovation. The two public entities said the agreement will further strengthen the efforts of both authorities to develop an innovation-friendly ecosystem and regulatory environment. This continues a trend by both countries to ink bilateral relationships to boost emerging technology within the financial sector. The agreement was signed in Hong Kong by DFSA chief executive Ian Johnston and Ashley Alder, chief executive of the SFC. This step follows the introduction of regulations formalising a tailored regime for loan and investment crowdfunding platforms earlier this month. It also follows the launch of the FinTech Hive at DIFC and its Innovation Testing Licence (ITL).

#Nigerian central bank aims to grow Islamic banking sector with new regulations

The Nigerian central bank is setting up two new financial instruments to provide liquidity support for non-interest financial institutions. The new regulatory measures are designed for the proliferation of sukuk and takaful. Among the banks in Nigeria, only Sterling Bank, Stanbic IBTC and Jaiz Bank offer Islamic services. Jaiz, the only fully-fledged Islamic lender on the list, opened its doors in 2012. The Nigerian central bank stipulated several conditions for offering Islamic finance in October. Non-interest lenders must have a liquidity problem to be able to access a new discount window, which will offer it at zero interest, though lenders must post collateral.

BNM to measure VBI adoption in Islamic FIs

Bank Negara #Malaysia is developing a scorecard with Islamic banking players that will measure the adoption of value-based intermediation (VBI) initiative. According to deputy governor Abdul Rasheed Abdul Ghaffour, the VBI marks the next step to realise the full potential of Islamic finance. The VBI Community of Practictioners (COP) includes nine Islamic banking institutions, Bank Islam, Bank Muamalat, CIMB Islamic, Agrobank, HSBC Amanah, Maybank Islamic, AmBank Islamic, Alliance Islamic and Standard Chartered Saadiq. While VBI shares similarities with ethical finance, ESG (environmental, social and corporate governance) and SRI (sustainable, responsible, impact investing), the distinguishing factor is the Syariah aspect. Business propositions from new sectors such as small and medium-sized enterprises (SMEs) would benefit from financial applications based on potential value creation and not just their credit scores.

#Nigeria to offer liquidity support to boost Islamic banking

Nigeria’s central bank is setting up two financial instruments to provide liquidity support to boost Islamic banking. The central bank has been working to set regulatory ground rules for sukuk and takaful to try to emulate the success of the industry in Malaysia. Islamic banking services are currently offered by the Islamic window of Sterling Bank, Stanbic IBTC and Jaiz Bank, but Nigeria wants to increase the sector. The country is gradually opening up to Islamic finance to bring non-interest banking to over 80 million Muslims. In October the regulator granted liquidity status at its discount window for banks' investment in Islamic bonds issued by national governments, and for banks’ liquidity ratios. Nigeria launched a 100 billion naira ($318 million) debut sovereign sukuk in the local market in June to help develop alternative funding sources.

Bridging the $300b #infrastructure #gap with Islamic finance

In #Nigeria about $300 billion (N108.75 trillion) is required to close the country's infrastructure gap. To close the gap, the Federal Government has turned to the Islamic Development Bank (IsDB). Some financial analysts are warning that this is capable of undermining the nation’s constitution and its secularity. While insisting on the need to defend Nigeria’s secularity, some of them pointed out that there are other viable options and numerous non-religious lending institutions Nigeria can turn to for help. For example, public affairs analyst, Barr Obiora Akabogu, said Nigeria could fall back on the Sovereign Wealth Fund (SWF) to raise cash. Nigeria’s pension fund, which stood at N6.02 trillion as at last November, is another viable option to build infrastructure. Others have recommended the Public-Private Partnership (PPP) model for designing, building, financing and operating new infrastructure.

Applying VAT to Islamic finance products can get complicated

Some countries have introduced laws to level the playing field between Islamic and conventional finance when it comes to the relationship between VAT and financial products. Whereas countries like Malaysia and Singapore have legislated to level the playing field between conventional and Islamic finance by recognising its religious underpinning, the United Kingdom have dealt with the issue in a not dissimilar manner but with a secular approach. Customers have enough difficulty understanding conventional finance. Investment in training to ensure product sales persons can comfortably communicate their Islamic finance offerings will be essential.

Islamic finance, a big chance to back SDGs

The #Indonesian National Alms Agency (BAZNAS) agreed to support the widening of electricity access to the poor in Jambi province in July. This marked the first official disbursement of the Islamic zakat fund to support the sustainable development goals (SDGs) in Indonesia.

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