Islamic Banking

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Awqaf and Minors Affairs Foundation signs #agreement with Islamic Development Bank

Awqaf and Minors Affairs Foundation (AMAF) has signed a Memorandum of Understanding (MoU) with the Islamic Development Bank (IDB) to collaborate in areas related to endowment services enhancing the prosperity of Muslim societies. Tayeb Al-Rais, Secretary General of AMAF, and Dr Bandar Al Hajjar, Chairman and President of IDB, signed the MoU in Jeddah, Saudi Arabia. The two parties will work towards maximising the availability of Islamic banking services to the endowment sector. AMAF and IDB will also explore the possibilities of forging endowment partnerships and engaging third parties. Other areas of cooperation include building successful marketing strategies and providing advanced endowment tools for banking, finance, and investment.

Unlocking Islamic finance potential in #CPEC, beyond

The Centre for Excellence in Islamic Finance (CEIF) IBA held an International Forum on 'Unlocking Islamic Finance Potential in CPEC and Beyond'. The China-Pakistan Economic Corridor (CPEC) consists of $45 billion worth of domestic infrastructure projects planned by the government of Pakistan. The Forum analyzed the effects and impact of CPEC on the Islamic Finance industry in Pakistan. In his keynote address Irfan Siddiqui, President & CEO Meezan Bank, highlighted that CPEC is not just a need of China but also of Pakistan. From the government Chief Economist Nadeem Javaid stated that there are four main components of CPEC: Energy, Infrastructure Development, Economic Incentives and Industrial Cooperation. He said that CPEC will greatly lower the per unit cost of energy, incentives such as exemption from local duties and materials, whereas suspension of trade union activities will give opportunities to investors. Therefore, designing cost-effective, Shariah compliant finance options is the need of the hour.

Goldmoney Inc. Announces Compliance with Shariah Standard on #Gold

Goldmoney announced that Goldmoney Network Accounts and Wealth Holdings have been endorsed as Shariah-compliant by the Shariah Supervisory Board of Amanie Advisors. Islamic investors can now instantly purchase, save, and transact in gold globally on the Goldmoney platform. Goldmoney's chief strategy officer Josh Crumb said that the company's platform democratizes access to 100% reserved and allocated gold-based savings, payments, and investment solutions. CEO Roy Sebag stated that compliance with Shariah law was an important step in the company's growth, enabling Goldmoney to expand its offerings to the Islamic market.

#Zurich: #Responsible #Finance & Investment Summit 3-4 May 2017

Summit will explore intersection of #fintech, #ESG and #Islamicfinance. #RFISummit17

January 24, 2017, Zurich, Switzerland –

Bringing together a diversity of perspectives is critical for continuing the growth occurring within responsible finance. On this premise, the Responsible Finance & Investment Summit 2017 will convene in Zurich, Switzerland from 3-4 May 2017 around the theme “Building Bridges, Expanding Impact”.

Recent estimates from industry stakeholders show continued growth in responsible finance assets in many geographies and sectors. Responsible investment in Europe grew by 42% during the past 2 years, while in the U.S., assets grew by 33%. In Islamic finance, which has a global presence with a significant presence in Europe, the Middle East and Asia, growth in the last 2 years has been 21%. Identifying actionable areas for collaboration will support continued growth towards a more sustainable financial system.

#Sukuk issuance in core Islamic markets set to pick up pace in 2017

The share of sukuk issuance in core markets such as the Gulf Cooperation Council (GCC) region, Malaysia, Indonesia, Turkey and Pakistan are expected to keep up their market share in 2017. New sukuk issuance from the core markets rose to $40 billion (Dh147 billion) in 2016 from about $32 billion a year earlier. This represented 28.5% of total bond and sukuk issuance in these markets in 2016, down marginally from 29% in 2015. Malaysian companies continue to be the most active corporate issuers. Several other key markets have introduced or updated sukuk laws in the past few years, including Saudi Arabia, Oman and Kuwait, which should gradually boost issuance. According to Faisal Hasan, Head of Investment Research at Kamco, the outlook for sukuk issuance in 2017 remains positive as GCC economies are expected to return to issuing sukuks to fund their deficits. Analysts say GCC corporates that tap capital markets are more likely to issue sukuk or a mixture of both, rather than only bonds to attract a wider local and regional investor base.

#Sukuk issuance in 2017 to remain robust-Fitch

Fitch Ratings said it expects sukuk issuance in 2017 to continue at the same pace like last year. Sukuk issuance in core markets rose by 26% in 2016 and maintained its share of capital markets funding despite large conventional bond issues by Saudi Arabia, Abu Dhabi and Qatar. New sukuk issuance with a maturity over 18 months from the core markets of the Gulf Cooperation Council (GCC) region, Malaysia, Indonesia, Turkey and Pakistan rose to $40 billion in 2016 from about $32 billion a year earlier. In 2016 10 key markets issued sovereign sukuk and other sovereigns in the GCC region have indicated they could issue sukuk, or a mix, in the future. Sovereigns and supranationals are likely to remain the dominant issuers, but bank issuance may also rise in some markets, driven by issuance to meet regulatory capital requirements.

#Saudi Binladin seeks extension on SAR10bn Grand Mosque financing

Saudi Binladin Group (SBG) is negotiating with banks an extension of up to two years on a 10 billion riyal ($2.7 billion) Islamic credit facility used to pay for building work at the kingdom’s Grand Mosque in Mecca. Contractors in Saudi Arabia have had to deal with delays and late payment after the government trimmed spending to adjust to the impact of lower oil prices. Mecca’s mayor Osama bin Fadl Al-Bar told Reuters in September that the expansion would be completed in either 2017 or 2018. But the timeline for the mosque has now been delayed. SBG had received some of the backlog of payment owed to it by the government in recent months, but a large portion remains outstanding.

#Bahrain’s Nogaholding approaches banks for debut #bond programme

Nogaholding, the investment arm of Bahrain’s National Oil and Gas Authority (NOGA), has approached banks with the aim of setting up an international bond programme. The bond programme could be either for conventional bonds or for sukuk, but since Nogaholding’s latest U.S. dollar fund-raising exercise was an Islamic loan, a sukuk programme seemed more likely. A spokeswoman for Nogaholding declined to comment. In March last year, the company raised a $570 million murabaha facility with a five-year maturity. The 2016 loan backed projects such as the Bahrain LNG Import Terminal, a modernisation programme for Bahrain Petroleum, and expansion of facilities at the Bahrain National Gas Expansion.

CPEC likely to unleash potential of Islamic finance schemes

The planned China-Pakistan Economic Corridor, or CPEC, is expected to bring the full potential of Islamic finance in infrastructure funding into action. The CPEC will see €54bn in investments up to 2030 to create or expand highways, railways, ports, airports, power plants, solar parks and wind farms, pipelines and optical fibre lines. Pakistan’s Finance Minister Ishaq Dar has repeatedly emphasised that Pakistan wanted to make Shariah-compliant financing its first choice for infrastructure and long-term financing needs. In fact, the government plans to shift between 20% and 40% of its debt financing to Islamic sources from conventional ones, which is also the case for CPEC projects. Co-financing for the corridor comes from Chinese state loans, as well as from the Asian Development Bank and the new, China-backed Asian Infrastructure Investment Bank. The CPEC is predicted to create more than 700,000 direct jobs up to 2030 and add two to 2.5 percentage points to Pakistan’s annual economic growth.

#Iran Key to Islamic Banking Outreach

For Islamic banking, the opening up of Iran is a huge development, as Iranian banks make up the world’s largest financial system based on Islamic law. A large number of sukuk and other Islamic securities from Iran are expected over the next few years. Estimations are that there are over 150 Iranian companies considering Islamic sukuk sales. Iran also requires funds for its infrastructure development programs estimated at around $1 trillion over the next decade, according to a report published by Forbes. Islamic banks in the region are building their activities in key sectors of the economy. Retail banking has traditionally been the mainstay of Islamic banking in the region. Here, investment in digital and smartphone banking will be crucial in future.

Islamic finance: quarterly update

The fourth quarter of 2016 saw proposals published by AAOIFI for standards on central sharia boards as well as new governance rules for Islamic banks in Kuwait and the Federal Territory of Labuan. The quarter also saw the IFSB issue a technical note on stress testing for institutions offering Islamic financial services. The proposed AAOIFI standard on central sharia boards is intended to provide guidance for strengthening corporate governance and thereby increase the consumer appeal of sharia-compliant financial products. It covers several aspects such as the appointment, composition and dismissal of board members, tenure of the board, functions of the central sharia board, responsibilities of the appointing authority, fit and proper criteria, and independence.

SC unveils five-year blueprint to further strengthen #Malaysia as a leading Islamic investment hub

The Securities Commission Malaysia (SC) has launched a five-year Islamic Fund and Wealth Management Blueprint designed to drive further development and growth of Malaysia's Islamic capital market. The Blueprint aims to establish the country as a leading international centre for Islamic fund and wealth management. It was launched by Datuk Johari Abdul Ghani, Second Finance Minister of Malaysia, on behalf of Prime Minister Dato’ Sri Mohd Najib Tun Razak, at the International Fund Forum 2017. To be implemented on a phased approach, initial work programmes will include the formulation of a framework for SRI funds, the setting up of a global centre for Islamic capital market and the introduction of a digital investment services framework.

#Saudi Arabia plans #bond deal to help finance budget deficit

Saudi Arabia plans a new Islamic bond issue in a sale that could come as early as February. The sharia-compliant sukuk will form part of a pipeline of bond sales to finance the kingdom’s budget deficit and invest in economic diversification away from oil. Last year, Saudi Arabia set a record for developing countries with its first sovereign bond sale, attracting $67bn in investor bids for a $17.5bn issue. Bashar Al-Natoor, global head of Islamic finance at Fitch Ratings, said diversification is natural for any emerging market, but the fall in oil prices have made it a necessity for exporters like Saudi Arabia. Lower oil prices have led to a drop in government reserves held in banks, which in turn has had an impact on their willingness to lend, so they have to look for alternative sources of financing.

#Africa Finance Corp plans maiden #sukuk soon - sources

Africa Finance Corp (AFC), a pan-African multilateral institution based in Nigeria, is likely to make a debut U.S. dollar sukuk issue by early February. If AFC makes a final decision to go ahead with the proposed debt sale over coming days, the sukuk will be issued in two or three weeks through a private sale. The sukuk would be structured with a murabaha format and use Nasdaq Dubai's platform for murabaha transactions. Mohamed Damak, global head of Islamic finance at S&P Global Ratings, said more sukuk issuance will come from Africa-based issuers over the next few years as borrowers seek to expand their investor bases. Another reason for issuers in Africa is that sometimes sukuk can be cheaper than conventional bonds, especially when it attracts significant interest from the market.

#Sukuk ‘too complex’ as tool to raise funds

Sukuk issuance growth in the Arabian Gulf is likely to remain subdued this year even as ­countries in the region need to raise more debt to plug budget deficits. According to the latest research from S&P Global Ratings, the reason lies in the complexity of selling Sharia-compliant bonds. S&P's analyst Mohamed Damak said sales of Islamic bonds fell in 2015 and 2016 in the GCC as the issuance of conventional bonds soared. Globally, the market for sukuk is also expected to remain stable this year at between US$60 billion and $65bn. Despite the recent rebound in oil prices, the GCC will need about $275bn of financing between this year and 2019, of which half is expected to come from bonds and sukuk. Complexity of sukuk issuance is not the only headwind facing Islamic financing. According to S&P, rising interest rates in the US will also dampen appetite for sukuk this year.

Major #Fintech #Achievements in Islamic Finance in 2016

The year 2016 records quite remarkable achievements in terms of financial technology (fintech). The Investment Account Platform (IAP), Malaysia’s first multi-bank platform for financial intermediation in the Islamic financial system, was launched on the 17th February 2016. The IAP serves as a central marketplace to finance small and medium enterprises (SMEs) with initial funds of RM 150 million. Eight Islamic Crowdfunding Platform operators from across the globe clicked together to form Islamic Fintech Alliance (IFT Alliance) and launched it on the 1st April 2016. Then, on the 26th September 2016, New York-based Wahed Invest launched Wahed, the world’s first automated Islamic investment platform. Two months later, the Kuala Lumpur-based Faringdon Group announced that it would be launching Asia’s first Shariah compliant Robo Advisor. The online tool called Algebra will provide automated portfolio management advice. Further progress of these initiatives and new innovative entrants will position 2017 for more excitements.

SCC ups #Sukuk scheme to RM3.5 billion

Sabah Credit Corporation (SCC) increased the size of its Sukuk Musharakah programme from RM1.5 billion to RM3.5 billion. According to CEO Datuk Vincent Pung, the move will allow SCC to consolidate outstanding Sukuk issuance and generate an additional RM1 billion for the corporation to plan its future loans growth. Pung also announced i-Cash, a personal loan facility, offering borrowers simplified and online loan processing and the flexibility of drawing the loan. Finance Minister Datuk Seri Musa Aman noted that SCC had anticipated a significant drop in profits of RM16 million initially to RM54 million for the year 2016, but instead reported a beyond expectation pre-audited profit of over RM60 million as of December 2016. He said the corporation has also donated over RM23 million through more than 150 Corporate Social Responsibility projects such as rural hostels, orphanages, half-way homes and centres for single mothers.

#China-#Pakistan corridor set to unleash potential of Islamic finance schemes

The planned China-Pakistan Economic Corridor, or CPEC, is expected to bring the full potential of Islamic finance in infrastructure funding into action. The CPEC will see €54bn in investments up to 2030 to create or expand highways, railways, ports, airports, power plants, solar parks and wind farms, pipelines and optical fibre lines. Pakistan’s Finance Minister Ishaq Dar has repeatedly emphasised that Pakistan wanted to make Shariah-compliant financing its first choice for infrastructure and long-term financing needs. In fact, the government plans to shift between 20% and 40% of its debt financing to Islamic sources from conventional ones, which is also the case for CPEC projects. Co-financing for the corridor comes from Chinese state loans, as well as from the Asian Development Bank and the new, China-backed Asian Infrastructure Investment Bank. The CPEC is predicted to create more than 700,000 direct jobs up to 2030 and add two to 2.5 percentage points to Pakistan’s annual economic growth.

Global #sukuk issuance likely to hit $65bn this year: S&P

According to S&P's latest report, the global sukuk market is expected to remain fairly quiet in 2017, with total issuance reaching around $60bn -$65bn. The relatively subdued sukuk market anticipated for this year is mainly due to reasons related to complexity of sukuk issuance. S&P Global Ratings’ Global Head of Islamic Finance Dr Mohamed Damak said returning issuers, new entrants, and regulatory developments can stimulate issuance activity, but more likely in the medium term. S&P anticipates some GCC countries might take the Islamic finance route alongside a conventional one. Bahrain will most likely remain a prominent player after issuing $3.2bn of sukuk in 2016. Other GCC members will probably tap the market in 2017. The buyers of sukuk are not only in the GCC or Malaysia, but come from a broad range of investors, including conventional financiers in developed markets. More importantly, there is reportedly a large gap between sukuk issuance and demand.

#Nigeria’s first non-interest commercial bank to list on Nigerian Stock Exchange

The Nigerian Stock Exchange is set to list Nigeria’s first non-interest commercial bank, Jaiz Bank. The council of the Nigerian Stock Exchange (NSE) has approved the bank’s listing of its entire issued share capital on the exchange. Jaiz Bank will be listing a total of 29.46 billion ordinary shares of 50 kobo each at 1.25 naira, indicating a start-off market capitalisation of 36.83 billion naira. The bank has more than 20,000 shareholders, including shareholders such as the former Chairman of First Bank, Umaru Mutallab, industrialist Aminu Dantata, and development finance institution- Islamic Development Bank. The listing will be executed by way of an introduction, however, the company has indicated its interest in an Initial Public Offering.

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