IslamicFinance.de

Ethical investment which has similarities with Islamic based investments has reached US$32 trillion (RM105.6 trillion) in size in the US and the European Unión, according to Nicholas Kaiser, a global investment manager specialising in the issues of ethical and Islamic investment. Though the number of very wealthy Islamic investors in the US were scarce compared to investors in conventional funds, he said his Amana funds are doing very well in the US. The funds attracted American citizens from all backgrounds and Muslim investors are only a small number of the investors in the Amana fund, he added. Nevertheless, it appears that while Amana’s success is the result of the discipline of its Islamic investment nature, investing in Islamic stocks does not necessarily bring profit to the investors.

A bachelors degree in Islamic banking and finance programme has been inaugurated by Al Khawarizimi International College (KIC). The new programmes will start from September 1. KIC said the programme will develop a clear understanding of the structure of the Islamic finance industry. The bachelors degree will provide students with the opportunity of learning Islamic principles and methods of banking, economic, finance and accounting through Sharia. Moreover, KIC is also planning to offer more higher education programmes in Islamic economics such as Islamic hospitality and Islamic insurance. According to KIC, graduates rarely face difficulties in finding employment opportunities.

The British government is seeking to renew sanctions against Iran's Bank Mellat regardless of a court ruling branding the ban as unlawful. Britain's Treasury is now attempting to intervene in the European Union Council's appeal against a decision by the EU General Court in January to quash sanctions imposed against the Iranian bank. This comes after reports that Bank Mellat intends to make a legal claim of 500 million pounds against the UK government for loss of business caused by US-engineered illegal sanctions on Tehran between 2009 and 2013. Earlier on June, Britain’s Supreme Court also overturned a ruling against Bank Mellat over its alleged links to Tehran's nuclear energy program, saying the British government was wrong to have imposed sanctions on the bank.

Zaheeruddin Khalid, director of portfolio management at Saudi-based Jadwa Investment, said that the mutual funds market is dominated by asset managers backed by commercial Banks. However, in the segregated accounts market, Jadwa Investment is one of the major players along with the big five. He moreover explained that Shariah-compliant products investing in Saudi Arabia have generally had performance similar to the conventional products. Shariah-compliant versions of most conventional products are available in the Saudi market. Most innovations are taking place in the private investment product side instead of the public products (mutual funds) because of higher demand for the former, he added.

India’s central bank has allowed a firm in the southern state of Kerala to operate as a non-banking financial company that follows Islamic principles ? a small step towards developing syariah-compliant finance in the country. Cheraman Financial Services said it had obtained approval to operate from the Reserve Bank of India (RBI) and would follow the Islamic ban on interest. RBI governor Duvvuri Subbarao has said Islamic banking was not possible in the country but syariah-compliant products could be delivered through alternative means.

New rules to rein in credit card debt in Turkey will force the country's banks to set aside more funds to cover non-performing loans, cutting 2 billion lira ($1.03 billion) off their annual profits. The rules obliging credit card holders to repay more of their debts each month were announced weeks after Prime Minister Tayyip Erdogan urged Turks not to use credit cards, accusing banks of locking people into poverty with excessive fees. The measures announced on Friday by Turkey's banking watchdog, the BDDK, will make it harder for consumers to pile up more credit card debt than they can afford. The government also wants to boost personal savings and reduce household spending on imported consumer goods that have bloated Turkey's current account deficit. The effect in the medium-term is that many consumers with existing debts will struggle to make the higher repayments.

Iran's Bank Mellat is claiming GBP500 million ($782 million) from the U.K. Treasury after a London court ruled against a British decision to sanction the bank. In June, the U.K.'s highest court ruled against sanctions that had been imposed on Bank Mellat as a result of its alleged links to Tehran's nuclear program. The London ruling follows a similar decision in favor of Bank Mellat at a European Union court. But it won't lead to an end to restrictions against the bank for now because EU sanctions remain in place on Mellat. The U.K. sanctioned Mellat in 2009, banning its operations in the country and freezing its assets after it was accused of facilitating Iran's nuclear program. The measure was expanded to the rest of the European Union the following year.

Arcapita Bank announced the sale of 3PD Holding, Inc. (3PD), a last-mile logistics company in the United States and Canada, for $365m. 3PD was acquired by XPO Logistics Inc., a transportation logistics companies serving North America. Arcapita acquired a majority stake in 3PD in 2006 and afterwards provided investment capital to 3PD. Its portfolio managers worked closely with the founders and management of 3PD to develop and deliver a strategy that propelled the business to a market leadership position despite a weak economy. Profitability has since grown by over 70%. The sale of 3PD to XPO is considered to be strategically the right step in the business' development.

Nigeria is trying to establish itself as the African hub for Islamic finance. In recent months, a string of regulatory initiatives have set the groundwork for products such as Islamic bonds (sukuk), insurance (takaful) and interbank lending products, although there is still only a small number of local market participants. Islamic banking is currently offered by the Islamic window of Stanbic IBTC, a unit of South Africa’s Standard Bank, and Jaiz Bank, a full-fledged Islamic lender which has operated since 2012. Sterling Bank has been granted approval in principle for an Islamic window, while two more lenders have expressed interest in obtaining licences to operate Islamic Windows. However, Nigeria’s banking sector remains underdeveloped, with the majority of adults being unbanked.

The Inland Revenue and Stamp Duty Legislation (Alternative Bond Schemes) (Amendment) Ordinance is a new piece of legislation, introduced in Hong Kong. This law, which puts the taxation of sukuk on a level footing with conventional bonds in Hong Kong, marks a significant effort by the Hong Kong Government to promote the development of a sukuk market in the territory. However, success in developing a market for Islamic finance is not just about regulation and tax. Most importantly, it is about ethics, in the form of Shariah compliance. Islamic finance continues to be dominated by banking. Insurance (takaful) has received much less attention and its development reflects a degree of neglect. The problem lies in the widespread use of takaful and retakaful contracts which are nothing more than conventional insurance and reinsurance contracts. A strong ethical framework needs to be created and enforced within which Islamic finance can thrive.

Jaiz Bank Plc has joined other commercial banks in processing of foreign exchange transactions. This allows the bank to process forex transactions for eligible bureau de change (BDC) operators at the Central Bank of Nigeria (CBN). The bank will reportedly commence bidding for its BDC customers from all branches by the first week of September. Furthermore, the bank has also commenced over the counter transactions of PTA and BTA sales at all its branches. Jaiz Bank has 10 branches in several regions of Nigeria. Its capital base had also grown from N5 billion when it started operations last year to about N10 billion.

Citigroup is the third largest bond underwriter in the Gulf region this year, up from fourth a year earlier and 19th in 2011. It’s also the fourth-largest arranger of syndicated loans, up from 11th last year. Citigroup is relying on the UAE and Qatar for lending as rivals including JPMorgan & Chase Co and Deutsche Bank AG expand in Saudi, the region’s biggest economy. However, the bank’s reliance on UAE debt may bear some risks. The spread between bonds from Saudi Arabia and UAE notes widened to 323 points on August 7, the highest since April 2009. UAE yields have risen 128 basis points this year. Besides, Citigroup is also expanding elsewhere in the Middle East. The bank in June got Iraqi approval to open an office in Baghdad. Iraq is the New York-based bank’s first country opening for six years and comes as CEO Michael Corbat seeks to sell or scale back consumer operations in nations such as Turkey, Pakistan and Uruguay, reversing an expansion strategy into faster-growing economies by former CEO Vikram Pandit.

The stock of outstanding GCC fixed income instruments rose to $239.8 billion in the first six months of this year. The largest debtors are the Qatari public sector (23 per cent), the UAE financial sector (16 per cent) and the UAE public sector (15 per cent). Among non-financial private issuers, the Saudi sector is the most active with 10 per cent of all outstanding GCC debt followed closely by the UAE. Issuance was up 13.2 per cent compared to a year ago, with $30.1 billion worth of debt securities issued over the last six months. The UAE, Saudi Arabia, and Qatar accounted for 82 per cent of the issuance in 2013. The private sector has been increasingly outperforming the public sector over the last twelve months. The average maturity of outstanding GCC debt securities remained steady at 5.8 years at the end of the first half of 2013.

Laws, legislative rules and regulations governing Islamic bonds will be implemented as planned, as part of government efforts to revive the economy, according to Egyptian Finance Minister Ahmed Galal. However, he refused to say who would assume the role of Chairman of the Islamic Bonds Division within the ministry, after the sacking of previous chairman Ahmed Al-Nagar. Ahmed Al-Gabali, Advisor to the Minister on Islamic Bonds, is reportedly interested in the position but will need to be made aware of the nature of the job before applying. Galal previously published a decision to dispose of a number of legal advisors and chairmen of financial units due to their affiliation with the Muslim Brotherhood, among them Ahmed Al-Nagar, previous Chairman of the Ministry of Finance’s Islamic Bonds División.

According to Mr. Darkhan Nurpeissov, Vice Chairman of the Agency regulating the Regional Financial Center of Almaty (RFCA), Almaty is to be transformed into a global center of Islamic finance by 2015-2020. By 2012-2015 it is planned to put in place infrastructure for the Islamic financial industry to turn Almaty into a full-fledged center of Islamic finance. Legal foundation has already been laid. Almaty is home to the first Islamic bank in Kazakhstan. A second Islamic bank is to enter the market shortly. Besides, an Islamic insurance company and a brokerage, a handful of consultancies and funds have been launched. However, according to Mr. Nurpeissov, the population is not fully aware of Islamic finance. Kazakhstan is going to take over the chairmanship of the Organization of the Islamic Conference (OIC) in June.

Le conseil d’administration de la société « El Wifack Leasing » a déposé auprès de la Banque centrale de Tunisie (BCT) une demande d’agrément pour la transformation de la société en Banque islamique universelle. Dans un communiqué publié sur le site du Conseil du marché financier (CMF), la même source souligne que l’instruction du dossier d’agrément demeure encore au stade initial et que le conseil d’administration de la société El Wifack Leasing ne peut s’exprimer jusque là sur les issues potentielles que peut prendre cette demande. A défaut d’obtention de l’agrément, la société continuera à développer son activité et lancera sa deuxième tranche d’augmentation de capital, a avancé El Wifack Leasing.

Pakistan will reportedly receive 250 million Euros from the Islamic Development Bank (IDB) in the ongoing month of August, which is part of 750 million Euros loan. Similarly, the country will also avail the trade facility of $150 million for import of fertilizer and Petroleum products this month. The Islamic Development Bank had agreed to the loan and the trade facility in a meeting between the President of the Islamic Development Bank, Dr. Ahmed Muhammad Ali, and Pakistan’s Finance Minister Senator Ishaq Dar in Jeddah last week. Pakistan will also receive $500 million from Asian Development Bank and $500 million from World Bank in the second half (January-June) of the ongoing financial year 2013-14. Moreover, Pakistan is expecting to receive $3.4 billion from IMF during the current financial year. The loans will help building the foreign exchange reserves, which are currently around $10.25 billion.

Foot Anstey LLP, a South West law firm, is winning valuable contracts from the Middle East by specialising in Islamic finance. The firm, which has five offices across the South West región, is one of very few firms in the UK to be able to arrange finance deals in accordance with Islamic law. The Islamic finance team at Foot Anstey has recently advised Islamic banks and Middle Eastern investors on a range of high value and complex transactions. They have created structures to allow conventional and Islamic financiers to work together. Foot Anstey has already advised several Middle Eastern investors on Islamic finance deals. Although most of its business has been in the Middle East, where there is still potential growth, the firm is now looking to expand into South East Asia as well.

US-based World Council of Credit Unions (WOCCU) recently published the “Islamic Finance Manual: Operating Policies and Procedures”, a guide that is intended to assist bankers with establishing Shariah-compliant credit unions in developing countries. The manual was developed by the Customer Owned Banking Association (COBA), an Australia-based member organization of WOCCU, based on COBA’s experience establishing Islamic investment and finance cooperatives in Afghanistan since 2004. The guide is intended to provide operating policies and procedures based on international standards for financial cooperatives and to comply with Islamic law. Each chapter includes a review of procedural requirements as well as template contracts and forms. The manual is available online from WOCCU’s website.

Dr. Mohammed Namadi Sambo, Vice President of the Federal Republic of Nigeria has received Dr. Ahmed Mohamed Ali, President of the IDB Group in Makkah Guest Palace. The discussion covered arrangements made for the implementation of number of projects approved by the Bank for Nigeria and the on-going efforts that aim at establishing a representation office in Nigeria. Discussion also touched on issues related to the IDB’s role in supporting the Transformation Agenda Progamme in Nigeria. The Programme pursues growth in a number of sectors that include projects such as electricity transmission lines, regional and national road network, partnership between private and public sector in energy and supporting exports. The IDB President has offered to organize an investment conference in Nigeria early in 2014 similar to a conference organized by the IDB last year in Abuja. The Vice president of Nigeria welcomed this initiative.