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Coveting the Islamic finance global position

#Saadiq, synonymous with "truthful" in Arabic, is the brand name for Standard Chartered’s global Islamic banking services. Currently Saadiq provides a comprehensive range of Shariah compliant international banking services across the wholesale and consumer banking. To ensure that Standard Chartered Saadiq products comply with the principles of Shariah, it consults an independent committee comprising three of the world’s most renowned Shariah scholars – Dr Abdul Sattar Abu Ghuddah, Sheikh Nizam Yaquby and Dr Mohammed Ali Elgari.

#Russia's Muslim Regions Turn to the Gulf for Help

As Russia's economy continues to stagnate, the country's 83 regions are being forced to compete with one another for outside investment. Four of Russia's Muslim republics, Tatarstan, Bashkortostan, Chechnya and Dagestan, have set their sights on Muslim states in the Middle East and Southeast Asia. Despite their economic differences, Russia's Muslim republics have been uniformly hurt by the collapse in global oil prices. Though Islamic financing has been legally banned in Russia, the Muslim republics have simply ignored it outright, issuing transactions under Islamic banking guidelines or negotiating with foreign financial groups to start implementing them. Tatarstan and Chechnya discussed several construction projects, but the question now is whether Russia will allow Gulf state financing to continue. Most likely it will continue to put national security and Russian unity ahead of the needs of the Muslim population.

#Malaysia’s $30b fund goes long as Islamic plan progresses

Malaysia’s second-largest pension fund plans to buy more bonds to hedge against another interest-rate cut as it moves further toward becoming a full-fledged Islamic entity. CEO of Kumpulan Wang Persaraan, Wan Kamaruzaman Wan Ahmad said the fund is considering lowering its 5% minimum return target because of the uncertainty in global markets. He also added that this low interest-rate environment, low corporate returns, lower dividend yields will prevail for a much longer period. KWAP bought 30-year Malaysian government bonds at a yield of 4.613% on June 29, days after the UK voted to leave the European Union. Wan Kamaruzaman said the fund will likely keep its 2% allocation to UK assets, despite the results of the referendum, because it adds diversification to the portfolio.

The ins and outs of #IslamicFinance

In #South Africa First National Bank (FNB), Al Baraka and HBZ Bank are the only financial institutions offering Islamic banking services. These banks offer a range of Islamic cheque accounts, Islamic savings accounts and Islamic investment accounts as well as vehicle, property and asset finance. CEO of FNB Islamic Banking Amman Muhammad says the bank has seen a consistent rise in the number of South Africans taking up the bank’s transactional banking and investment, vehicle and property finance products irrespective of faith. Customers are looking for an alternative banking form and FNB can offer a principles-based approach. Muhammad says the normal regulatory and risk rules apply to all Islamic banking products.

Deloitte and IRTI launch new Islamic Finance insights series

Deloitte and the Islamic Research & Training Institute (IRTI) have launched a new whitepaper entitled "The catalysts for change: Strategic priorities in governance and regulation in Islamic Finance practice." It is the first publication of a series of whitepapers aiming to address industry issues and present practical analyses. According to Joe El Fadl, Partner at Deloitte Middle East, the primary goal of the series is to provide a forum through which best practice, knowledge and Islamic finance research can be shared with stakeholders. It also presents the progress in governance, regulatory compliance, risk, sustainable business models, financial reporting, transparency and leadership.

Politics of Islamic finance in #Turkey

For over three decades Turkish governments did not dare speak the name Islamic banking for fear of being branded radical. These institutions were officially named special finance houses, profit-and-loss banks, interest-free banks and more recently, participation banks. Now Islamic finance public policy is elevated to a pivotal position in the official management of the Turkish economy.
Ankara has recently embarked on a wholesale restructuring of its participation banking sector, which has seen the entry of three new banks including Ziraat Participation Bank, Halk Participation Bank and Vakif Bank. This brings the total number of participation banks in Turkey to seven including the four established ones, Kuveyt Turk Participation Bank, Albaraka Turk Participation Bank, Turkiye Finans and Asya Bank. Ankara is also keen in making Turkey a leading proponent of Islamic finance and developing Istanbul into an international financial centre.

Does #Somaliland Need Islamic Banking System?

Somaliland's President has signed the Central Banking Act into law. According to Central Bank Governor Abdi Dirir the Commercial Banking Act will be passed in the next three to four months.
Back in 2012 the financial sector agreed to have a Dual Banking system where both Conventional and Islamic banking systems operate in the country. However, the Commercial Banking Act is more than four years overdue. Economically, Somaliland's longterm competitiveness can only be ensured by introducing the Dual Banking System in the country.

IFSB completes dissemination of two years quarterly data on #Islamicbanking from 17 countries

The Islamic Financial Services Board (IFSB) has announced the fourth dissemination of data on financial soundness and growth of the Islamic banking systems from 17 IFSB member jurisdictions, covering quarterly data from December 2013 to Q3 of 2015. The 17 member countries include Afghanistan, Bahrain, Bangladesh, Brunei, Egypt, Indonesia, Iran, Jordan, Kuwait, Malaysia, Nigeria, Oman, Pakistan, Saudi Arabia, Sudan, Turkey, and United Arab Emirates. The total assets of the Islamic banking industry grew from $1,216 billion in 2014Q3 to $1,245 billion in 2015Q3. Total funding/liabilities declined from $1,007 billion in 2014Q3 to $946 billion in 2015Q3. Financing by Islamic banks from the jurisdictions participating in the PSIFIs project reached $710 billion in 2015Q3 from $681 billion in 2014Q3.

#Merger with bank islami: Sale of KASB Bank challenged

The controversial sale of the Kasb Bank to Bank Islami has been challenged before the Islamabad High Court. The petition was filed by Mohammad Khalid Randhawa, a shareholder of the Kasb bank, who claims that Kasb Bank was sold to the Bank Islami for only Rs1,000. He was praying before the court to declare the sale illegal. Judge Aamer Farooq made documents related to the inquiry of the deal as part of judicial record and adjourned the case.

Michael Hudson: Socrates on #Debt and Ibn Khaldun on the Cyclical Rise and Fall of Societies

In Book I of Plato’s Republic, Socrates discusses the morality of repaying debts. Cephalus, a businessman living in the commercial Piraeus district, states the typical ethic that it is fair and just to pay back what one has borrowed or received. Socrates replies that it would not be just to return weapons to a man who has turned into a lunatic. Because of the consequences, paying back the debt would be the wrong thing to do. At issue is not the micro-economic morality of paying a debt, but how this act affects society. The morality of paying back all debts is not necessarily justice. It should not be surprising that modern financial elites are fighting back against democratic moves. It has all happened before – and so have revolts by debtors and other exploited victims of such 'economism'.

What a #Brexit could mean for the UK’s aspiring #Islamic #finance #market

As the referendum on whether to leave or remain in the European Union looms in the UK, voices are getting louder, particularly in the country’s financial industry that it would not necessarily be a good idea to vote for a Brexit. Since the weight of the UK in the global financial market is substantial – the financial sector of the City of London has a 20% share in the global market for trading foreign securities and a sizeable part of it depends on the UK’s access to the internal EU market – such a strong position would be certainly threatened.
This could have serious impact on the growing role of Islamic finance in Europe which is entrenched in the UK and from there makes its way into the continent. Since the 1990s, when the first mortgages in the UK were set up in line with Shariah law, the country has aggregated the most advanced experience in Shariah-compliant finance in the Western world. Corporate sukuk followed a decade later, and in 2014, the UK became the first country in the EU to issue some sovereign sukuk and listed them on the London stock exchange. From then on, Islamic finance steadily entered the rest of Europe.

#HE MO IBRAHIM PRIZE FOR AFRICAN LEADERSHIP HAS NO WINNER YET AGAIN

On Thursday, the Mo Ibrahim foundation announced that its prestigious Mo Ibrahim Prize for Outstanding African Leadership and Governance will have no winner for 2015. This makes it the fifth year this prize has gone unclaimed since its inception in 2006.
In a statement issued by the Chairman of the foundation, Mo Ibrahim, he agreed with this verdict. “When we launched the prize ten years ago, we deliberately set a very high bar.” The Sudanese-British mobile communications entrepreneur and billionaire founded the foundation with a clear objective: to encourage better governance in Africa based on the belief that governance lays at the heart of tangible and shared improvements in the equality of life of African citizens. However, this recent announcement means that a number of revered heads of states such as Emilio Guebuza (Mozambique) and Jakaya Kikwete of Tanzania, both widely credited with the sharp reduction of poverty in their respective states, and presiding over periods of notable economic success, have been overlooked for this year’s prize.
The Award has now been unclaimed more times than won

#Algeria plans to launch #Islamicfinance, push banking reform

Algeria is preparing to launch Islamic financial services as the OPEC member seeks new ways to raise money after a sharp fall in energy earnings. Algeria’s outdated financial system has been a barrier to investment as the government seeks to diversify its economy away from oil and gas, which account for 60 percent of the state budget. Boualem Djebbar, head of the state-run Banks and Financial Institutions Association, said a legal framework would need to be finalized before introducing Islamic financial services. Djebbar said developing the banking system had become inevitable, with a particular focus on electronic payment systems, which are still little used in Algeria.

Islamic banking catches on

A Memorandum of Understanding was signed between the Islamic Development Bank (IDB) and India’s EXIM Bank, which enables IDB to open its first branch in Ahmedabad. During Prime Minister Narendra Modi’s visit to Saudi Arabia there were a wide range of discussions on business and investment in the background of the Kingdom’s $2 trillion Public Investment Fund. Islamic banking could restore equilibrium in Indian society by providing succour to debt-ridden farmers, labourers and other marginalised groups. Hence, Islamic banking has potential as a tool of financial inclusion.

#China Turns To Islamic Finance To Drive Economic Initiative

The Silk Road Economic Belt and Maritime Silk Road initiative, now known as One Belt One Road (OBOR), was designed in 2013 to develop economic cooperation between China and Eurasia. The Chinese government has now decided to speed up the operation of the Silk Road fund. Proposals to strengthen the cooperation of China-ASEAN Interbank Association have also been completed. Also a High Speed Rail project in China is considering using Islamic securities to raise a fund for almost 30 billion Chinese yuan (US$4.7billion). In addition, Hainan Airlines Group is planning to raise US$150 million for ship purchasing and to raise offshore Islamic securities.

How should #VAT systems treat Islamic finance transactions?

Unless tax systems properly accommodate Islamic finance transactions, prohibitive tax costs can arise. The legislation in South Africa, Singapore and Malaysia explicitly refers to Islamic finance transactions. Strictly speaking, this introduces a religious test into secular tax law, which may not be acceptable to other countries. The UK takes a different approach. UK tax law proceeds by only looking at the economic implications of the transaction, without any concern for whether it qualifies religiously as Islamic finance or not, so religious tests do not enter into the UK tax system. UK law already operates to avoid additional VAT costs. In other countries specific legislation will be needed to create parity of tax treatment between conventional finance and Islamic finance.

#Islamicfinance aspires for more fertile ground

Roughly one-third of those suffering from extreme poverty worldwide live in member states of the Organisation of Islamic Cooperation (OIC). In 21 of those 57 countries, fewer than half of the population has access to adequate sanitation. Instability places enormous strain on national budgets. The capital accumulated in some of the OIC countries could play an important role in helping them. If Islamic finance is to play its full part, governments will need to undertake important reforms. There is a need for stronger legal institutions that protect property rights and ensure that contracts are enforced. The industry will need to be standardised and regulated.

#Dubai Islamic Bank set to open $860m rights issue

Dubai Islamic Bank is opening subscriptions on Tuesday for a 3.16 bn dirham ($860.3 mn) rights issue. The bank is offering 988.4 mn new shares to shareholders in total, with subscription open on the basis of one new share for every four currently held. Shares are priced at 3.2 dirhams each, a substantial discount to Monday's closing share price of 4.95 dirhams. DIB is the latest bank in the Gulf to replenish reserves after a period of strong lending growth. At the end of March DIB's total capital adequacy ratio stood at 15.6%, above the UAE's regulatory minimum of 12%.

Al Baraka Bank #Egypt reports net income of EGP 127 million for Q1 2016

Al Baraka Bank Egypt announced that the net income of the bank jumped by 101% for the first quarter of 2016 compared to the same period in 2015. Total assets also increased by 4%, financing and investments portfolio by 4%, deposits by 5% and equity by 6% at the end of March 2016. Chairman Adnan Ahmed Yousif said the bank has an ambitious branch expansion and geographical spread plans. It is on track to complete its new headquarters building in the New Cairo area. The bank's rolling expansion programme envisages a network of 42 branches by 2020.

Islamic finance discovering the charm of offshore jurisdictions

Offshore jurisdictions have become increasingly popular with Islamic finance institutions in the recent past. Such jurisdictions allow the hassle-free incorporation of trusts, special purpose vehicles or other financial intermediary bodies necessary to be established between parties within an Islamic finance structure. Also, offshore financial centres are usually offering services at lower costs in a favourable tax environment. The most developed in this respect are the Cayman Islands, Luxembourg and Labuan in Malaysia, as Kuala Lumpur-based International Islamic Finance Center pointed out.

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