The Islamic Development Bank's annual meeting was held on Monday in Jakarta, Indonesia. At the meeting Finance Minister Bambang Brodjonegoro said sukuk played a significant role in promoting resilient infrastructure and sustainable economic development, and therefore should be boosted in the future. Indonesia has been active in sukuk markets since 2007. This year, Rp 110.9 trillion (US$ 8.33 bn) in sukuk was issued in the domestic and international markets, according to ministry data.
Fitch Ratings has affirmed EI Sukuk's updated $2.5 bn certificate issuance programme's 'A+' rating on the basis of the final programme documents received. The Outlook on the IDR is Stable. The rating on the current outstanding certificates is driven by Emirates NBD's (ENBD) Long-Term IDR of 'A+'/Stable. This is due to the Sukuk structure where ENBD, as the guarantor, provides a direct and unconditional guarantee of EI's Sukuk obligations under the transaction documents.
Gulf borrowers are back in the bond market, and a new pattern is emerging. GCC bond sales climbed 32% to a total $15.9 bn this year, according to data compiled by Bloomberg. Dubai’s government sold a $569 million privately-placed sukuk in March and Emirates NBD raised $499 mn from such deals. Bahrain and Oman have also opted to privately place sovereign issues. Rizwan Kanji, consultant at King & Spalding said most private-placement issuances are underwritten by the arrangers, which provides the issuer with certainty of execution and pricing.
Suriname's Trust Bank plans to complete a conversion of its operations to Islamic banking by the end of this year, becoming the first full-fledged Islamic bank in South America. CEO Maureen Badjoeri said the bank aims to expand financing to small businesses and build stronger commercial links with Muslim countries. The advisor of the coversion is the Islamic Corporation for the Development of the Private Sector (ICD), which may also take a strategic stake in the bank after the transition is completed.
The Ugandan government reviewed the Financial Institutions Act 2004, that allowed the introduction of both Islamic and Agency banking. However, Islamic finance agitators still believe that without the revision of the Central Bank Act, the Hire Purchase Act, The Stamp Duty Act and the Accounting Principles Act, it will be difficult for Islamic finance to deepen in Uganda. Sulaiman Lujja from the Islamic University in Uganda says Central Banks have to develop, adopt and adapt various policies and prudential guidelines.
Iran is working on a plan to establish a joint bank with Azerbaijan. Elman Rustamov, the chairman of Azerbaijan's Central Bank (CBA) is discussing the matter with Iran's Minister of Economic Affairs and Finance Ali Tayyebnia. The two neighbors are also discussing the opening of branches of the two countries’ banks in Baku and Tehran. The Iranian minister said the main obstacle on the way of banking cooperation is the existing sanctions against Iran's financial sector.
The Islamic Financial Services Board (IFSB) plans to tighten oversight of market practices and revise capital adequacy and disclosure requirements. The new disclosure requirements would cover financial but also sharia-compliance aspects, and may include guidance on specific sukuk formats such as convertible instruments and those used for regulatory-capital purposes. Islamic finance has now systemic importance in 11 countries, these include Qatar, Kuwait, Malaysia, Saudi Arabia and Brunei, with the latest entrant Djibouti. Bahrain and Jordan are close to achieving that status as well.
#Malaysia’s Employees Provident Fund (EPF) announced plans to divest its stakes in tobacco businesses and focus on investing in assets deemed socially and environmentally responsible. CEO Shahril Ridza Ridzuan said EPF plans to dispose of its stake in British American Tobacco (Malaysia), despite not outlining a specific timeframe for the move. The first fully shariah-compliant fund (EPF-i) is planned to launch in January 2017 with an initial fund size of between 80 and 100 bin ringgit. Preparing for the launch of the EPF-i, the fund had increased its exposure to shariah-compliant investments covering multi-asset classes to about 40% of total investments.
More than half of the 170 local and regional banks surveyed by the World Bank reported losing their relationships with global partner banks. Banks also have closed accounts for hundreds of money-transfer firms that provide lifelines to migrants and their families in the $582bn remittance business. As long as governments show little sign of flexibility, banks don’t dare take a chance running afoul of money-laundering and terrorist-financing restrictions.
#Dubai ports operator DP World has selected more than a dozen banks for its sale of Islamic bonds. Fifteen lenders have been hired for the offering of dollar-denominated, benchmark-sized securities whose maturity may be as long as seven years. Proceeds from the sale will be used for a tender offer for the company’s existing sukuk due in 2017.
Banks across the #GCC are resorting to job cuts and tighter recruitment policies to trim costs. The banking sector has come under pressure following decline in economic activity resulting from reduced oil revenues. According to industry estimates UAE banks have shed nearly 1,200 jobs from the second half of last year. RAKBank has announced a cut of up to 250 jobs, Abu Dhabi-based First Gulf Bank, HSBC and Standard Chartered have also reduced their headcount.
Islamic and Christian finance have evolved from the same roots and a shared history. They share much in common and divergent views on interest and usury will probably remain the key difference for the near future. Like Islamic Finance, Christian Finance operates alongside modern-day conventional financial services. For example Reliance Bank in the UK avoids dealings with any company whose main source of income is derived from sales of tobacco, alcohol, gambling, pornography and armaments.
The federal government has urged Nigerians to embrace Islamic insurance as it can guarantee economic security in times of economic uncertainties. At the official launch of the book Understanding Takaful, the minister of Education, Malam Adamu Adamu, described takaful insurance as a safety net for the community. The author of the book, Malam Zubairu Sulaiman Darazo, identified the interest rates inherent in conventional financial institutions as responsible for the low level of insurance penetration in Northern Nigeria.
In Pakistan Islamic modes, financing and products have captured at least 15% of the overall financial market share in 2016. The interest is illustrated by the results attained by the UAE-based banks Alfalah and Bank Al Meezan. Bank Alfalah CEO Atif Bajwa reported a double-digit top line growth, Rs7.523 bn in CY-15, 33% growth from 2014. Meezan Bank reported a Rs2.67 bn profit for the first half of CY-2015. The bank has also introduced Meezan Asset Allocation Plan-1, Pakistan's largest asset management company.
The Dubai Financial Services Authority (DFSA) issued a warning about scams which have cloned firms registered in the Dubai International Financial Centre (DIFC). The scammers use the names, the registration numbers, and the addresses and contact details of genuine firms registered in the DIFC to create false websites. The purpose of the creation of these false websites is to facilitate advanced fee scams by adding legitimacy to the scam.
Fisch Asset Management says Middle East credit ratings are likely to come under further pressure due to low oil prices and an increase in primary issuance will support market liquidity. According to Philipp Good, head of portfolio management at Fisch, the region has the highest average ratings globally, but budget deficits need to be addressed through a combination of investment and reform.
In #Malaysia the Employees Provident Fund (EPF) expects 1.5 mn to 2 mn members to convert their contributions to the syariah-compliant fund in the first year of implementation. CEO Datuk Shahril Ridza Ridzuan said 71% of the members agreed on the need for the Islamic pension scheme called Simpanan Shariah. Simpanan Shariah’s initial fund size will be RM120 bn. EPF is in the process of classifying its assets as syariah-compliant and conventional, with about 40% of its assets now fully syariah-compliant.
Singapore charged a former wealth manager at Swiss private bank with forgery as part of a money laundering investigation related to 1Malaysia Development. The forgery charge is the seventh filed against Yeo Jiawei, a 33-year-old Singaporean banker. While the charges didn't mention 1MDB by name, they stem from investigations into the fund's money flows. The prosecutors charged Yeo with "fraudulently" signing a reference letter to the head of anti-money laundering and sanctions compliance of Citigroup Inc in Europe.
On the eve of an international anti-corruption summit the International Monetary Fund has warned of the rising costs of corruption on the world economy. The cost is estimated around $1.5 to $2 trillion, roughly 2% of global GDP. IMF Managing Director Christine Lagarde said the indirect costs may be even more substantial and debilitating, leading to low growth and greater income inequality.
The Islamic Development Bank (IDB) will elect a new president next week in Jakarta, replacing long-serving president Ahmad Mohamed Ali. Saudi Arabia, the IDB's largest shareholder, has nominated Bandar Hajjar for the post. His candidacy was also endorsed by the outgoing IDB president. The new president will have big shoes to fill: Mr Ali tripled the bank's authorised capital to US$150 bn in 2013 and last year up-sized its sukuk issuance programme to US$25 bn.