#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.
Kuwait’s Investment Dar has offered to hand assets to creditors immediately in order to win them over to its latest plan to restructure debts of KD 813m ($2.7bn). Investment Dar has had mixed success in restructuring its debts since getting into trouble during the financial crisis. Its latest attempt, called Al Sharq, promises to immediately hand over control of assets in the company to creditors, while also guaranteeing that shareholders will not get paid until all creditors are paid.
Egyptian Takaful Property and Liability Insurance (EGTAK) will soon start talks to renew its reinsurance agreements with Hannover Re SE. Head of the Reinsurance Department Hamed Mahmoud said he expects the German reinsurer would renew its agreements without placing any additional conditions.
Islamic banking is increasingly attracting global funds. Mark Mobius, executive chairman at Templeton Emerging Markets Group sees great potential in Islamic finance and emerging markets. Tepleton invested $1.2 bn in sukuk alone and plans to invest more. Emerging markets have been negative in the last 3 years, but are now growing rapidly. The trend is towards greater privatization, more fairness and more disclosure.
Badlisyah Abdul Ghani, president of Chartered Institute of Islamic Finance Professionals, says we need a megabank in every country. Today most jurisdicitons do not have effective infrastructure for Islamic finance, some banks are efficient in their own country, but not in other countries. Megabanks have to be multi-country players.
RHB Islamic International Asset Management is favoring the sovereign and corporate debt in maturities of 7 to 10 years. CEO Sharizad Jumaat said the company sees limited currency weakness in 2016 and expects the key central bank rate to remain unchanged. Sharizad said the ringgit will be quite stable within the weak environment of slower growth in China and Europe.
The Central Bank of Nigeria (CBN) released guidelines on the regulation and supervision of non-interest microfinance banks (MFBs) in the country. In the document the banking sector regulator placed the NIMFBs into three categories namely Unit, State and National. A Unit NIMFB is required to have a minimum paid-up capital of N20 mn, a State NIMFB is required N100 mn, while a National NIMFB required N2 bn.
Mushtak Parker, research consultant at Islamic Finance, says millennials are the main drivers in Saudi Arabia and Oman. The biggest challenge of Islamic finance is public policy, that most Islamic countries do not have a recognized or stated public policy in Islamic finance. It is the responsibilty of the governments because nothing can happen in a market without government approval or facilitation.