IslamicFinance.de

The country’s largest mobile phone operator, Maxis Bhd, is planning to raise as much as RM5bil from a 30-year sukuk for its capital expenditure (capex) and debt refinancing. The company said in a stock exchange filing that the unrated sukuk murabahah programme would be available 30 years from the date of the first issuance, which should be made within two years of approval. The issue price of the Islamic bond will also be fixed prior to each issuance. It added that the Islamic medium-term notes might be with or without periodic profit payments. The coupon rate and yield to maturity would also be fixed prior to each issuance of the sukuk. CIMB Investment Bank Bhd is the sole principal adviser and the sole lead arranger for the programme.

While the sustained demand for sukuk is widely acknowledged, challenges relating to restrictive legal regimes, standardization and default mechanics could potentially impede its anticipated growth. Latham & Watkins partner Nomaan Raja discusses the challenges the developing global sukuk market faces. The majority of Shari’ah scholars agree that a guiding set of principles should be developed for future sukuk issuances. Increasing standardization stabilizes the market and safeguards investor confidence. The development of a mature market requires that sukuk investors understand their rights and remedies in default scenarios. The AAOIFI is seemingly encouraging a move towards asset-backed structures, in which the investors have actual recourse to the assets in the event of a default.

Demand for Islamic Finance in Canada at the retail level s increasing. Awareness is strongly rising and demand is following suite. So far, Islamic finance clients and interested potential clients are Muslims. As per Statistics Canada, the Muslim community is rapidly growing in Canada, the majority of Canadian Muslims being in the province of Ontario. So naturally, that's where the institutions are concentrating their marketing efforts with a few expanding to reach all the way to the province of British Columbia. The most popular product is hands-down real estate, be it residential or commercial.The technical knowledge of Islamic finance is, for the most part, basic. Islamic finance in Canada is in the calm before the storm.

Capital Intelligence (CI) announced today that it has affirmed Bahrain-based Al Baraka Islamic Bank’s (AIB) Financial Strength Rating (FSR) at ‘BB’, on ‘Stable’ Outlook, supported by its strong ownership, comfortable liquidity premised on customer deposit funding, and the improvement in the capital adequacy ratio (CAR). The FSR remains constrained by sovereign risk exposure in Pakistan (through ‘AlBaraka Bank Pakistan’), where economic conditions remain difficult despite some improvement, and a relatively high non-performing financings (NPFs) ratio and low loss-reserve cover. Also constraining the FSR is the Bank’s ongoing very weak profitability at both the operating and net levels. AIB’s Long and Short-Term Foreign Currency Ratings are maintained at ‘BB+’ and ‘A3’, respectively.

La Banque marocaine du commerce extérieur (BMCE) et le groupe bahreïni Al Baraka Banking Group projettent d’ouvrir une banque islamique au Maroc dans les prochains mois. Le PDG du groupe bancaire bahreïni, Adnan Ahmed Yousif, a déclaré que la future banque sera détenue à parts égales par la Banque marocaine du commerce extérieur (BMCE) et Al Baraka. L'institution ouvrira ses portes durant le premier trimestre 2016. Il a également ajouté que la nouvelle banque couvrira un réseau de 20 branches au cours de ses cinq premières années d’activité. Rappelons que le parlement marocain a adopté en novembre 2014 la loi n° 103.12 qui autorise les institutions bancaires locales et étrangères à créer des banques participatives (islamiques) au Maroc.

Islamic finance could help Russian companies hit by Western sanctions to gain access to credit, Rustam Minnikhanov, President of the Russian republic of Tatarstan, said at the Kazan Summit Forum. According to Rustam Minnikhanov, Russian banks, including the country’s largest bank Sberbank, are currently showing an interest in Islamic finance. One of the advocates of the development of Islamic banking in Russia is the head of Sberbank, former Russian Minister of Economic Development, German Gref. Minnikhanov also said that the development of Islamic banking in Russia should be done on a federal level and that there is no talk of creating a unique financial zone in Tatarstan.

Credit intermediation and stock markets have hugely expanded over the past half-century. Since the 1960s, credit by banks and other financial institutions to households and businesses has grown three times as fast as economic activity. Stock markets have expanded, too, but starting from a lower base and at a much slower pace, so that today their value equals 65% of GDP, a little more than half that of financial sector credit.

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Improving the structure and composition of finance is as important as avoiding credit booms for the health of our economies. Facilitating stock market funding through ***lowering the costs of equity floatation and making taxation more neutral between debt and equity, is linked with higher GDP growth (Figure 1). Hence, encouraging changes in the mode of finance, away from debt and towards equity,*** would be particularly powerful in raising economic activity. [page 2 link below]

The Iranian banking industry remains completely regulated by sharia law and is by far the world’s largest center of Islamic banking. Yet its experience is unique within the global Islamic community, as it is inspired by Shia jurisprudence, which often diverges from mainstream Sunni jurisprudence. Sunni scholars have repeatedly questioned the “rightfulness” of Iranian banks. However, with Iran now seemingly closer than ever to an agreement with the West over its controversial nuclear development program, local financial institutions are poised to regain access to international markets and place their sharia-compliant products among emerging market enthusiasts. Yet instead of adding new momentum to the growing Islamic finance industry, Iran’s financial comeback risks opening a new chapter in the century-old clash of principles between Sunni and Shia Islam.

Brunei's financial regulator is preparing to issue long-term Islamic bonds in the "very near future" while widening the eligible list of buyers of its issuance programme. The Autoriti Monetari Brunei Darussalam (AMBD) wants to develop the local capital market to help shift the economy away from oil and gas exports, with plans to launch a securities exchange as early as 2017. The AMBD did not give a specific timeframe or potential size for the deal. Since 2006, the AMBD has issued sukuk in maturities of up to 1 year for use by the country’s seven domestic commercial banks, but never in longer tenors. The new sukuk will be available to buyers outside the domestic banking sector.

Jordan will soon launch its first sovereign issue of Islamic bonds to finance real estate projects, Finance Minister Umayya Toukan said. Toukan did not give details on the size of the planned Islamic Sharia-compliant issuance, but informed sources indicated that the sovereign sukuk could raise around JD400 million. The source said the government may enter the Islamic financial market in the coming few weeks, adding that Islamic banks in Jordan enjoy liquidity in excess of JD1.4 billion. In April of this year, the government chose the Islamic Corporation for the Development of the Private Sector to support the country's debut for the planned domestic sukuk offering. The sukuk issuance will be a dinar-dominated offering.

King Salman has reorganised his cabinet, removed princes from government roles, merged ministries and realigned succession since ascending to the throne in January. Half a year into his reign, Saudi companies have yet to market a single security in 2015, making it the country’s quietest start for Islamic sales in nine years. The inactivity in Saudi Arabia comes as more financial centres seek to compete in the sukuk market. Saudi Arabia is pursuing a $130 billion spending plan to diversify its economy away from oil, and has vowed to invest in major infrastructure projects. King Salman’s changes will impact many areas, especially financial markets. The country’s economy may expand 2.5 per cent this year, after growing at an average rate of 5.4 per cent in the previous four years.

The Malaysia unit of Japan's Toyota Motor Corp. plans to setup a 2.5 billion ringgit ($667 million) programme to raise funds via both conventional and Islamic bonds. The proposed programme from Toyota Capital Malaysia Sdn Bhd was rated AAA by RAM Ratings, and follows a 1 billion ringgit sukuk programme setup in 2008 that matured earlier this month. The Malaysia unit has two other conventional debt programmes that can raise a combined 1.8 billion ringgit; It sold a debut sukuk in 2008. The move comes at a time when Japanese firms are renewing efforts in the sector, with Japan's financial regulator relaxing rules for domestic banks to use Islamic financial products.

Founded in San Francisco and recently moved to Jakarta, a financial startup called Blossom aims at nothing less than shaking up the microfinance sector in Indonesia. The company, launched in October 2014 by US entrepreneur and practicing Muslim Matthew Joseph Martin, plans to bring Shariah-compliant microfinance to the country. What sets Blossom apart from other financing schemes are two special features. First of all, its entire platform is Shariah-compliant. The second feature is the fact that its platform uses the cryptocurrency Bitcoin for global money transfers, at least in the background, to keep transfer costs low and money flows transparent. Last month, Blossom announced that it will make a "pilot investment of up to 100,000" in Bitcoins into BMT Nusantara Condet to fund small to medium businesses in Jakarta.

As salamu alaikum,

The best wishes for you and your families for the month of Ramadan. May your fast and prayers be accepted inshallah.

Best regards,

Michael Saleh Gassner

Bitcoin (https://bitcoin.org) started to make the idea of a cryptocurrency popular. What is missing so far is an intense discussion among Sharia scholars.

What makes Bitcoin unique is, that it is a) created by a computer program b) that it is created and verified by a decentralised process, the so-called 'Blockchain' technology (https://en.wikipedia.org/wiki/Block_chain_(database)), which is solving a practical problem for the first time: To enable trust and accounting without a central ledger, such as a central bank. c) that it faciliates payments quick, efficient and discreet - while the latter leads to accusation of misuse, e.g. for gaming, drugs, terror finance etc.

How it can be seen from an Islamic perspective is not widely discussed, despite it deserves the attention. What we find in search engines are some discussions and also an initiative, which calls itself a bank (https://bitcointalk.org/index.php?topic=21732.0).

A unit of Stanford Marine Group has closed a 1.2 billion dirham ($326.7 million) sharia-compliant loan deal with a group of banks to consolidate its debts into one facility at a cheaper cost, the arranging bank said on Monday. The murabaha-structured facility for offshore vessel operator Stanford Asia Holding Company was arranged by Dubai-based Noor Bank, with five other banks from the United Arab Emirates and Qatar taking part, it said. No pricing or length of the murabaha, a cost-plus-profit arrangement, were provided.

A string of innovative financial products from Indonesian start-ups are circumventing the traditional payment and investment system, helping to broaden financial inclusion and challenging the established banks. Indonesia’s tech-savvy youth have already given rise to pioneering start-ups with social and religious missions and the so-called FinTech industry is set to disrupt traditional banks by offering everything from Bitcoin remittances to mobile pawn shops and retail lending platforms. With a large swath of the population still unbanked – in part due to the country’s challenging geography – new technologies in banking, transactions and payments offer significant growth potential, with banks under increasing pressure to respond to the trend.

The Indonesian government plans to merge the Shariah-compliant units of state-owned PT Bank Mandiri, PT Bank Negara Indonesia, PT Bank Rakyat Indonesia and PT Bank Tabungan Negara with paid-up capital of more than 15 trillion rupiah ($1.1 billion) next year, Gatot Trihargo, deputy minister for government-run enterprises, said. Financial Services Authority Chairman Muliaman Hadad said in January that the plan may materialize this year. In the Indonesian plan, the government will ask the four lenders to provide 5 trillion rupiah to 10 trillion rupiah of capital to their Shariah banking units before the planned merger, Trihargo said. The combined entity will help manage about 70 trillion rupiah and this would be used to fund infrastructure projects, he said.

1Malaysia Development Bhd (1MDB) today rebutted claims by former prime minister Tun Dr Mahathir Mohamad saying that a cabinet paper was presented and approved for the issuance of a government guarantee RM5 billion sukuk by Terengganu Investment Authority (TIA). TIA was renamed 1MDB in 2009 after the federal government took over. In a statement today, 1MDB also said that the guarantee was not off-budget, and that Putrajaya was fully liable for the amount it had guaranteed. 1MDB also denied Dr Mahathir's claim that the RM2 billion loan it obtained from Ananda Krishnan was used to pay interest on its loans. It also questioned the "motivation" behind Dr Mahathir's allegations, which it said had numbers and figures changing every time.

Bahrain-based Al Baraka Banking Group plans to launch an Islamic bank in Morocco early next year after receiving approval from the country's central bank, and is looking to expand into East Africa, chief executive Adnan Ahmed Yousif said. The new bank will be equally owned by Al Baraka and Banque marocaine du commerce extérieur (BMCE), and will start operations in the first quarter of 2016. He said the new bank would open 20 branches in its first five years of business. The chief executive also said the group is considering expanding into East Africa because the banking system there is similar to that of the Gulf region, and was currently exploring opportunities in Kenya. Besides, the bank also plans to grow its operations in Egypt.