IslamicFinance.de

Al Rajhi Bank, Saudi Arabia’s second largest bank by assets, is to replace its chief executive, with the new head’s priority likely to be reversing its fortunes after seven straight quarterly profit drops. Suleiman bin Abdul Aziz al-Zabin resigned as chief executive for personal reasons, effective May 17, it said on Sunday in a statement. His replacement would be Steve Bertamini, who had been appointed chief executive, effective from May 18, it said. The bank’s consumer business has been hit by new rules and tougher competition from other lenders in the kingdom. It has one of the highest exposures in the financial sector to the retail segment.

London-based Gatehouse Bank plc has announced the acquisition of Fountainbridge, a student accommodation property located in Edinburgh, United Kingdom, from Rockspring Property Investment Managers LLP UK Value fund for £20.0 million. The property is a modern, purpose-built student accommodation asset with a total of 331 bedrooms, centrally located to the University of Edinburgh, Herriot-Watt, Napier and Queen Margaret universities. The investment follows the firm's successful realisation of four investments comprising over 1,600 beds with a combined value in excess of £100 million, completed last year. The firm is currently considering other investments in the UK student accommodation sector.

Moody's Investors Service has today upgraded Qatar International Islamic Bank's (QIIB) long term and short term issuer rating to A2/Prime-1 from A3/Prime-2, and changed baseline credit assessment (BCA) and adj. BCA to baa3 from ba1. Moody's also changed the outlook on the bank's long term ratings to stable. At the same time, Moody's assigned a new Counterparty Risk Assessment of A1 to QIIB. Moody's rating action reflects QIIB's improved and consistently strong asset quality performance and its solid capitalisation, liquidity and funding profile. These strengths are moderated by high borrower and sector concentrations, risk management challenges stemming from rapid financing growth and margin pressures driving a modest decline in profitability.

The theory of Islamic banking as a new phenomenon started to appear during 1940s through 1960s, in Urdu, Arabic and English. Among the earliest proposal for Islamic banking, one was made by Qureshi (1946) in his book Islam and Theory of Interest. He suggests that both Islamic bank and entrepreneur can create partnership. Later contributions such as Uzair's (1955), Irshad (1964) and Al - Arabi (1966) also suggested that mudarabah should be the main principle for Islamic banking. While the first theoretical works began in 1940s, the experimental works in this regard did not start until 1960s. In 1975 the first private commercial Islamic Bank 'Dubai Islamic Bank' was established by a group of Muslim businessmen from several countries.

The Security and Exchange Commission of Pakistan (SECP) has asked the State Bank of Pakistan (SBP) to review the deal to merge KASB Bank and BankIslami, which cost millions of rupees to the equity investors. Sources said that SECP Chairman Zafar Hijazi wrote a letter to SBP Governor Ashraf Mehmood Wathra, urging him give compensation to equity traders who faced losses as a result of the amalgamation of BankIslami with KASB Bank. The value of KASB Bank’s shares became zero after the amalgamation process – as the shares now stand cancelled and retired – and there was no protection to investors’ money, mainly that of shareholders.

Oman government on Sunday officially announced the much-awaited maiden sovereign Sukuk issue of OMR200 million. The sovereign Sukuk issue will be through a private placement and will open for subscription soon. It will be marketed primarily to Islamic financial institutions, and sophisticated investors with a minimum subscription amount of OMR500,000, said Tahir Salim Al Amry, who heads the Sukuk committee. The sovereign Sukuk is primarily aimed at addressing the need of the nascent but fast growing Islamic financial sector in Oman. The Sukuk will serve as a domestic investment and liquidity management instrument to Islamic financial institutions in the country, he added.

Alkhabeer Capital , an asset management and investment firm based in Saudi Arabia, announced the launch of its "Waqf" (endowment) program, intended to provide advisory services for structuring Waqf entities and managing its assets. Through its Waqf program, Alkhabeer is targeting educational and charitable institutions, family offices, high net worth individuals and other philanthropists who aspire to establish Waqf entities. The program addresses the challenges of traditional Waqf by providing Waqf structures in compliance with best standards of governance, disclosure and independent supervision to ensure the management of the Waqf affairs in accordance withterms of the Waqif (Waqf founder).

ICBC Financial Leasing signed a landmark collaboration agreement with the Islamic Corporation for the Development of the Private Sector (ICD). The two entities will work together across multiple lines to develop Islamic capabilities and opportunities and assist economic evolution across ICD member countries: including the provision of financing and banking services such as Ijarah, placement of funds, lines of finance and liquidity management; as well as technical assistance, training and expertise. The parties also plan to encourage and implement co-financing, club deal and syndication projects for eligible private sector projects.

The Hong Kong Monetary Authority announced plans this week to sell $1 billion (Dh3.67 billion) of five-year sukuk, the same size and tenor as its debut issue in September that drew $4.7 billion of bids. Those notes last yielded 2.06 per cent, almost the same as the rate at issue and about twice the level of the government’s similar-maturity non-Islamic securities. While the city government’s AAA- rating will ensure demand, Hong Kong is unlikely to host any corporate offers in the next one to two years as sukuk is seen as an “exotic instrument”. The main objectives of Hong Kong selling sukuk are to demonstrate that the legal framework for issuance in the city is widely accepted internationally and to attract more issuers and investors to the local market.

Saudi British Bank (SABB) is planning to sell a riyal-denominated sukuk that will boost its capital reserves, with an announcement set to be made as early as next week. The issue will boost SABB's Tier 2, or supplementary, capital and will be arranged by HSBC's Saudi Arabian unit. The sukuk could be worth 1.5 billion riyals ($400 million) and will have a 10-year lifespan but a clause that will allow the bank to redeem the issue at the end of the fifth year. Riyad Bank announced plans to issue a 4 billion riyal bond to boost its capital base earlier this week. It will have the same 10-year, non-call five, structure that SABB is planning to offer.

Abdul Halim bin Ismail, the recipient of the Royal Award for Islamic Finance 2014, is proposing a new way for the Islamic finance sector to do more for society. His idea calls on central banks, most notably in Muslim-majority nations, to issue licenses to Islamic banks that would allow them to establish subsidiaries — or Sadaqah houses — catering to the social welfare sector. These charity houses would collect donations from the private sector and utilize the funds to make sound investments, with profits supporting programs that improve livelihood, health and education services for disadvantaged populations.

The Islamic Corporation for the Development of the Private Sector (ICD), the IDB's private sector arm, will cooperate with ICBC Financial Leasing, a wholly owned subsidiary of ICBC, China's biggest lender by assets. China's population of Muslims is estimated at over 20 million but there is very little if any Islamic finance activity inside the country, and it is not clear whether the industry will develop the legal and regulatory backing to develop there. However, some Chinese companies see Islamic finance as a way to expand their trade and investment in fast-growing Muslim majority markets such as the Gulf and southeast Asia, and to access pools of capital there.

The Waqf Fund held its 8th Roundtable Discussion on "Venture Capital - Building the Next Phase of Economic Development in Bahrain". The half-day session was attended by a group of 39 senior professionals. Some of the key takeaways from the Roundtable are as follows: Venture capital is an important industry. An ecosystem is needed to create a vibrant venture capital industry. There is a strong case for the government to kick start the venture capital industry. A change of mindset is required among capital owners of the region. The conclusions reached and recommendations provided by the Roundtable Discussion will be compiled by the Waqf Fund for further consideration of the relevant authorities.

Demand for Islamic financial products has increased over the last decade—not just in the Gulf and Southeast Asia, but also in America. There are 5.7 million Muslims in the U.S. with $98 billion in disposable income, according to a report by DinarStandard, and many are looking for Sharia-compliant investments. But for many advisors in the U.S., it’s a peculiar market because not a lot of financial experts have expertise in Sharia law. Deals often involve multiple layers to enable them to be Sharia-compliant, and that can lead to added costs, such as double taxation. But one of the biggest issues is the diverging opinions about what makes investments Sharia compliant.

Kenya's regulator has introduced new takaful rules which will allow the entry of conventional players into the sector. The rules will come into effect in June with firms required to adhere to the requirements by December, according to a document from Kenya's Insurance Regulatory Authority. This would see Kenya join the countries such as Pakistan and Indonesia in allowing takaful windows. Kenya's first full-fledged takaful firm was launched in 2011, Takaful Insurance of Africa. Islamic lender First Community Bank also operates a takaful scheme while Kenya Reinsurance Corp has developed a sharia-compliant reinsurance product of its own.

The federal government has approved the merger of KASB Bank Ltd with BankIslami Pakistan Ltd (BIPL). KASB Bank had been in trouble since 2009 as it failed to meet the Minimum Capital Requirement (MCR) and Capital Adequacy Ratio (CAR). The case became complicated when a Chinese company showed interest in buying the bank but the request was turned down by the SBP. However, the SBP clarified that the Chinese company neither had required capital nor was willing to show its credential as required by the SBP’s fit and proper condition needed to run a bank. All branches and customers of the former KASB Bank will be considered as BankIslami’s from Friday.

Malaysian fund manager i-VCAP Management has launched Southeast Asia’s first fully Sharia-compliant ETF, which will track equities in markets including Malaysia, Indonesia, Thailand, Singapore and the Philippines. Malaysia is arguably the planet's top market for Islamic and Sharia-compliant products, with an estimated US$135 billion or so in such assets. The MyETF MSCI SEA Islamic Dividend ETF is i-VCAP Management's third ETF, following the launch of two other similarly-themed Sharia-compliant ETFs.

Kuwait Finance House (KFH), the Gulf nations' biggest Islamic lender, may sell some of its investments including KFH Malaysia and has picked Credit Suisse to advise it on the matter, KFH said on Wednesday. It did not provide any details such as a timeline or a potential sale price of the unit.

Indonesia has mandated four banks for its next global sukuk, which is expected to be denominated in US dollars. CIMB Group Holdings Bhd, Dubai Holdings Bhd, HSBC and JP Morgan have been hired as joint lead managers for the sukuk. Investor meetings will be held in London, the Middle East and Kuala Lumpur over the next two weeks. The issuance marks the sixth global sukuk for Indonesia. It last raised US$1.5bil in September, with a 10-year sukuk that drew over US$10bil in orders.

International banks used to dominate Islamic finance. But their desire to innovate risked the market straying from its principles. Local and specialist firms have benefited from their withdrawal. Clearly there is immense growth potential. Nevertheless, many multinationals abandoned the field. At any of the innumerable Islamic finance conferences in the mid-2000s, one could more or less be guaranteed to see a familiar cast of characters onstage. The most likely would be a man who was not actually a Muslim: Geert Bossuyt, a Belgian who was the head of structuring for the Middle East at Deutsche Bank. Deutsche was a pioneer in Islamic structuring; for a period of three years it was a dealmaker and structuring brains trust without compare, even if some of its ideas, culminating in the deeply technical double wa’d, really did stretch the spirit of Islamic finance.