IslamicFinance.de

The tenth edition of Euromoney Saudi Arabia conference concluded on Wednesday with a firm belief that multisectoral reforms to diversify the Kingdom's economy an approach to look beyond the oil sector will add value to the local market with financial dynamism. Experts in the first session of the concluding day on sovereign bonds and sukuk referred to the intersection of ethical investment and Islamic finance in the wake of the Tadawul opening up to foreign investors for the first time. The panelists observed that in the context of the global financial crisis Islamic finance is seen as a significant option in international market which is good for the Kingdom that plays a leadership role.

Al Rayan Bank, formerly known as Islamic Bank of Britain (IBB), yesterday announced its strongest financial performance to date, resulting in the Bank more than doubling its operating income and posting its first profit since its inception in 2004. The bank’s operating income increased 168 percent to £11.8m in 2014 from£4.4m in 2013. The bank saw 86 percent increase in total customer financing, to £450.3m. Retail deposits increased 59 percent to £509.8m and while wholesale deposits increased 53 percent to £31.7m. Increasing consumer confidence, the continued strength of the housing market and opportunities to provide property finance to the commercial sector as well as to investors in the Gulf has enabled Al Rayan Bank to post its best results to date.

Thanks to its economic diversity and proximity to Europe, Morocco is well-placed to offer a platform for Islamic banks, Lahcen Daoudi, Minister of Higher Education and Scientific Research said. Speaking at a conference organized by the national school of commerce and management (ENCG) in Tangier under the theme: “the foundations of Islamic banks” the Minister said that Islamic banks are considered as a source of wealth for Morocco that will contribute by 0.5% to 1% in PIB per year. As for human resources, the minister affirmed that the staff working in other banks will not find difficulties in joining Islamic banks.

There are close to an estimated 500 million Muslim youth under 30, and they are social media-savvy, faith-inspired, connected to the Internet via their phones, and they are the middle class in the wait. Social media provide “access” to leaders, and leaders to constituents, where followers can favourite, share or comment; hence the companies, via their social media team, have an immediate or real time pulse on the sentiments of the people beyond traditional offline media sources on laws/regulations, developments, accomplishments etc. Social media is here to stay, grow and develop, and the young customers will be your best brand ambassador or your worst nightmare.

Saudi Arabia will remain a favoured destination for private equity investment in the coming years in spite of volatile oil prices and instability in neighbouring Yemen, investment professionals said. Lower oil prices in the past year are unlikely to affect the growth in consumer-facing sectors such as health care and retail, making companies operating in such sectors attractive targets, according to Huda Al Lawati, a partner with Abraaj Capital in Dubai. But sustained lower oil prices may have an impact on deals in infrastructure and construction sectors, according to Sameer Nawaz, the managing director and co-head of investment banking at Saudi Fransi Capital in Riyadh.

SEDCO Holding Group, a Shariah-compliant private wealth management organization, has acquired a 50% stake in Mektebim Okullari, a company operating in the private education sector in Turkey. Anees Moumina, CEO of SEDCO Holding Group, and Ümit Kalko, Mektebim's founder and Chairman, signed the accord. Under a partnership agreement with the Turkish company which currently operates 17 schools from pre-school to high school levels, SEDCO Holding Group will own 50% of the company's shares and play an active part in the company's growth strategy in the region. The schools currently have over 4,000 students and Mektebim Okullari will add 8 more schools this year to its portfolio and has many other projects under consideration.

Emirates Islamic Bank prévoit de s’implanter au Maroc et en Egypte au cours des deux prochaines années pour saisir les énormes opportunités qui se présentent sur ces deux marchés dans le segment de la finance halal. Le groupe bancaire compte se positionner dans les marchés marocain et égyptien en acquérant des banques existantes ou en demandant de nouvelles licences. A noter qu’une loi sur les banques islamiques a été adoptée en novembre 2014 par le parlement marocain. La Banque centrale marocaine a annoncé récemment avoir déjà reçu 15 demandes de licences émanant d’autant de banques islamiques étrangères.

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 allowing takaful windows, which enable firms to offer sharia-compliant and conventional products side by side. The rules require separate financial reporting requirements for takaful windows from their parent firm, and their operating model must be approved by a board of religious scholars. Operators must also maintain separate takaful funds for their general and life businesses.

The confluence of two strongly expanding industries, microfinance and Islamic finance, has seen rapid growth in the past years on the grounds that, according to banking studies, an estimated 70% of people living in Muslim-majority countries do not use formal financial services. As a result, Islamic microfinance is becoming an important instrument to fight the poverty among Muslims, especially in rural areas, and improve access to financial services. Islamic microfinance is expected to grow fast at a rate of 19.7% annually over the period 2014 to 2018. But so far, Islamic microfinance is centred on just a few countries. However, in the recent past demand has also grown in countries such as Jordan, Algeria, Syria, Sudan, Somalia, Yemen among others.

China remains a major market that Islamic finance has not yet reached. But this could be set to change in the coming years – and one province in particular is leading the way. Ningxia, in the north-west of China, is an autonomous region where 35% of the population is Muslim and there has recently been talk of establishing an Islamic Financial Centre there in the next five to seven years. Local laws and tax regulations need to be modified to permit shariah-compliant investments. However, the effort could be undermined by cultural insensitivities such as allowing Muslim restaurants to serve alcohol alongside halal food. The growth potential of Islamic finance in China is huge given the country’s 1.3 billion population.

The CMA announced on Monday rules allowing foreign institutions to begin investing directly in the stock market, subject to restrictions such as a 10 percent cap on combined foreign ownership of the market. On the other hand, foreigners will be allowed to buy directly into initial public offers of shares in Saudi Arabian companies on a case-by-case basis. IPOs are a special matter because they are usually priced in Saudi Arabia well below market value, as a way to spread the kingdom's oil wealth among its citizens. Letting foreign investors buy directly into the offers could be politically sensitive.

We can see the second intelligent species coming from all directions in the form of self-driving cars, automated call centers, chess-playing and Jeopardy-playing computers that beat all human players, airport kiosks, restaurant tablet systems, etc. The frightening thing is that these robots will soon be eliminating human jobs in startling numbers. Marshall Brain’s new book “The Second Intelligent Species: How Humans Will Become as Irrelevant as Cockroaches” explores how the future will unfold as the second intelligent species emerges. The book offers a look at the future of the human race, and the choices we will need to make to avoid massive unemployment and poverty worldwide as intelligent machines start eliminating millions of jobs.

The government of Hassan Rouhani, Iran's centrist president, has made attracting foreign investment a priority since taking office as he seeks to create jobs and bring down a youth unemployment rate that stands at 25 per cent, as well as stave off any Arab spring style unrest.

The Islamic Corporation for the Development of the Private Sector (ICD) is considering options for support of the private sector in Azerbaijan. According to the Ministry of Economy and Industry, Minister Shahin Mustafayev has received Khaled Mohammad Al Aboodi, ICD CEO. During the meeting, the Minister proposed to cooperate in the industrial and agricultural sector including the project of the Sumgait Chemical Industrial Park and establishment of agricultural parks in Azerbaijan, the Ministry said. Aboodi expressed his satisfaction with the cooperation with Azerbaijan and proposed to expand it.

Fajr Capital has been recognised as the Middle East's "Private Equity Firm of the Year" at the Global M&A Network's Atlas EMEA Awards 2015. The company also collected the "Middle East Deal of the Year" award for leading a consortium of investors to acquire the Dubai-based oilfield services company, National Petroleum Services. Headquartered in the Dubai International Financial Centre, Fajr Capital has a portfolio consisting of companies operating across a range of demographic-driven sectors, including: financial services, infrastructure, education, manufacturing and renewable energy, among others.

Gatehouse Bank plc has announced the completion of terms to provide £17.92 million of senior financing following the recent acquisition of a UK industrial estate by Saudi Arabia's SEDCO Capital. Palmer Capital is acting as the Investment Manager to SEDCO Capital which through this venture intends to deploy £100 million into UK real estate over the next 12 months through this venture. This transaction is the first such transaction for this programme, which will target the recovering office and industrial real estate market in the UK. The funding supports the acquisition of Blakelands Industrial Estate, an industrial estate in Milton Keynes.

The make-up of Islamic banks' loan books is changing in Pakistan and Indonesia with the growing use of profit-sharing contracts that could help Islamic finance win more customers in the two largest Muslim-majority countries. Murabaha has been the workhorse of Islamic bank financing globally, but after years of dominance the structure is losing favour in some areas to profit-sharing contracts such as musharaka, istisna and salam, which are seen by many scholars as closer to the economic principles of Islam. In Indonesia, the change is more gradual as murabaha still represents over half of all financing by Islamic banks.

The State Bank of Pakistan feels that under the current circumstances, merger of KASB Bank with Bank Islami is a viable option wherein the bank’s depositors’ interest would be safeguarded and its problem would be resolved on a sustainable basis. Although there is a possibility of foreign investment worth $100 million from a Chinese investor yet the State Bank is concerned of the safety of depositors’ money and prompt payments to them. At the same time SBP does not want to fall in any conflict with the shareholders. Considering the fact that Chinese investor company called Cybernaut was not able to establish its bonafide even after elapse of considerable time their request was declined on 27th April 2015.

The Asian Development Bank (ADB) and the Islamic Financial Services Board (IFSB) have announced the launch of a joint ADB-IFSB publication called "Islamic Finance for Asia: Development, Prospects, and Inclusive Growth". The book was launched by ADB Vice President, Stephen Groff during an ADB-IFSB panel discussion on "How Islamic Finance Can Contribute to Sustainable Growth in Asia", which took place on 4 May 2015 in Baku, Azerbaijan, during the ADB Annual Meeting 2015. The publication is a resource for better understanding the Islamic financial services industry in Asia, and a reference for jurisdictions in other regions that aim to understand, introduce and develop Islamic finance.

As part of the initiatives of the Dispute Resolution Authority (DRA), the DIFC has launched the DIFC Wills and Probate Registry, established by Resolution No. 4 of 2014. The new service aims to provide non-Muslim expatriates the ability to register English language wills that will allow their assets to be transferred upon death according to their wishes. The new rules have been drafted on the basis of Common Law principles from the Estates Act and Probate Rules of the UK, and legislation of other leading common law jurisdictions such as Singapore and Malaysia. While the rules are comprehensive, they are also easily accessible to legal professionals in the UAE.