IslamicFinance.de

Takaful received a grim assessment in the Islamic Financial Standards Board (IFSB) and Islamic Research & Training Institute (IRTI) Mid-Term Review (MTR), which was released last week. The takaful business model faces significant challenges, according to the MTR. The challenge starts with the gap between how takaful operators are organized in theory and practice. Moreover, Islamic insurance firms have been not been successful so far outside of a few countries like Saudi Arabia and Malaysia in reaching "critical mass". If the new firms are unable to grow to a large enough size, administrative costs become very steep and reserves will not be sufficient enough to cover losses. If takaful operators engage in a consolidation process (should regulations allow it), it would improve the underwriting marketplace.

Bank Islam Malaysia Bhd will spend more than RM5 million this year on its corporate social responsibility (CSR) programmes to cater for various segments of society nationwide. The CSR programmes planned this year include housing projects for the needy in Johor, which involved the rehabilitation and construction of houses for 22 families costing more than RM4 million. So far, the bank has built or rehabilitated houses for more than 151 improverished families in Kelantan, Terengganu, Kedah, Pahang, Perak and Sarawak. The bank is also looking to extend its CSR activities in Sabah as there is still a need for houses for the poor as well as basic infrastructure like surau and others.

Thomson Reuters released a country report on Islamic Finance in Morocco in collaboration with the Islamic Research and Training Institute (IRTI) and the General Council for Islamic Banks and Financial Institutions (CIBAFI). Based on exclusive retail consumer and corporate surveys, the report estimates that Islamic banking assets could potentially reach US$8.6 billion by 2018, with a profit pool of between US$67 million and US$112 million for Islamic finance providers. The national retail consumer survey indicates Moroccan Islamic banking assets could potentially reach up to 5% of total banking assets by 2018. However, Moroccans know very little about Islamic financial products, the report adds. Islamic banking and Takaful laws are expected to be passed by the Moroccan parliament this year.

Les actifs financiers islamiques devraient peser entre 5,2 et 8,6 milliards de dollars au Maroc en 2018, selon le rapport intitulé «The Islamic Finance country reports». Ce rapport, réalisé par Thomsom Reuters en collaboration avec l’Institut islamique de recherche et de formation (IIRF) et le Conseil général des banques et institutions financières islamiques (CGBIFI), estime que les actifs financiers islamiques devraient représenter ainsi entre 3 et 5% du total des actifs bancaires au Maroc en 2018. Le rapport énumère, cependant, un certain nombre de faiblesses qui doivent être surmontées afin de libérer le potentiel de la finance islamique au Maroc. En plus, le parlement marocain devrait adopter prochainement une loi régissant les activités des banques islamiques dans le royaume.

This Seminar on Wednesday, 18 June, is within a series of International seminars, workshops and dialogues the Academy of Philanthropy is organising around the world. This particular Seminar is held in Geneva for the benefit of private philanthropists, financiers, UN system, NGOs, as well as regular visitors to the region from the Muslim world.

The Seminar is intended as an attempt to bridge the gap between venture and institutional philanthropists on one hand and recipient countries and NGOs on the other, with the aim to discuss and learn how to leverage impact and sustainable development. The Seminar is forward-looking in light of global events, such as the post-2015 development agenda and the shifting landscape of development and philanthropy.

Session outcomes

1. Raise awareness on the roles of stakeholders in philanthropy and sustainable development at global, regional and country levels, namely: private sector, institutional donors/development agencies, venture philanthropy, and civil society.

Iranian businessman Mahafarid Amir Khosravi, convicted of masterminding a $2.6 billion banking scam, was hanged on Saturday in Tehran''s Evin prison. He was sentenced to death after being convicted of corruption on earth through bribery and money laundering. Revelations about the scandal swept Iran in 2011 when prosecutors uncovered a private umbrella group, led by Amir Khosravi and his brothers. Over the space of two years, Amir Mansour Aria Development Co bought 40 companies with forged letters of credit obtained from several major banks whose managers they had bribed. In addition to Amir Khosravi, three others have reportedly been sentenced to death.

A legal dispute between Pakistani insurance firms and regulators has been resolved after the country's five takaful firms had challenged the new takaful rules introduced in 2012. Under the agreement, insurers will have to allocate 50 million rupees ($506,100) in capital to their window operations, from no capitalisation requirement in the original rules. The takaful rules will be applicable after a three-month period and the regulator would also amend them to allow takaful firms to co-insure risks alongside conventional players, which the initial rules had forbidden. Takaful's share of the total insurance market is estimated at less than 3 percent. The regulator has now received five applications for takaful windows and expects as many as half of all conventional insurers to eventually apply for a licence.

Le directeur général de la Banque islamique du Sénégal (BIS), Babacar Ndoye, soutient que la finance islamique est assez efficace pour financer les grands projets des Etats. Les autorités ont, à travers les sukuk, un instrument capable de satisfaire les besoins de financement des infrastructures et du développement, selon M. Ndoye. Le Sénégal, pays majoritairement musulman, peut aussi mobiliser beaucoup d’argent par "la zakat". Babacar Ndoye estime que les possibilités pour le monde musulman de lutter contre la pauvreté et de se développer, au moyen de la zakat, sont extraordinaires. Appliquée à la banque, la "zakat" peut même créer des emplois, a-t-il assuré. Pour toutes ces raisons, la finance islamique et la finance classique doivent être considérées comme deux entités complémentaires.

Over the last two years, M&As in the Malaysian insurance sector have mainly involved conventional insurers, and analysts foresee some consolidation taking shape in the takaful sector in view of the Financial Services Act (FSA) and the Islamic Financial Services Act (IFSA). Among the candidates for potential M&As are Takaful Ikhlas Sdn Bhd, a unit of MNRB Holdings Bhd, and Syarikat Takaful Malaysia Bhd (STMB). The IFSA may prompt MNRB to sell its stake in Takaful Ikhlas to a strategic partner, as further internal capital injections could be complicated. In the next few years, the main thrust for M&As is expected to be on the general insurance and general takaful industry. The life insurance sector sees to have consolidated somewhat for the time being.

14 Iranian banks are involved in the famous 2011 $3-billion embezzlement case. Iran's prosecutor general Gholam Hossein Mohseni Ejei said that state-run Bank Saderat and Bank Melli were the main banks involved in the case. The prosecutor general went on to say that seven MPs who were accused of involvement in the case acquitted due to lack of evidences. Thirty-nine persons were accused of involvement in the case, and several high-ranking officials including certain persons in judiciary, parliament and presidential administration were persecuted or arrested. In addition to death and life sentences, some defendants banned from government jobs.

RAM Ratings has assigned AA3/Stable/P1 financial institution ratings to Turkiye Finans Katilim Bankasi AS (the Group). RAM moreover assigned an AA3/Stable rating to the proposed RM3.0 billion Sukuk Murabahah MTN Programme to be issued by the Group's wholly owned asset leasing subsidiary, TF Varlik Kiralama AS. The assigned ratings reflect a high likelihood of extraordinary support from the Group's major shareholder, The National Commercial Bank (NCB). Turkiye Finans enjoys sound earnings which support its capital position. Although its asset-quality indicators are healthy, they may weaken amid Turkey's more challenging economic and political backdrops. On the other hand, Turkiye Finans' ratings are constrained by its limited domestic franchise and relatively weak funding position.

Islamic finance has been one of the fastest-growing sectors in global finance but the industry has yet to shake off perceptions about high costs and complexity that are holding back some issuers. Britain, Luxembourg, Hong Kong and South Africa all are keen to make maiden sukuk issues, to diversify their funding sources and tap liquidity sources. However, these and other plans have been delayed by factors including double-taxation on some sukuk structures and a difficulty in identifying assets to underpin the transactions. Increased clarity on sukuk structures has helped: the design and approval process has become generic. Moreover, some jurisdictions have enacted legislation in the past few years to remove double or even triple tax duties on sukuk.

Two key growth areas for international capital markets are set come together in the first green and socially responsible sukuk offerings, writes Dan Alderson. The World Bank is endorsing the product through involvement in two new projects due this year. The Washington supranational’s ambition of issuing its own dollar sukuk is hampered by its mostly conventional asset base. But its UK-based affiliate the International Finance Facility for Immunisation (IFFIm) is looking to do a debut sukuk to fund vaccinations in 53 of the world’s poorest countries.

When mentioning waqaf, the benefaction for religious or public purpose, the general perception is that one has to donate land to build surau (prayer hall) or to be used as burial ground. However, there is more than this to waqaf as it could also serve as a mechanism or instrument to restructure or develop a community. In Malaysia, the properties donated under waqaf is administered by trustees, namely the state religious and customary councils. They later develop the properties for the benefit of Muslims. Although today the waqaf concept has been expanded to include donating cash and shares apart from land, the concept remains limited. Therefore, there's a need for information campaigns, better understanding and transparent waqaf institutions that carry out their duties in the right manner.

Bahrain-based Gulf International Bank (GIB) has announced the successful completion of a senior unsecured two billion Saudi riyal ($533 million) five-year floating rate notes issuance. The notes were issued at a spread of 72.5 basis points above three-month Saudi Arabia Interbank Offered Rate (SAIBOR). The order book was more than 1.7 times oversubscribed, reaching more than 3.4bn riyals from investors. The joint lead managers and book runners for the offering were GIB Capital, NCB Capital Company, Samba Capital and Investment Management Company and Saudi Fransi Capital. The primary shareholder in GIB is the Public Investment Fund of Saudi Arabia.

Abu Dhabi Islamic Bank (ADIB) agreed a $2 billion debt overhaul with mortgage company Amlak Finance. ADIB, part of a six-member creditor committee negotiating Amlak's restructuring, signed a tentative agreement that's being considered by the decision-makers on the Amlak side, CEO Tirad Mahmoud said. The prospective accord includes a temporary waiver on a certain part of the principal that you recapture later if Amlak achieves certain targets, he said. Amlak sought an extension on $2 billion of loans after property prices in Dubai slumped during the credit crisis that began in 2008.

Moody's has assigned Bank Al Bilad a long-term credit rating of A2 and short term credit rating of P-1. Moody’s said that the ratings on Bank Al Bilad reflect the banks strong financial position, strong asset quality and coverage metrics, solid capitalisation levels and strong profitability resulting from growing business volume, efficiency gains and the solid contribution of non-funded revenues, in addition to the strong fundamentals of the Saudi economy supporting the growth in the banking sector. Moodys emphasised the importance of Islamic finance and associated opportunities in the Kingdom of Saudi Arabia.

Dubai Islamic Bank (DIB) will purchase a 25 percent stake in Indonesian Islamic lender Bank Panin Syariah. Under the agreement, DIB will jointly manage and operate Bank Panin Syariah along with parent Bank Pan Indonesia, which will remain a controlling shareholder. No purchase price was given for the deal, which will be subject to regulatory approval. The investment will involve DIB accumulating around a 25 percent stake in Bank Panin Syariah in the initial phase, with a view to subsequently increasing its shareholding in the bank to 40 percent. Bank Panin Syariah has a network of 10 branches and held assets worth 4.3 trillion rupiah ($376.8 million) at March 31.

Saudi Arabia's Dar Al Arkan Real Estate Development Co raised $400 million through an Islamic bond, with strong demand for the paper helping to reduce the cost at which it borrowed. The developer attracted a final order book of more than $1 billion for its five year sukuk. Final pricing came at a profit rate of 6.5 percent. This was tighter than the 6.75 percent earmarked earlier on Wednesday and well inside the high-6s percent given as initial pricing thoughts on Tuesday. Alkhair Capital, Deutsche Bank , Emirates NBD and Goldman Sachs were coordinators and bookrunners of the deal. Abu Dhabi-based Al Hilal Bank, as well as Qatari trio Al Rayan Investment, Barwa Bank and QInvest were also bookrunners.

Henry Thompson will take over the role of London-based Gatehouse Bank's new boss with immediate effect. He substitutes current chairman and chief executive Fahed Faisal Boodai, who will remain in his role as executive chairman. Thompson had been working in Shariah-compliant finance at Arcapita as head of legal before. Gatehouse, which offers investment banking services, has been aiming to get a foothold in London’s wealth management sector and recently opened a new office in Mayfair. Boodai said Thompson brings with him sector knowledge, which complements the activities of Gatehouse Bank.