IslamicFinance.de

Since the Islamic Development Bank (IDB) commenced its journey in the late seventies, Islamic banking has been growing globally, with Islamic banking assets crossing the $ 1.8 trillion mark in 2013. The distinctiveness of Islamic banking in comparison with the conventional banks is not merely hypothetical. The aim, objective, policy and work strategy of this banking system are dedicated for the wellbeing of a wider section of people. This banking system does not attach preference to making only profit to satiate the greed of a few individuals. Rather, it gives priority to fulfilling the basic needs of all people in the society. Now all concerned should work collectively to present the theoretical and hypothetical issues of Islamic banking to the people easily.

With the support of the government to develop Islamic finance in Turkey, Turkish and foreign investors are becoming more and more aware of Islamic financing methods and products in Turkey. The main legislation regulating Islamic banking in Turkey is the Banking Law No. 5411 (the "Banking Law"). Regulated under the same legal framework, participation banks must establish their own financing models approved by shariah scholars, to the extent it is in compliance with Turkish laws. Due to lack of specific regulations on Islamic finance, financing offered by participation banks has its own obstacles. Despite legal and practical issues yet to be resolved, Turkey is determined to increase its standing in the Islamic finance market.

The backing of AAA rated Islamic Development Bank is a boon to the debut sukuk Tunisia plans by July. The North African nation is planning to sell more than $100 million of Shariah-compliant bonds, Finance Minister Hakim Ben Hammouda said. That will help keep borrowing costs lower than they would be otherwise, said Mourad El Hattab at STB Bank. The guarantor will help keep the interest within the current range, El Hattab added. The IDB has provided Tunisia $3.6 billion in support. The yield on Tunisia’s 400 million-euro ($557 million) bonds maturing in 2020 fell three basis points to 4.42 percent at 11.59: a.m. on May 8 in Dubai, compared with a high for the year of 5.7 percent on Jan. 6.

Turkey’s Finance Minister Mehmet Simsek said the government wants more foreign lenders to apply for operating licenses as the country’s pool of potential bank acquisition targets shrinks. The focus on licenses comes after Industrial & Commercial Bank of China Ltd. announced last month that it was buying Tekstilbank AS and Qatar Islamic Bank said on March 26 that was nearing the end of exclusive talks to buy a stake in Asya Katilim Bankasi AS. (ASYAB). While the acquisition field narrows, Turkey’s regulator said it will look favorably on applications for banking licenses as the government encourages foreign investment.

London-based European Islamic Investment Bank (EIIB.L) will propose a capital reduction plan next month to enhance returns for its shareholders, after the firm swung back into profit in the 2013 financial year. EIIB will seek shareholder approval for the plan, which could potentially take the shape of a share buyback or a tender offer, during its annual general meeting in June. The firm posted a pre-tax operating profit of 1.5 million pounds in 2013, compared to a 10.1 million pounds loss a year earlier. Under its 2012-2016 strategy, EIIB is restructuring its business by exiting higher-risk private equity investments, seeking more stable income streams such as asset management and advisory services under its EIIB-Rasmala brand.

Albaraka Turk takes up sukuk baton after Turkiye Finans. Albaraka Turk has picked arrangers as it aims to follow participation bank peer Turkiye Finans's recent return to the dollar sukuk market. But one investor warned that Albaraka may find its deal more challenging. Albaraka Turk is looking to issue up to $500m of five year paper and has asked BNP Paribas, Emirates NBD, QInvest and Standard Chartered to manage the sale. Albaraka filed to the Istanbul Bourse, but leads could not confirm the mandate or say if a roadshow will follow.

The International Islamic Financial Market ( IIFM ) held its 30th Board of Directors meeting at Bank Indonesia's headquarters in Jakarta. The Board commended IIFM efforts in holding two successful industry consultative meetings on Sukuk standardization requirements from documentation, structures and guidelines point of view which were very well attended by industry stakeholders. Moreover, IIFM aims is to come up with more standards as per its well established comprehensive development process, some of which will be issued during 2014 and in the next year. On the sidelines of the Board meeting, a specialized industry seminar on "Islamic Capital & Money Market" was also organized, discussing the technical aspects of Sukuk, Islamic hedging and liquidity management tools.

Kuwait's Investment Dar has made a settlement-in-kind offer to creditors, in the latest of a long line of restructurings at the company. In a statement, it said the new offer was presented to creditors at a meeting in Dubai on Wednesday, and that it was optional and voluntary. The offer is an alternative to a proposal Dar made under a KD1 billion ($3.6 billion) debt restructuring plan agreed in 2011. There were no details of the type or value of assets offered under Wednesday's proposal. Giving reasons for the new settlement offer, Investment Dar said it had originally hoped that one of its "major assets" would have been returned to it by now through the Kuwaiti judicial system, but that this had not happened. The company has been in a long-running legal battle over a stake it once held in Bouyban Bank.

A move by Iran to recover bad debts on behalf of banks has shed light on possible corrupt lending under the country’s previous president Mahmoud Ahmadinejad. President Hassan Rouhani’s administration, in power for nine months, says bad debt in the banking system has reached a “critical” level – 15.6 percent. The authorities this week have handed the names of 575 of the biggest defaulters to the judiciary to try and recover some of the $33 billion owed. The list has not released but some believe the bulk may have been borrowed by as few as 100 people and firms. The bad debt may hamper Rouhani’s plans to boost employment and raise living standards. However, analysts also see positives in the new openness on the debt problem and moves to fix it.

Bahrain-based Gulf Finance House has appealed a decision by Kuwait's financial regulator to monitor its Kuwait-listed shares after the stock was traded in high volumes ahead of a company disclosure last year. In recent months, Kuwait's Capital Markets Authority (CMA) has been clamping down on what it sees as unusual market activity. Some executives and analysts have welcomed the move but others say the watchdog is being heavy-handed. Kuwait's regulator noticed GFH stock traded in high volumes in May 2013. The regulator notified GFH of its probe into the firm last September and said in April this year that it would monitor the stock for six months.

The Dubai-listed Dar Al Takaful will raise paid-up capital by 50 per cent, or Dh50 million, to Dh150 million through right issues, plunging its shares by nearly 3.5 per cent in the early morning trade of May 8. Rights shares will be offered to shareholders who own shares at the close of trading on Wednesday, May 14, 2014. The right issue will be issued at the par value of Dh1 per share and one ordinary share for every two shares. However, any surplus shares will be allocated to subscribers from shareholders or non-shareholders on a pro rata basis. The Islamic insurance company earlier this year signed a deal with Daman Investments to manage it investment account.

Pakistan plans to sell more than $1bn of Islamic bonds after its first overseas debt sale in seven years boosted reserves. The dollar-denominated notes will be marketed at the end of the third or in the fourth quarter of 2014, Finance Minister Ishaq Dar said. Investor interest will determine the size of the offering which will be “much more” than $1bn and managers are yet to be appointed, he added. Dar said he expects investors from the Middle East, South Asia, Europe and the US. A successful conclusion to review talks with the IMF – which began in Dubai this week and will probably end on May 10 – will hopefully result in good pricing on the debt, he added. The sale is part of Prime Minister Nawaz Sharif’s plan to attract investment and overhaul the economy to meet conditions on a $6.6bn IMF loan.

ndonesian airline Garuda Indonesia Tbk has secured US$100 million in financing from a unit of Malaysia's Maybank to fund its operations and expansion. The Musyarakah-based loan has a tenure of three years and will be issued through Maybank's Indonesian unit, PT Bank Internasional Indonesia Tbk. Garuda Indonesia posted a net loss of $163.9 million in its first quarter ended March, compared with a loss of $33.75 million in the same period a year earlier, as the airline continued to struggle with rising competition.

Amid talk of merging banks in the country to boost size and competitiveness in the region, the Financial Services Authority (OJK) has said that consolidation of sharia banks is also needed. At the moment, however, many sharia lenders are units that operate within conventional banks. OJK expects the consolidation to take place after all existing sharia business units (UUS) had been spun off from their parent banks. At the moment, there are 11 sharia lenders and 23 UUS operating in the country. After the spin-off, there would be more than 34, but the OJK would like to fix the number at between 25 and 30. One sharia business unit of a commercial bank is reportedly ready to be spun off in 2014.

The United Arab Emirates should enact stronger measures to curb real-estate speculation in Dubai to prevent an “unsustainable” surge in prices, the International Monetary Fund said. According to Masood Ahmed, head of the IMF’s Middle East and Central Asia Department, there is evidence that prices of real estate have been rising at a very rapid pace over the past 18 months. However, not everybody shares the same view. The Institute of International Finance, a Washington-based financial industry association, said that the rise in U.A.E. property values probably won’t lead to an asset-price bubble because credit growth remains relatively modest.

Morocco's finance ministry has submitted a bill to the General Secretariat that will introduce takaful in the country.
A ministry official said the bill will enable the formation of takaful firms as separate entities instead of being units of insurers. If all processes move ahead as planned, takaful could be introduced in Morocco by the end of 2014.

Etiqa Takaful Bhd, a unit of Malayan Banking, plans to issue 300 million ringgit ($92.2 million) in sukuk as early as this month, its chief executive Ahmad Rizlan Azman said. Last month, Etiqa Takaful set up its maiden sukuk programme, rated AA1 by RAM ratings, designed to qualify as Tier 2 capital in the company's balance sheet. The sukuk would be a one-off transaction classified as Etiqa's liabilities, carrying a 10-year tenor and a non-call provision in the first five years, said Azman. Etiqa would use a musharaka structure and the proceeds of the sukuk would be used for general business operations, working capital and other purposes. Maybank Investment Bank is the advisor for the sukuk.

The forum "The Best Governance Practices for Combating Corruption in Family Businesses,” was held at the headquarters of the Council of Saudi Chambers in Riyadh. Representatives of a number of international organizations and CEOs of family businesses participated, among others. Speakers at the forum said serious efforts are needed to bring the concept of good governance to family-run businesses in the Kingdom. It was called for generalizing the culture of good governance in private sector firms as well as in government institutions, commissions and ministries and all civil society institutions. Good governance culture should prevail not only in financial aspects, but in all legal, administrative and financial work that combats corruption of all kinds.

In some countries such as Indonesia, creating shariah-compliant insurance products can touch the lower middle income people. However, awareness for micro insurance, in general, and Islamic micro insurance in particular is still very low. This will affect SME's decision to buy Takaful products, although the affordable premiums and significant benefit are the main determinant of preference between conventional insurance and Islamic insurance. In order to rise the awareness of Islamic micro insurance among BMT and insurance companies, the Islamic Economic Society (MES) held business matching events which were attended by dozens of BMT. Through these efforts, MES hopes to lead Indonesian BMT opinion that Islamic micro insurance is very important as one of the risk mitigation strategy for business customers.

Last month, Ikim organised a seminar on “Promoting Waqf as a Mainstream Tool in the National Economic Policy”. Several issues were discussed on the potential of waqf in supporting the social and economic development of the nation. One such issue perceived to impede its ability to unleash its fullest potential is the prevalent scepticism about the capability and professionalism of waqf management in managing its assets. Undoubtedly, waqf institutions – especially those under the purview of state religious councils – that are as professionally managed as well-governed corporations can significantly contribute towards improving the welfare standards and quality of life of many in a particular location or state.