IslamicFinance.de

The UAE is in the final stages of creating debt issuance and listing regulations that will help develop a domestic credit market and encourage the sale of Islamic bonds. The Securities and Commodities Authority, or SCA, has circulated draft rules that for the first time to treat sukuk and non-Shariah compliant debt separately. The regulator is seeking feedback from market participants by the end of the year and “hopes” to enact the regulations early in 2014. The UAE must develop local debt markets to help state-run and private companies find alternatives to bank loans because it is the only one in the six-nation Gulf Co-operation Council that doesn’t have a domestic, local-currency debt market.

His Highness Sheikh Mohammed bin Rashid Al Maktoum, in his capacity as Ruler of Dubai, has issued Law No 13 of 2013 on the establishment of the "Dubai Islamic Economy Development Centre". He also issued Decree No 42 of 2013 to form the Centre's Board of Directors, to be chaired by Mohammed Abdullah Al Gergawi. The decree is effective from the date of issuance. The Centre will have legal personality and financial and administrative independence as well as the legal capacity necessary to direct all actions and behaviours to achieve the goals of the Centre. Promoting Dubai regionally and globally as a main centre for Shariah-compliant goods and services, building a database on Islamic economic activities and encouraging recourse to arbitration in related Islamic economic activities disputes are among the key objectives of the Centre.

Gulf Finance House , the Bahrain-based investment firm which has restructured a number of debt facilities since the financial crisis, has confirmed Hisham Al Rayes as its chief executive officer. Rayes had been acting CEO since March 2012. He said in July that a leaner balance sheet and a new strategy in which it engaged more in its investments would help drive the business forward in future. Its current debt pile is less than $235 million.

Under an interim deal between world powers and Iran last month, the Islamic republic agreed to freeze part of its nuclear programme in return for modest relief from sanctions. The unwinding of sanctions in the Iranian context will prove quite challenging and difficult in part because as the sanctions have grown over time, they’ve been layered with elements of sanctions building on themselves. The issue of sanctions with Iran have not just been about nuclear issues but also about human rights, support to president Bashar Al Assad in Syria, support to Hizbollah, support to Iraqi militias. Under the interim sanctions deal, the Obama administration has estimated that the sanctions relief will be worth US$6 billion to $7bn. Banking and oil sanctions will remain in place while negotiators attempt to reach a permanent deal over the next six months.

Pak-Qatar Family Takaful Limited is a progressive and a technology-driven Shari'ah Compliant company providing Takaful solutions in Pakistan. Beginning operations in 2007, the company has an independent Shari'ah Advisory Board chaired by Mufti Muhammad Taqi Usmani which certifies all products and operations for Shari'ah compliance. The company is rated A (having Stable Outlook) by JCR-VIS Credit Rating Co Ltd. The paid-up capital of Pak-Qatar Family is in excess of Rs 700 million. Pak-Qatar General Takaful Limited is chaired by Sheikh Ali bin Abdullah al-Thani and sponsored by several financial institutions form the State of Qatar. The company is present in all major cities of Pakistan, and is on track to further expanding its branch network.

The Islamic Bank of Britain (IBB) has completed its first finance deal in Scotland for Al-Meezan, a non-profit, non-political organisation based in Glasgow. The deal for commercial property finance, valued at £400,000, has enabled Al-Meezan to complete renovation and extension work at its premises. It also includes refinancing of the credit for the initial building works, making Al Meezan's finances fully Sharia compliant. IBB 's commercial property finance is tailored to the needs of the customer, and is in line with Scottish law. In this case, the product uses the Islamic finance principles of Musharaka with Ijara. IBB expects continued interest in its offering, particularly in Scotland where there is a growing interest in Islamic and ethical finance.

There are big opportunities to promote Islamic finance in Tunisia which can be the global hub of Islamic finance for French speaking countries, said Muhammad Zubair Mughal, Chief Executive Officer, AlHuda Centre of Islamic Banking and Economics (CIBE) in an international conference on “Finance and Enterprise” in Tunisia. He also said no Islamic financial institution was effected by the global financial crisis. He added that Tunisia has a good recognition in Islamic financial industry having 2 full-fledged Islamic banks, takaful companies, universities with Islamic finance program, sukuk laws and some other similar institutions which indicate the best future of Islamic finance in Tunisia. Realizing the need of Islamic microfinance, he further said that Islamic microfinance is missing component of Islamic finance in Tunisia while socioeconomic development and poverty reduction can be done in better way through Islamic microfinance.

The Pakistani Islamic Banking Industry (IBI) is in a nascent stage compared to the rest of the world, but has shown constant growth in the past years. Islamic Banks (IB) hold a lion-share of 64 percent in the IBIs total assets. In terms of share, IBs contribute only 30 percent to the IBIs total advances, the rest being provided by the Islamic Banking Divisions (IBDs), i.e. conventional banks offering Islamic banking. IBDs are more efficient in recovering their loans with their infection ratio clocking in at just 1 percent of their advances. Conversely, full-fledged Islamic banks have an infection ratio of 8 percent. With the growing competition in the Islamic banking industry, the Islamic banks must rethink their asset deployment strategy, which is currently more inclined towards Investments. SME and agriculture sectors which are untapped thus far could be the potential avenues to hit.

Tribonian Law Advisors (TLA) acted as lead counsel to The Investment Dar K.S.C. (TID) in a transaction that involved a $1.2 billion settlement in kind with just under a third of its creditors by value. Participating creditors settled existing FSL claims at a significant discount in exchange for cash, debt and equity participation in a newly formed Jersey entity, to which various assets of TID were transferred. The debt in the Jersey entity was structured on a loan-to-value basis and provided enhanced security and information rights. Approximately 29 per cent of TID’s creditors elected to participate in the transaction. Non-participating lenders benefited from the transaction by seeing a 2.1x multiple reduction in the liabilities settled versus the realisable asset value which was contributed to the Jersey entity.

Kuveyt Turk is planning to sign its murabaha facility next week. The syndicated loan will consist of two tranches — a one year deal paying 205bp all-in and a two year note paying 250bp all-in.

The Islamic Financial Services Board (IFSB) has published new guidelines on capital adequacy for Islamic banks and risk management of takaful. The introduction of Basel III standards, which will be phased in over the coming years, has led to the new guidance. Revised guidelines detail the criteria for using sukuk as Tier 1 and Tier 2 regulatory capital, a practice that has been in operation this year in financial institutions in the United Arab Emirates and Turkey. Guidelines for takaful firms outline issues faced by Islamic insurers, including the risk that their products become non-compliant with sharia principles, and lays out best practice when it comes to supervising funds and disclosing information.

Abdul Rahman Hassan Abdul Rahman Hashim has been named Governor of the Central Bank of Sudan, replacing former Finance Minister Mohamed Khair al-Zubair who served as Central Bank Governor since 2011. Abdel Rahman Hassan took on the post after being General Manager of state-owned Omdurman National Bank since 2006. He had previously held a number of positions in Omdurman National Bank and before that with Faisal Islamic Bank. Both the new Governor and the former Governor are members of Sudanese President Omar Hassan al-Bashir’s ruling National Congress Party.

Bangladesh’s credit rating might deteriorate as well as the LC confirmation cost would rise further. This is because two local private commercial banks Prime Bank and Dutch Bangla Bank allegedly failed to repay the loans (not more than US$2 million only) from the Islamic Corporation for Insurance of Investment and Export Credit (ICIEC). Local commercial banks are now unable to repay the loans against local and foreign LCs due to stagnated business activities amid political deadlock ahead of the general election and prolonged violence. LC confirmation cost will be increased unless the local banks maintain the standard credit rating of the commercial banks.

Kuwait Finance House (KFH) offered a new financing product that allows the public to purchase seats at schools and universities using monthly installments. KFH purchases seats at universities, schools, and institutes, then resells those seats to the public. People can pay through monthly installments, and the ceiling of the service is KD 15,000. The first installment can be postponed for six months, and the service is possible for all people in Kuwait, regardless of whether they are KFH clients or not. However, the service is subject to the credit rules and regulations. The person requiring the service must have an original price quote, original ID, a recent salary certificate that shows the net salary, and a balance inquiry for the clients of other banks.

The decline in education for Syrian children has been the sharpest and most rapid in the history of the region, according to the paper “Education Interrupted” published today. Since 2011 nearly 3 million children from Syria have been forced to quit their education as fighting has destroyed classrooms, left children too terrified to go to school, or seen families flee the country. Progress achieved over decades has been reversed in under three years. At best, children are getting sporadic education. At worst, they drop out of schools and are forced to work to support their families. The paper details some of the factors that have contributed to the rapid emptying of classrooms.

The Islamic Development Bank (IDB) celebrated its 40th anniversary with a reception for consuls general organized with the Ministry of Foreign Affairs, Makkah region, at the bank's headquarters in Jeddah on Wednesday. IDB President Ahmed Muhammad Ali said this was the start of planning for the next 10 years after consulting member states and Muslim communities in nonmember countries. The bank's board of governors would discuss the program of action at its next meeting in June. Ali said the bank prioritizes projects in the least developed member countries, and projects in education. IDB’s commitment to help boost economic growth is evident from the rise in total financing from $8.3 billion in 2011 to $9.8 billion in 2012, an 18.4 percent increase.

The indebted Kuwaiti shareholder of British luxury carmaker Aston Martin has persuaded just under a third of its creditors to accept a debt restructuring deal that offers them shares in a portfolio of its assets. The sharia-compliant investor defaulted on a $100 million Islamic bond payment in 2009, leading it to restructure around $3.7 billion in debt two years later. Under the new deal which was accepted by 29% of Investment Dar's creditors, they settled claims at a 62.6 percent discount in exchange for cash, debt and equity held by a vehicle based in Jersey. In May, Investment Dar said creditors which did not want to take part in the offer could retain their claims under an original restructuring plan, which offered creditors a 10 percent stake.

Indonesia plans a new law that will require the spin-off of the sharia-compliant units of insurance companies. The move could reshape Indonesia's takaful market by spurring mergers as firms try to meet capital requirements for their full-fledged Islamic units. A draft law is now with parliament but won't be enacted this year as previously anticipated. It covers all areas - licensing, market conduct, corporate governance, consumer protection - for both takaful and non-takaful firms. The law is expected to give three years for insurers to comply with requirements to spin-off their Islamic units. Minimum capital requirements for full-fledged takaful firms would be set at 50 billion rupiah , compared with 100 billion rupiah for conventional insurers. Passing Indonesia's insurance law would close the last market that allows takaful windows to operate, helping develop the country's nascent Islamic finance market.

The global Islamic financial industry is expected to grow to US$2 trillion next year from US$1.3 trillion currently, propped up by growing demand from non-conservative countries, Malaysia's Deputy Finance Minister Ahmad Maslan said. The Islamic financial industry will expand because of the stability of the Islamic financial system. The system is not shaken by the economic downturn anywhere in the world, he added. Furthermore, the Islamic financial system was also fairer such as in terms of profit distribution, Ahmad said. In Malaysia, the growth of Islamic Finance would benefit both Muslims and and non-Muslim consumers, he said.

The Kuala Lumpur-based Islamic Financial Services Board (IFSB) has published guidelines on capital adequacy for Islamic banks and risk management of takaful as the industry body expands its activity and membership base. Revised guidelines detail criteria for using sukuk as Tier 1 and Tier 2 regulatory capital, those for takaful firms outline issues faced by Islamic insurers, including the risk that their products become non-compliant with Shariah principles, and describe best practices to supervise their funds and disclose information. Work now shifts to the IFSB’s 16th guideline covering the supervision of Islamic finance institutions, helping tighten regulatory oversight of industry practices. The IFSB council will be chaired in 2014 by the managing director of Brunei’s monetary authority, taking over duties from the Qatar’s central bank governor.