IslamicFinance.de

Nigeria and other African countries need to tap into opportunities provided by Islamic financing to fund infrastructure development on the continent, Sanusi Lamido Sanusi, the governor of the Central Bank of Nigeria has said. He stated this yesterday in Abuja at a conference on “Infrastructure Development through Alternative Funding (Islamic Finance) in Africa”. He said Sukuk, if well developed, could serve as a financing option for governments as is already evident in countries like Saudi Arabia and United Arab Emirates. The acting managing director of Jaiz Bank, Usman Hassan, urged the federal government to conclude the development of the framework for the issuance of Sukuk in the country. This is necessary because with Sukuk you cannot have failed projects and funds cannot be diverted.

At least three Islamic insurers are considering disposing their general takaful business ahead of the Islamic Financial Services Act 2013 (IFSA), which comes into force next month. Among companies that are mulling the sale of their general takaful business are HSBC Amanah Takaful (Malaysia) Sdn Bhd, Prudential BSN Takaful Bhd and Hong Leong MSIG Takaful. The IFSA, which has been enacted but pending implementation, requires existing composite licence of insurers to be separated into two capitalised legal entities, namely life insurance or family takaful and general insurance. It has been reported that the minimum capital for each company will be RM100 million. However, most bank-backed takaful companies' are not willing to pump the additional capital to set up a separate general takaful unit since the non-life segment is a small contributor to their overall business.

The global family of takaful market is projected to grow by over 160% in the next five years to hit US$5 billion (RM16.02 billion), World Takaful Conference CEO David McLean said recently. Though the bottom line profitability on the general takaful front is facing stiff competition, at a global level, the growth in family takaful continues to outweigh the growth observed in both general takaful and conventional life insurance. The contributions from Malaysia make up around 56% of the total global family takaful contributions. Recent reports indicate that the Malaysian takaful industry is expected to grow by 20% per annum for the next two years as consumer acceptance grows and regulatory changes provide a stronger and more stable infrastructure for the Shariah-compliant insurance industry.

Kuwait Finance House (KFH) has been granted an Independent Assurance Certificate of its Corporate Sustainability Report from Ernst and Young (E&Y). This certification came after meeting or exceeding all requirements of the certification criteria. Nadeem Shafi, the partner of (E&Y), handed the certificate to KFH's CEO Muhammad Sulaiman Al-Omar in the presence of a number of officials. The bank has been certified according to data and information related to the bank's sustainability performance, internal protocols, processes and controls related to the sustainability performance data and information related to the workforce. Moreover, environmental data, achievements and awards as well as training and community development initiatives, were also taken into consideration. E&Y sustainability assurance team also visited the company's corporate office to gain confidence in the data and selected claims presented in the report.

RHB Islamic Bank has agreed to offer Lembaga Pengarah Amanah Kebajikan Masjid Negeri Sarawak with a RM300 million Istisna’/Ijarah Term Financing Facility. RHB said the facility, with a financing tenure of 10 years, is intended for the construction of Baitul Makmur II, an 18-storey office/commercial building located in Kuching, Sarawak. Upon completion, Baitul Makmur II will house several Sarawak state ministries. This deal would represent one of RHB Islamic Bank’s single largest financing loans to Sarawak state-related group of companies.

Sabana Real Estate Investment Management, as the manager of Sabana Shari'ah-compliant Real Estate Investment Trust (Sabana REIT) has announced that SGD 1.5 million in aggregate principal amount of the SGD 80.0 million 4.50 per cent Convertible Sukuk due 2017, issued by Sabana Treasury, a wholly-owned subsidiary of Sabana REIT and convertible into units of Sabana REIT have been converted and cancelled pursuant to the exercise of conversion rights by the holders thereof. Following the above conversion, an aggregate of 1,257,018 new Units have been issued at the conversion price of SGD 1.1933 per Unit, and the total Units in issue is 648,711,000. As at 21 June 2013, the aggregate principal amount of Convertible Sukuk remaining outstanding following such conversion and cancellation is SGD 72.5 million.

Tunisia's first issue of a sukuk is likely to be postponed to next year. Tunisia had originaly planned to issue a sovereign sukuk this July to raise $700 million. Thus, the government wanted to push through a legislation to permit the issue, and hoped parliament would approve the bill by end-April or early May. But so far, the parliament has not begun considering the legislation because it has been occupied drafting a new constitution that would permit elections expected later this year. Postponing the $700 million issue will increase pressure on the country's budget this year. Tunisia is running a large state budget deficit, which it has projected at about $3.2 billion this year, and the sukuk was intended to help fill that gap. Tunisia might have to use IMF funds to fill the gap left by the sukuk delay.

Profits of Lebanese banks operating in Syria in the first three months of 2013 fell by 98.2 percent to $640,000 from $49.8 million in the same period of 2012. That was compared to aggregate net losses of 489.5 million pounds in the fourth quarter of 2012. The aggregate shareholders’ equity of the seven banks reached 35.3 billion pounds, or $406.5 million, at end-March 2013, unchanged from end-2012. The banks’ total operating income reached 4.7 billion pounds in the first quarter of 2013, down 35.7 percent from 7.3 billion pounds in the same period last year. Lebanese banks in Syria have increased provisions for nonperforming loans, though they realize this will affect profits considerably. All of the Lebanese banks said they had no intention of withdrawing from the Syrian market now or in the future because they believed the situation would get back to normal eventually.

The Islamic Development Bank has proposed to buy Marocco's sukuk rather than offering the country another loan, according to General Affairs minister Mohamed Najib Boulif. However, the amount has not been set yet. Earlier this year, the Morocco agreed a $2.4 billion package with the IDB, under which it will receive $600 million each year from 2013 to 2016. It also raised $750 million last month in a two-part reopening of its $1.5 billion bond. The North African country is considering other financial reforms, such as that of the pension and tax systems. It will also deregulate prices for some basic goods in the next two weeks, its first step towards reducing subsidies. However, the timing has not been decided.

The General Council for Islamic Banks and Financial Institutions (CIBAFI), a Bahrain-based non-profit organisation, plans to expand beyond the Gulf, so that it can shape rules and practices in new markets as they grow. Addressing a major weakness in Islamic finance, the lack of well-trained professionals, CIBAFI plans to expand its training and certification programmes. The body also plans to hold forums in new markets for Islamic finance, including events in Morocco and Libya later this year. One of CIBAFI's key messages is that Islamic windows need to operate under clear rules to improve the perceptions of consumers. Therefore, Omar Hafiz, secretary-general of the body, said that for its long-term health, the industry should focus as much on improving the regulatory environment as increasing its size.

The General Council for Islamic Banks and Financial Institutions (CIBAFI), a non-profit organisation, has traditionally focused on neighbouring countries, which form a core market for the industry. The Bahrain-based association now plans to expand beyond the Gulf, so that it can shape rules and practices in new markets as they grow. Addressing the lack of well-trained professionals in Islamic finance, CIBAFI plans to expand its training and certification programmes. The body also plans to hold forums in new markets for Islamic finance, including events in Morocco and Libya later this year. One of CIBAFI's key messages is that Islamic windows need to operate under clear rules to improve the perceptions of consumers. CIBAFI has 114 member institutions, including Egypt's Faisal Islamic Bank, Kuwait Finance House and Bahrain-based Al Baraka Banking Group.

Thuraya Telecommunications Company has secured a term financing facility through Dubai Islamic Bank (DIB). Thuraya will use the proceeds to upgrade its network infrastructure and to support further development and expansion of its product portfolio, including the highly successful Thuraya SatSleeve satellite adaptor for smartphones. According to Samer Halawi, Chief Executive Officer of Thuraya, this long-term relationship with DIB will help his company to strengthen its position as a leading MSS operator and provide it with additional financial flexibility to develop its next generation gateway and upgrade its network capacity. It also provides Thuraya with the breadth that supports its sustainable growth strategy as well as new business opportunities in key and emerging markets.

Kuwait Finance House (KFH) has launched the first version of a Quran Application for android users. Strategy and Corporate Affairs General Manager Fahad Al-Mukhaizeem said that KFH is keen to grant this gift since Ramadan is approaching. Moreover, Al-Mukhaizeem explained that this service sheds lights on the meanings of the Quran, and helps reciters in memorizing it. He revealed that the number of users is expected to reach 2 million users by the end of the year, after launching the current version that will be constantly updated through Play Store. It is worth noting that the new version has high resolution, in addition to features like night reading. Furthermore, the application will include many meanings in English, Arabic, French, and Turkish, not to mention the feature that allows users to listen to the Quran. Features also include choosing the colours that the reader wishes to see.

The United Nations Environment Programme Finance Initiative (UNEP FI) has elected its two new Co-Chairs to steer the initiative and to champion its revised motto: Changing finance, financing change. David Pitt-Watson, Senior Strategic Advisor and Representative of Inflection Point Capital Management, and Madeleine Ronquest, Head of Environmental and Social Risk Management at FirstRand Group Ltd., will co-chair the UNEP FI Global Steering Committee for the next two years. The Committee is composed of 15 elected members who focus on climate change, ecosystem management, and social issues. UNEP FI's upcoming two-day Global Roundtable (GRT), to be held on the 12-13 November in Beijing China, will focus on long-term decision-making and the fundamental role of finance in society.

The Bahrain Islamic Bank (BisB) has appointed Abdul Razaq Al-Qassim as new board chairman. Mr. Al-Qassim will take over from incumbent Khalid Al-Bassem, who opted to quit after holding the position for eight years. The appointment was on the sidelines of a BisB board meeting which finalized the sale of shares of Kuwaiti Investment House Holding Co. (51% of BisB shares) to National Bank of Bank (25.8%) and the General Organisation for Social Insurance (25.8%). The bank has also decided to convene a regular general assembly on July 7 to elect a new board following the ownership overhaul.

Kuwait's Investment Dar Co has asked creditors to take a 50% writedown on its debt, as it seeks to meet repayments after defaulting on a loan three years ago. Under the optional plan, creditors will receive a cash payment totaling 5.7% of their outstanding debt and a portion of a new Islamic loan equal to about 44% of their current exposure. Details are not public. Investment Dar's stake in Aston Martin and real estate holdings will be among assets backing the new credit facility.

Thuraya Telecommunications has secured a long-term financing facility through Dubai Islamic Bank (DIB). Thuraya said it will use the proceeds to upgrade its network infrastructure and to support further development and expansion of its product portfolio, including a SatSleeve satellite adaptor for smartphones. Adnan Chilwan, deputy chief executive officer of DIB said in a written statement that the deal makes DIB the preferred partner for fuelling the growth of progressive companies like Thuraya.

Fitch Ratings has affirmed the Islamic Development Bank's (IDB) Long-term Issuer Default Rating (IDR) at 'AAA' with a Stable Outlook and Short-term IDR at 'F1+'. IDB's ratings are underpinned by strong intrinsic features, primarily excellent capitalisation. The ratio of equity to assets has remained above 60% since inception. The ratio of debt to equity is low, at 57.5%. The bank also maintains a comfortable level of liquid assets, which more than fully covered its short-term liabilities. Moreover, credit risk is moderate. Fitch deems other risks like credit risk on treasury assets, interest rate risk and foreign exchange risk as well as the bank's risk on equity investments under control. Shareholders' support is also supportive of the rating since their willingness to support the bank is expected to remain strong.

Investment Dar has become overextended in the global financial crisis and its complex debt restructuring has dragged on for four years. The indebted Kuwaiti shareholder of ASTON MARTIN has offered a new debt restructuring deal to creditors, using its shares in the British luxury car brand as collateral. Under the plan, creditors of Kuwait’s Investment Dar will be given the option of becoming lenders to Oasis Holding (a Jersey-registered 'special purpose vehicle', SPV) while taking a 50 percent discount on what they are owed. The private equity group’s 24 per cent stake in Aston Martin and its 28 per cent stake in affiliate Asmar, which also holds shares in Aston Martin, will be among assets to be shifted across to the SPV. Altogether, Kuwaiti investors own 60.5 per cent of Aston Martin.

Asuransi Allianz Life Indonesia plans to double its takaful, market share in five years as it joins insurer Sun Life Financial Indonesia in forming partnerships with banks to tap rising Muslim wealth. Asuransi Allianz made an agreement with HSBC Holdings this year to offer its services. Sun Life will seek to boost business in rural areas via telemarketing campaigns and bank alliances. The takaful market share may climb to 7.9 percent in five years, from 3.9 percent currently. Islamic insurance assets in Indonesia, which has the world’s biggest Muslim population at 216 million, increased an average 53 percent in the last five years to Rp 11.4 trillion ($1.1 billion).