IslamicFinance.de

A sukuk deal issued by Asya Sukuk Company Limited is the first Turkish bank sukuk internationally placed where the obligor is a company which is entirely Turkish owned. The sukuk certificates issued are unconditionally and irrevocably guaranteed by Bank Asya. The inaugural issuance is for $250,000,000 and will have an initial yield of 7.5% per annum. The sukuk will be issued in fixed rate resettable Tier 2 certificates which are due in 2023. BNY Mellon has been appointed delegate, principal paying agent, registrar, transfer agent and Irish listing agent on the deal. It will perform fiduciary duties and make profit and principal payments to investors on behalf of Asya Sukuk Company Limited. It will also handle administrative duties related to the issuance of the certificates.

Indonesian corporate sukuk sales are expected to reach a full-year record as $92 billion of state-backed development projects buoy issuance. Bank Muamalat Indonesia and Adira Dinamika Multi Finance were among issuers of Rp 1.5 trillion ($154 million) of securities. The government is seeking to reduce fuel subsidies to set aside more funds for roads, railways and power stations to spur growth. Finance companies have accounted for 72 percent of sales this year, while state-owned construction company Hutama Karya and electricity producer Perusahaan Listrik Negara may sell Islamic bonds in 2013. The sectors with the biggest potential to actively tap into the sukuk market will be those involved in infrastructure-related projects and utilities.

According to Omar Al Mardi, Managing Director, Bahrain Financial Harbour, Bahrain depends on direct foreign investment. However, when there is political instability there is risk of having little foreign investment. Bahrain Financial Harbour ("BFH") has recently signed a 7 year BD90.5 million (US$ 240 million) Ijara facility for the Financial Center Project with several banks. The transaction was subject to Shariah Law and to English law. With this financing, the intention is to complete the infrastructure systems and facilities in Bahrain and to support the businesses within the Financial Harbour complex to eventually become the business location of the choice in the Middle East, Al Mardi said. Within the next six months to a year BFH will seek new targets and projects, he added.

Crescent Wealth has developed its own platform for its four investment options and has appointed Corporate Combined Superannuation (CCSL) as trustee. The Shariah-compliant funds - Australian equities, international equities, income fund and Australian infrastructure and property - were previously only available on the Association of Independently Owned Financial Planners Personal Choice Private e-wrap platform, after they were launched late last year. The company is also in talks with industry super funds to white-label the product as an ultra-ethical investment option. Although the product follows Islamic finance principles, the company expects the majority of its clients to be attracted to its ultra-ethical investing philosophy

Bank Nizwa and INCEIF signed a Memorandum of Understanding (MoU), under which the institutions will collaborate to jointly provide structured training and development initiatives for Omani nationals working in the Islamic Finance Industry. The MoU was signed at the Oman Islamic Economic Forum (OIEF), held recently at the Al Bustan Palace. The OIEF, the brainchild of Amjaad Development and Bank Nizwa, took the theme of 'The Islamic Economy: a Culture of Excellence'. INCEIF, The Global University of Islamic Finance, was set up by Bank Negara Malaysia (Central Bank of Malaysia) to develop human capital for the global Islamic finance industry. The collaboration aims to provide thought leadership training to the Omani Islamic finance industry in order for the regional and global industry to benefit.

Azzad Asset Management recently hosted Dr. Mehmet Yesilyaprak of Turkiye Finans Bank at its headquarters in Washington, D.C. Yesilyaprak gave the Azzad staff an update on the banking sector in Turkey and met afterwards with Azzad management to discuss areas of future collaboration. The Azzad Wise Capital Fund invests in deposits and notes from Turkiye Finans Bank, among other Islamic banks. The Fund also invests in sukuk. As of March 31, 2013, deposits from Turkiye Finans Bank represented approximately 13% of the Fund's holdings. Portfolio Manager Jamal Elbarmil recently highlighted the contribution of Turkey's Islamic banking sector to the Azzad Wise Capital Fund's first quarter results, stating that exposure to bank deposits from the four Turkish Participation Banks, including Turkiye Finans Bank, helped the Fund outperform its benchmark for the period.

Insurance major XL Group and Islamic specialist Cobalt underwriters will offer sharia-compliant insurance for companies buying commercial property, paving the way for Islamic investors to tap London’s subscription-based insurance market for the first time. The new offering will allow multiple insurers to take part in Islamic insurance deals, adding scale to the fledgling sharia-compliant insurance industry in the UK. Under Islamic insurance, premiums are reflected as contributions, capital is segregated from the participants' funds and there is transparency on cost. It's necessary to abide by the scholars' principles on how things should be structured.

Kuwait-based Asiya Investments has launched an Islamic trade finance fund with $20 million in seed capital, aiming to cater to small Asian manufacturers. Asiya aims to fill a gap left by Western banks that are scaling back their trade finance business, making credit scarce for small and medium-sized firms. Due to the world financial crisis and higher capital requirements under upcoming Basel III regulations, about 20 percent of the trade finance business could be opened up to non-bank institutions. Asiya's fund aims for a net return to investors of above 5.0 percent and it has $55 million worth of assets in the pipeline, with capacity for approximately $400 million. The firm identifies clients such as denim and latex manufacturers through its Singapore-based joint venture partner, EuroFin Asia.

A.M. Best Europe – Rating Services Limited has revised the outlook to stable from positive and affirmed the financial strength rating of C++ (Marginal) and the issuer credit rating of “b” of Boubyan Takaful Insurance Company (Kuwait). The revised outlook reflects Boubyan’s decision not to ring-fence assets in favour of policyholders. The risk-adjusted capitalisation of Boubyan’s policyholders’ fund remains weak. Additionally, recent management turnover adds uncertainty to the future performance of the company. Boubyan has experienced volatile operating results and is a small player in the Kuwaiti market. Concurrently, A.M. Best has withdrawn the ratings as the company has requested to no longer participate in A.M. Best’s interactive rating process.

Emirates Islamic Bank (EIB) reported a first quarter net profit of Dhs33.2 million, a 101 per cent increase compared to the previous year. The total income for the three months rose up by 42 per cent to reach Dhs443 million. EIB also reported a 42 per cent increase in operating profit before an impairment of Dhs195 million in the first quarter. The bank’s non-performing ratio as of March 31, 2013, improved to 19.2 per cent, from 20.4 per cent on December 31, 2012. EIB’s customer deposits stood at Dhs26.3 billion while the customer financing increased five per cent to Dhs20.7 billion. The bank maintained a financing-to-deposit ratio of 93 per cent, and a capital adequacy ratio of 16.3 per cent. According to Jamal Bin Ghalaita, chief executive officer of Emirates Islamic Bank, the bank has targeted segments of SME and priority customers and also continued to develop its commercial segment.

As Malaysians welcome their newly elected and returned Members of Parliament as well as state assemblymen, there is hope that people develop a better understanding and acceptance regarding different aspects of Islamic finance. People might better understand the different financial institutions that are undertaking Islamic financial activities in the market. Moreover, they might stop accusing Islamic financial institutions in general of merely emulating and replicating the products and services of conventional financial institutions. Legislators play a significant role in creating the right platform for a more inclusive Islamic financial market and we have not communicated enough on their roles in making Islamic finance in Malaysia the best in the world all these years.

Dubai Islamic Bank (DIB) is anxious to expand but is being held back in part by the unrest dominating the Middle East, according to its CEO Abdulla Al-Hamli. The bank expects to see close to 17 percent growth in net profit this year. DIB shares are up 43 percent so far this year to 2.88 dirhams, giving it a market capitalization of about AED 10.9 billion. After the global credit crisis the bank cut real estate investment to 27 percent of its portfolio from 45 percent in 2008. DIB’s non performing loans peaked at 14.5 percent after the crisis and dropped to 12 percent by the end of 2012. DIB is considering its expansion into Asian markets like Malaysia, Indonesia and India.

The National Insurance Commission has released takaful guidelines which state that applicants seeking permits to conduct takaful transactions must own the certificate of registration as a fully-fledged takaful company. The guidelines also state that the company's name must contain words or terminologies that imply takaful operations. In addition, companies must at all times keep a minimum deposit in a non-interest financial institution.

Qatar Islamic Bank is not expecting to issue more Islamic bonds before 2014, according to its Chief Executive Officer Bassel Gamal. The CEO said that there seems to be enough liquidity currently. Last October, it tapped the bond market with a US$750 million five year sukuk bond issue. This is part of the overall sukuk programme of the bank valued at US$1.5 billion. Gamal added that local currency sukuks would be expected to be issued in the coming years. He also said that many countries encourage local issuances of sukuk, such as Saudi Arabia and Malaysia.

A joint venture deal between Middle East’s EFG-Hermes and Qatar’s QInvest has failed because the Egyptian Financial Supervisory Authority did not approve it in time. Under the terms of the deal, QInvest would have injected $250m into a joint venture banking business, and owned 60 per cent. Businessmen in Egypt have complained that, since the 2011 revolution officials have shied away from making big decisions because of fears over possible allegations of corruption. Analysts had also speculated that the failure of the regulator to approve the deal might be linked to the trial of the two chief executives of EFG-Hermes, alongside the two sons of the former president, over profits from the 2007 sale of El Watany Bank of Egypt. However, EFG-Hermes has said in the past that it did not believe the case had anything to do with the delay in approving the joint venture.

Indonesia’s plan to shift 11 trillion rupiah ($1.1 billion) of pilgrim’s savings into Shariah- compliant lenders is a booster-shot that will help narrow the gap with neighboring Malaysia. Deposits set aside by those planning a Hajj visit to Mecca in Saudi Arabia will be shifted by the Ministry of Religious Affairs from non-Islamic banks within a year of announcing the policy. The funds are equivalent to 7.3 percent of the 150.8 trillion rupiah in savings at Islamic lenders, less than a sixth of Malaysia’s 310 billion ringgit ($102 billion). The entire Hajj fund totaled 55 trillion rupiah in March, with about 35 trillion rupiah invested in non-tradable sovereign sukuk and 9 trillion rupiah already placed at Islamic lenders.

Industry experts and analysts said Abu Dhabi World Financial Market (ADWFM) and Dubai International Financial Centre (DIFC) will complement each other in attracting investments to the UAE. The focus of the ADWFM will be on energy, oil and gas, renewable energy, carbon credits and other new products, benefitting from the fragile recovery in the USA and European markets. Abu Dhabi will differentiate this centre in terms of capabilities in annual operational costs, prompting businesses from the region and from the EU and US to invest in the UAE market.Both DIFC and ADWFM will be housing regional headquarters for many of the world’s biggest banks and finance firms as well as energy companies. The ADWFM will have a positive impact on the UAE economy regarding per capita income and unemployment.

Shari’ah-compliant Al Salam Bank-Bahrain reported a net profit of BHD 3.053 million in the first quarter of 2013, up 68 per cent. The bank also reported a rise of 32 per cent in total operating income to BHD 6.184 million. Total operating expenses fell BHD 122,000 to BHD 2.63 million, mainly as a result of an 8.5 per cent cut in staff costs to BHD 1.38 million. Provisions and write-offs were BHD 501,000 against BHD 117,000 in the same period last year. Al Salam Bank-Bahrain reported total assets of BHD 989.293 million, up from BHD 942.218 million in Q1 2012. Total liabilities rose from BHD 715.877 million to BHD 766.633 million.

With the ongoing credit squeeze from the debt crisis and uncertainty still stalking capital markets, many Western firms are eyeing up the Islamic liquidity pool as an alternative source of finance. The Irish energy group ESB had applied to local regulators in Malaysia for permission to issue a bond, with the aim of raising €1 billion. Had the issuance gone ahead, the ESB would have become the first Irish company, and one of the non-financials in Europe, to issue a Sharia-compliant bond. Nonetheless, prospective investors reportedly showed interest in investment in asset-rich companies like the ESB. Ireland already commands a share of pie when it comes to fund management, with some 20 per cent of Europe’s Sharia-compliant funds domiciled in Dublin’s Irish Finance Services Centre (IFSC).

The standards for Islamic asset management should be raised so that it can compete with conventional peers. according to Fajar Capital Group CEO Iqbal Khan. He said though the Islamic asset management industry remains marginal and fragmented and continues to lag behind conventional systems, its characteristics to compete in the market through values, ethics and authenticity will prove to be advantageous in the future. He added that global Islamic finance assets were expected to hit US$1.8 trillion in 2013, and Islamic asset management is expected to grow around US$300 million to US$500 million this year. He said Malaysia played a leading role, with a well structured approach, in the Islamic wealth management industry and hoped that Malaysia will export its success story to the rest of the Islamic world.