IslamicFinance.de

Dubai Exports , the export promotion agency of the Department of Economic Development (DED), recently showcased the emirate's expertise and resources in Islamic economic services to the business community in Toronto and Vancouver across a series of seminars. The seminars, jointly organised by Dubai Exports and Borden Ladner Gervais LLP focussed on encouraging linkages between Islamic financial and advisory firms in Dubai and their counterparts in Canada. Participants in the seminar also discussed the changes required in Canada's taxation and regulatory system regarding Islamic financial products. Opportunities are especially seen in the connection of the sophisticated financial and business communities in Dubai with leading edge Canadian technology companies and entrepreneurs in such areas as clean tech, life sciences, advanced materials and information technology, which are all shari'a compliant.

The majority of Muslim-Canadians strive to lead productive lives and contribute positively to their country. The rising profile of the “Islamic banking” industry is one of these ways. However, Islamic financial instruments are often very similar to interest-based lending, leading some to criticize it as dishonestly advertised for profit, or to promote Islam. The sector’s supporters say it provides a means by which people can bank in accordance with their values by avoiding lending at very high interest rates or providing funding to activities they are religiously and/or ethically opposed to. Canada’s Islamic banking sector is still relatively small compared to that of other Western countries, but it is likely it will continue to see growth in the coming years given the rising population of Canadian Muslims, which now number nearly one million.

The Canadian life insurer InSun Life Financial c. (SLF) has forged an alliance with Khazanah Nasional Berhad (Khazanah) to jointly acquire 98% of CIMB Aviva Assurance Berhad, and CIMB Aviva Takaful Berhad. The remaining 2%will be retained by CIMB Group. The bancassurance agreement will cover a span of 20 years and will cost C$586 million. Through this transaction, SLF will be able to expand its international operations in Asia.

Civil proceedings against former UM Financial CEO Omar Kalair and his associates have come to a close since prospects for recovery of expropriated money are limited even in case of a favorable judgment. However, the Royal Canadian Mounted Police and Office of the Superintendent of Bankruptcy are still investigating the events which may lead to criminal charges against Kalair and others.

Mr. John Robertson Wright was appointed Non-Executive Director of EIIB by the Board of EIIB.
Mr. Wright is a career Banker with important experience in UK and international markets including assignments in India, Sri Lanka, West Africa, Canada, Hong Kong and the United States. Before this appointment he was Chief Executive of Oman International Bank for 7 years, Chief Executive of the Northern and National Irish Banks in Ireland for 5 years, Chief Executive of the Gulf Bank in Kuwait and finally Chief Executive of Clydesdale & Yorkshire Banks prior to retirement.

The TFSA developed an Islamic Finance Working Group that published a report a while back on the Islamic Financial opportunities and challenges in Canada.
Some of the issues included are:
- The treatment of profit in a Murabaha transaction
- The treatment of double sale transactions where assets exchange hands generating GST and other taxes every time a sale is executed. Ideally for such transactions where assets exchange hands as part of a single deal, tax adjustments should be made in order to treat it all a single transaction.
- In Diminishing Musharaka (declining partnership) transactions when the financier is an equity partner in the asset, compliance obligations and costs can potentially make the product uncompetitive.

UM Financial came up for Canada’s 1.3 million Muslims with mortgages that don’t charge interest. But its failure last year has started a dangerous debate about whether Islamic banking should be banned, or whether it’s still a potentially lucrative industry in need of better regulation.
Mortgages with UM Financial were set up so that lender and borrower byed the house together. The homebuyer pays rent to the mortgage issuer, while gradually buying off the outstanding share of the property. After it is fully paid, ownership is transferred to the borrower.
Although UM’s troubles were many, for Islamic finance they probably won’t be the last word on a system that will remain in demand with a growing part of the population.

A man named Omar Kalair was told to rendezvous in the dead of the night in a deserted suburban parking lot and hand over a consignment of gold and silver bullion to achieve recognition on the debts of a secretive organization.
The bizarre payment of $2.1m in gold and silver made by Kalair to Joseph Adam, the finance manager of the newly formed firm Multicultural Consultancy Canada, was for Shari’ah compliance services the MCC supplied to the Canadian Islamic mortgage company.
Kalair and Mufti Yusuf Panchbhaya, chairman of this local Shari’ah board, were deposed by the receiver Grant Thornton to explain the transfer of gold and silver to Adam outside a suburban drug store in early October, three days before the court ordered UM Financial Inc into receivership. A month later, the gold had disappeared and Adam had flown Canada for Egypt. The receiver tries now to get permission from the court to enter Adam’s store, with assistance from the sheriff in order to recover the missing gold.

Although UM Financial Inc went into receivership back in October, the consequences of the bankruptcy are beginning to be noticed only now.
Besides the fact that the case risk is giving a bad name to sharia-compliant finance in North America, it also poses a series of legal hurdles that could have as a result to mortgage holders the losing of their homes.
Since the use of interest is forbidden in Islam, sharia-compliant mortgages are organized so that lender and homebuyer share the costs of purchasing a home. Instead of paying interest, homeowners preffer to rent the property from the lender while gradually purchasing the outstanding share of their house.

Dozens of Muslim homeowners are criticizing that they have been left in limbo by a disintegrating “sharia-compliant” mortgage arrangement, giving focus on the emergence of parallel banking systems in Canada.
After Toronto’s UM Financial was put into receivership this month by an Ontario Superior Court order, more than 170 Muslim homeowners are having a lot of questions about their properties and their debts.
Michael Creber, a partner at Grant Thorton, stated that the court order will not affect in any way the homeowners.

UM Financial is planning an extensive launch of its ifreedomplus Mastercard within the next quarter.
CEO Omar Kalair stated that once the product was launched in Canada, UM Financial would expand into the European Union with the same product.

The growing demand for securities that meet Islamic religious principles may lead Canadian governments and companies to start issuing Shariah bonds.
HSBC Bank Canada may offer $500 million and three government-related borrowers from one Canadian province may issue $1.5 billion of sukuk, Omar Kalair, chief executive officer of Toronto-based UM Financial, said in an Oct. 14 interview. A “handful” of Canadian companies may sell C$1 billion ($980 million) of Islamic debt by 2013, said Daud Vicary Abdullah, global Islamic finance leader at Deloitte Corporate Advisory Services Sdn. in Kuala Lumpur.
Egypt, Nigeria, the Philippines and Thailand have announced plans to sell their first sukuk in the past three months, partly to tap Persian Gulf oil wealth.

Kuwait Financial House has teamed up with Canadian based Killam Properties Inc and Sigma Real Estate Advisors to invest in the Canadian real estate market.

The demand for Islamic financial instruments certainly exists. But beyond holding basic accounts, observant Muslims in Canada find themselves disconnected from retail banking

There is huge potential for islamic finance in Canada as as mentioned by a speaker at a conference in Toronto.

Yasaar media published a new report called Islamic Finance in North America 2009 for free download, which is co-published by Codexa Capital, UM Financial Group, King & Spalding, and Doha Islamic.

According to the report Islamic finance in North America has developed along two quite separate paths:

• The first path focuses on retail Islamic finance and centres mostly on home financing products and credit cards.

• The second path involves a number of high profile GCC-based Islamic investment banks and their deployment of hundreds of millions of dollars in private equity and real estate developments in North America.

Read the full report for free at the link below.

Jovian Capital Corporation announced an agreement with UM Financial Inc. to explore the launch of a
co-branded, Shariah-compliant investment product. The product targets Canada's approximately 1 million strong Muslim population, as well as foreign investors looking for a uniquely Canadian, Shariah-compliant investment.