IslamicFinance.de

Turkey mandated banks for its second sovereign sukuk issue in international markets and will hold a series of investor meetings in the Middle East and Asia. HSBC, QInvest and Standard Chartered have been mandated to explore opportunities for a possible lease certificate issuance in the international capital markets. Turkey has borrowed $4.2 billion from international capital markets so far this year and plans to borrow a total of up to $6.5 billion through a mix of Eurobond, Samurai and sukuk issues by the end of the year.

The UK government's national savings scheme, NEST, recently announced that HSBC was its choice of fund manager for its Sharia investment mandate. Chris Gower, head of European consultant relations at HSBC, said the fund follows a quantitative passive method. What is unusual it that the fund can have no exposure to financials. This practice leads to the Islamic index being overweight in the oil and gas sector and the healthcare sector. In terms of expectations of the fund Gower explains that HSBC works with a large number of UK defined contribution (DC) pension schemes. It opens up an investment universe to investors who would maybe otherwise not have the possibility to save for their retirement. Gower says the fund is looking forward to working together with NEST.

HSBC reported profits before tax of US$8.4 billion for its global business during the first quarter, a 95 per cent increase on the amount generated during the corresponding period a year earlier. HSBC Middle East, the bank's regional arm, reported profits before tax of $524 million for the first quarter, a 57.8 per cent increase compared with a year earlier, as it released provisions earlier made for bad debts. Meanwhile, Abu Dhabi Islamic Bank reported net profit at group level of Dh340.1m for the first quarter, an increase of 10.6 per cent compared with a year earlier. ADIB reported 5.4 per cent growth in net customer financing assets during the quarter to Dh54bn. At the same time, the bank's provisions and charges for bad debts were flat compared with a year ago at Dh185.5m.

According to HSBC, global Islamic bond sales are set to surpass sales from 2012 by 64%. Mohammed Dawood, Dubai-based MD of debt capital markets at HSBC Amanah, says that sales in the six-nation GCC will surge to between $30bn and $35bn this year. The Dubai government kicked off sovereign sukuk sales last month with $750m of 10-year Islamic notes after its borrowing costs fell 40%. Standard and Poor’s estimates show that Islamic financial assets will double by 2015 to $3-trillion.

CIMB Group Holdings Bhd received its underwriting for global and local sukuk issuance fall in 2012. Meanwhile, the market share of HSBC Bank plc grew significantly during the same period. The total issuance for global sukuk of CIMB fell from US$7.77 billion in 2011 to US$6.21 billion (RM18.82 billion). As a result, its ranking dropped to second place and its market share eased to 12% from 17.7% in 2012. HSBC reached first place with total global issuance increasing to US$11.35 billion from US$4.88 billion in 2011. Its market share rosealmost double to 21.9% from 11.1% in 2011.

HSBC will have to pay $1.9bn to US regulators after admitting its faults. The money-laundering probe of the bank focuses on the transfer of billions of dollars on behalf of nations under international sanctions such as Iran. Also, through the US financial system, money from from Mexican drug cartels was transferred. HSBC admitted its control was not strong enough and made an apology in a statement. The bank further announced that it had reached a deferred-prosecution agreement with the US Department of Justice.

HSBC claims that bond sales by government-related companies in the Persian Gulf will be able to pick up at the beginning of next year. Then, more than $1 trillion in planned spending will be supported. The reason for the optimism towards bond sales is that this year's issuance by government-related enterprises fell to about $9.9 billion. Compared to that, it was $13 billion last year and $8 billion in 2010.

In Malaysia, Islamic finance has been developing at a rapid pace during the recent years and has become a serious rival to conventional banking in largely Muslim countries like this. The pioneer lender in the country - HSBC - embodies the development and success of Islamic banking in Malaysia. However, in other countries the bank did not gain such a profit. Not long ago it even announced the closing of its Islamic finance operations in six markets, remaining present only in Saudi Arabia, Malaysia, and a scaled-down operation in Indonesia. The reason therefore is said to be the differences in interpretation of the Islamic law in different countries.

The last couple of years of financial crisis proved to be unfavourable for the international banking sector. Nevertheless, one sub-sector was growing rapidly and reached significant success - Islamic finance. The majority of people still have not enough understanding and appreciation for Islamic finance. However, the facts show it is a US$1.3 trillion global industry with annual growth of 15% to 20%. During the past few years alone this sector has expanded to even not particularly expected markets adding to the portfolios of conventional international banks. The latter have already made the development of sharia-compliant services a priority.

Read more on: http://www.scmp.com/comment/insight-opinion/article/1071883/islamic-fina...

Last week HSBC decided to close down its Islamic retail banking operations in six markets so that it will be present only in Malaysia, Saudi Arabia and, in shrunken form, Indonesia. This event underlined the contradictions of the broader sector. On one hand, Islamic banking is continuously reported to be growing at e very high rate - more than 20% a year. On the other hand, there is a huge difference between asset growth and revenues and profit. Poor performance in retail banking markets is the reason for HSBC's withdrawal as well as for the decrease of Barclays' and Deutsche Bank's Islamic banking teams in Dubai.

See more on: http://www.zawya.com/story/HSBCs_Islamic_closures_highlight_dilemma-2012...

The Islamic financial market has boomed over the last decade and is more than ever at the top of the agenda for sustainable growth and development. The world's most actively traded Islamic finance product is the Sukuk, which is becoming more and more accepted in non-Muslim countries.

See more under: http://www.ibtimes.co.uk/articles/391214/20121004/iqbal-sacranie-islamic...

As part of the preparation for issuance of a dollar-denominated sukuk, Qatar Internationa Islamic Bank (QIIB) has charged QNB Capital and two international banks to arrange investor meetings which will be held in the Middle East, Asia and Europe starting on October 10th. At the moment there are no informations about the size of the sukuk or other offer details.

See more under: http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=535325...

Qatar Islamic Bank (QIB) which is the largest sharia-compliant lender in the country, is arranging an issue of a five-year benchmark-sized Islamic bond. The expecting value of the sukuk shall be at least $500 million.

See more under: http://www.reuters.com/article/2012/10/02/qatar-qib-sukuk-idUSL6E8L2BVU2...

Kuwait Finance House has issued $1.5 bln sukuk for Turkey in cooperation with Citigroup and HSBC. It is the first issuance of this kind for the Government of Turkey. The expectations of the financing are high due to high amount of potential investors (altogether 250) that have been attracted by newly-issued sukuk. This fact confirms not only the great confidence of investors to Turkish economy, but also the confidence of global markets in sukuk products.

See more under: http://www.zawya.com/story/KFH_issues_15b_sukuk_for_Turkey-ZAWYA20120930...

Qatar Islamic Bank has made plans of issuing a sukuk in dollar denomination. The move will be part of the bank's sukuk issuance programme worth $1.5 billion. According to a document from the lead arrangers, the banks mandated for the sukuk are Deutsche Bank, HSBC, Standard Chartered and QInvest LLC. Further details on the size of the sukuk are not known yet. The plans include investor meetings in Asia, Middle East and Europe.

More on: http://in.reuters.com/article/2012/09/26/qatar-sukuk-banks-idINL5E8KQ08R...

According to a statement by the Undersecretariat of the Treasury in Turkey, Citigroup, HSBC and Liquidity House have been mandated to investigate opportunities concerning the issuance of a Lease Certificate in the international capital markets. For this purpose numerous road shows for the Sukuk are planned and will be held in financial centres across the Middle East and Asia. The show will take place in the period 10-13 September. The Sukuk is supposed to be dollar-denominated and issued in the week of 17 September.

It seems that Dubai Islamic Bank has issued a $500 million (Dh1.8 billion), five-year sukuk sale after gaining good request.
Helping arrange the Regulation S transaction, after DIB met fixed-income investors in Asia, Middle East and Europe over the past few days, are: Deutsche Bank, DIB, Emirates NBD, HSBC and National Bank of Abu Dhabi.
Fitch Ratings assigned to DIB's $2.5 billion trust certificate issuance program a ‘A 'expected rating.

Abu Dhabi government-owned Al Hilal Bank has validated the appointment of three banks to administer its debut $500 million Islamic bond issue, which will be launched later this year.
Mohamed Berro, chief executive, noted that the banks chosen for the issue are: National Bank of Abu Dhabi, HSBC and Standard Chartered Bank. Berro added that the issue would help fund the bank's growth and strengthen its balance sheet.

The upturn in the global Sukuk market that has been forseen for the past few years doesn't seem to happen – but for all the wrong reasons. Nowadays corporates and banks are issuing because they need the money.
Citi, Emirates NBD Capital, HSBC, NBAD, RBS and Standard Chartered have all been secured in to advise on the five-year Reg S, dollar-denominated transaction, which could be priced at 350bps over midprice swaps. Fitch has given an A+ anticipated rating and Moody’s has given an A3 with negative outlook.
Bank Muamalat Indonesia is also planning to launch $140m worth of Sukuk in the first half of 2012 with both an Indonesian rupiah subordinated Sukuk and a $50m dollar-denominated senior tranche.

Abu Dhabi's First Gulf Bank (FGB) has chosen four banks for a five-year benchmark-sized Islamic bond: Citi, HSBC, National Bank of Abu Dhabi and Standard Chartered.
The timeframe for sukuk hasn't been decided yet.
Emirates Islamic Bank, is anticipated to print the first debt deal out of the Gulf, having launched price talk for a five-year, benchmark-sized sukuk.