IslamicFinance.de

We are in a fluid state of extremists trying to hijack the religion in the Muslim world and coordinated/lone wolf attacks in high-profile non-Muslim countries of US, UK, Australia, France. As a result, there is a vocal minority anti-shariah and halal-hysteria movement in those countries. Now, it would seem almost trivial to lump financial inclusion in context of the above-mentioned challenges, but disenfranchisement not only affects dignities of people, but is also an important pre-condition recruitment tool for those espousing hate and violence. The time has arrived to marry “compliant liquidity with compliant opportunity” as the status quo is no longer acceptable under the law necessity. The necessity is change to be relevant.

Takaful Ikhlas Bhd is confident the gross contributions for its financial year ending March 31, 2015 (FY15) will hit RM800 million, up from RM772 million in FY14, driven by its newly launched and final quarter awareness programmes. President and Chief Executive Officer, Ab Latiff Abu Bakar said the full-year target was achievable as the company had already secured RM400 million in gross contributions in the first six months of FY15. Ab Latiff said more promotional campaigns would be executed in the fourth quarter of FY15, that is from January-March next year, and expected non-Muslims to account for one-quarter of customers by end-March 2015.

Malaysia Building Society Berhad (MBSB) is planning a second issuance of its structured covered sukuk commodity murabaha programme. The proposed deal will come nearly a year after the government-owned company sold a debut RM495 million multi-tranche transaction via sole lead manager RHB Investment Bank. The second issue is targeted to raise up to RM700 million. MBSB is hoping to extend the tenors to 10 years in the new issue. The bonds are rated AA1, higher than the A2 corporate rating for MBSB. RHB will be leading the deal again, and may be joined by one or two other banks. The deal is expected to close by the end of the year.

Bank of Tokyo-Mitsubishi UFJ (BTMU) will issue Islamic bonds in two tranches under its debut multi-currency sukuk wakala programme in Malaysia. BTMU will issue US$25 million (RM81 million) in a US dollar tranche and 2.5 billion yen (RM74 million) in a yen tranche on Thursday, a statement said. Both sukuk issues will have maturities of one year; the statement did not give other details such as pricing. Malaysia's CIMB Investment Bank is managing the issues. BTMU, part of the Mitsubishi UFJ Financial Group, set up a US$500 million multi-currency sukuk programme through its Malaysian unit in June.

The creation of a mega Islamic bank will push Malaysian banks to look beyond local shores should the proposed merger of CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd materialise. While the local market for Islamic finance remains lucrative, banks should not be content to remain in the local market as a market downturn could cause a reversal of fortunes. Low risk tolerance is why local banks are not expanding their reach overseas. Some attempts thus far to go abroad have been on a partnership basis contributing knowledge and technical expertise. In addition, local banks’ issuance of Islamic sukuk in the international arena is still low relative to international banks.

The Employees Provident Fund (EPF) stressed it has the right to vote on the proposed merger between RHB Capital Bhd (RHBCap) and CIMB Group Holdings Bhd as it is the major shareholders of both entities. The pension fund’s chief executive officer Datuk Shahril Ridza Ridzuan reminded that it has the interests of 14 million members at stake. Some within the board of RHBCap were against allowing the pension fund to vote in the merger deal. The dissented parties thought that it was “inconceivable” that the EPF had not been engaged in prior discussions relating to the proposed merger between RHBCap and CIMB in which the pension fund holds a 41.34% and 14.46% stake respectively.

Malaysia and the Gulf Cooperation Council (GCC) countries remain the leaders in the Islamic finance industry, despite the emergence of new participants vying to get a piece of the pie. Bahrain Economic Development Board chief economist, Dr Jarmo Kotilaine, said an established financial industry required many component parts for its sustained development and the Islamic finance architecture was much more developed and complete in the Gulf and Malaysia than any other part of the world. Other centres can support the global growth of Islamic finance but are unlikely to challenge the established role of Southeast Asia and the Gulf, he said.

There are several issues which appear to indicate that Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim's integrity has been compromised. Shah Alam MP Khalid Samad said he hoped Abdul Khalid will clear the air over several issues, including his out-of-court settlement with Bank Islam over his RM66.67 million debt. Another issue Abdul Khalid is expected to clarify is his claim that he will be suing Permodalan Nasional Berhad (PNB) and will win RM300 million. Khalid also expressed doubts over the awarding of a RM591 million contract to Eco World to build 2,400 affordable houses in Sungai Sering, Ukay Perdana. PKR has been pressuring Abdul Khalid to step down from his position with party president Datuk Seri Dr Wan Azizah Wan Ismail chosen to replace him.

Malaysia's BIMB Holdings will issue a RM1.7 billion ringgit Islamic bond to help raise the US$884 million (RM2.835 billion) it needs to buy the remaining 49% stake of Bank Islam. The 10-year sukuk will be sold to Tabung Haji, BIMB's biggest stakeholder, in a private placement. The bond is made available for the six months to May 27, 2014. IMB's plans were initially rejected by the central bank due to a proposal to secure the sukuk with shares of the company. BIMB in August announced plans to acquire the stake it does not own in Bank Islam held by Dubai Group and Tabung Haji.

Malaysia's new Islamic Financial Services Act (IFSA) gives regulators greater oversight as the country seeks to retain its position as the world's second-largest Islamic Banking market. The new rules will boost protection for depositors by making religious advisers legally accountable for financial products, and liable to steep fines and prison time for wrongdoing. The new rules also include a plan to require Islamic life insurers to separate the life arm from other parts of their business. The regulations also could spur takeovers in the Islamic insurance sector through capital-base provisions that encourage larger participants. The IFSA also gives Malaysia's finance ministry more powers to further scrutinise financial holding companies and non-regulated entities if they pose a risk to financial stability.

Malaysian Rating Corporation (MARC) has affirmed its AAA/MARC-1 financial institution (FI) ratings on Maybank Islamic and AA+IS rating on Maybank Islamic's 1.0 billion ringgit Islamic Subordinated Sukuk (Subordinated Sukuk). The outlook on the ratings is stable. The Subordinated Sukuk, which qualifies as Tier-2 capital for Maybank Islamic, is rated one notch lower than the bank's FI rating in accordance with MARC's notching policy for subordinated debt issued by a AAA-rated bank. Positive rating drivers include Maybank Islamic's leading position as the largest Islamic bank in Malaysia, healthy capitalisation, sustainable earnings, and sound liquidity and funding profile. The ratings also factor in the high likelihood of full financial support from the parent/group Malayan Banking. Constraining the ratings are continued margin compression and fierce competition as well as Maybank Islamic's increased exposure to risks associated with regional expansion.

Regulatory reforms are underway to help Malaysia’s Islamic banking industry expand further. According to the country’s master plan for capital markets development, Malaysia aims for a 40 per cent share of Islamic domestic financing by the year 2020 and intends to make the industry more international. Therefore, regulators are preparing to release a new legal framework for Islamic finance this year. However, private-sector banks need initiatives of their own, including steps to address a leadership vacuum and to strengthen their overseas strategies.

A group of mainly Malaysian academics and organizations published an advertisement in The Sun Daily asking Bank Islam Malaysia to lift its suspension of chief economist Azrul Azwar Ahmad Tajudin. According to the 135 professionals, politicians and academics and 59 organizations, Azrul had given a professional opinion based on economics and that his academic freedom should be respected.

Paramount Corporation Bhd (PCB) agreed two private bond programmes worth RM550 million with Hong Leong Investment Bank Bhd, OCBC Bank and RHB Investment Bank. The deals consist of RM200 million private debt securities programme, which allows PCB to issue RM200 million perpetual bonds, and a RM350 million Sukuk Ijarah Programme for PCB’s unit, KDU University College Sdn Bhd (KDU UC). According to group CEO Chan Say Yeong, the fund arising from the bonds would be used for PCB’s future expenditure, increase landbank for development, investment in the education business and for working capital purposes.

Bank Islam Malaysia today confirmed that the suspension of its chief economist Azrul Azwar Ahmad Tajudin was due to his prediction of the results of Election 2013. The bank's current policy is to suspend its staff if they engage in political activity or make political comments. According to a statement, any staff irrespective of their position, who has breached the Bank’s internal policy, will be suspended with full pay, to facilitate investigation.

Azrul Azwar Ahmad Tajudin today confirmed his suspension as chief economist of Bank Islam after his prediction of the likely results of Election 2013. The bank, however, moved to distance itself from Azrul Azwar and emphasized that the views expressed by him should not be linked or attributed to Bank Islam. It is unknown how long the suspension will last.

Standard Chartered Bank sees opportunities in Islamic derivatives products but is steering clear of hedge funds, another grey area of sharia-compliant finance, the head of its Saadiq unit said.

The government is likely to approve an Islamic banking licence for the National Bank of Abu Dhabi. The move comes before the administration unveils its new economic model in which the services sector, and in particular Islamic finance, is given more emphasis.

Ingress Sukuk Bhd has obtained its sukuk holders’ approval to extend the maturity date of about RM48 million in Islamic bonds, the company said today.

Islamic Bank of Asia reacts positive on the announcement that Malaysia would issue up to 6 new licences for foreign institutions.