IslamicFinance.de

The Dubai Financial Services Authority (DFSA) has published its new financial technology (fintech) consultation paper. The paper is the third in a series, setting out the DFSA’s approach to the regulation of pioneering fintech activities. The paper sets out the DFSA’s approach to FinTech firms that want to test innovative products and services in the Dubai International Financial Centre (DIFC). Firms meeting the qualifying criteria will receive a Financial Services Licence, referred to as an Innovation Testing Licence. The testing phase is a step towards the FinTech firm obtaining a full Financial Services Licence.

Morocco's central bank has approved the use of five types of Islamic banking transactions. This means a final regulatory nod for the country to launch an Islamic finance industry. The central bank has recently set up a central sharia board to oversee the sector. The five approved transactions include murabaha, musharaka, ijara, mudaraba and salam. The central bank also set regulations for conventional banks to open windows selling Islamic products. It had given regulatory approval to three major Moroccan banks to open Islamic subsidiaries: Attijariwafa Bank, BMCE of Africa and Banque Centrale Populaire, as well as to smaller lenders Credit Agricole and Credit Immobilier et Hotelier. Subsidiaries of Societe Generale of France, Credit du Maroc and BMCI have also won permission to sell Islamic products.

In partnership with the Moroccan Crédit Immobilier et Hotelier bank (CIH), Qatar International Islamic Bank (QIIB) will launch Umnia Bank, a joint Islamic financial institution. Licensing for the Umnia Bank had already been issued by the Central Bank of Morocco. According to QIIB chairman Sheikh Dr Khalid bin Thani bin Abdullah al-Thani, QIIB is now closer to formally launching the activities of Umnia Bank. He expressed his happiness to reach this stage and stated that Umnia Bank looks to be the best Islamic bank in Morocco. He added that QIIB is determined to contribute to the growth of the Moroccan economy.

Gatehouse Bank looks set to expand into Islamic mortgage lending after registering two trademarks for shariah-compliant loans. The lender bought the trademarks for Gatehouse Mortgages and Milestone Mortgages last week. Gatehouse is currently known for shariah-compliant real estate investment and financing. Last month Gatehouse announced it had hired Aldermore group managing director of mortgages Charles Haresnape. Haresnape will join Gatehouse later this year. A Gatehouse spokesman declined to comment.

The Jaiz Foundation has expressed readiness to commence Islamic Takaful Insurance in 3 Nigerian states, Kaduna, Kano and Lagos, with the head office being in Abuja. This was disclosed by the Chairman of Jaiz Takaful Insurance, Dr Umaru Abdul Mutallab, who explained that the insurance products give equal opportunity for customers to be owners of the company as well. Also speaking on the operation of the insurance policy, the Managing Director of Jaiz Islamic Takaful Insurance, Momodou Musa Joof, said the company shares profit by 80% to its participants who have not suffered losses. In the meantime, those who suffer losses would have been paid first before the distribution of profit. The element which goes to the needy called Zakat is also distributed before profit is shared. Joof noted that the good thing in Takaful is that, if no loss occurs, the customer's contribution becomes an automatic investment.

The Bahraini Gulf Finance House (GFH) would seek to get rid of its Tunisian project, the Tunis Financial Harbor. The project was to be one of the largest Bahraini investments in Tunisia, which would be worth 7.5 billion USD. Tunis Financial Harbor was initially designed to make Tunisia a regional financial hub, but eventually turned into a simple real estate program. GFH is currently seeking to pass the hand and to pass the project on to another investor. The cause would be the financial difficulties of the Bahraini group.

Saif Hadef Al Shamsi, Assistant Governor at the UAE Central Bank, has said that total Islamic banking assets in the UAE have increased to approximately Dh520 billion in the past few years. Al Shamsi added that Islamic banking’ assets account for around 20% of Dh2.6 trillion of the total assets of the state’s banks. The assistant governor pointed out that UAE Islamic banking institutions account for about 7% of the total assets of Islamic banking around the world. This approximately amounts to a total of $1.5 trillion (Dh5.5 trillion). He further explained that Islamic banking deposits increased by 42% over the past three years and that lending by Islamic banks increased by 54%.

It’s only a matter of time before the first green sukuk comes to market. Speakers at a White & Case event last week explained that there’s nothing stopping issuers from drafting a shariah-compliant sukuk save for a lack of top-down support. In 2016, the climate-aligned bond market grew by 16% to $694 billion, $118 billion worth of which are labelled green. The global sukuk market, which has slowed in recent years, saw $40.3 billion worth of deals issued in the same timeframe. Climate-aligned finance is a fast-growing market that’s open to innovation. Sheikh Bilal Khan, co-chairman at Dome Advisory said green issues are not as spoken about in the Islamic finance industry as they should be. There’s nothing in the Qu’ran forbidding them, in fact it stresses our responsibility to the environment.

Bank Indonesia (BI) announced recently its plan to issue waqf based bonds as a social welfare mechanism. The Indonesian Muslim Intellectual Association (ICMI) will also launch the very first waqf venture bank this June. Waqf may become the new trend in Islamic banking for several reasons. Waqf funds can be utilized for equity-based financing, a financial structure considered ideal for Islamic values, but undervalued in the current Islamic banking and finance architecture. The nature of longterm waqf funds for investment will make a good source of funding for venture capital and private equity. The amount of money potentially generated under a waqf system is indeed huge. The value of waqf land is estimated to reach Rp 300 trillion. This highlights the need for a professional and well-governed management to create a waqf bank that functions well and is successfully implemented.

According to Fitch Ratings, a slowdown in Islamic financing growth in the UAE will reveal a deterioration in banks' asset quality as portfolios season more quickly. This will start to become evident as banks report their 2016 results. Financing growth slowed in 2016 and a continuing slowdown in 2017 is expected. Demand for Islamic financing in the UAE has grown rapidly with increasing customer awareness and wider adoption of Shari'ah products, especially among retail customers. Growth of Islamic bank financing in 2016 was expected to have been significantly lower than in 2015, although still higher than that of conventional bank lending. Newer Islamic banks with smaller franchises are likely to be affected first by the slowdown. Those that have been established for longer are likely to be affected later, and to a lesser degree, given their stronger franchises.

Algeria plans to raise money from an interest-free local bond in order to offset the huge fall in its energy earnings. The North African OPEC member has already cut public spending, introduced new taxes and reduced government subsidies on fuel. Finance Minister Hadji Baba Ammi said the new bond would not bear interest, which may help attract a greater number of Algerian buyers. The minister said bondholders would receive a share in projects that the issue would finance as an incentive. The government launched its first local bond last April, but it was harshly criticised by the religious community. While neighbours Morocco and Tunisia are developing laws for Islamic finance, Islamic banks and sukuk bonds, Algeria still has no legal framework for such operations.

Kuwait's Warba Bank announced the launch of a marketing campaign for sukuk to be issued with a total value of USD 250 million. Warba Bank's CEO Shaheen Hamad Al-Ghanim said the campaign targets investors in Kuwait and Gulf Cooperation Council (GCC) countries, in addition to global stock markets. Al-Ghanim explained that the bank signed a deal with an international advisor to a new strategy for 2021, which is based on improving the bank's operations and further enhancing the quality of assets and diversifying sources of income. He noted that Warba Bank has previously obtained approvals from the Central Bank of Kuwait and Capital Market Authority, while the General Assembly has authorized the board of directors to issue sukuk.

Barwa Bank Group said it will spare no effort to gain the largest possible share of financing infrastructure projects in the country. Barwa Bank chairman Sheikh Mohamed bin Hamad bin Jassim al-Thani said due to the national economy’s provision of promising opportunities, the bank will provide all possible support to the growth of the country’s economy. The group recorded strong growth in each of the financial position and profits, as net profit for 2016 rose to QR738.8mn and earnings per share reached QR2.49. The growth in the group’s business and the increase in its investment activities go in line with maintaining asset quality and risk management policies with total non-performing loans accounting for just 1.5% of the net financing portfolio.

Yielders has claimed to be the first UK Fintech company gaining a Sharia Compliance Certification. The equity-based property crowdfunding platform, founded by Irfan Khan, successfully completed the independent sharia certification conducted by IFC. Achieving the certification means that Yielders may significantly expand its market presence by operating across Asia, Europe, and the Middle East. Being compliant with FCA regulation, Yielders offers the opportunity for the public to invest as little as £100 towards buying a share of a crowdfunded property. Yielders explains that the UK Islamic market is one of the largest, most vibrant and dynamic outside the Middle East. Ethical Islamic investment is described as being crucial to the Yielders’ philosophy. Yielders only offer pre-funded investments to the retail crowd, meaning the assets are already generating an income.

The University of East London Centre for Islamic Finance, Law and Communities held a public lecture on 22 February 2017 focused on FinTech in Islamic Finance. The keynote speaker was Professor Volker Nienhaus. Professor Nienhaus dealt with four topics: Islamic FinTech and crowdfunding regulations, Shari’ah limits to innovation in FinTech, Shari’ah encouragement for FinTech solutions and the potential disruption of Islamic consumer banking by genuine trade credit. Nienhaus predicted that Islamic consumer banking could be disrupted in the future by genuine trade credit. Islamic-compliant cash rich e-commerce platforms could provide financial services equivalent to Amazon or Alibaba on a Shari’ah-compliant basis. These platforms could sell halal goods and approve Shari’ah compliance. These platforms could instantly check the credit worthiness of buyers and would have a higher credit risk tolerance than traditional banks.

The first act of business by the Turkish Sovereign Wealth Fund (SWF) will be the issuance of securities, while it will also focus on Islamic finance products in securitization. The fund will contact local and foreign investors for securitization over the next few months. Even though the Treasury announced that the transferred asset size was approximately worth $160 billion with an equity size of $35 billion last Friday, an endeavor is currently underway concerning the valuation and auditing of the transferred assets by the fund. According to a Turkish daily, Dünya, the fund is exploring various types of instrument models, especially in Islamic finance. For this reason, the issuance of sukuk is a major focus of the agenda for the fund.

Ajman Bank has signed a financing agreement with Saudi German Hospitals Group for the construction of Saudi German Hospital Ajman (SGH-Ajman). The planned hospital would be a 50- bed facility in the Emirate of Ajman. The total cost of the project is AED327.3 million, and the completion of all phases of the project and formal opening of the hospital is expected in 2018. The signing of the agreement was overseen by Mohamed Amiri, Chief Executive Officer of Ajman Bank, and Sobhi Batterjee, CEO and Chairman of the Saudi German Hospitals Group. Akram Khan, Vice President of Ajman Bank, said that the agreement includes providing a housing fund for hospital workers and a range of items within the framework of the agreement.

The #Malaysian government is encouraging investors from China to tap into the estimated USD3 trillion global demand for halal products by exploring business opportunities in Tanjung Manis Halal Hub (TMHH) in Bintulu, Sarawak. According to Second Minister of Resource Planning and Environment Datuk Amar Awang Tengah Ali Hassan, Malaysia is a pioneer in halal certification ensuring the integrity of halal products and services through strict compliance with Syariah requirements. Awang Tengah added that the Sarawak Government had established the TMHH which covers an area of 124,517 hectares making it the largest among all the other halal hubs in the region. Among the investment potentials in TMHH he revealed is the cultivation of food crops, aquaculture, poultry and livestock, food processing, cosmetics, and health products. On another note, Awang Tengah revealed that China has remained an important trading partner as well as a major source of Foreign Direct Investment (FDI) for Sarawak.

Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has launched a comprehensive report on "AAOIFI in 850 Days". The report provides concise details, including infographs, illustrations, and statistical figures, covering AAOIFI's developments in activities over the period from September 2014 to end of December 2016. Dr. Hamed Merah, AAOIFI's Secretary General, said that AAOIFI embarks on efforts to enhance transparency as key to effective communication. Meanwhile, AAOIFI's statute was amended, and a set of 7 by-laws, policies and procedures, charters were developed. These include launching of AAOFI's Shari'ah standards translation projects (for Russian, French, and Urdu languages), and publication of AAOIFI's standards in paper and digital formats including a mobile app for smart phones. The section on strategic relationships cover AAOIFI's ties with stakeholders, specifically development of ties with institutional members. The report highlighted AAOIFI's keenness to further solidify its relationship with central banks and regulatory and supervisory authorities.

Abu Dhabi Islamic Bank dismissed reports that it may merge with Al-Hilal Bank as consolidation takes hold in the emirate’s financial-services industry. Abu Dhabi is combining National Bank of Abu Dhabi and First Gulf Bank and two sovereign wealth funds as it seeks to cut costs and merge firms with overlapping assets. The next step could be a tie-up between ADIB with Al-Hilal and a combination of Abu Dhabi Commercial Bank and Union National Bank. Tirad Mahmoud said ADIB plans to stick to its core markets and strengthen its presence. He also said that mergers were a shareholder issue and there might be 'some pressure' on net interest margins this year. ADIB posted a 1% rise in 2016 net profit to Dh1.95 billion ($530 million) on Tuesday as provisions rose to Dh970 million from Dh820 million.