IslamicFinance.de

The Board of Executive Directors of the Islamic Development Bank (IDB) has approved US $789.4 million to finance development projects in eleven member countries as well as education projects for Muslim communities in non-member countries. The BED approved US $220 million for the Turkey Development Bank program to finance renewable energy projects. Moreover, Uganda will benefit from US $120 million for the upgrading of road projects. The rest of the approvals include US $8 million for Niassa electrification project in Mozambique, US $7 million for a project on access to energy for rural communities in Togo and US $23.7 million to the government of Mali to address food insecurity in the country. The government of Pakistan received approval of US $35 million for the financing of the reconstruction of schools destroyed by the floods and US $19.8 million will go to a water supply project in Ouahigouya, Burkina Faso.

The Libyan Stock Market has signed a multi-faceted memorandum of understanding (MoU) with global Shariah advisory firm, Amanie Advisors, to help Libya’s efforts to expand the role of Islamic finance in its economy. The comprehensive MoU sets out a clear roadmap for research into the areas of growth for Islamic Finance within Libya, Islamic Finance training and a joint agreement on conducting market research that aims to devise the proper development model for Islamic Finance with Libya. Amanie will also provide Shariah consultancy services to the relevant authority with respect to drafting relevant guidelines and regulations for their major Islamic capital markets initiative. With training a key challenge for Islamic banks, Amanie will provide in-depth guidance and training to the relevant agencies within Libya.

Dubai Islamic Bank (DIB) has announced the launch of the Al Islami FlexiBeta Dirham Certificate, a two-year Islamic certificate, providing investors with exposure to either emerging market equities or gold, depending on market conditions. The Certificate is issued by Oasis Certificate Programme Limited, a Special Purpose Vehicle that has been set up and sponsored by Citigroup to provide investors with a wide range of customised Shari'ah-compliant investment solutions. The certificate uses a framework comprising of observation of recent price trends and a forward looking risk indicator to adjust allocation between two asset classes, equities and gold. Investors will enjoy a capital protection without tying all their capital for the whole investment period. They will receive 90% of their total investment within two weeks of the issue date, with returns based on the full investment amount. The certificate is denominated in UAE dirhams with a minimum investment of AED 100,000.

South African power utility Eskom will look at new funding opportunities such as Islamic bonds to finance its capacity expansion projects. A lower than hoped for rise in power rates has left state-owned Eskom with an expected revenue gap of 225 billion rand ($22 billion) over the next five years. The associated decrease in projected revenues will materially affect operations, including ability to obtain funding for future capacity expansión. Funding for the next 12 to 18 months would be sourced from issuance of domestic and international bonds, export credit agency-backed financing, development finance institutions and the domestic commercial paper market. New opportunities from alternative funding sources and products such as Islamic funding (sukuk), preference share-type funding and project-based funding will also be explored.

In NCB Capital's (NCBC) view, the 14.7% YoY growth in Albilad’s net income is the result of an increase in NSCI income and fee and other Income. Although the bank’s total operating income came broadly in-line with NCBC's estimate, lower than expected operating expenses including provisions resulted in net income that was 9.4% better than the estimate. Albilad’s NSCI grew 10.7% YoY to SR228mn, in-line with the estimates, led by a 25.3% YoY growth in net loans. Albilad’s investment base also expanded about 8 times which enabled the strong NSCI growth. However, despite the shift from cash towards higher yielding assets, NCBC's calculation suggest that NIMs declined 4bps YoY and 9bps QoQ. This implies that the front loan rates have been declining by a significant level. Albilad’s total operating expenses including provisions grew 5.0% YoY, but came-in 2.7% below the estimates, enabling the 14.7% YoY growth in profits.

Rushdi Siddiqui, co-founder and managing director of the private equity advisory firm Azka Capital, is focused on halal industry initiatives with Islamic financing. He believes both industries have much in common, but hardly communicate with each other. Halal is not just about meats/foods, but also about pharmaceuticals, cosmetics, logistics, etc., all linked to the real economy, yet very unstructured and fragmented. The PE firm's goal is creating risk-adjusted portfolio value for investors who have traditionally invested in real estate, oil/gas, and healthcare. Strategic investors include family offices, high-net-worth individuals, sovereign wealth funds, food companies, Western investors looking for the next BRICS story in the emerging markets. Besides, Siddiqui believes that the development of the Islamic equity capital market (iECM) will bring balance to today's Shariah-complaint (debt bias) Islamic finance.

Bank Asya is eager to achieve bilateral trade between the Indian and Turkish economies worth $15 billion over the next five years. Officials of the Turkish Islamic lender Bank Asya were in Mumbai to discuss the rapidly growing business ties between India and Turkey. The proximity of financial institutes between the two economies would benefit business and trade, according to Cenk Karacaoglu, Vice President, Bank Asya, Turkey. The rapidly growing Indian economy presents huge potential for business and trade with Turkey, he added. The bank will further expand business with Indian companies. Bank Asya has agreed to offer Shariah compliant banking facilities in India and was awaiting the regulator's nod.

Abu Dhabi Islamic Bank (ADIB) has closed a Dhs1.32bn ($360m) Syndicated Islamic Facility for Abu Dhabi-based Gulf Marine Services (GMS), the largest provider of self-propelled self-elevating jackup barges in the world. ADIB acted as the Mandated Lead Arranger, Sole Underwriter, Sole Bookrunner, Investment and Security Agent for the facility. The deal was tailored by ADIB to meet GMS' financing needs, including re-financing existing facilities and providing finance for the acquisition of 2 additional vessels. The financing will also help GMS achieve its plan to further improve and expand its fleet. The facility evidenced strong demand from local and regional banks which resulted in it being 2 times oversubscribed by 10 local and regional banks.

The lack of experienced staff and the recent explosive demand for Shariah-compliant products makes it especially hard for the Islamic finance industry to find new employees. The global phenomenon is that an estimated one million professionals are required to fill various positions in the Islamic finance institutions worldwide by 2020. Managers face the challenge of staff being poached on a regular basis. Companies should consider a much more open approach to talent management by facilitating long-term career development by facilitating internal mobility and moves between suppliers, customers and even the competitors. Moreover, the current shortage of trained and qualified manpower in the Islamic finance sector has led to an eventual spiralling of wages, which in the long term does not benefit the industry. Getting the right people in the right roles is central, so pinching has become common place to meet those ends.

Maran Nakilat Company, a joint venture between Nakilat and Maran Ventures, has secured $662.4mn Islamic refinancing. At a ceremony held in Doha, Maran Nakilat signed the Murabaha refinancing agreement with Qatar Islamic Bank (QIB) and Barwa Bank. With the refinancing, Maran Nakilat will be able to expand its fleet of LNG carriers from four vessels to six, with the delivery of two new carriers scheduled for early 2014. At the same time, Nakilat has also increased its ownership of Maran Nakilat Company. Latham & Watkins advised Maran Nakilat on commercial and legal matters related to the refinancing, while Allen & Overy advised QIB and Barwa Bank.

On March 19, 2012, certain Arcapita entities filed voluntary petitions under chapter 11 of the US Bankruptcy Code as a means to reorganise their business and restructure over US$2.5bn of indebtedness. Arcapita’s chapter 11 process is still
ongoing but is already creating a new landscape for Middle Eastern companies to consider when they face restructuring scenarios. Several key elements of Arcapita’s ongoing chapter 11 process demonstrate that a chapter 11 filing can
be an effective means of implementing a restructuring for a Middle East-based company, including procedures
to prevent enforcement action by creditors, maintain the debtor’s control over its own restructuring and obtain access to new financing needed to complete a restructuring.

The Nigerian Stock Exchange (NSE) has announced that an Islamic screening exercise has been carried out on the 15 companies in the NSE Lotus Islamic Index (NSE LII) and other Shari'ah compliant companies using the 2012 year-end financial statements. The result saw some stocks likely to fail the screening exercise. The NSE said possible replacements will be made to the stocks that are due to exit the index. Some of the stocks being watched for replacement are Japaul Oil & Maritime Service Plc, Honeywell Flourmills Plc and Dangote Flour Plc. The 15 companies that will make the NSE LII list and market capitalizations will be made public before the end of the month, and before the index rebasing date of July 1, 2013.

Bank Islam Malaysia Bhd (BIMB) expects its 'Dream-of-a-Lifetime' campaign, starting today to Sept 30, 2013, to increase the customers' uptake of the Al-Awfar Savings and Investment account. Just as in the previous campaign, the latest promotional initiative also offers Al-Awfar customers the opportunity to win cash prizes of up to RM1 million. To be eligible for the draw, the account holders needed to maintain a minimum balance of RM1,000 in their accounts until Dec 31, 2013. Each RM1,000 deposited will entitle the customers one entry for the prize draw. BIMB said the campaign will be opened to all existing as well as new account holders. To date, the bank has secured approximately RM1.54 billion in deposits through Al-Awfar of which 90 per cent are in Al-Awfar Savings Account.

The Finance Ministry has set up a committee to investigate the past work of former president of Islamic Bank of Thailand, Thanin Angsuwarangsi. Finance Permanent Secretary Areepong Bhoocha-oom said that the investigation will focus on employees’ petitions, which must be clarified though Thanin already resigned. Thanin's resignation after only six months in office followed employees' pressure. Over 1,400 employees signed the petition to the board, saying that a number of the president's decisions caused damage to the bank.

Noor Islamic Bank has completed Islamic capital market mandates valued at over $1.4 billion (AED5.14 billion) in the past six months in Turkey. As an Initial Mandated Lead Arranger and Joint Bookrunner, Noor successfully closed a $500 million equivalent dual-currency Murabaha facility for Türkiye Finans Katilim Bankasi, which was oversubscribed two times. Noor Islamic Bank has also been an Initial Mandated Lead Arranger and Joint Bookrunner for a $382 million dual currency Murabaha Facility for Asya Katilim Bankasi A.S (Bank Asya) and a $500 million Sukuk for Tukiye Finans Katilim Bankasi A.S. In total, 85 banks and financial institutions across Asia, Middle East, Africa and Europe have participated in the syndicated financing deals led by Noor this year.

Kuwait Finance House (KFH) announced the official launch of its new Gold Account. This product enables KFH's clients to buy and sell physical gold biscuits securely. Available at KFH's Head Office branch in Kuwait, the gold biscuits each weigh 100grams and have a purity value of 999.9. KFH clients will be able to open Gold Accounts with no fees charged from 01 July by purchasing a minimum of one gold biscuit. They will then be able to choose whether to withdraw the physical gold or to keep it in custody with KFH without charge for an initial period. Further purchases or sales of gold can then be done conveniently and securely through crediting or debiting a customers' current or savings account. KFH currently plans to offer customers the ability to open Gold Accounts in other branches in Kuwait City in the near future.

Ghana and the Islamic Development Bank (IDB) have joined the African Legal Support Facility (ALSF). Ghana is now the 48th country to join the facility and the IDB the sixth international organization to become a member. The membership of the IDB shall be followed by the approval of an IDB financial contribution to the Facility of up to US$ 1 million, according to ALSF Director Stephen Karangizi. An independent body hosted by the African Development Bank (AfDB), the ALSF supports the AfDB's Regional Member Countries in the negotiation of complex commercial transactions and litigation brought against them by vulture funds. It also provides capacity building. The ALSF's goal is to ensure fair and balanced negotiations.

Emirates Islamic Bank contributed AED 7 million to Dubai Healthcare Authority to support Rashid Hospital in purchasing computed tomography (CT scan) machines, which will be used for medical imaging procedures at the government healthcare institution. The donation reflects Emirates Islamic Bank’s commitment towards the development of the UAE healthcare industry by working alongside government hospitals. The financial aid to Rashid Hospital follows similar initiatives by Emirates Islamic Bank to healthcare institutions in the UAE in recent years. Emirates Islamic Bank’s recent contribution to Rashid Hospital is also in keeping with its objective to support charitable causes via a dedicated Zakat Fund at the bank. In 2012 alone, the bank’s Zakat Fund contributed over AED10 million to various charitable causes.

The Islamic Development Bank is considering a recent request by Egypt for $10 billion in funding for infrastructure development projects, to be provided over the next five years. On Monday, Egypt received a $300 million loan from the IDB to the Egyptian General Petroleum Corporation. The loan is part of a total $1 billion loan agreement signed by Egypt with the IDB in July of last year aimed at funding food and energy imports. Ahmed Mohamed Ali, head of the Islamic Development Bank Group reiterated the bank’s commitment to helping Egypt surmount its formidable economic challenges, having already granted it $6 billion in funds. Ali pledged to send an IDB team to Cairo to begin discussions on the requested $10 billion loan in September.

Sukuk sales in 2013 will pick up speed to beat last year’s record because of the relative resilience of Islamic debt to surging global bond yields, said HSBC Holdings plc and Deutsche Bank AG, the top two underwriters. Issuance will reach US$55 billion to US$60 billion (RM191.88 billion), from US$46.5 billion in 2012. The prospect of the Federal Reserve tapering its monetary stimulus has pushed the average yield on global sukuk up 68 basis points this month to 4.06% on Monday. That compares to an 110 basis point increase to 6.17% for emerging-market debt. The Shariah market has many “buy-and-hold” investors, reducing price swings. The high borrowing costs in the conventional markets contributed heavily to the current growth of Shariah-compliant sales.