IslamicFinance.de

The Islamic Bank of Thailand plans to issue THB5 billion ($169.15 million) in long-awaited Islamic bonds by the first half of next year if the interest rate environment remains conducive.
In 2011, income contribution from the retail business is expected to rise to 40%-45% of operations and reach 60% in 2012.

Dear Reader,

Many times I read, and on all conferences we debate on the issue of form over substance - is their a simple solution?

Let's revisit:

Form over substance means that contemporary Islamic finance takes more emphasize on the form of the contracts (in their Arabic terminology like Murabaha, Musharaka etc.) as in their substance, especially their economic substance, which often looks the same after conducting a sequence of Arabic named contracts.

Scholars have to judge the appearance of the form, meaning the contracts in front of them. A judge shall not guess the intentions of the contractual parties but typically has to rely on the text itself to come a decision. Different schools of Islamic law have different degrees on reliance on the form and considering or rejecting to assume 'intentions' . The hesitance to guess about 'intentions' is based on the fear to commit injustice to the parties and a procedural cause to get evidence about them.

Tharawat Family Business Forum is a non-profit organization representing the first Arabian network for family businesses. Tharawat bases its activities around the four main pillars networking, research, education, and advocacy, thereby catering to the heart of family business needs. The forum, founded in 2006, has the clear vision of becoming the prime knowledge resource, research hub and networking forum for family-owned and -controlled firms in the Middle East and North Africa.
The Tharawat members are some of the largest and oldest family businesses in the region and the network accepts members upon application. While hosting activities across the entire Arab world, Tharawat has its headquarters situated in Dubai, UAE.

Banks’ gold savings accounts are expected to continue to gain popularity in anticipation of an uptrend in gold price and investors’ desire to diversify their investment portfolio in the current uncertain global economic conditions.
In FY10, the number of gold savings account and investment value recorded an average monthly growth of about 11%.
New entrants to the gold savings account market Kuwait Finance House (M) Bhd (KFH) and United Overseas Bank (M) Bhd (UOB) see good prospects for the product.
KFH chief executive officer Jamelah Jamaluddin said the KFH Gold Account-i which was launched nationwide on April 29 had been very well accepted.
Jamelah expects the demand for gold to hold at current levels, given the public’s heightened awareness on its availability and affordability.

Kuwait Finance House (KFH) CEO Mohammed Al-Omar stated that that the Fatwa and Shariah Supervisory Authority has embodied the moral and social responsibility towards the society as a unit that operates in harmony to protect the client by ensuring that all banking transactions are Shariah compliant. The authority has played a pivotal role in developing numerous products that caused a paradigm shift in the in the history of Islamic banking. He appealed to governments to resort to Sukuk, since Sukuk have greatly succeeded in financing many projects, which made Sukuk highly demanded by worldwide.
Al-Omar added in a paper that he presented during the Islamic Financial Institutions Forum in Beirut, that Sukuk are considered to be the Shariah compliant alternative for bonds, were not granted an opportunity to highlight its role as a suitable financing tool, despite the advantages that Sukuk have, such as creating assets that have a specific value, which makes the financing process based on real tangible assets, in addition to the fact that it does not burden governments and companies.

THE Jeddah-based Islamic Development Bank will be preoccupied with two developments in 2011 apart from its established plan of action. This is the progress toward the launch of its mega bank project and the other is the continuation of its trust certificate (sukuk) program.
The mega bank project was promoted by Saleh Kamel, head of Dallah Albaraka Group, who has been trying to get it launched for the last few years. But his failure to get the project started off through the support of both government and private investors saw the project somehow passed on to the IDB. The plan is to launch a mega bank that will effectively be an Islamic Interbank bank, with the aim of providing short-term liquidity to the global Islamic banking market and of promoting the trading of sukuk in the secondary market by acting as a market maker.
CIMB of Malaysia, Citigroup, HSBC and Standard Chartered Bank acted as joint lead managers and joint book-runners, and NCB Capital of Saudi Arabia acted as co-lead manager for this transaction. The success of IDB's transaction was underpinned by a comprehensive international road show covering Asia, the Middle East and Europe.

Fitch Ratings has affirmed Qatar Islamic Bank's (QIB) ratings as Long-term Issuer Default (IDR) 'A' with Stable Outlook, Short-term IDR 'F1,' Individual 'C,' Support '1' and Support Rating Floor 'A.'
The Individual Rating (or stand-alone strength) reflects QIB's position as the leading Islamic franchise with a nearly 50 percent share of Islamic assets and a nine percent overall market share of system assets, in addition to the Bank's high earnings power from core banking and healthy capital ratios.

Recent developments in the Islamic finance market prompted the industry to rethink the role of Shari'ah scholars. Most Islamic financial institutions appoint a supervisory board or committee of religious scholars who are tasked with reviewing their transactions in order to ensure that they comply with the principles of Islamic Shari'ah in their business and financial dealings. A Shari'ah supervisory board or committee approves or rejects a transaction through the issuance of a fatwa (an opinion or proclamation about the Shari'ah compliance of such a transaction).
When issuing fatawa, Shari'ah scholars are practising ijtihad and they should enjoy complete freedom in their practice of ijtihad; their guidance and limitations should only come from the five sources of Islamic Shari'ah being:
* Qur'an (the holy book revered by Muslims);
* Sunna (the practice and traditions of the prophet Muhammad (peace be upon him);
* Qiyas (a comparison, used to make a judgement on issues which have no clear-cut ruling in the Qur'an or the Sunna, by consideration of similar issues which do have clear ruling);
* Ijtehad (the diligent judgement of the scholars through reasoning and logic); and

Bahrain-based Shari'ah-compliant investment firm Gulf Finance House (GFH) plans to ask holders of its $200m Islamic bond to extend its maturity by three years to 2015 from 2012, as part of its debt restructuring, Reuters has reported.

King & Spalding announced today that Rizwan Kanji, a leading debt capital markets practitioner, is joining the firm as a partner in its Dubai office. Kanji will have a leading role in King & Spalding's debt capital markets and sukuk practice.
Kanji joins King & Spalding from Norton Rose, where he led its Middle East debt capital markets practice. He has advised on several recent landmark sukuk and conventional transactions, including the first Turkish sukuk.
King & Spalding has a team of nearly 30 lawyers in its Dubai, Abu Dhabi and Riyadh offices specializing in complex commercial, corporate and financial transactions as well as project development, construction and engineering, with particular emphasis on matters related to the energy industry.

When Malaysian Aida Othman signed up for the new law programme at the Islamic university, she did not expect to become one the few women with their hands on the levers of the world's $1 trillion Islamic finance sector.
Rising global demand for scholars who can advise firms on compliance with Islamic legal principles called sharia is behind the quiet and almost accidental way in which women are growing into a small but powerful force in a male-dominated business.
There are 221 Islamic finance scholars globally but only a handful are in high demand, with the top six occupying almost a third of the 1,054 board positions open to Islamic experts, a Funds@Work report issued this year shows.
This small circle of men dominate the boards of Islamic banks but there are now about 10 women sharia advisers in Malaysia, home to the world's largest market for sukuk, or Islamic bonds.
The number of women sharia scholars in Malaysia has more than tripled in the last five years according to some estimates.
There are no official figures, but practitioners say there are no women sharia advisers in the Middle East.

Emirati housewife Sarah Alzarouni brushed past a group of women clad in traditional dress to enter through the frosted doors of one of Dubai Islamic Bank’s women-only branches.
Alzarouni greeted the female tellers and sat down to do business.
Many affluent Muslim women share Alzarouni’s sentiments and they are increasingly turning to Islamic banks to manage their money. These women are looking beyond basic banking services to sophisticated products to grow their wealth while complying with Islamic principals that include a ban on interest.
Financial institutions in the Gulf Arab region, where many women are reluctant to mix with men outside their families, are tapping into the niche, with women-only bank branches and investment funds mushrooming. Saudi Arabia is leading the charge.
Abu Dhabi-based Al Bashayer Investments, a conventional wealth management firm geared towards women investors, is also looking to launch Islamic products to address the needs of women in the region who prefer investments that are in keeping with their religious beliefs.

Dubai-based Minhaj Sharia’h Financial Advisory and Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOFI) have launched a set of 11 new Sharia’h standards for Islamic financial institutions.
Commenting on the launch, Minhaj and AAOFI said these Sharia’h standards will help FIs tackle contemporary issues of banking, finance and investment.
The new Islamic norms have been conceived in the wake of the challenges faced by the Islamic FIs in the current times and paves the way for them to sort out a variety of issues in the light of Islamic jurisprudence.

Manazil Hospitality, a new company specialising in hospitality was launched in Qatar recently.
The firm is looking for opportunities at managing hotel properties, especially in the region by extending superior hospitality services while preserving the culture and tradition of the country.
Presently, Manazil is managing a successful business-corporate hotel in Doha and have been in the hospitality trade for the past decade while being Shariah-compliant.
Manazil is readying their second property, a new hotel which is expected to open in the first quarter of next year. The group is also negotiating with a couple of other hotel owners in managing their properties.

Kuwait Finance House (KFH), the country’s biggest Islamic lender, saw an 11 percent drop in loan loss provisions in the first nine months of the year.
On Thursday, KFH posted a 23 percent decline in third-quarter net profit. Net income in the three months to Sept. 30 fell to 26.5 million dinars compared with 34.3 million dinars with the same period a year ago.

Albaraka Banking Group BSC, the biggest publicly traded Islamic lender in Bahrain, expects to complete an acquisition in Indonesia in the first quarter of 2011 as part of an expansion.
The bank has identified targets for the planned transaction in the Asian country. Albaraka has also identified an acquisition target in Malaysia.
Albaraka this year acquired Pakistan’s Emirates Global Islamic Bank Ltd., which boosted its network in the country to about 90 branches. It also began operations in Syria this year.
The Manama-based bank has received approval to set up a representative office in Libya to benefit from the country’s strong trade ties with other markets where the bank operates, such as Egypt, Turkey, Algeria and Jordan.
The bank expects total loans to increase 20 percent in 2010.

Until recently the issuance of Islamic bonds, or sukuk, was confined to the Muslim world. But now a number of international borrowers are tapping the markets, including Nomura Holdings in Japan and Europe's first corporate borrower, International Innovative Technologies.
The ratings agencies Moody’s and Standard & Poor’s say they expect to see a rise in the number of sukuk issues by new players over the next 12 months, including issues by borrowers in Singapore, Australia, Luxembourg, Thailand, Hong Kong, France and Russia.
While the Islamic Financial Service Board and the accounting and auditing organization have defined standards for sukuk, defaults over the past year have shown that new guidelines must be set as problems arise, particularly as sukuk start to generate global attention.

The State Bank of Pakistan Thursday notified the de-scheduling of Al Baraka Islamic Bank Pakistan operations on account of its merger with and into Emirates Global Islamic Bank Limited with effect from the close of business on October 29, 2010. The State Bank has also notified the change of name of Emirates Global Islamic Bank Ltd to AlBaraka Bank (Pakistan) Ltd on 29.10.2010.

Islamic banks in the country are developing a local currency sukuk index to serve as a benchmark for sharia-compliant fixed income securities.
The index will track highly liquid, high grade bonds, including on-the-run ringgit denominated sukuk, said the Association of Islamic Banking Institutions Malaysia, which includes the local units of Al Rajhi and Kuwait Finance House.
Malaysia has the world’s largest sukuk market

Elaf Bank, a closely held Islamic investment bank in Bahrain, has applied for a banking license in Malaysia.
The Southeast Asian nation plans to issue two more Islamic bank licenses, including one of a new lender that will be jointly established by institutions from Asia and the Middle East.
Bank Negara Malaysia already issued conventional licenses to five foreign banks in June, including National Bank of Abu Dhabi and Indonesia’s PT Bank Mandiri.
The bank would use Malaysia as regional hub, covering Singapore, Indonesia and Australia.
It would try to use this as an opportunity to converge differing interpretations of Islamic finance between Malaysia and the Middle East by getting Shariah boards to work closely.