IslamicFinance.de

In his Keynote Address at the 2014 London Sukuk Summit on 18 June, Jaseem Ahmed, Secretary-General, Islamic Financial Services Board, noted that the high growth rate of the Islamic finance industry has led to the emergence of Islamic finance sectors that have attained systemic importance in a number of key economies in Asia and the wider Gulf and Middle East. The second aspect of the global IF industry he highlighted is that rapid growth of Islamic finance is taking place in a group of nations that display wide variation in their market, institutional and policy and regulatory development. The IFSB Secretary General noted that the key priority is to find the resources and organisational modes and partnerships that help committed jurisdictions to meet the challenges they face, and wish for assistance in addressing.

Representatives from Azzad Asset Management announced the selection of Federated Investment Management Company as sub-advisor for the Azzad Wise Capital Fund, America's first Halal fixed-income mutual fund. The Federated team has researched and purchased Sukuk, a significant holding in the Azzad Wise Capital Fund, for US and European mutual funds, as well as in separately managed accounts for large pension and institutional clients, said Azzad Senior Investment Strategist Fatima Iqbal. In addition, they have extensive experience managing fixed-income securities, generally. Much of the same analysis will be implemented in their management of the Azzad Wise Capital Fund.

The Gulf Bond and Sukuk Association (GBSA) held a seminar on Islamic finance in Dakar, Senegal last week at the Making Finance Work for Africa (MFW4A) Partnership Forum. The seminar covered key concepts in Islamic finance as well as current trends in the Sukuk market and the use of Shari’ah-compliant financing as a development tool. GBSA President Michael Grifferty said it has to be ensured that African companies and sovereigns are aware of all financing options available along with the respective risks and rewards.

Moody's has assigned Bank Al Bilad a long-term credit rating of A2 and short term credit rating of P-1. Moody’s said that the ratings on Bank Al Bilad reflect the banks strong financial position, strong asset quality and coverage metrics, solid capitalisation levels and strong profitability resulting from growing business volume, efficiency gains and the solid contribution of non-funded revenues, in addition to the strong fundamentals of the Saudi economy supporting the growth in the banking sector. Moodys emphasised the importance of Islamic finance and associated opportunities in the Kingdom of Saudi Arabia.

The Islamic Development Bank's (IDB) Board of Executive Directors has approved new fundings totalling $670.9 million for development projects in member and non-member countries. The Executive Directors approved $312.8 million to finance electricity projects in Egypt and Senegal; $110 million to fund the development of a major road in Uganda; $48 million to fund pearl preservation and economic revival projects in Bahrain; $44 million for an underwater communications cable in Bangladesh; and $12.4 million to finance fish farms in Mozambique. Moreover, the executive directors gave their approval for four donations for Muslim communities in non-member Bosnia-Herzegovina, Cambodia, India and Thailand while funds will also be channelled into development projects in Africa.

The Sukuk has been assigned an investment grade credit rating of BBB- by Fitch and is being issued in amortizing tranches, each with a term of five years, and an average life of approximately 2.5 years. Distributions will be made quarterly to investors on a fully amortising basis, with a profit rate of seven per cent per annum. The first tranche of the program, for $20 million closed in October 2013, and was oversubscribed. The transaction was structured to fund the operations of one of FWU’s five main subsidiaries, Atlanticlux Lebensversicherung S.A. (ATL), Luxembourg. The lead arranger and bookrunner for this issuance, EIIB-Rasmala, comprises the AIM-listed European Islamic Investment Bank Plc and Rasmala Group.

A report “Mid-Term Review of the Ten-Year Framework and Strategies for Islamic Financial Services Industry (IFSI) Development” will be launched on 19 May 2014. The Mid-Term Review report is a joint initiative of the IFSB and Islamic Research and Training Institute (IRTI). Previously, in March 2007, the IFSB, IDB and IRTI had jointly developed, in consultation with a wide range of stakeholders, the IFSI Development: Ten-Year Framework and Strategies. After five years of the initial publication, a Mid-Term Review of the initiative was undertaken with the aim to assess the progress made, incorporate the new developments taking place in the global financial system and the challenges. The report will be available for download from the IFSB and IRTI websites, www.ifsb.org and www.irti.org from 19 May 2014.

The demand of Islamic microfinance is rapidly increasing in order to serve poverty alleviation and social development. Its active client size has exceeded two million now from which more than 700,000 belong to Sudan and more than 400,000 clients of Islamic Microfinance Institutions are from Pakistan. Yemen, Indonesia, and Bangladesh also have a good number of clientage and Islamic microfinance has satisfactory demand in Morocco, Senegal, Nigeria, and Tunisia. However, there are lots of challenges faced by Islamic microfinance i.e. squeezed volume of organisations, lack of technical expertise and quality HR, lack of standardisation of the products, and especially the lack of funds for Islamic microfinance institutions.

Iran's Bank Mellat filed an application for a judicial review against the UK Government in the Administrative Court on 16 April 2014. In its final ruling last June, the UK Supreme Court found that by imposing domestic sanctions against Bank Mellat, the UK Government acted both “unlawfully and irrationally”. Following the UK Supreme Court decision, Bank Mellat had asked the UK Government to withdraw its 2010 listing proposal to the EU Council. It was hoped that this may have been sufficient to convince the EU Council to give up on its own sanctions against the bank. However, the UK Government has refused to withdraw the proposal. The UK Government has also now applied for permission to intervene in support of the EU Council’s appeal against the first European Court decision.

The European Bank for Reconstruction and Development (EBRD) and the Islamic Corporation for the Development of the Private Sector (ICD) have signed a Memorandum of Understanding developing joint collaboration to support SMEs in Egypt, Jordan, Morocco and Tunisia. Under the terms of the memorandum, the EBRD and the ICD will aim to establish a $120 million investment fund, to develop and to financially support SMEs across the southern and eastern Mediterranean region (SEMED). Various financing products will be used such as equity and quasi-equity.The two institutions will contribute to the SME Fund, as well as exploring additional institutional investors and donor streams in order to provide further SME financing and technical assistance required in the region.

Jordan Islamic Bank (JIB) achieved $14.71 million in net profits in Q1 2014, compared to $14.68 million during Q1 2013. The bank’s assets reached about $5.079 billion compared to $4.968 billion by the end of 2013. Clients’ deposits reached about $4.581 billion compared to about $4.500 billion as of end-2013. Facilities and investments reached about $3.565 billion compared to $3.519 billion at end-2013. The non- performing finance (NPF) ratio reached about 4.34 per cent, its coverage ratio about 86 per cent. The bank enhanced its capital base by increasing its paid capital by distributing 20 per cent as free shares to shareholders in addition to distributing cash dividends to shareholders at 15 per cent for the year 2013.

Standard & Poor's Ratings Services has affirmed at 'BBB' its insurer financial strength and counterparty credit ratings on Saudi Arabia-based Weqaya Takaful Insurance and Reinsurance Co. (Weqaya) but the outlook is negative. The affirmation reflects S&P’s view that despite a comprehensive net loss of Saudi Arabian riyal (SAR) 90.7 million ($24.2 million) for 2013 Weqaya's new senior management is taking appropriate remedial action. Consequently, policyholder confidence will be maintained and Weqaya will continue to enjoy both a satisfactory business risk profile, and at least a lower adequate financial risk profile. The negative outlook reflects S&P's belief that senior management at Weqaya must continue to work quickly and effectively to reinforce capital and earnings.

The 11th IFSB Annual Global Summit, themed "New Markets and Frontiers for Islamic Finance: Innovation and the Regulatory Perimeter", will be held in Mauritius. The session topics which reflect the importance of the Summit theme include: Global Overview of the Islamic Financial Services Industry (IFSI): Outlook and Policy Developments; Legal and Regulatory Environment of Islamic Finance; Sukuk, Market Development and Regulation, The Role of Islamic Finance in Economic Development: Promoting Financial Inclusion, Sustaining Innovation, Expanding the Regulatory Perimeter - Striking a Balance; Panel Discussion on "New and Emerging Islamic Finance Jurisdictions: Opportunities and Challenges Ahead. Global players and thought leaders from among the regulators and market players of the Islamic financial services industry have confirmed their participation.

In a statement to the Bahrain Bourse, Al Salam Bank-Bahrain noted the increase in its authorised share capital to BHD 250 million and in its issued and paid up share capital to BHD 214,093,075. The bank’s share capital has been increased as part of its acquisition of BMI Bank, approved by shareholders at EGM on 8 October 2013 and following the obtaining of the required regulatory approvals.

UK Universities Minister David Willetts has launched a 12-week consultation period on Shari’ah compliant student loans with the aim of getting more Muslim students into higher education in the UK. The Department for Business, Innovation and Skills (BIS) has been developing a model alternative finance product which would be Shari’ah-compliant and could potentially be offered alongside traditional loans. This model finance product has been developed by experts in Sharia-compliant finance and has received preliminary approval from the Islamic Bank of Britain’s Sharia supervisory committee. The consultation seeks to determine whether the alternative finance model identified would be acceptable to anyone who might be deterred from the conventional system.

The Council of the Islamic Financial Services Board (IFSB) has resolved to admit Bank of Korea, the Central Bank of the Republic of Korea into the IFSB membership as an Associate Member. The 24th meeting of the IFSB Council was held on 27 March 2014 in Brunei Darussalam. It was chaired by the Managing Director, AMBD, H.E. Dato Mohd Rosli Sabtu and attended by 10 central bank governors and heads of regulatory and supervisory authorities, as well as 12 senior representatives from among the Council and Full members of the IFSB, representing 17 countries. The meeting was also attended by the President of the Islamic Development Bank.

The Council of the Islamic Financial Services Board (IFSB) has resolved to approve the adoption of a new Standard in its 24th Meeting in Brunei Darussalam on 27 March 2014. The document is IFSB-16: Revised Guidance on Key Elements in the Supervisory Review Process of Institutions Offering Islamic Financial Services (Excluding Islamic Insurance (Tak?ful) Institutions and Islamic Collective Investment Schemes). The overall aim of the revised Standard is to update the earlier standard on this subject (IFSB-5). IFSB-16, which is broadly analogous to Pillar 2 of the Basel Accords, is about the supervisory process and how regulatory and supervisory authorities should supervise some specific areas pertinent to the IIFS. The softcopy of IFSB-16 will be available on the IFSB website, www.ifsb.org in due course.

GFH Capital has successfully placed its newly acquired prime central London residential property with GCC investors. The placement was oversubscribed by investors seeking attractive opportunities in the UK real estate market. The luxury property, which is located in Kensington, is a five unit Grade II listed building overlooking the Queens Gate Gardens. The investment is expected to deliver above average capital appreciation over the medium term for the bank and its investors. GFH Capital continues to assess other similar opportunities in the UK and US real estate markets where it sees value and upside potential. GFH Capital announced the acquisition of its Queens Gate Gardens property in early January 2014.

Dubai Islamic Insurance & Reinsurance Co. (Aman) has announced a loss of AED 51.6 million at year-end 2013 that has impaired its capital adequacy. Given that this loss represents about half of Aman's shareholders' equity, S&P consider that Aman's capital and earnings position and overall financial profile have weakened significantly. The rating agency is therefore lowering its ratings on Aman to 'BB+' from 'BBB-' and placing them on CreditWatch negative. S&P also believes that Aman's retained earnings over the next two years are unlikely to be sufficient to rebuild its capital adequacy to levels consistent with higher ratings.

Bahrain-based Ithmaar Bank reported a net loss of BHD 29.9 million in 2013, compared to a net loss of BHD 10.1 million in 2012. One of the major factors impacting the performance of the Group for this year is the reduction in benchmark profit rates in Pakistan, coupled with increased minimum profit rate on certain liability products resulting in significant margin compression in FBL. The bank has therefore taken some key decisions including cost rationalization measures across the Group. Moreover, the remaining conventional operations of its subsidiary Faysal Bank Limited Pakistan’s (FBL) will be conversed to Islamic banking, subject to approval from FBL shareholders and the regulators.