IslamicFinance.de

According ot a report by Standard & Poor's Ratings Services, a trend to develop and globalize the sukuk market is being set. Since conventional banks worldwide tend to producing fewer and shorter loans, companies look for an alternative in terms of financing. In this case, it is very probable that Islamic financial instruments become a significant source of funding, particularly in the GCC and Asia. While these regions mark the center of a huge estimated $1 trillion market, they also need high capital for developing their infrastructure.

Capital Market Authority (CMA) of Saudi Arabia issued a strongly worded warning towards companies that operate without a license, thus surprising many people in the Gulf region. In the warning notice CMA states that non-licensed operations will be sanctioned since they are considered violating the relevant provisions of the capital market law and its implementing regulations. The problem that rises from this warning is obtaining a licence to operate in Saudi Arabia. For this purpose, an office and a minimum number of staff are required.

Al Izz Islamic Bank plans to launch an initial public share offer (IPO) for 40 percent of the bank. the bank has set a goal to raise 40 million rials ($104 million) in this way. The offer will be opened on September 22 and will run for one month. Shares in Al Izz's offering will be priced at 0.1 rials each. Both local and foreign investors can make use of the shares with the condition that foreign investors are only allowed to have up to 70 percent of the offering.

Seera Investment Bank has negotiated a Sharia-compliant structured financing facility wich will serve for developing a new purpose built student housing project and commercial property in central London. The project should be completed next year. The property will provide 339 rooms for students as well as a commercial space of 37,000 square feet. The property will be constructed in the vicinity of Aldgate East Station in Central London which location is not far away from a number of higher educational institutions. The first phase of the construction has recently been finished.

Qatar’s $4bn sukuk issue marks great success and is referred to as a milestone in the rise of Qatar’s sharia-compliant finance industry. The growth of Islamic financial services are supported by ambitious infrastructure investment programme and a growing wealth by capita. The sukuk was oversubscribed over six times which results in an order book of more than $24bn. During hte time of international economic uncertainty Qatar manages to show some stability. As a result, low yields of 2.09% and 3.24% of the five-year and ten-year bond of the two-tranche sukuk respectively are observed which is a sign of strong demand for Qatar’s sukuk.

Saudi Automotive Services' shares decreased by 0.50% to SR19.95. The company announced that it signed up for a SR255m Islamic credit facility with Banque Saudi Fransi. The financial means will flow into the realization of expansion plans.

Arcapita Islamic investment bank, which finds itselb in Chapter 11 bankrupcty, plans a new financial move. It will make a $1.9m Murabaha financing with a profit rate of 15% possible. The money will flow into District Cooling - a joint venture with Dalkia Utilities Company serving for district cooling and other services to three developments in Bahrain and Abu Dhabi. The financing is supposed to play the role of a bridge. Meanwhile Arcapita and District Cooling are occupied to renegotiate a concession agreement with Abu Dhabi’s Tourism Development & Investment Company (TDIC).

The Viability Rating of Kuwait Finance House has been downgraded to 'bb' by Fitch Ratings. The bank's Long-term Issuer Default Rating, however, remains at 'A+'. According to Fitch Ratings, the decrease in the VR is caused by he high concentrations in KFH's financing portfolio as well as asset quality indicators which continuously become worse. In addition, the bank reported slightly weaker regulatory Tier 1 and Fitch Core Capital ratios in H112. A positive move on KFH's side is expected: they plan to bolster their capital in the months to follow.

A few days ago, the Board of Directors of Saudi Hollandi Bank has made a decision to issue Sukuk worth SR 1,400 million. The issuance is a private offering aiming to support its capital base by using a Shariah compliant structure. The latter is to be approved by the competent authorities.

Saudi management company SEDCO Holding has started its corporate social responsibility program - Riyali. The program adresses the educational needs of the Saudi population in terms of financial literacy and aims to give people the financial skills to achieve a desirable standard of living. In the first phase of this program students will be the subjects.

Kuwait Finance House (KFH) has put an ent to talks about the potential sale of its stake in Al Salam (International) Hospital. As the largest investor in the hospital, KFH contributes to the stability, integrity and strength of the latter. Thus, Al Salam contrasts with other competitive hospitals which are of individual ownership. The end of discussions on KFS's side will not affect the bank's financial position.

According to a recent report by Kuwait Finance House (KFH), Islamic microfinance is a good solution for decreasing poverty. Since it is a combination of economic, social and religious principles, it uses two types of resources: external ones like Zakat and charity on one hand, and internal ones like deposits and equity. A number of institutions among which the Islamic Development Bank (IDB) and the World Bank are working on studying the viability of Islamic microfinance.

Looking for expansion opportunities, Noor Islamic Bank focuses on South East Asia as a strong growth market. While the development of global lending markets remains uncertain, Asian countries have growing needs in the areas of infrastructure and development combined with solid economic growth. The goal of Noor Islamic Bank is to cooperate with already establishedd financial institutions in countries like Malaysia, Indonesia and Singapore. This way the gap in funding, which was caused by the shrinkage of the global liquidity pool, shall be bridged.

A significant growth in the global takaful industry has bben observed over the last few years. According to the Ernst & Young World Takaful Report 2012, global takaful contributions show an increase of 19% to $8.3 billion in 2010. $5.68bn of these contributions belong to GCC. Nevertheless, it is a key challenge for takaful players in the Middle East to maintain the growth momentum while boosting profitability.

Profitability and asset growth in the GCC banking market have grown significantly since last year. This development is due to a favourable regional macroeconomic environment as well as reduced cost of risk. Since the facts correspond with A.T. Kearney's banking outlook from 2011, optimistic attitudes though with some cautiosness return. Markable differences in the growth rate and profitability of the UAE countries over the last year are discussed.

According to a GCC survey, insurance profitability has deteriorated significantly in the past four years across top 30 conventional insurers. While 28% in 2007, it sropped down to 9% in 2011. A solution to prevent further decline is to revamp operating models with profitability pillars. There is a huge difference between e.g. motor premiums and medical insurance, which causes controversial reactions by insurers. While motor premiums in the UAe show a decrease of 23% over the last three years, healthcare provider costs have grown up to 50% in the same period.

The ageing population of UAE is expected to highly demand for Islamic savings products. Thereby, Shariah compliance of the products is the major factor in making a choice. National Bonds Corp offers a number of different savings products including a mudaraba fund now worth 4.6bn dirhams ($1.25bn) in assets under management. The company's future plans include the development of a range of savings which aim to satisfy the growing demand.

The conventional private equity (PE) industry's taking advantage of excessive cheap debt before the global financial crisis in 2008 has a negative effect when the markets collapsed. In contrast, Islamic PE was able to avoid this situation by relying on restrictions on taking conventional forms of leverage. According to Qatar Finance Centre Authority's director, Yousuf Al-Jaida, there is a strong correlation between Islamic PE and the real economy. The huge difference between the both tyes of PE is that Islamic PE is based on Shariah principles which excludes businesses such as breweries, casinos, riba-based banks and pig farms.

The private equity firm Foursan Group has invested in in Jordan Dubai Islamic Bank (JDIB) and thus became the bank's second largest shareholder. The investment was completed through Foursan Capital Partners I. The goal of this transaction is a benefit from the rapidly growing Islamic banking sector as well as from JDIB's overall positive future growth prospects.

According to KPMG Oman, conventional banks in Oman that do not offer any Islamic banking services will face the threat to lose numerous customers which will prefer a bank that offers Shari'ah-compliant financial services. Khalid Yousaf, Director of Islamic Finance Advisory Services, KPMG Oman, claims that opening an Islamic window operation is a safe strategy. As a reason he points out that it requires less capital while, at the same time, sharing a common cost base with additional business.