IslamicFinance.de

The launch of the first online bank in Saudi Arabia will be announced on Friday evening. Manama-based Gulf International Bank will be launching the new bank, which will reportedly be an “online-only” service, with customers making deposits and transfers online and checks to be deposited via self-service machines at branches to be opened across the Kingdom. Customers will meet with an employee from the bank only once, when they register for a new account. The service will be open to individuals only. Despite having relatively low penetration rates for Internet banking, the Gulf region has great potential to assimilate new online banking services due to the high Internet penetration rates.

NCB Capital has sponsored a new fully equipped lab at Effat University in Jeddah as part of its commitment to spread financial literacy among Saudi Youth. The lab comprises of 25 computer machines and includes hardware and software which help students to monitor financial markets and train them on making sound investments. Sarah Al-Suhaimi, CEO of NCB Capital, said that education sector is a key part of NCB Capital’s corporate social responsibility activities. By sponsoring this initiative, NCB aims to forge a collaborative relationship with Effat University in order to support financial knowledge among the students, and to also introduce them to the world of investment, she added.

The Kingdom joined the rest of the world in observing International Anti-Corruption Day on Tuesday to raise awareness about the importance of making Saudi Arabia a corruption-free country. The Anti-Corruption Day is observed by the United Nations every year on Dec. 9 in order to highlight the evils of corruption and its negative impact on government systems globally. To mark the occasion, Nazaha, Saudi national anti-corruption commission, hosted a forum. A seminar entitled “The role of medial and cultural institutions in maintaining integrity and fighting corruption” was organized by Nazaha on the sidelines of the event.

Standard and Poor's has lowered the outlook for the world's top oil exporter Saudi Arabia to stable from positive and its Gulf partner Oman to negative on sliding oil prices. However, the ratings agency affirmed the strong "AA-/A-1+" long- and short-term foreign and local currency sovereign credit ratings for Riyadh over the "strong external and fiscal positions" it has built up in the past decade when oil prices were too high. It said low oil prices will place pressure on the kingdom's gross domestic product (GDP) and per capita income because Saudi Arabia's economy is undiversified and vulnerable to a sharp and sustained decline in the oil price.

The private sector arm of the Jeddah-based Islamic Development Bank plans to tap Islamic capital markets to raise as much as $1.2 billion in long-term funds during its current financial year, its chief executive Khaled Al-Aboodi said. The Islamic Corporation for the Development of the Private Sector (ICD) will also explore a capital increase as it expands its economic development activities, with a proposal to be presented to shareholders in June 2015. Fitch Ratings has assigned an AA credit rating to the ICD, which has a low level of leverage but which is expected to grow as the institution increases its lending activities. The ICD will consider both syndicated Islamic loans as well as issuance of sukuk, or Islamic bonds, Al-Aboodi added.

Saudi Arabia's Jadwa Investment says it is planning to invest in domestic real estate as it expands into new asset classes, hoping to cash in on booming demand for new homes. Tariq al-Sudairy, managing director and CEO of Jadwa, said the group will focus on the asset class and target major cities like Riyadh, Mecca, Madina. Jadwa would partner with real estate developers to select and execute projects on behalf of clients. Funds would be set up as projects were selected and the size of the investment would be determined on a case-by-case basis. Sudairy said private equity in the kingdom offered significant potential as well. Jadwa itself hopes to seal an unspecified deal as early as the first quarter of 2015.

A source at the Saudi Arabian Monetary Agency (SAMA) said a number of insurance companies that have incurred huge losses may be forced to halt operations to protect their clients. The source added that many of these companies’ financial situations are continually deteriorating, they have not committed to presenting a strategic plan to correct their situation and, at the same time, they have refused to merge with other companies. Insurance experts said there are six companies that have incurred losses of 55 to 75 percent: Salamah, Wafa, Arabian, International, Amanah and Inmaa. SAMA has seized the operations of Sanad and Wiqayah insurance companies due to their huge losses.

The Islamic International Rating Agency (IIRA) has reaffirmed a national scale rating of A+/A-1(sr) (A plus/A-One) to Bank AlJazira ( BAJ), incorporated in the Kingdom of Saudi Arabia. IIRA has also reaffirmed the bank's international scale ratings at A-/A-2 (A Minus/A-Two). Outlook on the ratings is 'Stable'. BAJ has posted continued business growth over the years. Moreover, capital adequacy ratio (CAR) has remained consistently above 15% over the last 5 years, sustaining the increased business levels. BAJ 's fiduciary score has been assessed in the range of '71-75', reflecting adequate fiduciary standards. The overall governance framework and practices are largely at par with international best practices.

One of the major reasons why Saudi Aramco's investment wing Wa'ed became a partner in PayTabs was because PayTabs has the ability to build entrepreneurs in Saudi Arabia. PayTabs can help build businesses and make entrepreneurs by tackling one of the major problems people face when they start an online business; collecting payments online. PayTabs is a payment gateway with its instant online invoicing system PayPage and ready to integrate eCommerce APIs/Plugins. PayPage can be used even without a website. With additional features like Express CheckOut, PayTabs has introduced some features enabling the customer to pay without leaving the merchant's website.

Saudi Arabia's Kafala loan guarantee program proves to be a vital conduit between banks and smaller businesses, a report recently produced by the global publishing firm Oxford Business Group (OBG) revealed. The Report: "Saudi Arabia 2014" provides extensive coverage on the national drive to boost lending activity and facilitate growth in the Kingdom's small and medium-sized enterprises (SMEs). The report also looks in detail at the impact of e-banking and online services. Facing lengthy bureaucratic procedures and licensing is a big problem for SMEs. Another problem is accounting, as most SMEs are single proprietor companies, and the distinction between company and private assets is often hazy.

Not even a fatwa against National Commercial Bank’s initial public offering could derail the biggest-ever share sale in the Middle East. Saudi Arabia’s largest bank said in a statement today it attracted 311 billion riyals ($83 billion) of bids from about 1.26 million investors. While that pales by comparison with the almost 9 million who subscribed for Alinma Bank’s IPO in 2008, NCB’s offering to sell 300 million shares was 23-times oversubscribed, signaling investors pitched for larger blocs of shares. The IPO is considered un-Islamic, as criticism deepened over the bank’s non Shariah-compliant assets. To mitigate the controversy, NCB pledged to divest about $38 billion of assets to become fully Shariah-compliant in five years.

Saudi Arabia will again host the CSR Forum to be held 24- 26 November 2014 in Jeddah. The forum will gather representatives of corporate organizations, ministries and other government bodies, NGOs, foundations, universities and SMEs, who will discuss topics including how to embed corporate and social sustainability into CSR programmes to drive community development, strengthen education delivery and empower the Kingdom's youth. Employment generation and the development of women are other key topics on the agenda. More information can be found on www.csrsummitsaudi.com .

Under the sponsorship of Alinma Bank, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held its Shariah standards hearing session in Riyadh. Participating in the event were Shariah-finance professionals from Alinma Bank, AAOIFI and other financial and research institutions from Saudi Arabia and abroad. Attendees discussed, debated and made comments on draft policies related to deposit and repurchase agreements. The meeting was the first time AAOIFI held for its Shariah standards hearing session outside Bahrain, and the move to Saudi Arabia represented an attempt on AAOIFI’s part to expand its activities and cooperation.

Jadwa Investment’s Head of Research, Dr. Fahad M. Alturki, and Saudi-US Trade Group President Richard Wilson spoke about the Saudi economy and investment in the Kingdom as well as the planned opening of the Saudi stock market to qualified foreign investors. Dr. Fahad said that the average growth in the Saudi economy is going well, with a growth rate of around six percent per annum on average. All the economic or macro indicators like interest rate, fiscal accounts and monetary policy, point to a very strong macro picture in the Saudi economy. However, there is difficulty for SMEs to access banking credit. He considers it a positive development to open the market, and allowing foreign investors’ access to bonds and Sukuk issued by local companies in domestic currency.

The Board of the Islamic Development Bank approved an operation plan for the new fiscal year 2014-2015 at its 300th meeting held on 19 -22 October in Jeddah. According to the Bank, the plan has a budget of US$ 5.1 billion not including the administrative budget for the Bank and its Funds and Programs. The Bank also approved US$ 814.2 million for development financing. Amongst the approvals of the Board was US$ 230.2 million for Development of Sharm El –Sheikh International Airport Project (Phase-II) – Egypt. IDB has already contributed US$ 226.8 million to the project and with the new approval IDB contribution to the project reaches US$ 457 million.

Saudi Arabia's National Commercial Bank is going ahead with an initial public offering worth $6 billion despite opposition from Muslim clerics. The IPO from Sunday, making NCB the last Saudi bank to go public, is expected to be one of the largest in the world this year. However, Abdullah al-Mutlaq, a member of the kingdom's official Council of Senior Ulemas, said that the IPO is haram, or forbidden under Islamic tenets which ban usury. On the other hand, NCB's sharia advisory council on Thursday declared the share offer to be acceptable under Islamic law. An NCB prospectus says the bank will offer 300 million shares to the public at 45 riyals ($12) each, for a value of $3.6 billion, while another 200 million shares will be allocated to the state pension agency bringing the total to $6 billion.

The Middle East conflict raises concerns over the general outlook for the sukuk market. But portfolio managers remain positive both on fundamentals and technicals for sukuk as they also offer a potentially attractive alternative amid prospects of rising interest rates. Sukuk are considered as an attractive option for those whose mandate allows to test new boundaries. Mohieddine Kronfol, chief investment officer of Global Sukuk and MENA fixed income at Franklin Templeton Investments said, that "the lower duration and persistent strong demand from Islamic financial institutions should continue to support the market and allow it to perform well relative to other fixed income sectors, particularly those that have higher average durations."

The Bahrain’s stock exchange has plans to launch a financing tool and real estate investment trusts. The range of Islamic investment products will include a novel equity-based murabaha financing tool and Islamic real estate investment trusts. It is seeking to attract regional funds from bigger markets such as Saudi Arabia, Qatar and the United Arab Emirates; Islamic financial products are a major part of the strategy. The exchange aims to host trading of sukuk (Islamic bonds), which at present is mostly done over the counter, said Shaikh Khalifa bin Ebrahim Al-Khalifa.

Sukuk issuance and investing is expanding outside of the Islamic world. The asset holders range from sovereign wealth funds and high-net-worth-individuals in the Arab Gulf, to retail investors in other Muslim majority countries such as Turkey, Pakistan and Indonesia. According to Moody’s Investors Service, Malaysia at present dominates the sukuk market when it comes to both sovereign and corporate issuance. Other major issuers include the governments of Indonesia and Gulf states including Saudi Arabia, Qatar and the United Arab Emirates. The overall outstanding amount of sukuk will probably reach around $115 billion this year.

The Holding Group has signed a strategic agreement with the Saudi Kuwaiti Finance House. The bank will act as a financial advisor for the group to arrange Islamic funding, in addition to executing residential, administrative, industrial, and commercial projects in Mekka, Medina, and Jeddah. The selection of the bank was based on financial and technical criteria. The group also operates hospitals, airports, and other private and public facilities.