IslamicFinance.de

SWIFT said the certification would pave the way towards the automated processing of Murabaha treasury transactions, which reportedly represented 60 per cent of all Islamic financing.

Over 240 Islamic banks representing 84 per cent of global syariah-compliant assets are members of SWIFT.

Technical details:
http://www.swift.com/solutions/by_business_area/islamic_finance/index.page
Contact:
Asim Butt, asim.butt@swift.com

The Central Bank of the UAE has announced the successful inaugural auction of Shariah-Compliant Certificates of Deposit (ICDs).
The inaugural auction was held on Wednesday, 10th November 2010. The ICDs, which are based on Murabahah concept, are the first Islamic liquidity management tools issued by the Central Bank of the UAE.
The ICDs are the first Islamic liquidity management tools issued by the Central Bank of the UAE.

In order to recover from the repercussions of the global fiscal crisis, family businesses in Gulf oil producers need foreign financial and technical assistance.
Nazem Al Kudsi, CEO of the government-owned Invest AD, said such a development and the strong demand for private capital make the Gulf one of the best destination for local and foreign capital.

The United Arab Emirates needs to boost investment in the agriculture sector, which can supply only 37 per cent of its annual food demand and makes it vulnerable to fluctuating prices.
In 2008 the UAE was forced up to import their bills. Since then they are trying to improve security of food supplies.

The country's shariah-compliant certificates of deposit (CDs) was successful amid the Islamic banks participation in issuing the newly launched Islamic finance product.
The initiative is seen as an important move towards bolstering Islamic finance and banking movement in the UAE.

The UAE Central Bank started issuing the country's first Islamic certificates of deposits (ICDs) as part of a plan to create a new investment tool for Shariah-compliant banks in the country.
The new ICDs would be issued in dirham, US dollar and euro and their maturity date would range between one week and five years.

"The Private Equity Calamity

This paper dissects the balance sheet and business model of Gulf Finance, and scrutinizes the existence of a "pre-exit premium" in their activities - on top of the usual exit fees and/or performance fees. The study suggests that this practice (uncommon even for conventional Private Equity businesses - much less for an Islamic Private Equity house) was pioneered by GFH and it is this same practice that brought them down to their knees. "

In a recently published quarterly report by Kuwait Financial Centre "Markaz", which aims to analyze the performance of over 150 equity funds across the region, GCC markets were positive in the third quarter as all markets saw gains following a lackluster summer and slow Ramadan month. The Dubai World debt issue was resolved with creditors coming on board for the restructuring.
Fund managers continue to favor Saudi Arabia, with an allocation of 42% though down from 45% in June 2010.

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.

North east company International Innovative Technologies (IIT), UK, issued a Sukuk. The 4-year, USD 10 mn musharaka sukuk – small by international capital markets standards – was placed privately with Millennium Private Equity and regulated by Dubai Financial Services Authority.

Islamic private equity funds in the Persian Gulf plan to take advantage of lower asset prices after the property market in Dubai tumbled as much as 50 percent from its peak in 2008.
Middle East and North Africa investment groups have about $10 billion available after raising a record $5.4 billion in 2008 that they haven’t been able to spend, Gulf Venture Capital Association said in a July 20 statement. Mid-sized businesses in the Gulf may need as much as $1 billion from investors, Jalil said. The Bloomberg GCC 200 Index of regional stocks has declined 26 percent since the end of September 2008 after credit markets collapsed.

With the room for further organic growth being limited, mergers and acquisitions should be considered as an avenue for sustained growth, says A.T. Kearney.
According to A.T. Kearney, the global financial crisis has put an end to the heydays of growth in the banking sector and the current market outlook suggests that these days are not returning quickly. Islamic banks, which traditionally grew faster than their conventional peers, are also affected.
The global financial crisis highlighted the need for consolidation in the Islamic banking industry in the region. Growing out of their niche and becoming mainstream business is considered one of their major challenges and if Islamic banks do not succeed, the room for further organic growth is limited as the market space in some GCC countries is already overcrowded.

Kuwait Financial Centre (Markaz) in its recent research on the GCC Fixed Income Market has highlighted the trends in the Kuwaiti bonds and sukuk market during the period from 2003-2009.
CBK issued 1) Treasury Bills, which are debt obligations with maturities of less than one-year and no periodic interest payments, 2) Central Bank Bonds, which are debt obligations with maturities of less than one-year carrying a fixed coupon rate, and 3) Treasury Bonds which are debt obligations with maturities greater than one-year with a fixed coupon rate.

Sharjah Islamic Bank (SIB) has announced the launch of zero per cent profit financing service for Hajj under the theme "Perform Hajj this year and pay it off over the year with no profit".
The service, the first-of-its-kind to be offered by an Islamic bank in the UAE, will enable a lot of people to perform Hajj and pay back the cost via easy and affordable monthly instalments for one year without any profit, fees or extra costs.

Asian Finance is conducting a due diligence and aims for the acquisition by Qatar Islamic to be completed by April next year.
Qatar Islamic, the Persian Gulf country’s biggest lender that complies with the religion’s ban on interest, is seeking to expand its services to take advantage of growth in the $1 trillion industry. Asian Finance also held meetings with Australian government officials to advise them on Islamic products, as the nation plans to change laws to attract investors from the Middle East and Asia.
Indonesia, the world’s most populous Muslim country, is studying ways to make tax laws more conducive to developing Islamic finance.

The UAE is working on a mortgage law which will make it easier for people to buy residential units, UAE Central Bank Governor said.
Speaking at the seminar, the Central Bank governor said the government has also set up a committee to look into the Amlak issue.
The UAE government said in late 2008 that it would merge Amlak Finance and Tamweel and has been working on a plan to restructure them. Shares in the two firms have not traded since. But last month, Dubai Islamic took majority stake in Tamweel leaving Amlak's fate hanging in balance.
Sources told Emirates 24|7 on Wednesday that three Islamic banks - Emirates Islamic Bank, Dubai Bank and Noor Islamic Bank - are considering merger and then the merged entity will take over Amlak.

Two UAE banks have presented a plan for their merger to the Central Bank despite conditions made by one of them not to shoulder any losses suffered by the other bank.
The Emirates Islamic Bank (EIB), which has been locked in negotiations to merge or acquire Dubai Bank (DB), stipulated that the government should handle DB’s losses which could range between Dh500 million and Dh2 billion.
Dubai’s Government holds around 29.8 per cent of Dubai Bank, which has an authorised capital of nearly Dh3.4bn. It is controlled by the Dubai Banking Group, an affiliate of the government-owned Dubai Holding.

Moody's Investors Service has today assigned an Investment Manager Quality (MQ) rating of MQ2 to Jadwa Asset Management, a division of Saudi Arabian investment bank Jadwa Investment. This is the first MQ rating in the Middle East region and reflects Moody's opinion of the firm's very good investment management capabilities, financial profile and investment performance. At the same time, the rating also takes account of the firm's limited operating history, exposure to "key man" risk and the challenges the firm may face in managing growth.
Moody's believes that Jadwa's challenge to grow is primarily personnel-driven. A shortage of local investment talent and the challenge of retaining key members of the intestment team are likely to test Jadwa's ability to maintain the high standard of its personnel.
However, Moody's notes that Jadwa has been successful in attracting talent both locally as well as from outside the GCC. Moreover, the firm also reinforces the team's capabilities through internal and external training, and offers equity-based incentives to align interests and minimize turnover of key staff.

A recent survey conducted by YouGov Siraj, to understand consumer banking preferences in the region, with a focus on Islamic banking, revealed that 54 percent of consumers cannot differentiate between Islamic and conventional banking services. The reason cited was both banks provide similar products and services.
The findings are crucial particularly, during a period when Islamic banks are differentiat-ing themselves with a renewed emphasis on fundamental ethics at the heart of Islamic banking model.
The survey has also been conducted with an aim to answer an important question: “Would the average customer prefer a bank that promises moral salvation or one which offers friendly, convenient service, value for money, and an envy inducing credit card?” The complete results of the survey will be released exclusively at the International Islamic Finance Forum

Al Rajhi Capital, the investment-banking subsidiary of Al Rajhi Bank and a leading asset manager in the Kingdom of Saudi Arabia, announced the launch of the Al Rajhi Saudi Equity Fund, a Specialized Investment Fund (SIF) established under Luxembourg law.
Al Rajhi Capital Company is the independent, wholly owned investment subsidiary of Al Rajhi Bank, the world's largest Islamic bank and the largest commercial bank in the GCC region in terms of market capitalization.