IslamicFinance.de

The government will sell sharia-compliant bonds for retail investors over the next two weeks to help plug the state budget deficit and deepen the local bond market, senior finance ministry officials said. The thee-year Islamic bond would be sold at its face value, starting Friday until March 4, 2016, bearing a coupon of 8.3 percent. At that rate, the sukuk would yield 80 basis points higher than time-deposit interest guaranteed by the Deposit Insurance Agency (LPS) and 130 bps higher than the benchmark rate set by the central bank. The government seeks to raise between Rp 25 trillion and Rp 30 trillion ($1.85 billion-$2.22 billion) from the sukuk sale.

A new Bank of England consultation, which closes on 29 April, builds on a feasibility study carried out last year and sets out two possible deposit facilities, and two possible liquidity insurance models. The idea behind the proposals is to help firms that are prevented by Shari’a law from undertaking activities involving interest to manage fluctuating liquidity demands and ride out periods of particular stress. Although the consultation sets out options for both Shari’a compliant deposit facilities and liquidity insurance, the Bank of England said that it was prioritising the former as the area of greatest demand. Following the consultation and further analysis, it will decide whether any of the proposals are feasible, it said.

Azerbaijan could see the launch of its first standalone Islamic bank as early as next year as the government makes progress to introduce legislation to facilitate interest-free finance, Behnam Gurbanzada, an advisor to the new venture said. Azerbaijan, alongside Kazakhstan and Tajikistan, are among several central Asian countries creating a more welcoming framework for sharia-compliant banking with the help of the Jeddah-based Islamic Development Bank. A working group of cabinet ministers and the IDB is making progress on the legislation, which would allow the proposed Islamic bank to launch next year, said the independent Islamic finance consultant. The proposed Islamic bank would be able to launch operations as soon as the legislation is passed, said Gurbanzada.

The European Court of Justice ruled on Thursday that the assets of Iran's Bank Mellat should not have been frozen from 2010, dismissing an appeal brought by the European Council. The Council, the grouping of the EU's 28 member states, froze the funds of a number of Iranian financial entities from 2010 to combat Iranian activities that could have led to it developing nuclear weapons. In Bank Mellat's case, the Council said that it engaged in conduct which supported and facilitated Iran's nuclear and ballistic missile programmes. The court ruled that the reasoning set out did not enable Bank Mellat to establish which banking services it provided to which entities, particularly as the persons whose accounts it managed were not identified.

The Cameroonian subsidiary of the Pan African banking group Ecobank now offers to its clients the "Mudaraba saving account", which follows the rules of Islamic finance. Ecobank Cameroun thus joins on this segment Afriland First Bank, a credit institution with Cameroonian majority shareholding, which went into Islamic finance some years ago, with the Islamic current account (compte de dépôt islamique - CDI). On 20 February 2015, this Cameroonian bank officially opened a branch focused on Islamic finance, with the support of the International Company for the Development of the Private Sector. During the first year of operation of this specialised branch, Afriland First Bank was planning to collect around FCfa 3 billion, based on the 20% of the Cameroonian population of Muslim faith.

Sharia insurance products have gained in prominence and are steadily securing a foothold in Indonesia, the world's largest Muslim country of more than 200 million. The large Muslim population offers vast, untapped potential for takaful products. However, total takaful insurance and reinsurance gross premiums have stayed low, compared with the entire Indonesian insurance market. Takaful has expanded to account for 6.2% of Indonesia's insurance market by gross written premiums (GWPs) as of end- 2015, from 2.6% as of end-2010. The sector's GWP expanded by around 4.1% to around IDR10.5trn in 2015, slower than the previous year amid a slowdown in the country's real GDP growth but outperforming the conventional insurance product segment that had more modest growth of 1.6%.

The capital markets arm of Abu Dhabi Financial Group (ADFG) has raised its stake in Dubai-listed GFH Financial Group to 10 percent, ADFG said on Wednesday. Integrated Capital's stake was 7.4 percent previously, data from the Dubai Financial Market shows. Bahrain-based GFH, an Islamic investment bank, is among the most traded stocks on Dubai's bourse. The shares have gained 41 percent since the end of November, while Dubai's index fell 4.4 percent over the same period. ADFG has about $3.2 billion in assets under management, its statement said.

Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz is likely to leave when her term expires in April. Zeti said she had not received any request to stay on amid the current market volatility, a scenario which had fuelled speculation that her contract may be extended. She stressed that it was "very unlikely" for her term to be extended again, as the succession process is already underway. Zeti, who has served as governor for 16 years, was however tight-lipped on who her successor would be, saying she is not at liberty to discuss the matter. She, however, said the central bank will remain independent even with the appointment of a new governor. Zeti stressed that a politician should not be appointed as governor of the central bank.

A group of six Malaysian Islamic banks has launched a sharia-compliant investment platform that could shift the role of Islamic lenders to investment intermediaries from credit providers currently. The Investment Account Platform (IAP) will serve as a central marketplace to finance small and medium-sized businesses, with the Malaysian government backing the scheme with an initial RM150 million in funds. Chief executive Mohamed Izam Mohamed Yusof said they were looking at raising between RM200 million and RM300 million (US$47.53 million to US$71.29 million) through the IAP over the next two to three years. Its maiden project could be listed as early as next month, with future plans including listings in other currencies, he added.

The Securities and Exchange Commission (SEC) and the Debt Management Office (DMO) have inaugurated a committee for the nation’s first sovereign Sukuk. Mr Mounir Gwarzo, SEC Director-General, who confirmed the committee’s inauguration, said it comprised staff of the commission and DMO, and would set up modalities for the first sovereign bond. He said that Sukuk had not been approved by the commission at the moment. Gwarzo said that recently, the commission was working with the DMO to ensure issuance of the bond in the second quarter of 2016. He said that the commission would support DMO in capacity building to ensure successful issuance of the bond.

Indonesia fund management companies are readying to market Islamic/shariah-based mutual funds that will invest in offshore instruments. This follows Indonesia’s regulation, announced late last year, that allows shariah mutual funds to use at least 51 per cent of their investment components in offshore instruments such as bonds and stocks. The move is seen to allow investors an option to diversify their investments and deepen the country’s shariah mutual funds market. In addition to this, the government also allowed these funds to invest up to 100 per cent of their shariah mutual funds units in overseas bonds. With the change in regulations, a host of fund management firms have announced their plans to launch products that will invest in offshore instruments.

There are a growing number of transactions in the Turkish market that are financed by GCC institutions; and the Gulf States are steadily rising investors in Turkey. Among the lastest crop of deals, Qatar’s QInvest has provided a five year $30m murabaha mezzanine finance facility for Turkish private equity firm Crescent Capital to fund its acquisition of a 100% stake in Akocak HPP, an operational 81 MW hydro-electric power plant in Turkey. QInvest has structured and invested in the transaction. The deal also shows that traditional project finance structures are giving way to alternative financing structures, with Islamic finance showing potential for further growth in the funding of capital goods projects.

Kenya is reviewing all laws and regulations governing its nascent Islamic finance industry to aid the issuance of a debut Islamic law-compliant bond, its attorney general said. The East African nation, which issued its first Eurobond in 2014, wants to expand the range of financing available for infrastructure projects like roads and power plants. The Treasury has said it is looking at the possibility of issuing the sukuk in the 2016/17 fiscal year, starting in July, but it has not offered details. Githu Muigai the review of that entire regulatory framework will be completed in a maximum of nine months. Kenya's central bank licensed two shariah-compliant banks in 2007. At least one firm has since started to offer Shariah-compliant insurance products.

Businessmen, policy makers and top government officials met at the 2016 East African Islamic Finance Summit in the Kenyan capital of Nairobi to discuss how to build a regulatory infrastructure that could enable the financial system to deliver in east Africa. There is a need for legislative changes in order to promote Islamic finance in the east African region, Mona Doshi, an expert in Islamic finance who works with the Kenyan law firm Anjarwalla and Khanna, said. She said the current legal framework that applied to Islamic banks was based on conventional banking systems, though adjustments have been made for the special nature of Islamic banks. She furthermore urged the Kenyan government to change the legal framework to take advantage of the opportunities that Islamic finance could bring to Kenya.

The US$2 trillion Islamic finance industry has grown rapidly over the past decade fueled in part by a robust sukuk market and a growing Islamic asset management industry. Going forward, Islamic finance is expected to grow in response to expanding economies in countries with a growing Muslim population and amid increasing demand for Shariah-compliant investments. On Thursday February 18, the Islamic Finance Summit took place in the city of Jakarta. The summit discussed highlights of the past year as well as offered glimpses of what’s ahead. Participants of the summit also heard Indonesia’s plans for developing Islamic finance.

Emirates Foundation and Abu Dhabi Islamic Bank (ADIB) have partnered in support of financial literacy through Emirates Foundation's programme 'Esref Sah', which aims to educate youth on ways to manage their current and future financial and asset base. The three-year agreement was signed by Mohanna Al Muhairi, Chief Operations Officer of Emirates Foundation , and Mohamed Ali Al Fahim. Region Head, Corporate Banking. With a commitment of AED 1.5 million, the agreement, which offers both financial and knowledge-sharing technical support, is in line with the Foundation's business philanthropy model. On the other hand, this partnership comes as part of ADIB's UAE vision to invest in development programmes.

Jordan's Minister of Planning and International Cooperation Imad Fakhoury and President of the Islamic Development Bank Ahmad Mohammad Ali have singed a $200,000 grant agreement under which the bank will finance capacity building project for societies. The agreement aims to improve the quality of life in rural areas to curb poverty, increase economic growth and integrate the poor in the local community. The total cost of the project stands at $350,000, $200,000 of which will be covered by the Islamic Development Bank while the German Agency for International Cooperation (GIZ) will contribute $100,000 and the Jordanian Hashemite Fund for Human Development $50,000. Fakhoury stressed the need to support the plan to enable Jordan to deal with the issue of hosting Syrian refugees.

Fintech, or financial technology with its potential to disrupt traditional structures in the financial industry, is seen as an important factor to change the perception and dissemination of Islamic finance in the Muslim, as well as in the non-Muslim world. New ventures combine Shariah-compliant financing principles with new technologies, such as web-based Islamic crowdfunding and peer-to-peer lending, as well as other forms of IT-based alternative financing including special variants such as Bitcoin-based, Shariah-complaint micro-lending. The latest conferences on Islamic finance as well as the upcoming Islamic Banking & Investment Asia/Middle East Congress 2016 to be held in Singapore in early April all are focusing on new financial technologies featuring “out-of-the-box, forward-looking visionaries” from beyond the traditional confines of the Islamic finance industry.

Faisal Islamic Bank of Egypt's volume of business has increased by 7.4 percent to register EGP 56.141 billion (US$7 billion) at the end of January 2016. The indicators also revealed that the bank's volume of business hit EGP 52.259 billion at the end of January 2016. Furthermore, the total assets of the bank increased by 7.6% from EGP 51.756 billion in January 2015 to EGP 55.701 billion in January 2016. In addition, the bank's current accounts and saving pools rose 7.5% to record 49.494 billion, compared to 46.048 billion in the same period of the previous year. However, the Liquid assets gained 6.6% to LE 3.081 billion, up from LE 2.889 billion in the same period a year earlier. Meanwhile, the bank accounts inched up 3.5% to 1.157 million, up from 1.117 million a year earlier.

"The Age of Stagnation", the latest book by former banker and author Satyajit Das is now available. The book says that the world is entering a period of stagnation, the new mediocre. The end of growth and fragile, volatile economic conditions are now the sometimes silent background to all social and political debates. For individuals, this is about the destruction of human hopes and dreams. Authorities have been increasingly forced to resort to untested policies including QE forever and negative interest rates. It was an attempt to buy time, to let economies achieve a self-sustaining recovery, as they had done before. Unfortunately the policies have not succeeded.