IslamicFinance.de

International Finance Corporation (IFC) has agreed to invest $75 million in PT Bank Danamon Indonesia Tbk (BDMN), to develop the bank’s Islamic trade financing operations. Bank Danamon is majority owned by Temasek Holdings (Private) Limited through its affiliate Fullerton Financial Holdings Ltd (67.37%) with JPMB Franklin Templeton Investment Funds holding 6.81 per cent and 25.82 per cent with the public. IFC proposes to invest up to $75 million structured as an Islamic trade financing instrument. The total facility size would be approximately $150 million including co-investment by the Bank. With this investment, IFC is targeting deepening of Islamic financing in Indonesia through new financial products and services designed to expand outreach.

The Shari’ah Advisory Council (SAC) of the Central Bank of Malaysia discussed the issue of application of Tabarru` contract (voluntary gift) in Takaful, transfer of ownership of Hibah asset, breach of condition in Wakalah bi al-istithmar contract (agency contract for investment) and Wa`d (promise) which is attached to action, time or situation. The SAC has decided the following: 1) The underlying concept for Takaful scheme is Tabarru` and Ta`awun among the Takaful participants. 2) Tabarru` in Takaful is applied through contributions from the participants to the Tabarru` fund which is managed by Takaful operator. 3) Financial obligation (Zimmah maliyah) of Tabarru` fund is independent from the financial obligation of Takaful operator and individual Takaful participant.

When asked about the plans of the central bank on Al-Amanah Bank, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. said they found it best to leave it to the Legislative to decide how the government will go about the planned sale, as well as on how the state will accommodate Islamic-based banking activities. BSP has led the drafting of a law amending AIIB charter and creating an Islamic banking system. The bill thereon which has been filed in the House of Representatives aims to create an expanded Islamic banking system and address constraints including the issues on taxation. Currently, Al-Amanah Bank is the first and only Islamic bank authorized to practice Islamic banking in the country.

Hogan Lovells advised the Islamic Corporation for the Development of the Private Sector (ICD), as arranger, on the arrangement of an inaugural CFA 150 billion sukuk offering by the government of Ivory Coast. The debut sukuk is an amortising sukuk al-ijara targeted at local banks and institutional investors. The offering mirrors a successful Senegal sukuk that Hogan Lovells advised on in 2014. The team was led by the firm’s global head of Islamic finance, Rahail Ali, and partner Imran Mufti. They were assisted by debt capital markets partner Baptiste Gelpi, in, Paris and Lina Bugaighis, Dubai. Bensaid outlines the sukuk sector as very promising, referring to recent developments which have seen governments focusing more on creating a more enabling environment for sukuk issuances.

Bank accounts frozen. Bankers quizzed. As offshore authorities seek to track money flows involving Malaysia's troubled government investment fund, fresh questions are rising about doing business in the country. Crisscrossing countries from Switzerland to the US, Middle East and Singapore, investigators are chasing a trail of transactions linked to 1Malaysia Development Bhd. With the probes potentially running for years, investors and analysts say it may damage the perception that Malaysia is trying to become a more transparent place. The risk is political, economic and commercial. Malaysia's global score worsened in Transparency International's Corruption Perceptions Index for 2015, putting it on a ranking near Slovakia and Cuba.

Iran currently accounts for more than 40% of the world’s total Islamic banking assets, or around $482bn. Iran could easily cross the $1tn-asset mark by 2018 given the urgency for cash-strapped Iranian public and private companies to raise liquidity after years of isolation from the international finance industry. Analysts expect that a large number of sukuk and other Islamic financing vehicles will hit the world market soon. Adding to private companies, the country requires funds for its infrastructure development programmes earmarked for the next decade worth an estimated $1tn. However, analysts point out that the road back into the global finance system for Iran could be bumpy as the long isolation withheld Iranian banks from implementing globally accepted reporting and compliance standards, and restoring ties of its formerly stand-alone banking system to global financial institutions could prove regulatory and technically difficult.

Khaleeji Commercial Bank (KHCB), a prominent Islamic retail bank, announced its financial results for the year ended 31 December 2015 recording net profit of BD 8 million compared to BD 3.8 million reported in 2014. The bank has recorded a net profit of BD 1.9 million in the fourth quarter of 2015 compared to a net profit of BD 1 million reported in the fourth quarter of last year. Total assets also grew to BD 654 million, increased by 9.6% compared to 2014. Return on average assets reached 1.3%. With these results, the bank sustained its profitability and strengthened its financial position with a liquid assets ratio in the excess of 22.5% and capital adequacy ratio of 18.8%.

The Islamic Research and Training Institute (IRTI) of the Islamic Development Bank Group has signed an agreement with leading provider of Massive Open Online Courses (MOOCs), edX, to deliver Islamic banking and finance courses. On February 23, 2016, IRTI will begin offering, through the edX learning platform, free courses under two series, namely ‘Islamic Finance and Banking X’ and ‘Islamic Financial and Capital Markets X’. The IRTI MOOCs program is part of a project aimed at expanding access to knowledge in Islamic economics and finance to support the development of a dynamic Islamic financial industry globally. To register for the IRTI MOOCs, please visit http://irti.org/English/News/Pages/IRTI-is-launching-Massive-Open-Online....

The British Virgin Islands remains the most popular international financial centre for incorporating companies due to its tax neutrality, political stability and flexible legal system based on English common law. It is a ready-made platform for the needs of the Islamic finance market. As the Islamic finance market grows and matures, international financial centres such as the British Virgin Islands are being used to facilitate the structuring of Islamic finance products and transactions such and the incorporation of investment funds and corporate structures. There is likely to be an increase in Islamic asset managers using the BVI. In addition, there will likely be a continual increase in Islamic financial institutions and investors using BVI companies in Islamic finance structures such as musharakah and murabaha.

Tajikistan is keen to benefit from Islamic banking and utilise the experiences of Islamic banks in his country, Minister of Economic Development and Trade Nematullo Hikmatullozoda has said. Hikmatullozoda, who visited QIIB headquarters yesterday expressed the hope that Tajikistan would be able to attract Islamic banks to his country, where his ministry is making efforts to convince investors about the attractive investment opportunities available. In particular, Tajikistan is keen on expanding and further cementing the relationship with Qatar’s financial and business sectors.

The State Bank of Pakistan (SBP) has introduced three-year Fixed Rental Rate Government of Pakistan (GOP) Ijara Sukuk (FRR-GIS). Presently, Variable Rental Rate GOP Ijara Sukuk (VRR-GIS) is being auctioned and its rental rate is being fixed every three months on the basis of Market Treasury Bills' cut-off yield. However, on the request of Islamic Banking Industry, SBP has decided to launch Fixed Rental Rate GOP Ijara Sukuk for market development. The rental rate decided in the auction will be applicable to the entire tenor of FRR-GIS and will be paid to FRR-GIS holders on semi-annual basis. Minimum bid size will be Rs 100,000 and in multiples thereof. Rental rate (% p.a.) has to be specified up to a maximum of two decimals points.

Western companies have been rushing into Iran for a part of post-sanctions business action but European banks, still reeling from punitive US fines over links to the country, are waiting on the sidelines until they feel it is safe to do business with Tehran. France has already hailed a new era after welcoming Iranian President Hassan Rouhani, who sealed a host of post-sanctions deals last week. But when it comes to high finance, there is hesitation, at least on the part of European banks. The hefty fines levied on these financial institutions during the sanctions has made them particularly wary. European banks are not only confronted with potential sanctions risks, but also other exposure points under international banking regulations and practices.

The Employees Provident Fund (EPF) plans to launch its first fully syariah-compliant fund by January 2017 with an initial fund size of up to RM120bil. Those who are interested in converting their savings to full shariah compliance status can do so on a first come first serve basis, EPF deputy chief executive officer of investments Datuk Mohamad Nasir Ab Latif said. The pension fund’s total investment assets grew to RM667.56bil as at September last year. Its total income for the first nine months of last year amounted to RM31.58bil. 51% of the EPF’s portfolio mix comprise of fixed income investments, while 43% is from equities. The remainder is for real estate and infrastructure as well as other investments.

The Malta Stock Exchange (MSE) will launch on Monday an Islamic equity index aiming to attract business from Middle East firms, a move it hopes will also prompt the government to issue Islamic bonds. The launch of an Islamic index, developed alongside Dubai-based sharia advisory firm Dar al Sharia, and a debut sovereign sukuk would mirror steps taken by Britain and Luxembourg to develop their own credentials in the sector. In 2011, Malta's financial regulator issued a guidance note on Islamic investment funds, the first EU member country to do so, although no such funds have been listed yet. The exchange is also launching this month a new capital market for small and medium-sized firms.

In Iraq, authorities continue to battle ISIS while advancing important political reforms. And microfinance – in the broad sense of providing credit, savings, payments, and insurance to low-income households and small businesses – is one intervention poised to promote local economic activity and help manage economic shocks. The 2014 Findex survey found that only 11% of the adult population has an account at a formal financial institution. It also revealed a significant gap between Iraqi citizens who borrowed formally (4%) and those who did so informally (65%), hinting for a much higher demand than that currently served by the financial sector. This is notably because Iraq’s financial system remains seriously underdeveloped, as highlighted in the World Bank’s 2011 Financial Sector Review.

Despite transformative innovations in digital technologies, the digital divide is still substantial. As this year’s World Development Report on “Digital Dividends” notes, digital finance is likely to play a key role in answering the question of how digital technologies can contribute to the World Bank Group’s twin goals of eradicating extreme poverty and increasing shared prosperity. Digital connectivity is key, but it is only a starting point for successful digital development. It is as important to strengthen other factors that interact with technology in order to make digital technologies work for the poor. The World Development Report calls these other factors the ‘analog complements’ to digital technologies, which fall into three categories: regulation, skills, and institutions.

Since Parliament has finally approved Islamic Banking, an increase is expected in investment from numerous Islamic Banks. Abubaker B. Mayanja, financial economist with ABL Dunamis, anticipates an increase in Capital inflow of $600m over the medium term; driven first by international banks that already include Islamic Banking products in their offering elsewhere. The second wave will come from regional players that are already in the East African market. The third wave will come from the traditional Middle East players. The fourth wave will be an expansion of Islamic finance system; insurance (Takaful), capital markets- sukuk bonds and funds, pension management, leasing (Ijara), mortgages and investment banking.

Silkbank introduced Emaan Islamic Banking through conversion of its seven conventional banking branches into dedicated Islamic Banking branches. In early 2013, three new branches were added to the Islamic Banking network. Emaan Islamic Banking offers a suite of deposit products as well as a range of asset products. The Islamic Banking Division has an alliance with Pak Qatar Family Takaful to provide Takaful & Saving Plans. With the implementation of the SBP Shari’ah Governance Framework and induction of a renowned Shariah scholar, the Islamic Banking Division endeavours to develop Islamic Banking products in Pakistan and serve as a catalyst in Islamic Banking growth in the region. The Bank plans to add 60 new branches in 2016 to the existing network and another 102 branches in the next two years.

Authorities in Singapore say they have seized a "large number" of bank accounts that various media have linked to a Malaysian government-run fund that stirred controversy around Prime Minister Najib Razak. While Singaporean authorities didn't confirm the link, the move comes days after Switzerland said it would submit evidence of illegal transactions to Malaysian authorities, asking them to help pursue the investigation. The developments come just before Najib and other Southeast Asian leaders hold a special summit with U.S. President Barack Obama in California this month. Obama is strengthening ties with the region to help counter China's growing assertiveness in the South China Sea and to tap the region's large and fast-growing economies.

A report by international charity Oxfam on Monday showed some of the countries most deeply involved in Syria's civil war, including Russia, Saudi Arabia and France, are among the least generous in helping its victims. Oxfam released the report ahead of a donor conference in London on Thursday along with an appeal for increased aid and resettlement abroad for 10 percent of the refugees registered in Syria's neighbours by the end of the year. Most rich countries were contributing less than their "fair share" of financial aid, the amount a country should contribute relative to the size of its economy. Countries gave 56.5 percent of the $8.9 billion requested by aid appeals for 2015, it said.