IslamicFinance.de

Ratings agencies in the European Union, which came under fire during the financial crisis for the verdicts they gave on sub-prime debt, still need to be better supervised, the bloc's auditor said on Monday. The European Court of Auditors said that the European Securities and Markets Authority's supervision of the agencies since 2011 was well established, but not fully effective. Cumbersome registration rules and central bank hurdles are making it harder for smaller credit ratings agencies to compete with the "Big Three" in the EU, the report concluded. Ratings agencies came under the gun during the 2007-09 financial crisis.

The Thomson Reuters Global Sukuk Index was last at 116.20589 points, down from 116.97354 at the end of last year. The Thomson Reuters Investment Grade Sukuk Index is at 114.17065 points against 115.21206 at end-2015. Some of the sukuk in the pipeline are: Kuwait Finance House is studying the issuance of sukuk to boost its capital reserves, its chief executive said. Indonesia's government has appointed CIMB , Citigroup, Deutsche Bank, Dubai Islamic Bank and Standard Chartered for an offer of U.S. dollar sukuk. The chief executive of state-run Kuwait Petroleum Corp said in late January that the company was studying means of finance including sukuk.The government of Qatar is in talks with banks about a sovereign sukuk issue as soon as March or April.

Singapore has seized a “large number” of bank accounts over possible money laundering offences linked to an international investigation into the Malaysian state investment fund 1MDB, authorities in the city-state said on Monday. In an illustration of the mounting pressure from global regulators on the troubled fund, Singapore confirmed that it was “cooperating closely” with relevant authorities in Switzerland and the US. The Swiss attorney general announced on Friday that there were “serious indications” that $4bn had been misappropriated from Malaysian state companies and that a portion of the funds was transferred to accounts held in Switzerland.

In a new report, Fitch Ratings says Islamic finance is a mature and developed industry in Saudi Arabia, representing about two-thirds of total bank financing. About 38% comes from Islamic banks and 28% from the Islamic windows of conventional banks. Due to the largely Islamic finance nature of the lending market in Saudi Arabia, the performance and credit matrices of both Islamic and conventional banks are to a large extent similar. All banks are subject to a single supervisory authority and the same disclosure requirements. The Saudi Arabian Monetary Agency (SAMA) regulates sharia-compliant banks in the same way as it regulates conventional banks. However, one of the key differences between conventional and Islamic banks is the structure of their liquidity/investment portfolios.

Islamic Development Bank (IDB) has chosen eight banks to arrange a potential dollar-denominated sukuk for the Jeddah-based supranational institution, sources familiar with the matter said. The AAA-rated IDB has picked Boubyan Bank, CIMB, Commerzbank, Emirates NBD, Gulf International Bank, JP Morgan, Natixis and Standard Chartered to arrange the transaction, two sources with direct knowledge of the matter said. The bank is planning the benchmark-sized sukuk offering in the first quarter, they added. IDB, which last issued a $1 billion five-year Islamic bond in March 2015, is looking to increase its issuance of sukuk, partly to raise its profile among international investors and to secure similar pricing levels to other development banks.

There have been many surveys done by academic and business institutions on the skills gap in Islamic banking in recent years, and they all come to the same conclusion: that unless this gap is bridged, the impressive average annual growth of 15 per cent achieved by the Islamic banking industry in recent years will be undermined. More Islamic financial institutions, individually and collectively, need to engage in formalised training. Next, clear and easily understood standards need to be adopted that help to define products which Islamic banks and other institutions offer. Apart from the positive impact this would have on the regulation of the industry, this would also help to demystify what the sector offers to the general public.

The proposed merger of Malaysia Building Society Bhd (MBSB) and Bank Muamalat Malaysia Bhd, to create the country’s biggest standalone Islamic bank has fallen through. MBSB said on Tuesday that after a series of discussions and negotiations, the financial institution and the shareholders of Bank Muamalat -- DRB-Hicom Bhd and Khazanah Nasional Bhd – have not been able to reach an agreement on the terms and conditions of the proposed merger. Accordingly, the parties have mutually agreed to end all discussions and not proceed with the proposed merger. The deadline for the proposed merger between MBSB and Bank Muamalat was on Tuesday.

Chechen President Ramzan Kadyrov plans to open an Islamic bank, with help from the United Arab Emirates. Kadyrov is known for his conservative, heavy-handed response to dissent against his rule and that of Russian President Vladimir Putin, recently calling for the Russian opposition to be tried as “enemies of the state.” Kadyrov has repeatedly portrayed himself as a protector of moderate Islam in the primarily Muslim Chechnya. Now Kadyrov has revealed that he is setting up a new project to attract more investment from the Gulf. He said he had spoken with Abu Dhabi-based development company Mazcorp and it had agreed to help him “move towards the realization of the project.”

The Islamic banking system continues making its way to Russia, although not as quickly as its supporters would like, primarily Russian Muslims who number 21 million people, according to various estimates. The main problems relate to the need to change the Russian legislation. But the first steps in this direction are already being made. A draft of amendments to the Civil Code was submitted to the State Duma this week to help separate Islamic money flows from non-Islamic funds. The document prepared by Deputy Chairman of the State Duma Committee for the Financial Market Dmitry Savelyev stipulates opening special bank accounts to allow investing funds on these accounts into assets permitted by the Code of Muslim Laws.

Sharia-compliant funds have suffered their worst sales in four years as the price of oil plummets and tensions in the Middle East spook investors. Sales of the products fell more than 75 per cent last year compared with 2014. The slowdown is a big setback for the fledgling $60bn Islamic fund industry, which only began finding its feet in recent years, and raises questions about the products’ prospects. As recently as 2013, the Islamic fund industry was growing at a rate of 10 per cent a year. However, because a large number of investors in Islamic funds are based in countries dependent on oil or commodities for their wealth, the fall in the price of oil has had a large impact on sales.

The Swiss attorney general’s announcement that $4 billion may have been misappropriated from Malaysian state-owned companies opened a new front in the troubles facing 1Malaysia Development Bhd. Switzerland’s top prosecutor on Friday named a number of firms in Malaysia, Saudi Arabia and Abu Dhabi in relation to the matter, but gave no details of their roles, if any. The investigation is one of a series of global probes into 1MDB. A Malaysian government investigation last year found that almost $700 million entered Mr. Najib’s alleged bank accounts via agencies, companies and banks linked to 1MDB ahead of a close election in 2013.

Malaysia's government through Deputy Prime Minister Ahmad Zahid Hamidi issued a startling statement saying the Swiss attorney- general should not have made public his request for Malaysia's help into 1MDB probe. More specifically, it was related to the US$4 billion (RM16.6 billion) suspected misappropriations by 1MDB and possible violations of Swiss law. The government must be very nervous since Switzerland is no longer the safe secret haven for ill-gotten funds as its banking secrecy law is no longer what it used to be. Since the Swiss AG's report mentioned possible involvement of former Malaysian government officials, Putrajaya is getting plenty of sleepless nights.

Bahrain-based Ibdar Bank has announced that it has made a £8 million investment in a prime new residential project. Angel Gardens, consisting of residential 458-apartments and a total development value of £124 million, forms part of the wider NOMA re-development project aimed at transforming Manchester city centre. The development is being funded through a combination of equity invested by Ibdar and other co-investors and senior debt to be obtained from one of the Banks. Forecasts indicate an expected income return through operations starting at 9.1% on stabilized income, rising to 10.8% per annum after three years of stabilised operations and a targeted IRR of +15% over a five year investment period.

Worried by turbulent developmental challenges facing the Northern part of Nigeria, selected Governors from the northeast, northwest and north central, representing the 19 Governors of the region, will on Sunday begin a three day meeting with top executives of Islamic Development Bank (IDB), at the bank’s headquarters in Saudi Arabia. The parley deliberated on ways of tackling challenges of Agriculture, poverty, education, maternal mortality ?and other problems most prevalent in the north than any part of Nigeria. In subsequent days, the Governors will hold different meetings with the Islamic Corporation for the Development of the Private Sector (ICD), International Islamic Trade Finance Corporation, ITFC and the Islamic Corporation for the Insurance of Investment & Export Credit (ICIEC), Islamic Research and Training Institute (IRTI), Islamic Solidarity Fund for Development (ISFD).

Bahrain's Al Baraka Islamic Bank plans to open a sharia-compliant bank in France next year as the lender seeks to expand into Europe, Chief Executive Adnan Ahmed Yousif said on Sunday. France has one of the largest Muslim populations in Europe but cultural and legal obstacles have impeded the development of its Islamic finance industry. Some Gulf-based Islamic banks that have expanded in Europe have gone elsewhere. Qatar's Masraf Al Rayan owns Al Rayan Bank in the United Kingdom, while Kuwait Finance House's Turkish arm opened its first branch in Germany last year. Al Baraka also plans to acquire a bank in Indonesia either this year or in 2017 and was in talks with the Indonesian central bank governor, Yousif said.

Kuwait Finance House (KFH) is studying the issuance of Islamic bonds that would boost its capital reserves. The offering still requires necessary approvals, its chief executive Mazen al-Nahedh said. The firm could issue capital bonds that either enhance its core Tier 1 capital or its supplementary Tier 2 capital. Besides sukuk plans for the parent company, KFH is also planning to issue Tier 2-enhancing sukuk this year for its Turkish subsidiary. The firm expects the issue will happen this year to support its capital situation so it can grow, he added.

Sukuk issuance for the near term will remain stable despite current global economic uncertainties, as it is seen as a resilient financing instrument to weather through difficult times, according to Islamic Financial Services Board (IFSB) secretary-general Jaseem Ahmed. This is because the issuance of the Islamic finance instrument is very much dependent on preconditions of a particular country, and not solely or directly correlated to current economic and market volatility, he said. However, he added that while current concerns regarding global headwinds are not to be underestimated, many governments are recognising that it does help to have a diverse source of income.

Fixed term deposit accounts, which pay an “expected profit rate” instead of interest, beat the best fixed rate bonds when it comes to earnings. HM Revenue & Customs (HMRC) confirmed that profits from Sharia accounts would count towards the personal savings allowance. Where returns are the economic equivalent of interest (and meet certain other criteria) they are taxed as if they are interest - and will be included within the definition of savings income, according to HMRC. This means Sharia compliant savers will be able to take advantage of the new £1,000 tax free interest earnings allowance if they are a basic rate taxpayer (£500 for higher rate taxpayers).

An agreement has been reached in Groznyy, the capital of Russia's Chechen Republic, to open an Islamic bank in the republic, Chechen leader Ramzan Kadyrov said. Executives of Mazkorp company Hilal Suhail Hilal Rashid Al Mazrouei and Wael Saab came from the UAE and agreed to start implementing the project. Opening of the bank is of enormous value for the republic, Kadyrov said. Large properties are under development in Chechnya with participation of capital from the UAE. The decision was also made at the meeting with the management of Mazkorp on shareholding participation in development of Magnus-Groznyy pharmaceutical cluster to start next year and on investment into construction of Ahmat-Tower multifunctional high-rise property in the capital of Chechnya.

President Beji Caid Essebsi and the Bahrain Prime Minister agreed to restart the mega project Tunis Financial Harbor, said official spokesman for the Presidency of the Republic, Moez Sinaoui. This mega project is financed by the Gulf Finance House, an Islamic Investment Bank of Bahrain, with a budget of 7.5 billion dinars. It will set up the first financial center for offshore banking institutions in North Africa. The Financial Harbor will house a set of shopping centers and residential units and recreation spaces: marina, golf courses.