IslamicFinance.de

The Council of the Islamic Financial Services Board (IFSB) has resolved to approve the adoption of a new Standard on Core Principles for Islamic Finance Regulation (Banking Segment) (IFSB-17). The main objective of IFSB-17 is to provide a set of Core Principles - along with associated assessment methodology - for the regulation and supervision of the Islamic financial services industry (IFSI), taking into consideration the specificities of the institutions offering Islamic financial services (IIFS) in the banking segment, the lessons learned from the financial crisis, and complementing the existing international standards.

The G20 group of nations' decision to examine the use of sukuk to finance infrastructure investment could eventually spur a big increase in the size of the market, Fitch Ratings says. But several significant challenges would need to be overcome first, most importantly finding a legal structure that would be acceptable to governments, investors and the sukuk's Sharia boards. One of the main uncertainties is whether sovereign issuers will be willing to directly pledge infrastructure assets to sukuk investors or accept the most common structure, known as Ijarah sukuk. Alternative structures could be found, but it would take longer to achieve and could see slower take-up, especially as innovative structures would have to be approved by a Sharia board.

Bahrain-based Ithmaar Bank has announced that the strategic decisions taken by the Bank's Board of Directors early in 2014 have already started yielding results. The decisions, which aimed at turning the Ithmaar Group around by significantly transforming operations, included initiatives for increased revenue, improved margins, divestment of non-core assets and cost reductions across the Group. Ithmaar Bank 's financing business in Bahrain increased by 23 percent to US$914 million at the end of 2014. This growth in 2014 was driven mainly by Home Financing and Personal Financing. Similarly, total customer current accounts, savings accounts, Thimaar and URIA deposits, increased by 11 percent in 2014.

The Islamic debt market in Jordan is set to capitalise on growing worldwide interest in sukuk after long-awaited regulations allowing banks to issue and buy the financial instrument have been put in place. Only one corporate sharia-compliant bond has been issued so far in Jordan, a seven-year, JD85 million ($119.8 million) security launched by Al Rahji Cement in 2011, while the government has yet to tap the market with an Islamic sovereign bond. However, the passage of the sukuk law and the government's request in June last year for assistance from the Japan International Cooperation Agency to launch an Islamic bond suggest Jordan is intent on entering the market in the near future.

Gatehouse Bank plc ("Gatehouse") and Threadneedle Investments ("Threadneedle") have outlined their plans to explore the development of a range of diverse investment products aimed at the growing market segment of Islamic investors. This comes shortly after the announcement of Threadneedle's acquisition of a 2% strategic equity stake in Gatehouse. An important part of Threadneedle'sinvestment in Gatehouse is the desire of both parties to work together, sharing their respective global fund structuring knowledge and Shariah-compliant origination track record. This partnership recognises the growing potential for investment products targeting the Shariah-compliant financial sector.

The Thomson Reuters Global Sukuk Index is at 117.36419 points, down from 117.49811 at the end of last month but up from 115.79726 at the end of last year. The Thomson Reuters Investment Grade Sukuk Index is at 116.08405 against 115.48693 at the end of February and 113.69014 at end-2014. Some of the sukuk in the pipeline are: Indonesian flag carrier Garuda Indonesia plans to issue $500 million worth of sukuk in May to refinance $350 million in loans maturing in June. Besides, Turkey's Capital Markets Board approved the issuance of 2.05 billion ringgit ($554 million) of sukuk by Turkiye Finans Katilim Bankasi.

Saudi mining and metals company Ma'aden has partnered again with the GCC Board Directors Institute ("BDI") in committing to high corporate governance standards, with the official signature of a sponsorship agreement in Riyadh. The signature of this new agreement also embeds a training platform for Ma'aden employees to access in order to always be well-informed of the latest best practices, be local or international, as well as networking opportunities with other board members across the Gulf. This month, BDI also inaugurated new half-day Focused Sessions for its members.

According to EY's "World Islamic Banking Competitiveness Report 2014-15: Participation Banking 2.0", Islamic banking assets with commercial banks in international markets were set to exceed $778 bilion in 2014. Global Islamic banking assets witnessed a compound annual growth rate (CAGR) of around 17 per cent from 2009 to 2013. The report, prepared by EY's Global Islamic Banking Centre, said that approximately 95 per cent of international Islamic banking assets of commercial banks are based out of nine core markets, five of which are in the GCC (Saudi Arabia, UAE, Qatar, Kuwait and Bahrain).

Abu Dhabi Islamic Bank (ADIB) is expected to see an increase in its wealth management portfolio, with more high net worth individuals set to start banking at ADIB, according to Daffer Luqman, the bank’s global head of liabilities and wealth management. Luqman said he did not see an impact of falling oil prices on their portfolio of high- and ultra-high net worth individuals. He added that the global financial crisis in 2008 has resulted in more people, including those with high net worth, to look into long-term savings as their financial situation is prone to change.

Turkey's Capital Markets Board has approved issuance of ringgit-denominated Islamic bonds by Turkiye Finans Katilim Bankasi and a debut lira-denominated deal by Zorlu Energy. Islamic lender Turkiye Finans will raise up to 2.05 billion ringgit ($553.7 million) via sukuk, issued by its wholly-owned unit TF Varlik Kiralama. Separately, Zorlu Energy received approval to raise 100 million lira ($38.4 million) via sukuk. So far the bulk of sukuk issuance has come from the government and the country's four Islamic banks. Islamic lender Kuveyt Turk also plans to issue a debut sukuk in the Malaysian market, through a 2 billion ringgit programme.

Bank Muscat's shareholders have approved the Board's recommendation for the setting up of a RO 500 million (or its equivalent in US Dollar currency) Meethaq Sukuk Programme for the issuance of sukuk in various tranches in the domestic and international markets through public subscription or private placement. The Sukuk tranches under the Meethaq Sukuk Programme will be in different amounts, maturities, and profit rates, issued on different dates with varying terms and conditions of subscription. All Sukuk will be issued within five years. Approval was also given to the Board's recommendations to issue convertible bonds.

The Japan International Cooperation Agency (JICA) and the government of Jordan will begin work in the coming weeks on a debut issuance of Islamic bonds. In October, JICA signed an agreement with the Islamic Corporation for the Development of the Private Sector (ICD), to develop its Islamic finance capability. Jordan is JICA's first target. JICA and ICD will start their joint technical assistance to the country within a month, Tetsutaro Kon, director in charge of Middle East operations at JICA, said. The consultation would continue over the next six months and address details such as currency and tenor of the sukuk.

Oman's Bank Nizwa has launched a pioneering educational platform entitled 'Islamic Finance Knowledge Series', which aims to raise the community's awareness about Islamic banking across Oman. Jamil El Jaroudi, the bank's chief executive officer, noted that the new initiative is seeking to address the misconceptions about the concept of Islamic banking. El Jaroudi said that one mistaken belief is that it is more expensive to obtain financing from an Islamic bank than a conventional bank, which is not necessarily true. The sessions of the series will be delivered to both the public and private sector individuals, as well as college and university students.

Qatar has called for a global regulatory framework for the industry, saying it is needed to ensure the sector's stability. An important task of the authority would, naturally, be to collect data on credit risks of Islamic financial institutions so that those risks could be identified, said the Governor of Qatar Central Bank (QCB). There are certain high-risk areas in the Islamic banking and financial sector and they, for example, include real estate and consumer lending to certain categories of people, H E Abdullah bin Sauod Al Thani said. Efforts have indeed been made to diversify Islamic financial products, but they are not enough.

Abu Dhabi Islamic Bank said Sunday it has been shortlisted as a buyer for Citigroup 's Egypt retail business in what is set to be a heated battle to tap into one of the world's fastest growing economies. Mashreq and Emirates NBD are also reportedly bidding to buy Citi 's Egypt consumer banking network. Whoever wins this will have an advantage because Citibank has a good portfolio of clients, they have more than 100,000 credit cards, Tirad Al Mahmoud, ADIB's chief executive, said. Citi , which has also dropped its retail banking businesses in Turkey, Romania, Greece and Pakistan, has said it sees potential in other booming economies such as in Sub-Saharan Africa.

The Thomson Reuters Global Sukuk Index is at 117.18655 points, down from 117.49811 at the end of last month but up from 115.79726 at the end of last year. The Thomson Reuters Investment Grade Sukuk Index is at 115.91606 against 115.48693 at the end of February and 113.69014 at end-2014. Sukuk in the pipeline include: Malaysia has hired three banks to manage the issuance of sovereign sukuk worth up to $2 billion. The emirate of Ras al-Khaimah picked four banks to arrange investor meetings for a potential US. dollar-denominated sukuk issue of benchmark size. Oman Telecommunications will seek shareholder approval on March 22 for a debut issue of sukuk; no size or time frame was given.

Qatar Islamic Bank (QIB) has signed a memorandum of understanding (MoU) with South Korea's Woori Bank, aimed at further strengthening co-operation and sharing business opportunities. The signing ceremony held in Doha was signed by QIB's group CEO Bassel Gamal and Lee Dong-Gun, deputy CEO of Woori Bank, and attended by senior executives from both the banks. The partnership is aimed at servicing both Qatari and South Korean entities that are currently engaged in business activities in Qatar and/or South Korea; and companies that are intending in the future to set up such type of business arrangements.

Gatehouse Bank has announced the addition of Threadneedle Investments as a shareholder in Gatehouse. Threadneedle, an international asset manager based in London with assets under management of $148.2 billion, has acquired a shareholding of approximately two per cent in Gatehouse. The addition of Threadneedle to its shareholder base enhances Gatehouse's ability to continue to deliver value-added opportunities for its clients. The bank has a long history of bridging capital from the GCC region and Southeast Asia with investment in Western markets.

Ownership restrictions, corporate governance limitations and a lack of geographical or cash flow diversification are the key credit risk challenges faced by GCC’s family owned businesses from a rating perspective, said Martin Kohlhase vice president and senior credit officer of Moody’s. Despite such restrictions some of the long-established merchant families enjoy access to attractively priced sources of funding from local banks. Family-owned corporates often benefit from very competitive short-term domestic bank market funding rates suggesting they have a lower risk profile as compared to the ratings Moody’s would assign assuming a medium to long-term funding exposure.

The Islamic Development Bank (IDB), rated Aaa/AAA/AAA by Moody's, S&P and Fitch (all stable outlook), has successfully priced $1 billion, 5-year, trust certificates (sukuk) issued at par with a 1.83 percent semi-annual profit rate under its $10 billion trust certificate issuance program. Despite an uncertain market environment, IDB achieved extremely attractive pricing, with the deal pricing approximately 22bps inside the secondary market levels. The trust certificates will be listed on the London Stock Exchange, Nasdaq Dubai and Bursa Malaysia under an exempt regime.