IslamicFinance.de

Indonesia’s Islamic insurance industry is expanding three times as fast as Malaysia’s, prompting American International Group Inc. and Sun Life Financial Inc. to seek a broader presence in the nation. AIG is considering offering retakaful in Indonesia in two years. The initiative would complement an Islamic insurance business it started in the Southeast Asian nation in 2010. Meanwhile, PT Sun Life Financial Indonesia will add to its 35 outlets in the country, while Reinsurer PT Reasuransi Internasional Indonesia plans to make all its branches fully Shariah-compliant. As Islamic insurance becomes more prominent, that should increase demand for Shariah-compliant bonds as insurers try to match liabilities with their investments.

The Federal Government of Nigeria has inaugurated an advisory council for the implementation of the Takaful insurance product in the country. he Minister of State for Finance, Ambassador Bashir Yuguda, who inaugurated the council in Abuja, stated that the move was part of the implementation of some of the reforms in the insurance sector. The minister said the inauguration was the result of the National Insurance Commission’s resolve to key into the National Financial Inclusion Strategy introduced by the Federal Government in 2012. The Chairman of the advisory body, Prof. Dawud Noibi, said the council would do all within its power to effectively discharge its mandate.

Petronas has announced price guidance levels for an offering of US dollar bonds, which includes a sukuk tranche. The senior unsecured notes of seven, 10 and 30 years have been announced to yield around 150bp, 175bp and 220bp over US Treasuries, respectively. The sukuk of five years is being offered at a yield of around 135bp over US Treasuries and be in a Wakalah structure. The 144A/Reg S senior unsecured notes are expected to be rated on par with the company at A1/A- (Moody's/S&P). Bank of America Merrill Lynch, CIMB, Citigroup, JP Morgan and Morgan Stanley are the active joint bookrunners. Deutsche Bank, HSBC, Maybank and MUFG are passive bookrunners.

Arab Women's Enterprise Fund (AWEF) aims to empower poor women, increasing their income and well-being and ultimately improving their livelihoods and growth opportunities. The programme will do this by increasing their participation in markets through working with market actors to encourage the adoption of new practices and also by addressing constraints in the enabling environment. AWEF is an 10 million pouns market development programme that will work in Egypt, Jordan and the Overseas Palestinian Territories (OPTs). DFID will work in partnership with the Islamic Development Bank (IDB) who will contribute an additional 10 million pounds in sharia-compliant concessionary finance through financial intermediaries.

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.

Sharjah Islamic Bank (SIB) priced a $500 million sukuk of five years duration on Tuesday. The Islamic bond was priced at a spread of 110 basis points over midswaps and carried a profit rate of 2.843 per cent. The final spread was at the tight end of price guidance issued earlier in the day of 115 bps, plus or minus 5 bps, over the benchmark. The order book was worth around $3 billion. SIB’s sukuk was arranged by Noor Bank, Abu Dhabi Islamic Bank, Al Hilal Bank, Dubai Islamic Bank, Emirates NBD, HSBC, KFH Investment and Standard Chartered and was sold after a series of investor meetings in Asia and Europe.

According to Standard & Poor's (S&P), the replacement of Bank Asya's management and upcoming general elections do not create risks for the banking industry. The international rating agencies' ratings for Turkey are not affected by the decision by the Banking Regulation and Supervision Agency's (BDDK) in regards to the seizure of Bank Asia. S&P futher noted that the bank's share in the banking system was only around 0.1 percent and therefore does not create any systematic risk for the banking sector. Moreover, Turkey's banking system is being positively affected by geopolitical developments with Turkish banks benefiting from what is happening in Russia and Ukraine.

The 12th IFSB Summit will be hosted by The National Bank of Kazakhstan. The theme of this year’s Summit is «Core Principles for Islamic Finance: Integrating with the Global Regulatory Framework». The 12th IFSB Summit will focus on the major development in the supervision and monitoring approach to the Islamic financial services industry. In particular, various sessions in the Summit will address the role of the Core Principles in enhancing the regulatory consistency and resilience of the Islamic financial services industry as well as enabling the necessary frameworks and pre-conditions for the assessment of regulatory and supervisory regimes.

Two Islamic banks, Al Baraka and Al Shamal, are currently in talks with Russian credit organizations to enter their capital market. Both banks have been interested in the Russian market but had trouble trying to enter it independently due to a lack of regulations that let organizations work with Islamic banks and abide by their rules in Russia. The main sphere of their interests is corporate financing. First Vice President of Al Baraka bank Khalid Qattan confirmed in a comment that his institution was currently holding negotiations with several Russian banks, with no final agreements reached yet.

Qatar’s low insurance penetration is “a revealing factor” of great opportunities, Qatar Central Bank Governor HE Sheikh Abdullah bin Saud al-Thani has said. The country’s current level of penetration is around 0.5% of GDP and 1.6% as share of the insurance as part of the global business sector, Sheikh Abdullah said in his keynote address at the ninth MultaQa conference. Asserting that it is the desire of Qatar to reduce reliance on energy, Sheikh Abdullah, who is also the chairman of the Qatar Financial Market Authority and the Qatar Financial Centre Regulatory Authority, said the country’s insurance sector has been undergoing significant evolution and is in the process of establishing a committee for supervision of risk management.

A study carried out by the Qatar Financial Centre Authority has found that the outlook for Takaful insurers improved over the past year, but many remain critical of the segment's future. Just 22 percent of respondents thought Takaful insurers would underperform the rest of the market, down from the 32 percent recorded in the prior year. But executives said that they felt Takaful offered no genuine differentiation and often did not live up to the concept.

Morocco is poised to have its first full-fledged Islamic bank as early as September. Dar Assafaa, an affiliate of the country’s largest lender AttijariWafa Bank, will probably become the nation’s first wholly Sharia-compliant financial institution when the central bank approves its switch. The country’s Islamic finance bill, which came into force on January 30, also allows for the formation of a centralised Sharia board to oversee Islamic banks. The Moroccan Association of Participative Financiers estimates total investment in Sharia-compliant products in the country will reach $7 billion by 2018.

Japanese banks' Islamic finance capabilities could be boosted following a Financial Services Authority (FSA) consultation. The consultation, which runs until March 27, is expected to open the onshore sukuk market - a boost for Asia's largest domestic bond market. This proposal broadens the products that Japanese banks can offer. It will allow banks to provide Islamic finance services to their clients, so that they can lend in the forms of commodity murabahah andijarah. It also adds clarifications for banks to make certain investments in the forms of mudarabah andmusharakah as well as certain derivatives transactions.

Islamic finance is surging across the globe, gobbling up an ever-increasing share of the more than $220 trillion in international assets outstanding. That is, everywhere except in the US and Canada. A combination of regulatory hurdles, a lack of proper rules and standards, and general Islamophobia can be blamed. Another hurdle is the requirement that US banks keep their risk ratios fairly low. In order to be compliant while also maximizing profit, banks usually invest in the huge supply of fixed-income securities such as treasuries and conventional corporate bonds, which are prohibited by Islamic laws. Despite the challenges, both the US and Canada are a natural fit as homes to the bustling and dynamic Islamic finance industry.

The Islamic Corporation for the Development of the Private Sector (ICD) and the African Export-Import Bank (Afreximbank) have signed an agreement under which they will cooperate in the development of the private sector in ICD member countries in Africa. However, Uganda is the only member ICD country in the East African Community. According to the agreement, ICD and Afreximbank will share information on projects and business opportunities in Africa and on participation in the arrangement of syndications or investment in funds. The two will also cooperate in structuring sukuk/debt capital market transaction opportunities, co-invest in Islamic leasing companies and support local financial institutions in Africa.

Although many states with large Muslim populations have set up businesses to offer alternative financing products that comply with Islamic law, no such companies exist in Maine. That means no credit cards, no mortgages, leaving little opportunity for Muslims in Maine to establish credit or participate in certain aspects of the state’s economy. Several organizations that assist immigrants and refugees in Maine have convened to examine the problem, which they say is holding back economic growth in some of the state’s most depressed areas. Despite those challenges, a surprising number of immigrants and refugees are starting businesses and creating jobs by relying on alternative financing methods such as borrowing from friends and family

Islamic lender Bank Asya has posted a net loss of 877 million lira ($335.58 million). The bank, in which Turkish banking regulators seized a small stake last week over an alleged illegal share sale, had posted a net profit of 180.6 million lira in 2013. Bank Asya has been battered by President Tayyip Erdogan's attempts to wipe out Gulen's religious movement, which he accuses of attempting to build a "parallel state". Regulators last month took over the bank's management after the government said it failed to meet some legal criteria.

Emirates Investment Bank (EIBank) has published its second “GCC Wealth Insight Report”, which outlines the views of high net worth individuals (“HNWIs”) across the Gulf on local and global economies as well as the main elements that define their investment and banking decisions. The Report found that GCC HNWIs are more positive about the economic situation in the Gulf region than globally. The more cautious approach to the global economy taken by regional HNWIs is matched by an increasing preference to keep assets closer to home, which has risen 19 percentage points since last year to 83 per cent. Regional HNWIs are also more likely to have a local rather than international bank to help manage their wealth compared to last year.

International Islamic (QIIB) was honoured for its distinctive role in Corporate Social Responsibility (CSR) at a ceremony held at the Qatar University. QU’s College of Business and Economics partnered with the Qatar CSR Network in organising the event, which also saw the launch of the ‘CSR Report Qatar 2014’. Ali Hamad Al Mesaifri, Chief of Human Resources and General Services at QIIB, received the honorary award from the President of Qatar University, Dr Sheikha Al Misnad. The Bank has cooperated and still is cooperating with major and active institutions engaged in community services at various spheres such as health, education, charitable and social activities, and culture and sports.

RHB Islamic Bank Bhd has teamed up with Malaysian Technology Development Corp (MTDC) to provide financing for Bumiputera technology-based small and medium enterprises (SMEs) under the Bumiputera Expansion Fund (BEF) scheme. MTDC currently manages RM150 million fund for the BEF scheme via Bumiputera Agenda Steering Unit (Teraju). Under the pact, RHB Islamic will be the custodian of the fund, which will be placed in the bank’s commodity murabahah deposit-i account. The fund is expected to raise financing of at least RM300 million for eligible Bumiputera companies involved in biotechnology, green technology, nanotecnology and food technology.