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Gulf Finance House (GFH) has approved the proposed settlement with assets of an estimated $350-450 million, subject to counterparties' fulfillment of their obligations. The company said the estimated value of the assets is preliminary and subject to regulatory approvals before being recorded in GFH’s financial statements. The recoveries after realisation will have a positive impact on GFH’s financials for the fourth quarter of 2016. GFH shares, which have outperformed the Dubai index, were up nearly 1 per cent to be at Dh1.14.

#Malaysian banks may have dominated the sukuk market but in value terms the world’s top three sukuk managers, namely HSBC, Standard Chartered and JPMorgan Chase are ahead of any of the local top banks. Second Finance Minister Datuk Johari Abdul Ghani said that despite accounting for 54% of the global sukuk issuances, the country still lags behind global banks. He said local banks could not compete on this front because Malaysia lacks the presence of an Islamic mega bank. Malaysia had in the last 12 months issued 25 of the 30 largest sukuk issuances which collectively totalled US$37 billion (RM154 billion) in value. Thirteen of these sukuk offerings were domestic offerings. Johari urged the 57 member states of the Organisation of Islamic Cooperation (OIC) to consolidate their capabilities to produce higher global gross domestic product (GDP).

The Kingdom of Jordan closed its inaugural local currency Sukuk, which was more than three-times oversubscribed. The Kingdom raised Jordanian Dinar JOD 34 million (USD 47.9 million) maturing in 2021, with an expected profit rate of 3.01%. The Islamic Corporation for the Development of the Private Sector (ICD) acted as Transaction Technical Support and Advisor. The sovereign issuance is part of a comprehensive joint-Technical Assistance Package provided by Japan International Cooperation Agency (JICA) and ICD. According to Finance Minister Omar Malhas, Jordan aims to widen the use of Sukuk in the short-term. The Sukuk will play a critical role in increasing the effectiveness of the financing mechanisms of government needs to cover the budget deficits.

Ahli United Bank Kuwait has opened books on a perpetual dollar sukuk after wrapping up investor meetings on Monday. Books were oversubscribed and were due to close on Tuesday. Citi, Credit Agricole and Credit Suisse ran the roadshow, which started in Abu Dhabi and Dubai last Wednesday before taking in Zurich and Geneva, London and Singapore. Books were opened at 5.75% area on Monday before guidance was refined to 5.5%-5.875%.

Despite the efforts of the #Kenyan regulators, some toxic products have been allowed into the market under the banner of Islamic finance. The lack of clarity among regulators has allowed unscrupulous managers to mask certain offerings as Islamic, which has tainted the sub-sector’s reputation in recent months. Chase Bank was placed under receivership in April after special purpose investment vehicles it had classified as Islamic products were contested. Juma Makomba, the Sharia compliance manager at Takaful Insurance of Africa, said Chase Bank was not brought down by Islamic banking products because the facility would have qualified as a Qard-Hassan. He added that Qard-Hassan is given to somebody who is in distress, but the product they were calling a Qard-Hassan was in fact Musharakah.

Fitch Ratings has assigned Kuveyt Turk's proposed US dollar-denominated sukuk certificates an expected 'BBB(EXP)' rating. The expected rating is in line with Kuveyt Turk's Long-Term Issuer Default Rating (IDR) of 'BBB', which has a Negative Outlook. The issuer is KT Kira Sertifikalari Varlik Kiralama (KKSVK), which is wholly owned by Kuveyt Turk. The documentation includes a negative pledge provision that is binding on Kuveyt Turk, as well as financial reporting obligations, covenants, Kuveyt Turk event (including cross default) and change of control clause. Certain aspects of the transaction will be governed by English law while others will be governed by Turkish law.

The International Islamic Liquidity Management Corporation (IILM) has conducted an auction of US$1.11bil (RM4.63bil) three-month tenor sukuk priced at 1.35389% profit rate. The IILM said the 11 primary dealers that participated in the Sukuk offering were Abu Dhabi Islamic Bank, Al Baraka Turk, Barwa Bank, Boubyan Bank, CIMB Islamic Bank, Kuwait Finance House, Maybank Islamic, National Bank of Abu Dhabi, Qatar Islamic Bank, Qatar National Bank and Standard Chartered Bank. The IILM Sukuk is rated A-1 by Standard & Poor's Rating Services and the 29th series brings the total cumulative amount of the IILM Sukuk that were issued and reissued to US$21.14bil (RM88.14bil).

According to Moody’s Investors Service, Oman and Indonesia have made the most progress this year in terms of taking initiatives to advance Islamic finance. According to Khalid Howladar, global head of Islamic finance at Moody’s, Oman’s strategy has already yielded substantive results and new sukuk regulations have been published. Over three years Oman’s Islamic banking sector has gone from zero to an agregate of around 10% of the banking system’s financing assets as of June 2016. Indonesia has several inititives to accelerate growth. Also, the country launched a 10-year Islamic finance master plan that consists of action plans and interventions covering key aspects. Meanwhile, markets that seem to have stalled this year are the United Arab Emirates (UAE) and Saudi Arabia.

Kenya launched an office dedicated to oversee its Islamic finance industry and help prepare for the issue a debut sovereign shariah-compliant bond. With 11% of Muslim population, Kenya has seen the emergence of Islamic institutions in recent years, including two banks, five Islamic banking windows offered by commercial lenders, insurance firms and a unit trust fund. The government wants to build up the industry as part of a long-term plan to turn Nairobi into an International Financial Centre. Kenya, which has applied to become a member of the Islamic Financial Services board, is carrying out legal and policy reforms to facilitate the growth of the industry. According to Kamau Thugge, the principal secretary at the Treasury, the government will consider issuing a sovereign Sukuk as soon as the legal and policy reforms are implemented.

The Saudi Capital Market Authority (CMA) has been recently accepted as an institutional member of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The official signing ceremony was held at the CMA’s headquarters in Riyadh on 13 October 2016. The membership agreement was signed by Mohammad Bin Abdulla Al Jadaan, Chairman of CMA, and Hamed Hassan Merah, Secretary General of AAOIFI. Al Jadaan said the CMA was pleased to forge such a professional relationship with AAOFI, as their cooperation had always been successful. They had several joint activities and events, including a major international conference at al-Madinah al-Munawwarah and several training programs on essentials of Islamic finance and economics.

In #India Jammu and Kashmir Bank said it was ready to offer Islamic banking, if the Reserve Bank of India approved the move. The bank's newly-appointed chairman Parvez Ahmad said there was a strong demand for such banking service in Kashmir but RBI would need to examine the proposal. RBI has recently suggested to explore the modalities of introducing interest-free banking products in the country in consultation with the government.

According to leading expert on Islamic Finance, Mehmet Asutay, Brexit may have some effect on real estate investments in the UK but London will continue to remain the centre for Islamic investments. Asutay noted that if Islamic finance continues to invest in real estate in the UK, they might find another hub in Europe rather than the UK. He said that having a large amount of liquidity, the Gulf region has contributed to expansion of Islamic financing and he called for expansion of Islamic financing in other developing countries. Professor Asutay said that in Europe, the UK and Luxembourg have been developing strategies to become important centres for Islamic finance. But the UK is also aiming to become an important centre for teaching and learning Islamic Economics and Finance.

The International Islamic Liquidity Management Corporation (IILM) has conducted an auction of US$1.11bil (RM4.63bil) three-month tenor sukuk priced at 1.35389% profit rate. The IILM said the 11 primary dealers that participated in the Sukuk offering were Abu Dhabi Islamic Bank, Al Baraka Turk, Barwa Bank, Boubyan Bank, CIMB Islamic Bank, Kuwait Finance House, Maybank Islamic, National Bank of Abu Dhabi, Qatar Islamic Bank, Qatar National Bank and Standard Chartered Bank. The IILM Sukuk is rated A-1 by Standard & Poor's Rating Services and the 29th series brings the total cumulative amount of the IILM Sukuk that were issued and reissued to US$21.14bil (RM88.14bil).

External Sharia audits are gaining support in Islamic finance as consumers and regulators seek more transparency and accountability. Pressure for more external oversight has been building in several countries that have major Islamic finance industries, and this year Bahrain’s central bank proposed new governance rules that would require Islamic banks there to conduct external Sharia audits. The study, published by the Malaysia-based International Sharia Research Academy for Islamic Finance and Britain’s UK Islamic Finance Council (UKIFC), said external Sharia audits should become mandatory globally. Omar Shaikh, advisory board member of the UKIFC, said external Sharia audit would play an important role towards providing reassurance to scholars, financial institutions and customers. The study suggested that to help national regulators introduce external Sharia audits, the scope of the audits should be made clear, results should be publicly disclosed and there should be conflict resolution mechanisms.

According to Samba Financial Group, GCC sovereigns have raised $87bn in both domestic and international bonds and sukuks since January 2015. The largest international issuance so far is the $9bn offering from Qatar in late May. Abu Dhabi also issued eurobonds worth $5bn in May in both five and 10 year tenors, while Oman issued $2.5bn of bonds in May. The markets are waiting on a Saudi issuance, which Samba thinks will be around $15bn later this year, though the government has already secured a syndicated loan worth $10bn. Corporate international debt issuance is also on the rise, with the majority of offerings coming from financial institutions. Since January 2015, UAE banks have issued $10.9bn in bonds. According to Samba, GCC stock markets suffered large losses at the beginning of the year, owing to the general risk-off sentiment and a further decline in oil prices.

The Dubai Center for Islamic Banking and Finance (DCIBF), a joint initiative of Hamdan Bin Mohammed Smart University (HBMSU) and the Dubai Islamic Economy Development Centre, has formally released its second annual report on Islamic economy. The report titled 'Islamic Banking: Growth, Efficiency and Stability' focuses on the efficiency performance of 131 Islamic banks operating globally and other key aspects of Islamic banking. The Kuwait Finance House (KFH) received the highest efficiency score, followed by Al Inma Bank from Saudi Arabia, which obtained the top score in terms of the most cost-efficient Islamic bank in the world. The top 20 most efficient Islamic banks come from seven countries, including the UAE, Qatar, Malaysia, and Bahrain in addition to Kuwait and Saudi Arabia. Outside the GCC region, it is only Malaysia that made it to the top 20 list. Mansoor Al Awar, HBMSU Chancellor, said the results would positively impact the entire global Islamic economy, as more essential reforms will be implemented to improve competitiveness.

#Indonesia's state-owned infrastructure financing company Sarana Multi Infrastruktur (SMI) will establish a sharia business unit to meet demand for Islamic infrastructure financing. SMI president Emma Sri Martini said the documentation and legal matters had been completed, but the company had to wait for the appointment of a sharia supervisory board by the government. SMI will inject Rp 500 billion (US$38.42 million) into the business unit. All of the money will come from internal funds. Currently, SMI's assets total Rp 35 trillion. Before year-end, the business unit will structure some sharia products from direct placement to sukuk.

The recent announcement of Abu Dhabi Islamic Bank (ADIB) to enter the #fintech era through a partnership with a digital-only bank is a good example how the times in the banking industry are changing. ADIB partnered with Fidor Bank to launch what it calls the GCC’s first 'community based digital bank', targeting the region’s 'millennials', or 'Generation Y', who are looking for digital banking offerings matching their life- and working style needs. Tirad al-Mahmoud, CEO of ADIB, said the bank's proposition would allow users to completely change the way they bank and manage their finances using digital technology to serve all their banking needs. For every financial transaction there are new digital services in development and the Islamic finance industry will have to follow suit. According to EY consultancy, it is not enough for Islamic banks to introduce new digital channels, they must completely reinvent their customer processes to offer technology-enabled, simple end-to-end experiences.

Nasdaq Dubai and IdealRatings has announced the launch of benchmark indices that track the performance of global Sukuk, in order to provide investors with new data to make informed trading decisions. The data includes daily movements in price and total return, with monthly updates on yield and other key indicators. It tracks a universe of more than 1,800 Sukuk globally, with eligibility criteria including a minimum issue size of 100 million US dollars. The Global Sukuk Index covers all currencies and has five sub-indices. The sub-indices reflect distinct segments of the market, which are: investment grade issuances, issuances by sovereigns, issuances by corporates, issuances by financial institutions and GCC issuances. According to Hamed Ali, CEO of Nasdaq Dubai, the indices add a valuable new stream of information to investors’ existing trading tools.

A worldwide Sharia standard for bullion trading is moving closer to realisation. An exposure draft has been brought out and placed before the wider public for possible feedback. It was the Accounting and Auditing Organisation for Islamic Financial Institutions that adopted the exposure draft. This was the result of preparatory work and extensive consultations. The General Secretariat was tasked with inviting the opinions of scholars and experts to probe the depth of the exposure draft and its inclusion of relevant technical aspects and issues faced by practitioners in the industry.