IslamicFinance.de

DIFC Investments, the investment arm of Dubai’s financial free zone, has set final guidance for a $700 million (Dh2.57 billion) 10-year sukuk in the range of 185 to 190 basis points (bps) over midswaps on Tuesday, according to lead arrangers. Pricing has tightened with investor orders topping $3 billion, lead arrangers said. Earlier on Tuesday, the sukuk had been marked at 195 bps plus or minus 5 bps over midswaps. On Monday, it was marked initially at the very low 200s over the same benchmark. Dubai Islamic Bank, Emirates NBD, Noor Bank and Standard Chartered are arranging the sale.

GFH Capital has signed an agreement to sell a $25 million prime property in one of London's most prestigious postcodes. The investment firm said it has sold the Queen’s Gate Gardens property that it had acquired last year. The property is a Grade II listed building located in the prime Kensington area of London overlooking the gardens. According to the terms of the agreement, the buyer has paid an initial deposit with a target to complete the transaction in six weeks, subject to receiving relevant approvals. GFH Capital said investors in the deal can expect to make a return that can reach 21 percent return per annum. The deal is expected to positively reflect in the Q4 financial results of GFH.

EIIB-Rasmala, the Dubai-based investment bank and asset manager, will expand its leasing and property fund products amid increased investor demand in the Arabian Gulf region. The group yesterday said that it was finalising the launch of two leasing fund strategies and planning to expand its UAE property business. This came amid a surge in demand driven by progressive regulatory activity of regional markets, particularly in Saudi Arabia and the Emirates, as well as greater investor confidence in the underlying market fundamentals of the region. EIIB-Rasmala said that it expected to raise about US$1 billion for its growing leasing and alternatives business and approximately $250 million to invest in a broad mix of property transactions in the United Kingdom.

Indonesia has much work to do in improving infrastructure and regulations to support an Islamic-compliant economy. Thomson Reuters’ Islamic Finance Development Report 2014 showed Malaysia topped the list, scoring 93 (on a scale of 100), far higher than Indonesia which ranked 12 with a score of 28. However, the 10th World Islamic Economic Forum (WIEF) in Dubai, revealed growing interest from many governments. South Korea was one of the many non-Muslim countries that looked eager to develop the Islamic economic industry. Besides, the halal industry won great attention over the past decade as the volume of the industry reached more than US$2.1 trillion. Moreover, there's growing demand for Muslim-friendly tourism.

Indonesia’s Islamic insurance market will be reshaped over the next decade by a new law that requires conventional firms to spin off their sharia-compliant units, while encouraging more foreign investors to enter the market. The takaful market in Indonesia is dominated by so-called “windows”. The new law, which came in force last month, requires insurers to spin off their windows within 10 years. Most firms are likely to meet the spin-off requirement as late as possible and they will first expand their sharia units to ensure they are big enough to be spun off easily. The rules are expected to spur consolidation among conventional firms.

Malaysian Prime Minister Datuk Seri Najib Tun Razak thinks that the maximum potential of the Islamic economy, including finance, banking, industry, waqaf and the insurance takaful, is still not fully realised. However, there are many challenges that need to be addressed: strong support from the political leadership to make things happen; institution building; human capital development; the shortage of expertise in many areas like Islamic finance, standardisation and regulatory framework; syariah experts to make sure your products are syariah-compliant, among others. Regarding SMEs, Malaysia has a masterplan for their development, with the goal to make SMEs achieve about 41 per cent of GDP by 2020.

The central bank has extended ICB Islamic Bank's timeline by three and half years to repay the money it owes to its clients. According to central bank's figures, former Oriental Bank's financial liabilities towards it depositors stand at Tk 7.5 billion. The bank was rechristened ‘ICB Islamic Bank’ in 2007 and a scheme was initiated to pay back the money to its depositors within six and half years. In a circular issued on Sunday, Bangladesh Bank extended the tenure of the scheme by 42 months on a request from the ICB Islamic Bank.

The financing gap continues to be one of the major obstacles to global development efforts. For the global education agenda, the United Nations Educational, Scientific and Cultural Organization (UNESCO) estimates the current need at $42 billion annually through 2015. Even with donors’ contributions, the yearly gap remains $38 billion. To help tackle this challenge, the United Nations General Assembly established the Intergovernmental Committee of Experts on Sustainable Development Financing to support countries in mobilizing more resources and to advise them on how to spend these resources more effectively. The Arab world could also play an important role as a partner in finding more sustainable solutions to addressing the global education financing gap.

Saudi Arabia will again host the CSR Forum to be held 24- 26 November 2014 in Jeddah. The forum will gather representatives of corporate organizations, ministries and other government bodies, NGOs, foundations, universities and SMEs, who will discuss topics including how to embed corporate and social sustainability into CSR programmes to drive community development, strengthen education delivery and empower the Kingdom's youth. Employment generation and the development of women are other key topics on the agenda. More information can be found on www.csrsummitsaudi.com .

Turkish state-run lender Halkbank has decided to establish an Islamic finance unit, in line with a government effort to develop the sector and tap a pool of investors in the Gulf and southeast Asia. The bank said its management would seek regulatory approval for the Islamic unit, known locally as a participation bank, but gave no further details on the plans. The Halkbank board has mandated the general management for the establishment of a participation bank, and to carry out the required processes for legal and administrative permissions, it said in a stock exchange filing. Since 2012, the Turkish government has pushed the development of Islamic finance by regulatory moves and issuing sukuk.

HDG Mansur is on the ropes, with numerous affiliated companies in bankruptcy, and its principal Harold Garrison himself sought personal bankruptcy last month. Worse Garrison and HDG Mansur are the subjects of a federal criminal investigation into whether they took $5.8 million from a client. Those plaintiffs, two Cayman Islands-based funds, aren’t alone in howling fraud. A year ago, KFH Capital Investment Co. and Kuwait Finance House Real Estate Co. filed a lawsuit in the United Kingdom accusing Garrison and HDG Mansur of misappropriating more than $11 million in connection with a failed development called Finzels Reach in Bristol, England. The court did not go along with a push by creditors to convert the bankruptcy of the HDG Mansur companies from Chapter 11 reorganizations to Chapter 7 liquidations.

In response to the slow growth of Islamic banking and finance, OJK organized the seventh Islamic Finance Research Forum. It was held from Oct. 14 to 16 at the IPB campus, and brought together students, scholars and practitioners of Islamic finance industry to exchange new ideas to help propel the sector’s performance. Among the causes of Islamic finance’s slow growth are the lack of capitalization driven by a paucity of high-quality human capital and a shortage of innovation and creativity. The OJK disclosed that the root problems can be solved by, inter alia, sound research and development activities, which are still lacking in the Islamic finance industry.

After a false start, Islamic banking has become the fastest growing segment of the Pakistani banking industry, with the full support of the government. Apart from the ever-present challenge of liquidity management, most local Islamic bankers agree that their most important task now is to build awareness in the country.

There has been a significant growth in Islamic financing in recent years, and yet there is still strong potential for further growth, particularly through crowdfunding. This was debated during an expert panel on the final day of the 10th World Islamic Economic Forum (WIEF) in Dubai. The relationship between the markets and the people has been demonstrated in detailed research which shows that, in the long run, a 30 per cent growth in equity markets can lead to 20 per cent growth in GDP per capita. The panel agreed that Islamic capital markets are more efficient at mobilising funds to support sustainable growth that traditional markets. The experts however, also called for standardisation.

The scope of Britain's Islamic finance market is widening with several initiatives from the government and private sector, although the country is about to lose European Islamic Investment Bank, one of its six full-fledged Islamic banks. Last week a government official said the central bank would look into developing a liquidity management tool for use by Islamic banks, while Britain's export credit agency expects to guarantee sukuk for the first time next year, an issue by a customer of European plane maker Airbus. Taken together, the new official initiatives seem likely to create a more benign environment for Islamic finance, allowing banks to operate more flexibly and efficiently, and therefore more cheaply.

Luxembourg is poised to test demand for Islamic bonds as the issuer of the lowest-yielding sovereign sukuk on record plans to become a regular borrower. The country has been “encouraged” by investor feedback and the market’s readiness and will begin working on its next sukuk, Finance Minister Pierre Gramegna said. Luxembourg sold 200 million euros ($254 million) of five-year Islamic bonds in September priced two basis points below midswaps. That compared with 10 basis points above the swaps for notes of similarly rated Islamic Development Bank. However, Luxembourg’s sukuk isn’t for everyone, least of all those looking for yields, an expert said. The reason why it’s so tight is because there are still Islamic investors that are looking for very conservative assets.

Mohammed Amin is Chairman of the Conservative Muslim Forum. He says that one particularly successful UK micro-policy is the country’s approach to Islamic finance. Gordon Brown and Ed Balls deserve credit for promoting Islamic finance and changes to UK tax law to facilitate it. Sadly, their efforts eventually ran out of steam in 2008, due to the combined effects of the global financial crisis and excessively frequent changes in the ministerial responsibility for the subject. Promoting Islamic finance as the government has done is clearly in the best interests of the economy and therefore of all British citizens and taxpayers. However, it is also good politics, since it should increase the Conservative party’s appeal to Muslim voters.

Malaysia's Prime Minister Najib Razak said that he backed the idea of creating a large stand-alone Islamic bank, in order to develop a global footprint for Islamic finance and position it as an alternative to conventional banking. A proposed merger between Malaysia's CIMB Group Holdings Bhd and two smaller peers would create a sharia-compliant bank with the financial clout and regional scope that has so far been absent in the industry. Such consolidation would be positive for Malaysia's banking sector, although the government will not press for a deal and will leave the decision entirely up to the shareholders, Razak said.

Bank Islam Brunei Darussalam (BIBD) is helping to arrange a benchmark-sized Islamic syndicated loan which it hopes to close later this year for a petrochemical project in the oil-rich sultanate. Currency and tenor are being finalised for the deal, said Javed Ahmad, BIBD's managing director. The new syndicated loan could open a much wider pipeline of deals in Brunei, which might be denominated in both local and foreign currencies, Ahmad said. Besides, in the medium term BIBD will consider establishing a regional footprint across Asia to enhance its growth prospects, with Malaysia and Indonesia offering the greatest opportunities, Ahmad said.

Turkey’s government has moved to expand Islamic banking by inviting public banks into the sector. Earlier this month, the largest state-run bank, Ziraat, received approval to establish an Islamic unit with $300 million in capital. Ziraat has nine months to establish the new bank. But a key question remains unanswered: Where will the capital come from? If Ziraat’s interest-based earnings are considered illicit, how is it going to establish the capital of an interest-free bank? To resolve the conundrum, the Treasury is reportedly planning to provide the required capital although it also operates on the basis of interest. Meanwhile, the government has already submitted a bill to parliament to clear legal hurdles in Vakifbank and Halkbank’s path to Islamic banking.