IslamicFinance.de

Under the sponsorship of Alinma Bank, the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) held its Shariah standards hearing session in Riyadh. Participating in the event were Shariah-finance professionals from Alinma Bank, AAOIFI and other financial and research institutions from Saudi Arabia and abroad. Attendees discussed, debated and made comments on draft policies related to deposit and repurchase agreements. The meeting was the first time AAOIFI held for its Shariah standards hearing session outside Bahrain, and the move to Saudi Arabia represented an attempt on AAOIFI’s part to expand its activities and cooperation.

Dubai Islamic Bank CEO Adnan Chilwan has no doubt that Dubai is well-poised to become the global capital of Islamic economy. The key sectors such as real estate, travel, tourism, hospitality, healthcare, and education are equally poised for future growth. Keeping this in mind, there's an overwhelming support from the government as the setting up of Dubai's Islamic Economic Development Center has just shown, he said. However, there are challenges like skill, efficiency and investor confidence. And most of these challenges can be overcome just by pure innovation, Chilwan believes. About Dubai Islamic Bank, he said that service and innovation are a very integral part of its strategy.

Nigeria's Jaiz Bank Plc has financed an executive aircraft as part of its programmes to venture into the aviation sub sector. The aircraft, which has been delivered to the customer, Aviation Resource Service Limited, was financed under the bank’s Ijarah wa iqtina. Under this model, the bank and the Aviation Resource Service Limited are co-owners of the aircraft based on a partnership arrangement whereby ownership is gradually transferred to the customer as it pays down. The general manager of Aviation Resource Service Limited, Tanko Yakubu, said that the company was a little bit skeptical at the initial stage of their discussion with Jaiz Bank but were proven wrong.

Qatar Islamic Bank (QIB) has introduced a child education plan, Walady. It is a long-term savings and investment plan coupled with Takaful protection for the parent, and offers a return on contributions depending on the fund’s performance. Upon maturity of the contract, the outstanding value of the participant’s investment account is paid in a lump sum to take care of the education needs of the child; in the case of the early death of the parent, the amount of life cover is paid upfront to the nominee as per the terms and conditions of the contract; and in the event of the parent’s total disability, regular contributions will be paid until maturity of the plan subject to satisfying the claim conditions. Walady was underwritten by Medgulf Takaful.

The role of Islamic endowments need to be further streamlined and redefined to unlock their true potential, experts said during a panel discussion on ‘Mobilising Capital from Waqf, Pension Funds and Unit Trusts’ at the the 10th World Islamic Economic Forum (WIEF) in Dubai. Abdullah M Al Fouzan, Founder and Chairman of the Investor for Securities Company in Saudi Arabia, called endowments 'a sleeping giant', which suffer from a state of negligence with annual returns at less than 3 per cent. He called for tapping the true potential of endowments through a structured and concerted effort. The panelists were unanimous on the role of Islamic endowments in driving social growth and urged to explore innovative, Shariah complaint ways to further build asset base and value.

The asset management arm of Malaysia's Malayan Banking Bhd has launched its first U.S. dollar-denominated mutual fund that invests in Islamic bonds. The new fund will invest partly in sukuk issued from Gulf countries. This is rare for Malaysian funds, because there is an abundant supply of local ringgit-denominated sukuk, but demand for dollar-denominated paper has been growing. The fund will initially be available to Malaysian investors only, although the firm plans to distribute the fund overseas as well, Nor' Azamin Salleh, chief executive of Maybank Asset Management Group Bhd, said.

There has been a surge in UAE's Islamic banking and capital market activities, but more government support at policy level could help speedy growth of the industry, said Hussain Al Qemzi, Group CEO, Noor Investment Group and CEO Noor Bank. Data suggests that Islamic banks’ asset growth is outstripping their conventional peers in the Gulf region especially in Saudi Arabia and Qatar due to government support. As the biggest borrowers, government entities in the Gulf need to push Islamic structures. Going forward, more Islamic issuances, especially by players who have already transacted conventional issuances, will provide greater depth to the market and confidence to investors who are yet to invest in Islamic instruments.

The Muslim world must focus on efforts to rediscover Islamic principles and promote regional cooperation in order to successfully overcome economic challenges, The Hon. Dato' Sri Mustapa Mohamed, Minister of International Trade and Industry, Malaysia, stated during a panel discussion on the opening day of the 10th World Islamic Economic Forum in Dubai yesterday. The minister added that Malaysia is ready to share its experiences in economic prosperity with other countries. The 10th World Islamic Economic Forum, which runs until Thursday, October 30, is being organised by the WIEF Foundation in collaboration with Dubai Chamber.

Jadwa Investment’s Head of Research, Dr. Fahad M. Alturki, and Saudi-US Trade Group President Richard Wilson spoke about the Saudi economy and investment in the Kingdom as well as the planned opening of the Saudi stock market to qualified foreign investors. Dr. Fahad said that the average growth in the Saudi economy is going well, with a growth rate of around six percent per annum on average. All the economic or macro indicators like interest rate, fiscal accounts and monetary policy, point to a very strong macro picture in the Saudi economy. However, there is difficulty for SMEs to access banking credit. He considers it a positive development to open the market, and allowing foreign investors’ access to bonds and Sukuk issued by local companies in domestic currency.

Leaders of global and regional institutions pledge political support and major new financial assistance for countries in the region, totaling more than $8 billion over the coming years. UN Secretary-General Ban Ki-moon, the World Bank Group (WBG) President, Jim Yong Kim, as well as the President of the Islamic Development Bank Group and high level representatives of the African Union Commission, the European Union, the African Development Bank, and Intergovernmental Agency for Development (IGAD) are combining forces to promote stability and development in the Horn of Africa. The initiative covers the eight countries in the Horn of Africa -- Djibouti, Eritrea, Ethiopia, Kenya, Somalia, South Sudan, Sudan, and Uganda.

Iranian banks gave 1,463 trillion rials (some $45.7 billion based on the exchange rate of US dollar at the free market) worth of loans in the first half of the current Iranian calendar year. However, a great portion of the bank's loans are bad loans. Iran's Melli Bank, Parsian Bank and Tejarat Bank have the highest amount of bad loans in Iran. Of the total 870 trillion rials (about $28 billion) in bad loans, Melli Bank's share is 130 trillion rials (about $4.2 billion), Parsian and Tejarat banks' shares is 110 trillion rials each (about $3.5 billion).

The third Turk-Arab Youth Congress started on Oct. 24 and was hosted by the Istanbul Youth Assembly Foreign Affairs Commission at the Istanbul Congress Center to create a platform for Turkish and Arab youth to discuss a vision for the region's future. A team of well-educated youth from around the world gathered at the three-day program titled "How to Lead the Future." Several sessions were held on the first day of the congress, discussing different issues of the region. On the second and third day, workshops were held under the subsidiary bodies of the congress and they published a final declaration with the remarks of the participants.

Economic strategist James Rickards, pointing to another collapse of the international monetary system will reveal to global financial experts in Dubai next month how new "rules of the game" will be written to prevent disaster. The American lawyer, economist, investment banker and author, says investors should not be surprised if another collapse happens soon, following previous breakdowns of the system in 1914, 1939 and 1971. His presentation will show what those new rules of the game might look like, and helps investors understand what they can do today in their portfolios to preserve wealth in the collapse and prosper in the new system. Rickards is one of the speakers at the ICA Conference taking place in Dubai from 6-9 November.

BIMB Holdings Bhd (BHB), which owns Bank Islam Bhd, is still keen to acquire a stake or even have a management control in Bank Syariah Indonesia as part of its expansion plan. Its group managing director and chief executive officer Johan Abdullah said the talks were still at a preliminary stage, and there was still no material development. Due to the regulatory uncertainty in Indonesia, Johan said that the group would engage the Indonesian authorities before making any decision to acquire a stake in the bank. At the firm's EGM, shareholders gave their nod to the proposed dividend reinvestment plan (DRP) that would provide shareholders with the option to elect to reinvest in whole or in part of their cash dividend with the new ordinary shares of RM1 each in BHB.

Maybank Islamic Bhd will provide RM20 million of seed capital to a Waqf Fund which will be invested into investment portfolios, to include fixed income, equities, balanced fund and real estate. The local financial institution said that majlis Agama Islam Wilayah Persekutuan (MAIWP) will be the trustee of the Waqf fund while the bank will be the project manager. Profits or capital yield from the investment portfolio will be used to fund programmes related to development of educational and health care infrastructures, as well as to develop young entrepreneurs. Maybank Islamic Chief Executive Officer, Muzaffar Hisham said Waqf was one of the potential investments which can be developed to fund various economic activities for the benefit of the community.

Tunisia, where citizens started voting for a new parliament, plans to raise $500 million from the sale of sukuk by the end of November, according to Finance Minister Hakim Ben Hammouda. Consultations with Citigroup Inc., Natixis SA, Standard Chartered Plc and Qatar-based QInvest are ongoing, Hammouda said. Former Finance Minister Elyes Fakhfakh in July 2013 said the nation would raise as much as $700 million from the sale of Islamic bonds, the same month it approved a sukuk law. Tunisians cast ballots for a new parliament today, marking a milestone in the North African nation’s transition to democracy following the ouster of President Zine El Abidine Ben Ali more than three years ago. Results are expected Oct. 29, and presidential elections are scheduled for next month.

The Board of the Islamic Development Bank approved an operation plan for the new fiscal year 2014-2015 at its 300th meeting held on 19 -22 October in Jeddah. According to the Bank, the plan has a budget of US$ 5.1 billion not including the administrative budget for the Bank and its Funds and Programs. The Bank also approved US$ 814.2 million for development financing. Amongst the approvals of the Board was US$ 230.2 million for Development of Sharm El –Sheikh International Airport Project (Phase-II) – Egypt. IDB has already contributed US$ 226.8 million to the project and with the new approval IDB contribution to the project reaches US$ 457 million.

Kuwait Finance House (KFH) said its net profit fell 10.2 per cent in the third quarter to September. It fell to 35.5 million Kuwaiti dinars in the third quarter compared to 39.2 million in the same quarter last year. Total assets jumped to 17.1 billion dinars in the third quarter as against 14.7 billion dinars in the same period last year. The company’s financing income, which contributed to 76 per cent of its revenues, jumped the most by 35 per cent to 185 million dinars. However, investment income fell by 66 per cent to 24 million dinars. Total deposits reached 10.9 billion Kuwaiti dinars, up 7.5 per cent compared to December 2013. Chairman Hamad Al-Marzouq said that the achieved results come amid major changes taking place in the bank.

Ahmet Beyaz, the chief executive of Turkey’s government-besieged Bank Asya, says his bank is the victim of a political campaign waged by Turkey’s powerful president Recep Tayyip Erdogan. Beyaz and his executive vice-president Feyzullah Egriboyun claim the repeated attacks on the bank clearly constitute a crime under Turkey’s strict banking legislation. The Turkish president has denied any orchestrated campaign against Bank Asya. He went on to say "this bank has already failed", without naming Bank Asya. Such claims are wrong, Beyaz says, insisting Bank Asya is among the three strongest banks in Turkey, boasting a capital adequacy ratio at about 20%. Bank Asya supporters argue that the Erdogan attacks on Bank Asya pose a systemic risk to the wider Turkish banking system.

A rapid rise of young population in the GCC is causing a surge in demand for housing that could lead to a massive shortage. There could be a scarcity of more than one million units by 2018, reveals a study by management consultancy Strategy& (formerly Booz & Company), and governments need to pursue more holistic policies to better meet people’s housing needs. Governments should drive sustainable development, promote public-private partnerships, establish prudent real estate laws and facilitate greater access to housing finance to revitalise the sector, the study adds. GCC countries are currently experiencing a shortage of housing, particularly for their large and growing populations of low-income residents.