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Dagong Global Credit Rating and Islamic International Rating Agency (IIRA) have jointly maintained the ratings of AlBaraka Banking Group (ABG) at BBB+/A3. At the same time, IIRA has re-affirmed the national scale ratings of ABG at A+/A2. Outlook on the assigned ratings has been revised to 'stable' from 'negative' indicating the macroeconomic and political stability in ABG’s core countries. ABG operates through a globally diversified franchise spread across 11 jurisdictions in Europe, Africa and Asia. ABG’s ratings derive strength from the recent tier 1 Sukuk issuance this year. While the Group’s subsidiaries are individually governed by their supervisors, the Group maintains close coordination and oversight. Furthermore, Bahrain's institutional framework for Islamic banks ensures adherence to a strong framework for Shari'ah governance.

In this interview David Parker, Executive Director of Bahrain's Economic Development Board, talks about the kingdom's efforts to position itself as a fintech hub. He recognizes that certain regulatory requirements can make it more challenging for firms to experiment. To mitigate this, the Central Bank of Bahrain launched a regulatory sandbox to help enable innovation. A number of accelerators and incubators have also launched operations recently, including the region’s first cloud accelerator, operated by C5 and powered by Amazon Web Services (AWS). When determining the structure of the regulatory sandbox, the Board was in close consultation with the industry. An agreement was signted with the Singapore Fintech Consortium and advisory firm Trucial Investment Partners to support the local Fintech ecosystem. The Central Bank also issued directives on crowdfunding for both Shariah compliant and non-Shariah compliant platforms and launched a national e-wallet.

#Kuwait's Warba Bank announced its financial results for the first nine months of 2017. Net profits increased by 442% reaching KD 4.752 m compared to KD 877 K for the same period last year. The increase in the Bank’s total revenues was driven by strong performance of all business units. The total revenues reached KD 42.66 million at an increase of 63% compared to the first nine months of 2016. Moreover, the operating revenues increased by 70%, amounting to KD 26.800 million by the end of September 2017 compared to KD 15.741 million for the same period of 2016. Warba Bank's CEO Shaheen Hamad Al-Ghanem said that the Bank has successfully accomplished a number of deals most notably a strategic financing deal in the aviation sector in Kuwait. Warba Bank also participated in Sharia -complaint co-financing for the Ziraat Participation Bank of Turkey amounting $236 million. The Bank also participated in arranging the $400 million Sukuk issuance of the Dubai-based Miraas Holding for Real Estate Development.

Arab Petroleum Investments Corporation (APICORP) has mandated banks to arrange a series of fixed income investor meetings ahead of a potential sukuk sale. The sale is that of a potential five-year benchmark US dollar-denominated sukuk. Meetings will start on October 19 in Riyadh and end on October 24 in London. Apicorp has hired Bank ABC, Crédit Agricole Corporate and Investment Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, KFH Capital and Standard Chartered Bank as joint lead managers and bookrunners for the planned deal.

Dubai-based entrepreneur Com Mirz is set to launch a new Shariah-compliant cryptocurrency called Habibi Coin. The startup has already seen a staggering 750-member syndicate that is willing to invest in Habibi Coins with a $100-million initial coin offering (ICO). That is in addition to $3 million dollars raised by Mirza. In the same way that Bitcoin works as a decentralized payment system of digital currency with peer-to-peer transactions, Habibi Coin is essentially the bitcoin of the Middle East as it involves no intermediary. There is a significant rise in technology and digital currency that is paving the way forward in the Middle East. The Middle East is set to undertake one of the largest Shariah-compliant tokens, the Habibi Coin.

#Bahrain-based Ibdar Bank has acquired a prime office building in Boston, USA. The deal is a collaboration with US property manager Lincoln Property Company and asset manager Ritz Banc Group and the total size is $48 million. The Boston property is a single-let building leased to Amazon Robotics, a wholly-owned subsidiary of Amazon Inc. The area is regarded as the "technology corridor", and is home to many well-known technology-related companies making it the epicentre of robotic innovation. The bank’s head of real estate, Bassam Kameshki, said the Boston metropolitan area has witnessed substantial growth within the technology and medical sectors. He ensured that Ibdar Bank will be working to add further value to the property and ensure a profitable exit scenario.

Dubai Aerospace Enterprise (DAE) intends to tap the Islamic bond market within the next nine months to diversify the company's funding. DAE Chief Executive Firoz Tarapore confirmed that the company intended to issue a sukuk very soon, but did not specify how much the company could raise. According to Tarapore, DAE wants to change its capital structure to include a higher percentage of unsecured debt. The company intends to be a benchmark issuer in the U.S. debt market. DAE has already raised $2.3 billion in the United States through a senior bond issue this year to finance its acquisition of AWAS.

Qatari banks have met investors in Europe and Asia to gauge their interest in potential U.S. dollar bond issues. Access to international debt markets has become problematic since the diplomatic crisis has erupted. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties with Qatar, accusing it of supporting terrorism. Cross-border deposits accounted for about a quarter of Qatar's total deposits, so banks started to look for alternative funding. Al Khalij Commercial Bank, Doha Bank, Qatar International Islamic Bank and QNB have all met investors in recent weeks. Feedback was positive, but investors also made clear that issuers would have to pay premiums in order to attract sufficient demand. According to an international portfolio manager, the premium that Qatari banks would have to pay is about 30-40 basis points. A second fund manager said Qatari banks would have to pay up not only because of the increased political risk, but also because of general market conditions in the region.

Saudi Arabia’s central bank is preparing tougher rules for insurance companies. A new supervisory framework will be introduced in the coming months that will force insurers to boost capital significantly and improve internal risk controls. The moves are aimed at triggering consolidation in the insurance industry and forcing weaker companies to merge with stronger ones. The proposed changes were discussed during a meeting between officials of the Saudi Arabia Monetary Authority (SAMA) and senior insurance executives. Saudi Arabia’s insurance market is fragmented, with only a few companies dominating the sector and an abundance of smaller firms unable to make inroads. The central bank does not want the smaller companies to fail, as more than half of the shares are owned by politically sensitive retail investors in a market unaccustomed to liquidations.

Arcapita and Bahrain Mumtalakat Holding Company have partnered to acquire an approximately 90% stake in NAS United Healthcare Services (NAS). Arcapita is a global Shari'ah compliant alternative investment manager. Mumtalakat is the sovereign wealth fund of the Kingdom of Bahrain. Abu Dhabi-based NAS is a regional leader in the provision of third-party administrator services to more than 40 health insurance and takaful companies in the Arabian Gulf. NAS services a pool of more than 500,000 insured members and processes more than 3 million medical claims per year. The market for outsourced medical claims management in the GCC region is expected to grow significantly. Most GCC governments have either implemented mandatory healthcare insurance coverage or plan to launch initiatives in the next 2 to 3 years.

Qatar International Islamic Bank has finished creating a $2 billion sukuk issuance programme and is preparing to issue it when market conditions improve. Qatar's access to international bond markets has become problematic since Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties with the country. Instead of debt markets banks have turned to privately placed bond and sukuk deals, as well as bilateral loans. Qatari banks are facing greater urgency to secure funding because banks from the four Arab countries have been withdrawing deposits from Qatar. Last month the largest Qatari lender, Qatar National Bank, raised $630 million in Taiwan’s Formosa bond market. Commercial Bank of Qatar is also considering whether to borrow money on the Taiwanese bond market.

In 2013, 2014, and 2016, the UAE was the world’s biggest international donor, disbursing billions of dollars each year. In 2015, it had the fourth highest aid per capita in the world. Most westerners have no idea that the UAE is so active in foreign aid. Around 90% of its foreign aid is developmental with the rest going on humanitarian and religious/cultural assistance. The recipients are primarily developing Arab and Islamic countries, including Egypt, Yemen, and Jordan. A key factor is a difference in Islamic and secular westerner attitudes to charity. When Islamic banks in the Gulf region are solicited for funds to support civil society projects, they often donate only on the condition that their donation be anonymous. Going forward, transparency efforts must continue. However, the UAE must also work hard to protect the dignity of its aid recipients via appropriate levels of discreetness.

The Securities and Commodities Authority (SCA) launched a strategy for Islamic capital market development. The strategy includes the supervisory role played by SCA, the role played by self-regulatory organizations (SROs) and the challenges encountered. SCA's role is to issue legislative regulations for the Islamic capital market, updates on sukuk and capital adequacy regulations, the introduction of shari'ah board governance system and the organization of training programs. Markets' role is to issue provisions regulating trading securities, update existing regulations and develop investment indicators for Islamic securities. There are numerous challenges facing the Islamic finance market. They include the high costs of Islamic contracts, the increased complexity of Islamic products, the difference in perspectives of Islamic law and the availability of trained and qualified human resources.

Hamad Bin Khalifa University (HBKU) and the Qatar Financial Centre (QFC) jointly organised the event entitled Shariah Governance in a Globalized World. It featured over 50 experts comprising Shariah scholars, Islamic finance professionals, academics, practitioners and regulators. Issues regarding Islamic jurisprudence were discussed as well as contemporary best practices in the corporate governance of banks. Some participants offered proposals on reforming models of Shariah governance of Islamic banks. Dr Haitham Mohamed Al Salama, chief economic adviser at the QFC, said contributing and collaborating in the field of Islamic finance was a key goal for the QFC. He added that such events were part of QFC's strategy to develop a world-class international business sector in Qatar.

#Saudi asset manager SEDCO Capital participated in the Islamic Finance Forum in London as an associate sponsor. Several panels and workshops were held focusing on trends in Islamic Finance and European markets. Panel topics included the role of European Stock Exchanges in facilitating Islamic capital raising, Islamic corporate financing activity in Europe and the impact of Brexit. Kamran Butt, Managing Director at SEDCO Capital, participated in the panel discussion entitled "Responsible Investing: The Shift towards Green Finance, ESG & Ethical Funds". Butt said SEDCO's Prudent Ethical Investing (PEI) strategy created optimal risk adjusted returns by integrating Shariah-compliant investment approach with ethical investing. PEI stresses the importance of due diligence and transparency. PEI investment products are getting increasingly popular. International investors can choose from over 14 SEDCO Sharia-compliant investment strategies in Luxembourg with total AUMs of $1.8 billion.

There are several rumors about possible mergers of the smaller Islamic banks in the GCC region. According to UCapital, the relatively small size of Islamic banks is one of the compelling reasons for them to consider consolidation. However there is no compelling reason for a big number of regional banks to rush into merger deals. Banks across the region are facing pressure on profitability and tighter liquidity. The UAE, Bahrain and Oman would benefit from consolidation as many banks in these countries lack sufficient scale. A proposed merger of Kuwait Finance House and Ahli United Bank is expected to result in second biggest Islamic Bank in the GCC. Merger of Qatari banks Masraf Al Rayan, Barwa Bank and International Bank of Qatar which was announced last year is progressing and is expected to complete by end of the year.

A judge at a United Arab Emirates court has postponed the ruling in the Dana Gas sukuk case. Dana is refusing to make payments on the sukuk, which will mature this month. It argues that changes in Islamic finance over recent years have made the bonds unlawful in the UAE. The postponement means the next major development in the dispute may occur in a London High Court, where fund manager BlackRock and Deutsche Bank are representing the sukuk holders. In late September, High Court judge George Leggatt said he would adjourn the London trial until October 12.

Warba Bank announced that it will be partaking in a USD 1.25 billion five-year joint venture with the Islamic Development Bank (IDB). Warba Bank said that subscription for the deal had attracted regional and international financial institutions. The amount of issued bonds reached over 136%, around USD 1.7 billion. Warba Bank indicated that it would reap around 2.6% of annual income due to the deal. The IDB issued around 53% of the bonds to investors from the MENA region and Europe, while 47% of the bonds target investors from Asia.

Abu Dhabi Islamic Bank (ADIB) is planning to spend significant financial resources on digital technology this year. The lender is not rushing to downsize its branch network, as clients continue to value human interaction. According to Phil King, head of retail banking at ADIB, the bank is also planning to open three to five branches across the UAE next year. King noted that while mobile banking transactions at ADIB rose 49% in the first half of the year, there was a 10% drop in visits made by customers to the bank’s branches in the same period. He added that new branches would be smaller in size, ranging between 35 to 70 square meters versus the larger ones of the past. As a result of the bank’s increase in consumer lending, ADIB’s retail staff has grown 7% so far this year to 247 employees compared to a year-earlier period. ADIB's second-quarter net profit rose 8.7%, beating analyst forecast, thanks to a drop in provisions, gains in income from credit cards and other fee products.

Sukuk investing in environmentally sustainable projects has become increasingly popular in the recent past. In the latest development, Malaysia saw its first green sukuk in July, when solar power firm Tadau Energy came out with a green sukuk with a tenure of 16 years, raising 250mn ringgit ($59.2mn). Malaysia’s Securities Commission came up with a Sustainable Responsible Investment Sukuk Framework as early as in 2014. This regulation clarified that proceeds of such sukuk should be used to preserve the environment, conserve the use of energy and promote renewable technologies. The World Bank lauded Malaysia for its innovative approach. Another initiative emerged in the Gulf Cooperation Council. The Green Sukuk and Working Party was set up as a collaboration of experts in project development, environmental standards, capital markets, and Islamic finance. Founders include Masdar City’s Clean Energy Business Council, the Climate Bonds Initiative and the Gulf Bond and Sukuk Association. The group is now developing green sukuk for interested issuers, including governments, companies and development banks.