IslamicFinance.de

Falcon Private Bank Ltd. on Wednesday sought to distance itself from a controversy involving a Malaysian state fund caught up in allegations of political corruption, saying the transactions it carried out were based on purely commercial terms. Several Swiss banks, including Falcon, have come under scrutiny for transactions involving 1Malaysia Development Bhd. fund, or 1MDB. Among the transactions that are being investigated by authorities in Switzerland and Malaysia is the transfer of $681 million to the private account of Najib Razak, Malaysian Prime Minister.

Maybank Islamic Bhd is focused on ensuring a healthy capital and liquidity buffer in the face of the current economic challenges. Chief executive officer Datuk Muzaffar Hisham said Islamic banking and financial institutions as such, need strong, effective and sustainable risk management strategies. He also said the risk management helps to evaluate risks and formulate mitigating action. In terms of assets and financing outlook, Muzaffar said Maybank Islamic expects to see between nine and 10 per cent growth this year as compared with about 18-19 per cent year-on-year in 2015. For the financial year ended Dec 31, 2015, Maybank Islamic’s total assets exceeded US$36 billion, while gross financing reached RM131.1 billion, with deposits at RM123.4 billion.

Fitch Ratings has assigned Indonesia's proposed US dollar-denominated sovereign global certificates (sukuk) issued through Perusahaan Penerbit SBSN Indonesia III (PPSI-III) an expected 'BBB-(EXP)' rating. The expected rating is in line with Indonesia's Long-Term Foreign Currency Issuer Default Rating (IDR) of 'BBB-', which has a Stable Outlook. The rating reflects Fitch's view that cash flows supporting payment on the sukuk will constitute direct, unconditional, unsecured and general obligations of Indonesia, ranking equally with Indonesia's unsecured and unsubordinated marketable external debt. Fitch has given no consideration to the sukuk's underlying assets.

Petroliam Nasional Bhd (Petronas) is enjoying a twin boost as commodity prices rally and Islamic bond costs fall just as it considers borrowing. The difference in yield between 10-year government sukuk and two-year securities shrank to a five-month low of 91 basis points last week from as high as 128 in early January, making longer-term financing attractive for issuers such as Petronas. That’s been helped by record foreign purchases of ringgit government bonds last month, a rally in the currency and a recovery in Brent crude. Petronas last month posted its third loss in five quarters, announced plans to cut 1,000 jobs and said it might need to raise funds and tap cash reserves to cover capital expenditure and dividends.

With a more inclusive foreign policy, including a renewed stance on the Middle East and Africa, Chinese president Xi Jinping has set in motion greater China-OIC relations, with the ‘One Belt, One Road’ initiative a central pillar to China’s grand strategy. In light of this development, the Islamic Corporation for the Development of the Private Sector (ICD) is hosting an event to connect investors and regulators from Asia, Africa and the Gulf with senior decision-makers of the world’s second-largest economy. To be held in Beijing on the 22nd March, 2016, the pioneering China OIC Forum aims to enhance partnerships between key industry players and multilateral bodies as well as identify joint investment opportunities.

Hosted by Bank Negara Malaysia, organised by the RFI Foundation and co-organised by Middle East Global Advisors, the Responsible Finance Summit will take place on 30-31 March at Sasana Kijang, a center for knowledge and learning excellence established by Bank Negara Malaysia. The Summit has announced the support of SEDCO Capital, the Saudi firm that manages assets across a diversified spectrum of investments in real estate, equities and other businesses with a total AUM of $3.9 billion. The Summit will host a discussion between leaders in the Islamic finance and responsible investment to identify how to fully realise the emerging market responsible finance opportunity.

Malayan Banking Bhd (Maybank) provided more Islamic loans than non-Shariah compliant financing in Malaysia for the first time in 2015 and the business was also more profitable. Maybank Islamic Bhd contributed 51 per cent of loans by the nation's biggest lender, up from 44 per cent in 2014, and a share 10 to 20 percentage points higher is possible, chief executive officer Muzaffar Hisham said. The unit achieved an average 16 per cent return on equity in the last four years, compared with 14 per cent for its parent. Maybank Islamic's total financing rose 21 per cent to RM131.1 billion (S$44.2 billion) last year. Growth will probably moderate to less than 10 per cent in 2016.

Indonesia's central bank has issued a regulation that allows the use of Islamic foreign exchange hedging tools by banks. The regulation, backed by rulings by Indonesia's National Sharia Board, specified that both Islamic and conventional banks can now offer deferred sale of foreign exchange under a muwa'adah scheme, or under a promise from both sides of a transaction. Such a transaction has to have an underlying real need, which could be export and import payments, Islamic bonds transaction in foreign currencies or hajj payments, among others. It will not be tradable and will have to be fully settled upon maturity or cancellation. The new rules will help Islamic banking and sharia-compliant customers to mitigate market risks.

There is strong demand for Indonesia's sharia-compliant government retail bonds (in Indonesian: Sukuk Negara Ritel, abbreviated Sukri). Since the launch of series SR-008 on Friday (19/02), a number of sales agents have run out of quota. These financial institutions now request additional quota from the government. The three year SR-008 series carries a fixed coupon of 8.3 percent per year and is tradable on the secondary market. The government of Indonesia targets to collect up to IDR 30 trillion (approx. USD $2.2 billion) in funds from the issuance. Sukri bonds are only available to Indonesian citizens.

Hong Kong’s possible third Islamic global bond in three years brings it closer to Indonesia and Malaysia in terms of sovereign sukuk presence, a boost to the market that coincides with China’s Silk Road revival. The finance center has already raised $2 billion from sales in 2014 and 2015, which attracted $6.7 billion in total orders, while Indonesia plans to tap investors for the sixth year running and Malaysia is returning for its seventh offering. Hong Kong, which is losing its role as a gateway to China as Shanghai’s financial market opens, is keen to become the launchpad for the global ambitions of Chinese companies.

The Financial Services Authority (OJK) is encouraging sharia-compliant lenders to improve their standard of service to increase their competitiveness alongside conventional banks that have greater experience. Citing a 2008 Bank Indonesia (BI) survey, OJK sharia banking head Ahmad Buchori said customers were mostly concerned about the benefits offered by the lenders when choosing who to bank with. The 2008 survey also shows that sharia lenders’ use of verses from the Koran to market their products is not effective despite the fact that more than 80 percent of Indonesians are Muslim, he added.

Investors can now look forward to investing directly in and sharing the profits from shariah-compliant investment activities via the first Islamic bank-intermediated financial technology (fintech) platform in the world. The Investment Account Platform (IAP) was launched by Bank Negara Malaysia on Feb 17. Similar to crowdfunding and peer-to-peer lending platforms, the IAP allows investors to fund either private or government-related ventures that are seeking financing to grow their business. Investors will be allowed to choose the ventures they invest in and may define the investment mandate and eligibility criteria for their financing, for example, the investment tenure and types of industries.

Islamic finance is drawing more interest in Russia as the country struggles economically and requires fundamentally new approaches to attract investments from abroad. The sector is just beginning to grow in Russia and its perspectives were discussed during the recent Gaidar’s Forum in Moscow, one of the major annual international conferences on economy in Russia. Implementation of Islamic finance in Russia started through the so-called pilot projects in the predominantly Muslim republic of Tatarstan. It has both existing infrastructure and client base. Islamic banking could account for up to 5 per cent of the entire financial market in Russia.

Malaysia plans to tap the global Islamic bond market for a second consecutive year, joining Indonesia that’s planning a sale in March. Banks have reportedly been asked to submit proposals by next week for a benchmark dollar-denominated offer. Malaysia sold $1.5bn of US currency sukuk in April 2015, its first international bond issuance since 2011. The ringgit is the best-performing emerging-market Asian currency over the past three months as exports have held up and the government managed to keep its budget deficit within target even as oil prices slumped. Indonesia plans to offer Shariah-compliant sovereign dollar notes in March.

Khazanah Nasional Bhd has priced a 5-year US$750mil (RM3.15bil) US dollar-denominated straight sukuk to refinance Penerbangan Malaysia Bhd guaranteed notes at a significantly lower cost. The USD sukuk will be issued via Danga Capital Bhd. The USD sukuk was priced at a profit rate of 3.035% following an accelerated bookbuilding process which attracted demand of 1.5x booksize from financial institutions, asset management companies, statutory bodies and insurance companies. Khazanah achieved its target issue size at a spread of 178 basis points above prevailing 5-year US Treasuries. CIMB and DBS Bank Ltd are the Joint Global Coordinators while CIMB, DBS Bank Ltd. and Standard Chartered Bank are Joint Bookrunner.

The Anti Corruption Commission (ACC) on Wednesday interrogated director of Islami Bank Bangladesh Limited and its audit committee chairman ANM Burhan Uddin in connection with a graft allegation. ACC deputy director Shamsul Alam questioned him for two hours from 11 am at the ACC head office in the capital, ACC Public Relations officer Pranab Kumar Bhattacharya said. According to the allegation received by the national graft watchdog, Burhan Uddin influenced the bank management in hiring a deputy general director by concealing information, and also misused his power in resolving audit objections of the bank for his personal interest, according to UNB.

Malaysian sovereign wealth fund Khazanah Nasional Berhad is marketing five-year US dollar sukuk in the US Treasuries plus 190bp area. CIMB, DBS and Standard Chartered are lead managers for the deal that is expected to price today. The Reg S senior unsecured bonds will list in Malaysia and Singapore under English and Malaysian law. The sukuk will be issued through Danga Capital Berhad, a special purpose vehicle, with the SWF acting as obligor. They will be issued off a multi-currency Islamic securities issuance programme.

Visa Incorporated recently announced partnerships with two organizations to promote financial inclusion in China: the China Foundation for Development of Financial Education (CFDFE), which is affiliated with China’s central bank and seeks to alleviate poverty, and the China Foundation for Poverty Alleviation (CFPA), a government-backed organization focusing on emergency relief. Visa will collaborate with CFDFE to build the “China Financial Inclusion and Education (Jinhui Project) International Demonstration Zone” to facilitate financial education and capacity building. In partnership with CFPA, Visa will launch a mobile phone-based program in Inner Mongolia to educate farmers in eight counties and to promote Internet-based financial services.

Malaysia’s Maybank Islamic Bhd says the investment account (IA) business is set to be a game changer for the group in its effort to boost earnings growth amid the subdued banking landscape. The Islamic lender, which has total assets worth close to RM147bil, will focus on its new mudarabah (profit-sharing) investment fund launched in July last year in view of the Islamic Financial Services Act (IFSA) 2013. Describing the IA business as “the evolution of the next phase of growth”, Maybank Islamic chief executive officer Datuk Muzaffar Hisham said that demand for the IA business has shot up significantly, as the value of its mudarabah fund rose to RM18bil in the last six months of 2015.

The government will sell sharia-compliant bonds for retail investors over the next two weeks to help plug the state budget deficit and deepen the local bond market, senior finance ministry officials said. The thee-year Islamic bond would be sold at its face value, starting Friday until March 4, 2016, bearing a coupon of 8.3 percent. At that rate, the sukuk would yield 80 basis points higher than time-deposit interest guaranteed by the Deposit Insurance Agency (LPS) and 130 bps higher than the benchmark rate set by the central bank. The government seeks to raise between Rp 25 trillion and Rp 30 trillion ($1.85 billion-$2.22 billion) from the sukuk sale.