IslamicFinance.de

Bahrain's Al Baraka Islamic Bank plans to open a sharia-compliant bank in France next year as the lender seeks to expand into Europe, Chief Executive Adnan Ahmed Yousif said on Sunday. France has one of the largest Muslim populations in Europe but cultural and legal obstacles have impeded the development of its Islamic finance industry. Some Gulf-based Islamic banks that have expanded in Europe have gone elsewhere. Qatar's Masraf Al Rayan owns Al Rayan Bank in the United Kingdom, while Kuwait Finance House's Turkish arm opened its first branch in Germany last year. Al Baraka also plans to acquire a bank in Indonesia either this year or in 2017 and was in talks with the Indonesian central bank governor, Yousif said.

An agreement has been reached in Groznyy, the capital of Russia's Chechen Republic, to open an Islamic bank in the republic, Chechen leader Ramzan Kadyrov said. Executives of Mazkorp company Hilal Suhail Hilal Rashid Al Mazrouei and Wael Saab came from the UAE and agreed to start implementing the project. Opening of the bank is of enormous value for the republic, Kadyrov said. Large properties are under development in Chechnya with participation of capital from the UAE. The decision was also made at the meeting with the management of Mazkorp on shareholding participation in development of Magnus-Groznyy pharmaceutical cluster to start next year and on investment into construction of Ahmat-Tower multifunctional high-rise property in the capital of Chechnya.

It took a Malaysian lender more than 10 years to complete its conversion to a fully-fledged Islamic bank, highlighting the challenge for countries such as Indonesia in their bid to become Shariah funding hubs. Agrobank would have given up its ambition to be Shariah-compliant had there been no commitment from employees and directors, said Chief Executive Officer Wan Mohd Fadzmi Wan Othman. The process was “grueling,” involving numerous meetings with staff and customers, and redoing all documentation, he said. The plan was first announced in 2004, derailed and then revived in 2012. Agrobank’s experience with complex approvals and legal hurdles brings to focus the uphill task for nations seeking to become financial centers for the $2 trillion industry.

Indonesia's Finance Ministry sold rupiah-denominated Islamic bonds on Tuesday, 26/01. The ministry set an indicative target of IDR 4 trillion (approx. USD $288 million). Proceeds from the bond sale will be used to finance the government's budget deficit. This deficit is estimated to reach 2.15 percent of gross domestic product (GDP) in the 2016 State Budget. Despite having the world’s largest Muslim population and forming a dynamic emerging economy, Indonesia plays a minor role in the global Islamic banking industry. Not only does Indonesia's Islamic finance industry lag far behind Islamic finance industries in other countries that contain a big Islamic community, but it also lags far behind the country's domestic conventional banking industry.

Mina Mehrnoush, the head of planning at Iran’s Organization for Trade Development, said three Russian banks have voiced their readiness to promote banking relations with the Islamic Republic in the near future in a bid to boost commercial cooperation between Tehran and Moscow. Mehrnoush also said that during a recent visit to Russia by an Iranian trade delegation, “good meetings” were held with three Russian banks, namely Mir Business Bank, Tempbank and RFC Bank. Mir Business Bank, which is the agent bank of Bank Melli Iran, agreed to provide good facilities and open proper credit lines for Iran, she said. The Iranian trade official went on to say that other issues were also discussed in her meetings with Russian banking officials, including opening accounts for Iranian companies without having to make a trip to Russia.

In a statement to Bursa Malaysia on 18 January, Malaysia Building Society Berhad reported that, ‘on behalf of the Board of Directors of MBSB, AmInvestment Bank Berhad wishes to announce that Bank Negara Malaysia (BNM) has vide its letter dated 15 January 2016 (which was received today) stated that it has no objection to MBSB’s application for the extension of time until 2 February 2016 to conclude the negotiations with DRB and Khazanah’ [shareholders in Bank Muamalat Malaysia] for the proposed merger and to submit the formal application to BNM.

1MDB's recent sale of its 60 percent stake in the Bandar Malaysia development project is in violation of the terms for the sukuk Islamic bonds it issued to finance the relocation of several air force bases, PKR secretary-general Rafizi Ramli claims. This, he said in a statement today, is based on pages 30 and 32 of the agreement. Rafizi pointed out that under Item 2(w)(i)(12) of the RM2.4 billion sukuk issuance agreement, Bandar Malaysia Sdn Bhd (BMSB) – "the issuer" – must remain as the wholly-owned subsidiary of 1MDB. The sale, Rafizi argued, is now a major snag to one of the main pillars of the 1MDB debt rationalisation initiative. He vowed to continue with his crusade, for as long as there is no clear answer or remedy from 1MDB.

Labuan International Business and Financial Centre (Labuan IBFC) has been recognised as a leading Islamic wealth management centre. In a statement today, Labuan IBFC said close to 55% of all respondents regarded it as a leading Islamic wealth management provider in a survey by London-based Edbiz Consulting. The survey, which reached more than 10,000 respondents globally, was aimed at assessing the knowledge, attitudes and practices towards Islamic wealth management in order to better understand the demand for Shariah compliant wealth management services within the investing community and their clientele. The research was part of the co-branded Islamic Wealth Management Report 2016, which was launched recently.

Bank Islam Malaysia Bhd (BIMB) expects slower growth in 2016 compared to last year amid the current economic challenges, according to managing director Datuk Seri Zukri Samat. He said he hoped the bank will maintain double-digit growth in terms of financing performance as achieved last year. Asked on plans to open more Bank Islam branches this year, Zukri said the bank was still assessing the current economic situation. He said the bank was eyeing 600,000 payWave debit cards issued in 2016, up from 200,000 cards issued by end-December 2015. Zukri said the bank had invested millions of ringgit in the “E-donation” Terminal Using Visa PayWave programme, and aims to provide these terminals to 10 mosques nationwide, including in Sabah and Sarawak.

Unsatisfied with 1Malaysia Development Berhad's (1MDB) explanation, PKR lawmaker Rafizi Ramli today challenged the company to disclose details on how it used the sukuk funds. He said 1MDB last night failed to address his main query, which was what had happened to the RM1.6 billion from the RM2.4 billion sukuk issued through Bandar Malaysia Sdn Bhd in 2014. 1MDB yesterday denied Rafizi's remarks and insisted the RM2.4 billion sukuk had been utilised in accordance with its agreement. 1MDB reportedly said the sukuk had been used to partly finance the relocation of the air force base at Sungai Besi, pre-fund the fees and expenses of the sukuk programme, fund the requisite financing reserve accounts, and fund the working capital requirements of 1MDB Real Estate Sdn Bhd (now known as TRX City Sdn Bhd).

Khazanah Nasional Berhad has mandated Barclays, CIMB, Morgan Stanley and UBS to arrange a series of investor meetings for a US dollar sukuk offering. The roadshow will take place in Dubai on Sunday, Hong Kong on Monday, Singapore on Tuesday and London on Wednesday. The Reg S offering will be unrated and issued off the Multi-currency Islamic Securities Issuance Programme established by Danga Capital Berhad. Danga Capital is a special purpose financing vehicle initiated by Khazanah, the sovereign wealth fund of the government of Malaysia.

Khazanah Nasional Bhd may sell its stake in Bank Muamalat Malaysia Bhd only after the latter merged with Malaysia Building Society Bhd (MBSB) to form the country's largest full-fledged Islamic bank. Reiterating that it is not taking the lead in negotiations, Khazanah managing director Tan Sri Azman Mokhtar said the country's strategic investment fund is not particular about the structure of the merger, provided the valuations are fair. It has been reported that the merger would be effected via a share swap. There have been various scenarios bandied about on Khazanah's preferred outcome for its 30% stake in Bank Muamalat. DRB-Hicom Bhd holds the remaining 70% of Bank Muamalat.

About RM1.6 million of the RM2.4 billion sukuk 1Malaysia Development Bhd (1MDB)? issued through Bandar Malaysia Sdn Bhd in 2014 remains unaccounted for, says PKR's Rafizi Ramli. The RM2.4 billion sukuk was issued to pay for the relocation of the army base on Bandar Malaysia land, said Rafizi. Yet the state investment arm announced that the consortium purchasing 60% equity in Bandar Malaysia Sdn Bhd may assume 60% of the remaining RM1.9 billion cost of relocation of the Pangkalan Udara Kuala Lumpur (PUKL) relocation?. The total relocation cost of PUKL had actually been RM2.7 billion, so only RM800 million of the sukuk had been used so far to pay for PUKL's relocation costs, said Rafizi.

Prime Minister Datuk Seri Najib Tun Razak’s goal of reining in the budget deficit looks set to get tougher as a unit of the nation’s biggest lender predicts borrowing costs on Islamic bonds will climb to a record. Maybank Islamic Asset Management says benchmark sukuk yields may rise to 5% this year should the United States raise interest rates to 1.25% from a maximum 0.5% now, and if investors price in further tightening in the following 12 months. Higher yields on government debt may complicate Najib’s efforts to fund a US$444bil development programme to build railways, roads and power plants. The ringgit is already down 2.2% in 2016 as a selloff in Chinese stocks sparked risk aversion.

Tenaga Nasional Bhd (TNB) is asking bankers to submit pitches for a US$3 billion (RM13 billion) sukuk programme, and proceeds will be used to fund overseas investments, including the purchase of a 30 per cent stake in Turkish power firm Gama Enerji AS for US$243 million. The company last issued dollar-denominated debt in 1996, when it sold 100-year conventional notes. Bankers’ proposals for TNB’s sukuk programme had to be submitted by the end of this week. TNB is rated “BBB+”, the third-lowest investment grade by Standard & Poor’s and Fitch Ratings. The yield on the company’s existing conventional dollar bonds due 2025 climbed 31 basis points last year to 4.39 per cent and was 4.33 per cent yesterday.

Tourism authorities have launched a program to make more halal-certified food products available in Russia. The program aims to attract more tourists from the United Arab Emirates, Saudi Arabia and Kuwait. The halal program will focus on Moscow, St. Petersburg, Kazan, Sochi and the towns of the Golden Ring. According to Schegolkova, these cities already have the infrastructure and hotels that can provide halal-friendly services. The list of cities will be expanded over the next few months. In addition to cuisine from Russia’s Muslim regions and internal republics, the program aims to make halal-certified traditional Russian dishes widely available in the country.

Bangladesh Bank (BB) signed separate agreements with six more private banks on Wednesday to facilitate long-term financing under the World Bank funded Financial Sector Support Project (FSSP). Under the agreements, the six banks - Dutch Bangla Bank Limited, IFIC Bank Limited, South East Bank Limited, Standard Bank Limited, Trust Bank Limited, and Standard Chartered Bank - would provide long-term financing for projects in manufacturing sectors. The central bank earlier signed similar agreement with ten other banks. BB Deputy Governor Nazneen Sultana said that the BB under the auspices of International Development Association (IDA) of the World Bank would provide $300 million through FSSP to meet the growing demand for long-term financing for productive sectors in the country.

PBMT is the coordinating body of BMT (Baitul Maat wat Tamwil / House of Social and Business) organizations in Indonesia. BMT itself is a microfinance institution which also acts as a social enterprise, using the principles of Sharia economy to lift people out of poverty. In Indonesia, the BMT helps the poor through a systematic step-by-step mechanism. First, the very poor people are given a grant from the donors’ donations, and guidance to start their micro-enterprises. Once they are on the right track, they will be granted a non-commercial loan with no interest. In the last stage, these people would ideally have established their own micro-enterprises.

The government is making it easier for the public to save for their higher education through its National Education Savings Scheme SSPN-i Plus. The SSPN-i Plus, which was introduced by the National Higher Education Fund Corporation (PTPTN) in June, doubles as an education fund besides providing affordable Takaful (Islamic insurance) coverage to the depositor. The product, a result of the strategic collaboration between PTPTN and Hong Leong MSIG Takaful (HLM Takaful), aims to instil in Malaysians the savings culture. The government has also provided a variety of exemptions for taxpayers to reduce their tax burden, with 21 tax exemptions given to taxpayers for the 2015 assessment year.

Malaysia will face pressure to sell global sukuk next year as $1.2 billion of Islamic debt matures in July and plunging oil prices erode fiscal revenue and currency reserves. RHB Investment Bank Bhd. and Union Investment Privatfonds GmbH see demand for a new Islamic bond holding up because of a scarcity of dollar sukuk and longer-term prospects for Malaysia’s finances. Prime Minister Najib Razak repeated a warning last week that government revenue for Asia’s only major net oil exporter could fall short of the official target by the equivalent of about $7 billion next year. Standard & Poor’s rates the nation A-, with a stable outlook on its credit rating.