IslamicFinance.de

Why an Islamic Finance training programme?

The Islamic banking and finance (IBF) sector has experienced substantial and unprecedented growth in recent years: growing at a rate of 10-15% per year. Today, more than 500 IBF institutions are operating worldwide, which are claimed to manage assets worth no less than $1.2 trillion, while the assets held in IBF institutions were only less than $10 billion in 1985. In Malaysia the IBF institutions are planned to capture the 25% of the market share, in terms of assets owned, by 2012, while it is expected that Islamic finance will be the mainstream finance in the Gulf region in the next decade.

Such immense growth has brought Islamic finance to the attention of the international banking and finance community, prompting the major banks to set up Islamic financial windows to take advantage of demand for Shari'ah compliant finance.

Qatar will sell QR4bn ($1.1bn) of three-year and five-year bonds and sukuk. The Qatar Central Bank will offer local banks QR3bn worth of bonds and QR1bn worth of Shariah-compliant notes. The local currency issues will take place quarterly, but it was not specified how much of each maturity would be sold. The objective behind an issuance is reportedly to build a domestic sovereign yield curve.

The Waqf Fund recently held a roundtable discussion themed, "Shariah and corporate governance issues in SPV governance," in Bahrain. The meeting was attended by a select group including lawyers, professional firms and Shariah scholars. Central Bank of Bahrain's Hana Al Murran made a presentation highlighting the regulatory and legal issues with special purpose vehicles (SPVs). Among others, the key issues highlighted were: mechanism to safeguard investors' interest, Shariah governance and compliance, mechanism and type of fee charged to investors, reporting frequency and transparency, and due diligence.

Albaraka Turk mandated four banks to secure a $200 million subordinated loan from international sukuk markets. Albaraka Turk is the Turkish subsidiary of Bahraini lender Al Baraka Bank.

Construction-based Eversendai Corp Bhd’s majority shareholder feels the company is undervalued and does not reflect the company’s true business potential and track record. Eversendai’s executive chairman and group managing director AK Nathan said that right now it is important to build up the base, build up the business. He also opined that the share price can not be suppressed for too long. However, construction stocks in Malaysia have been underperforming at the moment. Moreover, Eversendai’s lack of liquidity is also an issue in attracting fund managers to invest in the company.

Abu Dhabi Islamic Bank (ADIB) has signed an agreement to provide financing facilities for AED 500 million to Dubai Airport Freezone (DAFZA). The financing will be used to expand DAFZA's key offices buildings, business centre and food court which are due to be completed in 2015. The agreement was signed at DAFZA's headquarters by Dr. Mohammed Al Zarooni, Director General of DAFZA and Tirad- Al Mahmoud, CEO of ADIB. The project is in line with HH Sheikh Mohammed Bin Rashed Al Maktoum's initiative to make Dubai the Global Capital of Islamic economy.

The Egyptian government has signed a $250m leasing agreement with the Islamic Development Bank (IDB) to purchase equipment for a power plant to generate electricity in South Helwan. The deal will be finalised after presidential approval. The Minister of Planning Ashraf ElAraby signed the agreement in mid-January with the IDB president Ahmed Mohamed Ali. The project aims to meet the growing demand for energy in Egypt.

Dubai Group's $10 billion debt restructuring will be managed by David Smoot, chief executive officer of Dubai International Capital (DIC). In addition to Smoot's appointment, two banks will be named to a post-restructuring creditor committee to provide oversight of Dubai Group's business to ensure the interests of creditors are protected for the duration of the debt deal. In order to succeed the group is yet to divest some of its larger assets.

Pakistan's Prime Minister Raja Pervez Ashraf emphasized the close relations between Bahrain and his country and praised the Gulf Finance House Bahrain for doing well financially. Moreover, he drew the attention of Esam Yousif Janahi, Chairman and Founder of Gulf Finance House, to huge investment potential in Pakistan and expressed the need to invest in energy. He said that there were a good wind corridor, hydel potential and coal reserves. Jahani said that his company was examining the possibility of investing in energy sector in Pakistan. He further said that the investment policies of Pakistan were conducive and attractive for foreign investors because of rewarding returns on investments.

The National Bank of Bahrain (NBB) is likely to acquire the loss-making Bahrain Islamic Bank (BisB) and give itself an Islamic finance arm. NBB’s chairman Farouk Almoayyed said that the acquisition is a business opportunity as his bank does not have an Islamic banking operation. They are confident that it will do well under their management, he added. Last year, BisB, the first Islamic bank in Bahrain, posted a net loss of BD36 million ($94.95 million). NBB however is looking strong and is keen to move into the Islamic market.

Falcon Private Bank is planning to launch a fund early next month that will invest in global sukuk.The fund will be offered to the bank’s clients and could grow to $500 million, according to Zafar Khan, Falcon’s Mena chief executive. There is alreade substantial demand from the bank's clients for global sukuk investments, he added. He also considers the yields of the past two years dislocated and the current yields more realistic to the underlying risk.

Indonesia’s finance ministry raised Rp 760 billion ($78.30 million) at its March 5 sukuk auction, well below the target of Rp 1.5 trillion. The Finance Ministry sold 6-month, 9- and 14-year sukuk to help finance its budget deficit. Incoming bids were Rp 3.4 trillion. The G20 economy plans to raise Rp 57.5 trillion in the first quarter of the year.

A company is sharia-compliant if it conducts its business according to sharia stipulations, and accommodates Islamic principles and disciplines in its business structures, setups, and operations. There are several stipulations, that a business should comply with in order to follow shariah principles. These include full disclosure and honesty with customers, quality customer service and finding ways to serve social, developmental or environmental causes conducive to your direct business lines. Prohibited activities for sharia-compliant companies are among others borrowing and lending with interest, investment in alcohol, gambling, weapons and pork as well as activities that harm the environment.

Ernst & Young signed a working agreement with Accounting and Auditing Organization for Islamic Financial Institutions ( AAOIFI ) to assist in Sharia certification of Core Banking Systems (CBS) used by Islamic banks. On the back of this mandate, Ernst & Young is launching its new Advisory Solution, CBS Sharia Assessment, to assist international and regional technology firms. The certification programme will assess CBS services to ensure that they conform to the approved global Sharia and accounting standards.

Azeemeh Zaheer, vice president at the London-based Gatehouse Bank, has called on Saudi businesswomen to invest funds that are kept frozen in banks. According to the expert, with the accumulation of wealth, globalization and openness, women have begun to invest their funds and try to overcome all traditional barriers which limit their (financial) independence. She said women in GCC countries retain more than 300 billion and if 15 percent of that money, or 45 billion, invested in London, it would be a big success for shariah-compliant Gatehouse Bank.

The former Chief Executive of Gatehouse Bank David Testa has successfully appealed in the first-tier tax tribunal against HM Revenue & Customs' "flawed" refusal to suspend a penalty imposed for a careless inaccuracy. HMRC rejected David Testa's offer of using a qualified tax practitioner to ensure he ironed out future self-assessment errors after he mistakenly failed to declare his severance payment after he left his post with the bank in 2009. The tribunal upheld Testa's view, noting HMRC's policy "sits uneasily" regarding inaccuracies arising from one-off events. Judge Kevin Poole described HMRC's logic as "flawed" and added there is "a danger of taking too narrow a view of the legislation".

According to CIMB Equities Research, mergers and acquisitions (M&As) are still high on Affin Holdings's agenda to support its future growth. Hence, Affin is still planning to acquire Bank Muamalat. The banking group has submitted the offer and is waiting for the response from the owner of Bank Muamalat. It could also be interested in bidding for HwangDBS Investment Bank. CIMB Research said Affin is now reportedly less keen to purchase Bank Ina Perdana in Indonesia due to the 40% shareholding cap imposed by the Indonesian central bank.

The Saudi Arabian Monetary Agency (Sama) has decided to allow foreign financing firms to operate in the kingdom in order to boost the real estate financing sector, Saudi Gazette has reported. This will be in accordance with the provisions of the land mortgage law, said Sama governor, Fahad al-Mubarak.

Abu Dhabi-based Al Jaber Group eached a deal with its five main lenders to restructure about $4 billion of debt. The company agreed on terms, including loan repayments over five years. The debt, which includes both conventional and Islamic facilities, will pay annual interest of between 300 basis points, or 3 percentage points, to 400 basis points over the London Interbank Offered Rate. The deal will result in no loan losses. National Bank of Abu Dhabi PJSC, Abu Dhabi Commercial Bank PJSC (ADCB), Royal Bank of Scotland Group Plc and Union National Bank PJSC make up the coordinating committee with HSBC negotiating the new terms on behalf of about 30 lenders.

Dubai Islamic Bank (DIB) plans to boost its capital through the sale of a sharia-compliant debt instrument. DIB will hold investor meetings in Asia, the Middle East and Europe starting on March 7 ahead of issuing the dollar-denominated, benchmark-sized hybrid sukuk, subject to market conditions. The bank hopes to raise at least $500 million from the sale, but the final size will depend on demand. Emirates NBD, HSBC Holdings, National Bank of Abu Dhabi, Standard Chartered and the bank itself were chosen to arrange the deal.