IslamicFinance.de

The Islamic Finance Society is pleased to announce our first event. Starting with a presentation on careers opportunities in Islamic Finance, followed by a presentation and discussion on industry related topics in Islamic Finance: Asset Management, Real Estate, Investment Banking.

Tuesday 19 February 2013, 18:30-20:00
Cass Business School, 106 Bunhill Row, London EC1Y 8TZ
Room: LG001
Registration: 18:15-

Emirati nationals are "blindly" signing up for personal loans that they are unable to pay back later, according to Sheikh Mansour bin Zayed, UAE deputy prime minister. Because of this, UAE authorities set aside AED1.05bn (US$410m) for the Nationals' Defaulted Debts Settlement Fund, a programme aimed at clearing defaulted debts owed by Emirati nationals. Any person that with personal loan debts and not commercial or trade loans unpaid before December 2011 will have it covered by the programme. 17 banks take part in the fund which has dealt with approximately half of the 3,200 registered Emirati applicants.

Saudi Arabia has appointed Mohammad al-Sheikh to head the Capital Market Authority, replacing Abdulrahman al-Tuwaijri, who had been at the helm of the agency since 2006. Mr Sheikh’s financial and legal background should help with his new role as the kingdom pushes forward with its plans to open up its nearly $400bn stock market to direct international buyers for the first time. This appointment is the latest in a series of reshuffles in the financial and political teams in Saudi Arabia, shifting towards private sector expertise.

Geopolitics have a growing weight on consumer banking in Dubai because it is the Middle East's banking centre and geographically close to major countries targeted by sanctions. In theory, as long as money does not have criminal links or belong to people or companies directly targeted by international sanctions, banks should be able to accept it. But in practice, the costs of checking that rules are obeyed have become so high that banks are turning down some deposits in advance. The costs of regulatory compliance could slow Dubai's banking growth. Especially Syrian, Iranian and U.S. citizens are being affected by this concern.

The Libyan General National Congress (GNC) looks to amend regulations of the financial services sector and to introduce Islamic financing into Libya for the first time. Currently there are a number of discrepancies between a new law about Islamic finance and some of the existing supervisory legislation. This has resulted in confusion that is likely to put a brake on the development of this sector, as investment companies will not be willing to develop new products. Clear common objectives, separation of powers and clarity of written rules and regulations are necessary to raise the competitiveness of Lybia's domestic banking markets, develop new Shariah-compliant financing products and provide a secure approach to the growing needs of the Libyan customers.

The development of the sukuk market is sending mixed signals. On the one hand, issuance of sukuk in the last year has attracted not just Islamic but conventional investors by the yield, diversification and risk profile. Many deals were innovative, enjoyed popularity and performed well in the aftermarket. On the other hand, the market remained utterly dominated by domestic transactions, and there are still mixed reports about liquidity, both in domestic and cross-border markets. Although sukuks still don’t trade with anything like the volume common in conventional markets, a record year for global sukuk issuance is expected.

The Qatar Financial Centre (QFC) has a tax system that enables sukuk transactions to be carried out without excessive tax costs, according to a study conducted by the experts Mohamed Amin, Salah Gueydi and Hafiz Choudhury. The study reviewed the tax treatment of four common Islamic finance structures ‘murabaha’, ‘sukuk’, ‘salaam’ and ‘istisna’ in the eight Mena countries. Mr. Amin said the study shows clearly that the additional transactions required by Islamic finance are at risk of being subject to taxes, and can make Islamic finance transactions prohibitively expensive. Only Turkey and the QFC have modified their tax laws to facilitate Islamic finance.

London-based Gatehouse Bank has completed the acquisition of a 163,000 sq ft, state of the art office building in Salt Lake City, Utah, which is 100% leased to the General Services Administration (GSA) for a fixed term of 20 years.
The deal is expected to return a stable and healthy yield over the investment period. Gatehouse Bank was assisted by Arch Street Capital Advisors and sister company GSH in this transaction.

Indonesia, the country with the world’s largest Muslim population, is developing its Islamic finance industry. It’s speeding up government approvals and fixing a fragmented regulatory system as part of an effort to reach more unbanked Muslims and increase the portion of Islamic assets in the banking system to 15 percent by 2017, from 4.3 percent. Currently, Indonesia ranks fifth in the amount of outstanding Islamic bonds, the number of Indonesians using Islamic financial products increased 36 percent over the past year. However, that’s still only 13.4 million people in a country of 208 million Muslims, which shows Indonesia's growth potential regarding Islamic finance.

A senior Islamic Bank of Thailand (IBank) executive has affirmed that the bank’s financial status and liquidity are normal despite its non-performing loans (NPLs) at Bt39 billion, 20 per cent of its total lending. Thanin Angsuwarangsi, IBank manager, said Bt24.3 billion debts are being negotiated by the bank and debtors and the majority are willing to discuss debt resolution on the NPLs with the bank. After a restructuring of IBank’s role, it will emphasise giving loans to Muslim Thai people and small-time business operators. Mr Thanin believed the problem of Bt39 billion NPLs will be solved in three years, adding that IBank officers who are found to unscrupulously offer loans to customers will be legally dealt with.

According to a new Deloitte report, an organization's environmental, social and governance (ESG) performance can directly and indirectly impact its market valuation. The report highlights that short-term ESG issues and events, including human rights issues, product recalls, boycotts and protests often trigger the strongest and most immediate impact on stock prices. However, there is less convincing evidence that ESG performance leads to higher stock returns over the long-term. Deloitte's report highlights how and why ESG performance is expected to continue to be a consideration in financial valuation and several reasons risks may play an increasingly important role on performance.

Path Solutions, provider of Islamic banking software, has announced the deployment and successful rollout of iMAL Islamic core banking system at all five Al Hilal Islamic Banking Services branches of Ahlibank. iMAL was implemented using Microsoft Windows OS and Sybase Software. According to Ahlibank CEO Abdul Aziz Al Balushi, iMAL will enable the delivery of Islamic banking products and services whilst ensuring full compliance with the Sharia guidelines and local regulations.

Egypt's Principal Bank for Development and Agricultural Credit (PBDAC) is expanding its Islamic finance activities. The bank which has 18 branches offering Islamic finance, plans to open further six branches offering Islamic services in 2013. Furthermore, PBDAC is launching Shari’ah-compliant retail banking this month with a portfolio of EGP 50 million ($7.5 million) that can be raised to EGP 100 million next June based on demand, according to Abdel Rahman Al Kafrawi, head of Islamic transactions at PBDAC. The new Islamic services will reportedly cover areas including purchases of durable goods and agricultural equipment, the setting up of clinics and medical laboratories, and the financing of education fees.

United Gulf Financial Services - North Africa has announced the launch of its 'Themar Investment Fund', with a capital of TND 50 million (approximately US$ 32 million). The fund targets small and medium Tunisian institutions seeking financing in different business sectors that support the Tunisian economy. Priority is given to existing and restructured projects in urban areas. According to Mohamed Fekih, Chairman of UGFS - North Africa, the fund will contribute to boost and diversify the Tunisian economy as well as increase Foreign Direct Investment and further develop Islamic banking in the country.

Bahraini GFH Capital is considering selling a majority stake of Championship club Leeds United which it has owned since December 21. GFH bought Leeds from Ken Bates for £17million plus payments based on reaching the Premier League within four years. A multi-national consortium led by former Hull City executive Adam Pearson has made proposals to buy either 51 per cent or all of GFH's shareholding, which values Leeds at around £25m. According to a GFH statement, they received an offer for a majority stake that has not been accepted, although they have been seeking strategic investors.

Strong investor demand and a need to improve capital adequacy ratios are causing Turkey's Islamic banks to consider issuing subordinated sukuk. Ibrahim Oguducu, head of the financial institutions business at Bank Asya, said longer-tenor subordinated sukuk would help balance mismatches between the maturities of banks' liabilities and assets, while diversifying their funding sources. Subordinated issues might not be expensive for Turkey's Islamic banks that have issued only two sukuk so far.

The European Islamic Investment Bank PLC (EIIB.LN) said Tuesday it has sold a financing facility provided to Arcapita for $8.1 million in cash to Barclays Bank. The facility, dating from 2007, formed part of a syndicated loan facility which was due for repayment in March 2012. However, Arcapita defaulted on its payment obligations and in early 2012 announced that it had filed for Chapter 11 protection in the U.S. The sale will result in a total charge of $6.9 million in the results to December 2012.

Kuwait's Capital Market Authority (CMA) published a statement on Tuesday about self-regulation by Islamic financial institutions to ensure compliance with Shariah standards. The statement recommends to appoint a sufficient number of legal observers in accordance with the size of the institution and to provide full transparency in their communications with compliance officers. The CMA also urged companies’ sharia boards to take more care to issue rulings that were in line with each other.

Former executives of the Islamic Bank of Thailand who did not adequately pay attention to cash flow, collateral value and monitoring, are to be blamed for the high amount of bad dept at IBank, according to its new president Thanin Angsurarangsit. Non-performing loans at IBank currently amount to Bt39 billion, or about 30 per cent of outstanding loans. Moreover, the Finance Ministry is investigating possible corruption at IBank. The bank will try to maintain its lending at Bt120 billion this year. New lending to large corporates will be reduced as the bank focuses on retail clients who are Muslims.

Bank Asya plans to open 30 new branches and hiring 500 new staff members according to Ahmet Beyaz, the new General Manager. Abdullah Çelik is the general manager for Asia, who reported about the opening of the Erbil office and plans for India and Asia in general.