IslamicFinance.de

As a global leader in the field of Islamic finance, Malaysia boasts with state-of-the-art infrastructure and unparalleled government support. The development of Commodity Murabaha (CM) transactions on Bursa Malaysia under its Bursa Suq Al Sila’ enabled the country to try to snatch away the business of liquidity management by Islamic banks from the London Metal Exchange (LME). Bursa Malaysia’s Suq Al Sila’ is a representation of trading in commodities with complete irrelevance of commodities to the intended outcome. This exceeds simple exchange of cash between two participating banks.

15 Egyptian power stations have ceased to produce electricity due to fuel shortages. That is why Egypt is turning off half its streetlights in order to save 700 MW. This move is a follow-up to a previous initiative, by requirement of the government, shops and restaurants closed earlier. Even though the closing time rules did not enjoy popularity among most of the public, they went into effect in December 2012.

Aldar Properties PJSC (ALDAR) has consented to buy Sorouh Real Estate PJSC at the cost of 5.5 billion dirham ($1.5 billion). According to a statement y the two companies, 1.288 of Aldar's shares will be offered for each Sorouh share. Thus, based on the closing price of January 17th, Sorouh’s shares are worth 2.10 dirhams. The Managing Director of Sorouh - Abubaker Seddiq Al Khouri - will be chairman of of the combined Aldar Sorouh Properties PJSC. The deal was backed by the government of Abu Dhabi, which has taken an increasingly direct role in the development of projects and support of builders after the impact of the credit crisis on real estate.

Islamic finance is growing at a 20% per year rate which contrasts with what conventional banking is currently most famous for - scandals, huge pay offs and bonuses. Even non-Muslims are attracted to Islamic finance which led to the fact that numerous countries have adopted and accepted this financial model. It is obvious that there is a huge economic benefit to be sought from it due to the enormous potential of the branch. Malaysia seems to be the leader in the Islamic finance market, developing by leaps and bounds.

The Islamic Financial Services Board is actively working on organizing an Islamic Financial Services Industry (IFSI) Stability Report. The publication is due in May 2013. The goal of the report is to achieve a number of objectives, among which to stress on the growth trend and challenges faced by the IFSI post-crisis, and to bring the progress on various financial initiatives undertaken to promote global financial stability and the impact on the IFSI up to date. The Roundtable on the Islamic Financial Services Industry Stability Draft Report will take place on 21st of January 2013 at Sasana Kijang, Kuala Lumpur, Malaysia.

Kuwait’s Alafco Aviation Lease and Finance Co. announced that Ahmad Alzabin will no longer be chief executive officer. The deputy CEO of the company - Abulqassim Abdul Ghaffar - will take over his position. Alfaco has not given any information on whether or not Alzabin has stepped down from his position as a chairman.

According to the Economy Minister Sultan Al Mansouri, restructuring of Amlak Finance is considered a particularly complicated problem. However, solution is near. Amlak is currently discussing proposals to restructure bank debt of about US$2 billion (Dh7.34bn). Since the Dubai property crash in 2008, the company has been facing uncertainty in terms of finance due to the suspension of its shares. The authorities treat the situation with renewed urgency. The government of the UAE has summoned a special committee to resolve Amlak's problems.

Private banks in Iraq have almost utterly ceased to fulfill their traditional functions, e.g. giving out loans, lending credit and issuing letters of credit. The reason is the risk of default. That is why Iraqi private banks resort to participation in the currency auction regularly held by the Iraqi Central Bank instead. In order not to face defaults on payments, they demand exaggerated guarantees for the granting of any loans to local investors. Banking experts say that the value of some loans is not able to cover more than 40% of the guarantees which are demanded by the banks.

In a report titled "The growing crisis of affordable housing in MENA" Ernst & Young explain that the growing crisis of affordable housing can be fought if regional governments involve the private sector in the matter. Even though a number of countries in the MENA region have made commendable efforts, affordable housing is still far from enough and the demand is continuously rising. The government is not able to deal with the issue of supplying affordable housing on its own. That is why both supply-side and demand-side strategies should be used to mobilize the private sector and thus expand government resources.

Fimbank is about to make the first step into introducing Islamic banking to Malta. Provided that Middle Eastern institutional investors take a controlling interest in the near future, the bank will be able to expand into new markets and target larger clients. Fimbank has a commitment for additional equity of $160 million. According to the bank's president Margrith Lütschg-Emmenegger, it has the potential to triple or even quadruple its balance sheet over the next five years. She further stressed on the bank's striving towards a major strategic turning point. This will be possible if shareholders allow the joint offer by Kuwait-licensed Burgan Bank SAK and Bahrain-licensed United Gulf Bank BSC at the extraordinary general meeting on January 31st.

The banking facilities of the Al Aqsa Foundation with two banks in South Africa have been recently suspended. Even though the foundation is registered with the South African government as a bona fide charity, it is suspected by the US government to be covertly funnelling funds to Hamas. First National Bank (FNB) gave a notice to the foundation three months in advance before completely shutting its account. The move encountered rather negative reception from the South African Muslim community. It was even called for a boycott of FNB. There have been further discussions on the reasons to close the account and the relations between the bank and the US government.

According to a statement by CIMB Group Holdings Bhd, the sale of its 49% stakes worth RM1.11 billion in CIMB Aviva Assurance Bhd and CIMB Aviva Takaful Bhd to Khazanah Nasional Bhd has been completed. The life insurance and takaful companies stake sales are satisfied by RM1.06 billion in cash combined with RM43.5 million worth of shares in a new insurance holding company called Renggis Ventures Sdn Bhd. The latter s wholly-owned by Khazanah. To sum up, CIMB will maintain an effective 2% interest in CIMB Aviva Assurance and CIMB Aviva Takaful respectively.

Bank AlJazira registered a net income of SR 98 million for the fourth quarter of 2012. Compared to Q4 2011 this is a decrease of 11% from SR110 million. The difference compared to Q3 2012 is 25% in favour of Q3. Other important parts of the annual financial results of the bank are a total operating income of SR372 million for the last quarter of 2012 which is a 13% increase to the SR330 million for Q4, 2011. The net special commission income for Q4 2012 registered an increase of 25% from Q4 2011 reaching SR247 million.

The government of Malaysia paid higher yields for its second offering of state-backed sukuk on behalf of the national airline to entice investors. The total issuance of the notes had already reached 4.6 billion ringgit ($1.5 billion). The finance ministry was able to sell 1.2 billion ringgit of the debt on January 17th. The orders amounted to 1.5 billion ringgit. In comparison to that, rail operator Syarikat Prasarana Negara Bhd sold 3.6 billion ringgit in bids for a 2 billion ringgit sukuk sale on August 28th. The latter Shariah- compliant debt was government guaranteed as well.

The National Bank of Abu Dhabi (NBAD) has received the award Dubai Chamber of Commerce '&' Industry Centre for Responsible Business CSR Label. The award is a reflection of the recognition of the bank's responsible and sustainable business practices in the fields environment, marketplace, workplace and community. Senior Manager of Sustainability at NBAD - Belinda Scott - explained that being a major player in the economic development of the country goes hand in hand with caring for the social and environmental effect of the bank's activities.

Due to orders by Dubai's ruler, all legal action in the Dubai International Financial Centre courts involving Amlak Finance were transfered to a special judicial committee outside Dubai's normal legal system. According to a decree, which was issued on December 16th by Sheikh Mohammed bin Rashid, all Dubai courts including those in the DIFC are not allowed consideration and settlement of any application or claim related to Amlak Finance. A decree from 2009 established a special judicial committee which serves to hear claims against Amlak and Tamweel. That decree relocated all cases in the Dubai courts to the committee, did not however discuss cases in the DIFC courts, which have a separate set of procedures based on English common law.

Bank Islam Malaysia Bhd announced the suspension of chief economist Azrul Azwar Ahmad Tajudin for allegedly breaching the bank’s internal policies. Azrul predicted at a forum in Singapore last week that Prime Minister Najib Razak will not win the upcoming general election in Malaysia. In a statement, the bank explained that the nature of the breaches would be established as soon as the investigations are completed. They further stressed that the suspension had no relation to Azrul's voicing his personal political views. It was reiteratively said that Azrul’s political views and his comments should are not to be associated with the bank.

According to Minister of Finance Al-Morsy Hegazi, Egypt is now looking for a way to change the economic reform plan in order to obtain thr IMF $ 4.8 billion loan. He further added at a meeting with the Bank Group Chairman Ahmed Mohammed Ali that a few domains of cooperation between both sides will eventually be able to ease the burden off the country's budget. Several Egyptian projects will be financed by the Bank under different systems.

Galal Amin - author of Whatever Happened to Egyptians and prominent economist - expressed his doubtful attitude towards the new sukuk introduced by the government of Egypt. At a media roundtable held at the American university in Cairo (AUC) on Wednesday, Amin as well as some other experts in economy diagnosed the Egyptian economy and cast their predictions for the current year. It was said that due to political causes of the economic crisis it is difficult to make predictions. Especially the lack of security, a lack of trust and above all the nature and content of political discourse bringing Egypt far beck were mentioned as key factors.

This year, contracts worth $159 billion are to be awarded across the Middle East. Project finance loans are expected to grow almost 15% this year. It is expected that the area of project finance will grow from about $35 billion in 2012 to about $40 billion due to the increase in significance of infrastructure demand. On February 17-20 the Qatar Projects 2013 conference will be held in Doha, organized by Meed Events. The key part of the event will be a comprehensive review of contract financing opportunities and challenges in Qatar.