IslamicFinance.de

Saba Islamic Bank of Yemen and Dahabshil Bank of Djibouti are making plans to engage in operations in Somalia in the coming year. Basel Haj-Issa, the new CEO of Saba Islamic Bank, said at the Islamic Banking Summit Africa in Djibouti that the reason for the bank's expansion into Somalia is the client demand. Since trade between Djibouti and Somalia is quite intensive, many clients of the bank need Islamic banking services in the country.

A few days ago, Abu Dhabi Islamic Bank launched a sharia-compliant hybrid Islamic bond worth $1bn, thus aiming to boost its core capital. The Tier 1 perpetual sukuk has no particular maturity date. It was launched at a profit rate of 6.375%. Even though the structure of the sukuk is rather rare and unusual for the Middle East, the demand is high. This means that that ADIB offered enough of an incentive to reel in investors. It can be expected that more bonds of a similar kind may follow this issue.

A 50 basis-point premium for a 20-year sukuk over non-Islamic sovereign debt was paid by the Finance Ministry. This makes it the biggest spread for government-guaranteed syariah-compliant notes in 2012. Turus Pesawat Sdn was appointed to sell the securities which are intended to fund aircraft purchases for Malaysian Airlined. The company managed to sell RM3.4bil of debt in total. The yield of the RM1.65bil portion of 2032 notes was 4.36%.

The moderate Islamists-led government of Tunisia makes plans to issue sukuks worth 1 billion dinars ($634 million) in the coming year. Thus, the country will be using this financial sector for the first time in order to fund public borrowing. Chadli Ayari, the governor of the Central Bank, prompted that the issuance is t be expected at the beginning of 2013. Just as several other government in North Africa, Tunisia has waken up after last year's Arab Spring to see and make use of the strong growth potential in the Islamic banking sector.

Islamic International Rating Agency (IIRA) made an upgrade to the ratings of Kuveyt Turk Katilim Bankasi (KTKB) on the national scale from 'A/A-2' (tr) (Single A/ A-Two) to 'A+/A-1' (tr) (Single A Plus/ A-One). Both foreign and local currency ratings have been reaffirmed on the international scale at 'BBB-/A-3' (Triple B Minus/ A-Three) and 'BBB/ A-3' (Triple B/ A-Three), respectively. The outlook on the ratings is said to be stable. Even though the Turkish economy has shown resilience in the backdrop of global economic challenges, due to the policy measures taken in 2011, it can expected for the GDP growth to endure moderation.

Dana Gas PJSC was able to conclude a restructuring deal with sukukholders including BlackRock Inc. (BLK). Thus, the formerly mentioned seizure of its Egyptian energy assets will be averted. The company has reached an in-principle agreement with its creditors, according to which it will convert the Islamic bonds into an ordinary and a convertible sukuk. Sukukholders will receive a partial cash payment as well.

The two-day inaugural Islamic Banking Summit Africa (IBSA), which was held at at the Djibouti Palace Kempinski, Djibouti, focused on topics concerning 'capturing the Africa opportunity in Islamic finance'. More than 200 leading figures in the international Islamic banking and finance industry took part in the discussions. The event was officially supported by the Central Bank of Djibouti. The programme of the first day included keynotes from President of the Republic of Djibouti Ismail Omar Guelleh, and Governor of the Central Bank of Djibouti Djama M. Haid.

After achieving a revenue growth of 50% at the end of October 2012 compared with the same period last year, Great Eastern Takaful Sdn Bhd (GETSB) is convinced it will reach a 60% to 70% growth in revenue till hte end of the year. The focus of the company will be its single contribution business as well as its regular contribution businesses. Currently, GETSB has a share of 4% of the local takaful market. Apart from the growth in revenue, an increase in the number of agents from the current 5,000 to 6,500 by 2013 is expected.

Arcapita Bank received the approval of the court for a $125 million bankruptcy loan. The loan will be provided by Fortress Investment Group (FIG.N) and is said to be the first such loan in consistency with the sharia principles. It will enable the funding of the company in its efforts to restructure debt after filing for bankruptcy in March. Though the loan was initially set at $100 million, the committee succeeded in pushing to raise it. The approval was given by Judge Sean Lane in U.S. Bankruptcy Court in White Plains, New York.

Family businesses play a key role in the business scene of the Middle East and are intrinsic to the region's economy as well. According to the latest Deloitte ME Point of View publication however, challenges faced by today's family businesses grow in number. Ideas how they can be overcome are discussed in the publication. In the article titled 'Family Businesses: Addressing the challenges faced in today's environment' the competition of family businesses in a more turbulent environment is pointed out. The environment is marked by pluralistic social values, intensified competition, a global economy and rapidly changing politics and regulation.

Just as HSBC Holdings announced it would shrink its Islamic banking operations in a number of countries, the National Bank of Abu Dhabi made plans to increase the contribution of its Shariah-compliant operations three times over the next eight years. Thus, it becomes clear that HSBC's move is nothing but a sign of its own priorities. While it is set to continue its operations mainly in Malaysia and Saudi Arabia with a limited presence in Indonesia, local banks have the opportunity to step in for it.

According to a report by KFH-Research, the Sukuk market in October demonstrated a month-on-month decline in terms of issuance of 24.5% to $8.8 billion. However, compared to last year, these figures show an increase of 61.3%. Sukuk issuance in the first ten months of 2012 totaled $112 billion, which is 59.4% higher than the corresponding period last year. It is even already 31.5% higher than the overall issuance in 2011. The expectations for the current year are for the issuance to reach $130 billion.

Banks of the Gulf region are poised to raise billions of dirhams of fresh funds in order to meet the impending funding rules. The deadline for the first set of new Central Bank liquidity regulations at the end of the year is approaching.

After its default, Dana Gas has asked creditors for a decision on the liquidation of its US$920 million sukuk (Dh3.37 billion). Locked in last-minute negotiations with a committee of sukuk-holders, Dana discusses a standstill agreement over repaying the bond. The company has made a request to its creditors to declare whether they will seek to dissolve the bond. Such a measure would enable attempts to seize the company's assets, including concessions in Egypt and Sharjah.

The second National Islamic Microfinance Conference, which was jointly organized by the State Bank of Pakistan, University of Veterinary and Animal Sciences (UVAS) and Farz Foundation, was recently held. At the conference, it was discussed that it was necessary for State Bank of Pakistan to develop a new policy instrument to deal with the financial needs of the small businesses. It was further noted that skilled people in the Islamic micro-finance industry were needed. A suggestion was made for Wafaqul-Madaris to introduce Islamic microfinance as a subject in order to be of help in guiding the banks who are working in this sector after studying.

The total IT spending in the Islamic banking sector in the Gulf countries reached $400 million in 2011. Notable growth in the following years is expected. The financial crisis since 2008 has hit the Islamic financial sector as well, causing consolidation of institutions, merging of banks etc. Even though Islamic banks have remained on a positive financial footing during the post-crisis period in comparison with conventional banks, the former have had problems with profitability due to rising costs and operational inefficiencies. In order to optimize current infrastructure, banks invest in one major technology area - implementation and adoption of cutting-edge software and IT services.

An agreement was signed between Bank Sohar and Dar al Sharia, which will build the foundations of a Shari'ah-compatible Islamic window. According to the deal, Dar al Sharia shall provide help to the Omani lender in terms of issues relating to Islamic banking and financial services. These include Shari'ah-compliant structuring and documentation services for all types of products.

The Islamic Corporation for the Development of the Private Sector (ICD) considers opening two new Islamic banks in the countroes of Mali and Benin in the coming year. This was announced by the CEO of the ICD - H.E. Khaled Mohammed Al-Aboodi - at the Islamic Banking Summit Africa in Djibouti. This way, Islamic financial services can be provided in a greatly underserved area. Furthermore, the corporation intends to issue a $200 million Sukuk which is to serve the Government of Senegal to provide liquid Islamic products for Islamic banks.

Over 200 leading figures in the international Islamic banking and finance industry took part in the inaugural Islamic Banking Summit Africa in Djibouti. They discussed various topics concerning capturing the Africa opportunity in Islamic finance. The two-day was held at the Djibouti Palace Kempinski and was officially supported by Central Bank of Djibouti. On the summit, it was pointed out that Africa was becoming an increasingly attractive destination for Sharia-compliant investments.

This week, Abu Dhabi Islamic Bank (ADIB) plans to issue a hybrid sukuk. However, it is likely that investors will demand a big premium for the rare structure. According to expectations, the bank will raise minium $500m to shore up its core capital, complying thus with tighter Basel III global standards. This is a prerequisite for the Tier 1 capital which will be introduced in the UAE in the years to come. ADIB’s Tier 1 sukuk structure is different from the usual instruments to raise Tier 2 capital sold by different Gulf lenders. Firstly, there is no maturity date. Also, the principal is repaid at the discretion of the issuer.