IslamicFinance.de

The 13th Islamic Financial Stability Forum (IFSF) was successfully organised by the Islamic Financial Services Board (IFSB) on 12 April 2016 and was held in Cairo, Egypt on 10-12 April 2016, hosted by the Central Bank of Egypt. The theme of Forum was Consumer Protection in Islamic Finance, and the main presentation was by Professor Volker Nienhaus, the Former President of Marburg University. He stated that while most of the issues in consumer protection cover both conventional and Islamic segments of the financial system, there are some risks pertinent to Islamic finance sector, such as Shariah non-compliance risk.

The Malaysian government, via special purpose entity Malaysia Sukuk Global Bhd, has successfully priced the 10-year and 30-year benchmark sukuk papers at 3.18 and 4.08 per cent. The new sukuk format uses non-physical assets to underpin the agency-based transaction wakala, instead of the traditional use of physical assets. Finance Ministry secretary-general Tan Sri Dr Mohd Irwan Serigar Abdullah said Malaysia has strengthened its position as a top investment destination.

The Singaporean ex-BSI private banker Yeo Jiawei has been charged with receiving benefits from criminal conduct. He was charged on April 16 for receiving S$200,000 in his Bank of China account in 2013. While the charge sheet made no mention of 1Malaysia Development Bhd (1MDB), Bloomberg reported earlier on Friday that Mr Yeo was charged with money laundering following investigations into 1MDB's money flows.

Two billion people worldwide still lack access to formal and regulated financial services. In 2015, the World Bank Group with private and public sector partners committed to promoting financial inclusion and achieving Universal Financial Access by 2020. According to the Pakistan Microfinance Network
the estimated potential market size for microfinance is 20.5 million in Pakistan, yet the current Microfinance outreach is close to 3.7 million active borrowers, showing there is a long way to go.

Long-term sukuk issuance rose by 21 per cent year-on-year in the first quarter, as Gulf states with worsening fiscal balances tapped international bond markets. According to Fitch the GCC states – along with Mal­aysia, Indonesia, Turkey, Singapore and Pakistan – issued US$11.1 billion of sukuk in the first three months of the year. These countries issued 39.3 per cent of their debt as sukuk – the highest ratio of sukuk to conventional debt in eight years.

CEO Shahril Ridza Ridzuan announced that the Employees Provident Fund aims to open the Shariah-compliant plan in January 2017 and is targeting an initial size of as much as 100 billion ringgit ($26 billion). There’s strong demand and 1.5 million of its 6.7 million members should switch in the first year. EPF has a minimum guaranteed annual payout of 2.5 percent. The Islamic fund won’t have a minimum dividend as they can’t be guaranteed under Koranic rules.

Fitch Ratings has downgraded the Long Term Issuer Default Ratings (LT IDRs) of seven Saudi Arabian banks. The affected banks are Al Rajhi Bank (ARB), National Commercial Bank (NCB), Riyad Bank (RB), SAMBA Financial Group (SAMBA), Saudi British Bank (SABB), Banque Saudi Fransi (BSF) and Arab National Bank (ANB). At the same time Fitch has revised the Outlooks on Saudi Hollandi Bank (SHB), Saudi Investment Bank (SAIB), Alinma Bank (Alinma) and Bank Aljazira (BAJ) to Negative from Stable, while affirming their ratings.

Syarikat Takaful Malaysia Bhd (STM)’s first financial quarter ended March 31, 2016 (1QFY16) net profit was in line with their expectations, accounting for 24% of the full-year forecast. The positive takeaway from the 1QFY16 results was a swift expansion of 14.4% year-on-year (y-o-y) in gross earned contributions (GEC) to RM426.8 million. This emanated primarily from its family takaful unit, which chalked up a growth of 21.8% y-o-y in its 1QFY16 GEC (mainly from mortgage-related products).

Dr Jamil El Jaroudi, chief executive officer of Bank Nizwa, expects Islamic finance to grow above 15-20 per cent of the total banking sector activities in Oman. Speaking about the bank's growth, he said, breakeven was reached in December after three years of operation. Over the next few months, a mobile branch will travel around the Sultanate offering a host of products, services and also make the people aware on the benefits of Islamic banking. According to bank officials mobile branch will help customers to open new accounts, activate debit cards, receive account balances and mini statements, deposit cash and cheques.

Al Meezan Investments CEO Mohammad Shoaib announced the launch of the Meezan Asset Allocation Fund (MAAF), an open-end Shariah compliant asset allocation scheme. MAAF has an initial offering from April 18- 20, 2016 with no load and would be open for subscripion subsequently. MAAF aims to earn a potentially high return through asset allocation between Shariah compliant equity, fixed income and money market instruments. MAAF has an initial offering from April 18- 20, 2016 with no load and would be open for subscripion subsequently.

Islamic banking is growing fast in predominantly Muslim Pakistan, thanks to the growing popularity of its Sharia compliant structure and a helping hand from the government of Prime Minister Nawaz Sharif. According to the State Bank of Pakistan most of Pakistan's conventional banks have now opened Sharia-compliant branches and many are working on full conversion to Islamic banking, which is growing at an annual rate double that of the country's Western-style banking sector. Pakistan's 250 million people are served by 22 local and foreign banks, five of which are Islamic. With a few exceptions almost all local and foreign conventional banks also offer Islamic financing services.

Iran’s central bank governor Valiollah Seif demanded the Obama administration take more steps to facilitate his country’s banking transactions world-wide and warned the landmark nuclear agreement reached last year could be at risk if the U.S. doesn’t act. The White House in response to Seif’s comments replied that the U.S. is abiding by the nuclear agreement. Iranian banks have been unable to process international money transfers and finance trade freely in the months since the deal went into effect in January. Iran also has faced obstacles in repatriating tens of billions of dollars of its oil revenues.

Malaysia may price its 10- and 30-year global Islamic bonds at 150 and 165 basis points over U.S. Treasuries. The data compiled by Bloomberg show that Malaysia’s existing sukuk maturing in 2025 yield 3.05 percent, while securities due in 2045 are paying 3.96 percent. According to Abu Dhabi’s sovereign wealth fund International Petroleum Investment 1MDB and Malaysia’s finance ministry are in credit-default, but the state firm’s President Arul Kanda said the company is in dispute with IPIC and he sees an amicable resolution.

Chairman of CIMB Group Holdings, Datuk Seri Nazir Razak, is taking leave of absence to facilitate the review of the bank’s anti-money laundering processes. Earlier this month, Nazir was identified as one of the persons whom his brother, Datuk Seri Najib Tun Razak, had assigned the task of disbursing US$7mil (RM27.2mil) in the run-up to the 2013 general election. The review is expected to be complete in a few weeks, by which time the board of directors will decide whether Nazir will maintain his positions in the group.

Dubai Islamic Bank (DIB) plans to be operating in Kenya before the end of 2016, despite the Kenyan authorities' moratorium on issuing new banking licences. Kenyan banks have come under closer scrutiny from the regulator because of increasing bad debts, prompting officials and analysts to conclude the sector is ripe for consolidation. Three medium-sized and small banks have been taken over by the regulator since August last year. DIB had been in talks with the regulator before the moratorium was placed on the licensing of new commercial banks last November, meaning it would not affect a decision on its licence.

Islamic International Rating Agency (IIRA) has assigned investment grade, national scale ratings of BBB-(lb)/A3(lb) (Triple B Minus / A Three) to AlBaraka Bank Lebanon S.A.L (ABBL). Outlook on the assigned ratings is 'Stable'. The fiduciary score has been assessed in the range of '71-75', reflecting adequate fiduciary standards wherein rights of various stakeholders are adequately protected. ABBL was incorporated in 1992 as the first Islamic bank operating in the Republic of Lebanon. ABBL has sought to diversify its financings outside Lebanon, thereby mitigating the effects of the slowdown in the Lebanese economy. Owing to the market dynamics and management caution, ABBL maintains a highly liquid asset profile.

Strong views were recently expressed by the Muslim Consumers Association of Malaysia that the Islamic banking and finance industry follows the letter but not the spirit of Islam. Islamic finance (IF) is developing at a remarkable pace. However, Islamic banking is now being accused of operating in a similar fashion as its conventional counterpart, and being skewed to more profit and business-driven interests than serving the real needs of a just society. The heart of Islamic finance involves a risk-sharing spirit, which does not prevail in the practices of contemporary Islamic banks. The importance of independent Syariah supervision will significantly influence the development of the Islamic capital market.

The Bank of England has fined Qatar Islamic Bank’s UK, a subsidiary of Qatar Islamic Bank, for failings in reporting its financial resources to the regulator in 2011 and 2012. The Bank’s Prudential Regulatory Authority (PRA) imposed a fine of 1.385 million pounds ($1.95 million) on QIB for failing to undertake a regular assessment of its capital. Guy Priestley, QIB UK’s interim chief executive, said the problems identified by the PRA have been remedied.

Al Rajhi Bank Malaysia (ARBM), a wholly owned subsidiary of Saudi Arabia's Al Rajhi Bank, has received approval from Bank Negara Malaysia for the appointment of Steve Chen Thien Yin as its new Chief Executive Officer (CEO). As CEO, Steve Chen is responsible for the overall operations of ARBM’s business. He brings along with him more than 25 years of professional experience in Retail, Corporate and Investment banking in growth markets of Malaysia, Singapore, Vietnam, Cambodia and Laos. Prior to joining ARBM, he was the Chief Operating Officer (COO) for Corporate and Structured Finance at Malaysia’s Hong Leong Bank Berhad.

Mauritania is turning to Islamic finance to modernise its banking sector, trying to raise the number of people with accounts from its meagre levels today and in turn increase liquidity so banks can lend more to companies. Many of the Islamic republic’s citizens are uncomfortable with western banking, opting for informal banking collectives or just “keeping money under the bed”, says one local banking executive. Dieng Adama Boubou, director of banking supervision at the Mauritanian central bank, says that the goal was to increase the number of people with bank accounts from 10 per cent today to 25 per cent by 2018, partly by promoting Islamic banking.