IslamicFinance.de

The Department of Inspection for Factories and Establishments (DIFE) yesterday requested Islami Bank Bangladesh, the financier of Swan Garments, to further lend Tk 1.39 crore to the apparel maker so that it can clear one month's salaries of its workers. Both the DIFE and the bank had been in trouble finding a successor of the company after the death of its Chinese owner, Ming Yuen Hon (Toby), in April. Disputes over the ownership have to be settled to resume operations of Swan Garments, and if Islami Bank wants to continue financing, it will need permission from the central bank as the company's loans have already been classified.

The central bank's decision not to allow conventional banks to convert into Islamic banks has frustrated half a dozen lenders. Even conventional banks, which were earlier permitted to open branches or windows for Islamic banking, are not allowed to do it anymore. Bangladesh Bank will not entertain their demand, SK Sur Chowdhury, deputy governor of Bangladesh Bank, said yesterday. The banks that are now awaiting the licence to become Islamic Shariah-based banks should have taken their original permits as Islamic banks instead of conventional ones, he said. Some of the applications have been pending for more than two years now.

Islami Bank Bangladesh has moved 16 notches up to rank 954th in 2015 among the top 1,000 banks of the world by The Banker magazine of the UK. The bank ranked 970th in 2014 and 1,000th in 2012, the bank said in a statement. Besides, the bank has been ranked 70th, 250th, 791st and 785th considering return on capital, return on assets, capital assets ratio and amount of assets of the bank respectively, according to the statement. The Banker conducts a rating of the top 1,000 global banks since 1790. The magazine publishes the list in July every year on the basis of data and evaluation of more than 5,000 leading banks from 163 countries.

The resignation of Badlisyah Abdul Ghani, the chief executive officer of CIMB Group Holdings Bhd’s Islamic unit, added to clouds over Malaysia’s sukuk market, amid a probe into a state investment company and a renewed global commodity rout. He said that he resigned “to explore new opportunities”, declining to comment on speculation the decision was related to the investigation of 1Malaysia Development Bhd. CIMB, Malaysia’s lead Islamic bond underwriter for the past eight years, will now have to find and groom a replacement just as sukuk sales in the world’s biggest market dropped 36% in 2015 to a five-year low. Political uncertainty caused by the probes, falling commodity prices and a looming US interest-rate increase may deter issuers.

The National Commission on Muslim Filipinos (NCMF), the lead government agency tasked to spearhead the Philippine Halal industry, in partnership with Bangko Sentral ng Pilipinas (BSP), is now pushing for a new legislation on Islamic banking. Secretary Yasmin Busran-Lao of NCMF told reporters Wednesday at the sidelines of the opening ceremony of the first Mindanao Halal Festival that they are now furnishing the draft of a bigger legal framework for Islamic banking. She said that part of the plan is the conversion of Al Ahmana bank in the Philippines to a fully Shari'ah compliant bank.

The Shariah-compliant banking sector in Malaysia, already among the largest in the world by assets, is forecast to grow at an average annual rate of 18% over the next years to reach a value of $296.26bn in 2019. This is the prognosis contained in the Malaysia Islamic Finance Report 2015 revealed at a press conference in Kuala Lumpur on June 30. The report, commissioned by Malaysia’s CIMB Islamic and produced in partnership with Jeddah-based Islamic Research and Training Institute (IRTI), the General Council for Islamic Banks and Financial Institutions based in Manama, Bahrain and Thomson Reuters, also projects that takaful contributions in Malaysia will grow at an average 18.2% year-on-year to reach a market share of 17.96% of total insurance premiums by 2019, equal to $5.51bn.

CIMB Islamic Bank’s chief executive officer and board member Badlisyah Abdul Ghani will resign all his posts effective Aug 15, 2015. Badlisyah also heads CIMB Group Bhd’s Islamic banking and finance franchise. In a statement to Bursa Malaysia, CIMB Islamic Bank’s board of directors announced it has elected Mohd Shafri Shahul Hamid as the person-in-charge of the bank and agreed for the group nomination and remuneration committee to start the process of identifying Badlisyah’s replacement. Badlisyah courted controversy last week when he questioned the validity of documents used by The Wall Street Journal (WSJ) in its recent reports which claimed billions of ringgit were deposited into accounts belonging to Prime Minister Najib Abdul Razak.

A special task force comprising the Attorney-General's Chambers, police, anti-corruption authorities and Bank Negara is now probing the claim made by The Wall Street Journal (WSJ) on July 2. WSJ has posted documents on the money flow into Najib's accounts on the Internet to support its report. WSJ's report centres on some US$700 million (RM2.67 billion) funnelled into two of Najib's accounts at AmBank in Kuala Lumpur. The money was transferred in five separate deposits from two originating points. According to WSJ, the largest portion of the money – US$681 million – was transferred to Najib's accounts in March 2013, ahead of the May general election (GE13). Najib has denied taking funds for personal gain.

The Malaysian Attorney-General's Chambers (AGC) on July 9 said that six bank accounts, ordered frozen on Monday as part of a 1Malaysia Development Berhad (1MDB) probe, were not linked to the prime minister, as his accounts with AmBank Islamic had already been closed by then. The task force is investigating allegations in a report by The Wall Street Journal (WSJ) that up to US$700 million from state-owned fund 1MDB had been transferred to Mr Najib for personal use. Mr Najib refuted the accusations in a statement on Wednesday, reiterating he had never obtained funds from 1MDB for his personal gain. The AGC also detailed items seized in a raid of the 1MDB office in Kuala Lumpur on Wednesday, including minutes of meetings of the 1MDB Board of Directors.

The strong demand for Islamic debt papers by foreigners appears to be reaching a plateau. According to analysts, the demand for Islamic bond papers from foreign investors in the last one year has pushed up prices and subsequently the yields have come down. Standard & Poor’s (S&P) Ratings Services foresees the global sukuk market heading towards a correction in 2015 after Bank Negara stopped issuing the bond earlier this year. Bank Negara’s move leaves the door open to issuers such as the International Islamic Liquidity Management Corp and the Islamic Development Bank to step up their issuance and provide the industry with liquidity, thereby contributing to the development of an Islamic yield curve.

Indonesian financial authorities are considering to ease foreign ownership limits for local Islamic banks and to promote new sharia-compliant financial tools in an effort to make the Islamic finance industry more attractive to foreign investors and the Indonesian population. The current low market share of Islamic banking in Indonesia in combination with the recent high growth pace and government support implies that there is plenty of room for further growth of the Islamic banking industry in Indonesia. In this context, Indonesia’s Financial Services Authority (OJK) developed and launched a five-year roadmap earlier this year, which aims to triple the market share of Islamic banks to 15 percent by 2023. The OJK also announced that it considers to ease ceilings on foreign ownership for Islamic banks.

State-owned Islamic Bank of Thailand, branded as IBank, has become the target of domestic and foreign investors, including from the Middle East, according to its chairman Chaiwat Uthaiwan. In an effort to rehabilitate its business, the country’s State Enterprise Policy Office agreed to allow local or foreign private investors to acquire more than 50% of stakes in the bank. According to IBank’s chairman, several Asian financial houses including some from the Middle East were interested to take over a larger stake. But this could happen only next year because the bank has to separate its good and bad assets first before it could think about a stake sale, he added. At present, IBank tries to restructure $1.7bn of bad loans out of a total loan amount of close to $3bn. Net loss in 2014 was around $300mn.

CIMB Group chairman Datuk Seri Nazir Razak has ordered an internal inquiry on a senior executive of its Islamic banking unit who yesterday accused US-based Wall Street Journal (WSJ) of being duped by doctored documents in its explosive money trail exposé on 1Malaysia Development Berhad (1MDB). Nazir disclosed the action in a late night post on his Instagram account, after news portal Malaysiakini reported CIMB Islamic Bank chief executive officer Badlisyah Abdul Ghani for his erroneous analysis on WSJ in his closed-circuit Facebook page. Badlisyah has admitted to making an error in his analysis of the WSJ documents, which the daily purports were based on an ongoing government investigation on 1MDB, adding that he has also corrected his initial Facebook post.

The government uses effective approach and adopts efficient and integrated structure to develop Malaysia as an international Islamic financial centre, said Deputy Finance Minister, Datuk Chua Tee Yong. He said the approach was due to the strong cooperation among various ministries, agencies, private sector and other stakeholders via the Malaysia International Islamic Financial Committee (MIFC) committee chaired by Bank Negara Malaysia governor. Asyraf Wajdi wanted to know whether the Finance Ministry has plans to develop the Islamic financial system in Malaysia by establishing ‘local centres’ as in Qatar, Bahrain, UK and Singapore. Chua said the plan and strategic issues would be discussed by MIFC exco to facilitate the administration and smooth implementation of the MIFC initiative.

Abu Dhabi Islamic Bank PJSC is considering entering markets in South East Asia and Africa to tap demand in countries with a large Muslim population. The bank has “looked closely” at Indonesia and Malaysia as well as Algeria, Morocco and Jordan, Chief Executive Officer Tirad Mahmoud stated. The bank may consider an acquisition next year as part of the plan, he said. ADIB in 2014 acquired the retail banking business of Barclays Plc in the U.A.E. for 650 million dirhams ($177 million). The bank was also among lenders that bid to buy the retail banking assets of Citigroup Inc. in Egypt this year, losing out to Commercial International Bank Egypt SAE last month. ADIB expects lending to grow by four percent to six percent this year, Mahmoud added.

Md Mustafa Khair has recently been promoted as the deputy managing director of First Security Islami Bank. Prior to the promotion, Khair has been serving the bank as senior executive vice president, the bank said in a statement. He started his banking career at Bangladesh Shilpa Rin Sangstha, which is now known as Bangladesh Development Bank. He also worked with IFIC Bank and Dutch-Bangla Bank before joining First Security Islami Bank in 2006, according to the statement.

RAM Rating Services has reaffirmed the A2/Stable/P1 financial institution ratings of Bank Muamalat Malaysia Bhd. The ratings agency had on Monday also reaffirmed the bank’s A3/Stable rating of its RM400mil Islamic subordinated Sukuk programme (2011/2026). The one-notch difference between the bank’s long-term financial institution rating and that of its subordinated Sukuk reflects the subordination of the debt facility to the bank’s unsecured obligations, it said. RAM Ratings said the bank’s asset-quality indicators had weakened during the period under review. Its gross impaired-financing (GIF) ratio had increased to 3.0% as at end-December 2014 (end-March 2014: 2.7%), with the largest upticks in home and personal financing.

Indonesian regulators are promoting new sharia-compliant financial tools and considering easing foreign ownership limits for domestic Islamic banks, seeking to make the sector more appealing to foreign lenders. This year the financial regulator, Otoritas Jasa Keuangan (OJK), launched a five-year strategy that aims to triple the sector's market share to 15 percent by 2023. Attracting foreign capital is part of those plans; the OJK is considering easing foreign ownership ceilings for Islamic banks, now at 40 percent. Meanwhile, companies can raise cash in foreign currencies more easily with Islamic instruments, after the country's national sharia board approved sharia-compliant currency hedging tools in April.

HSBC Amanah Malaysia Bhd has launched its Islamic Socially Responsible Unit Trusts, the first of its kind in the Islamic banking landscape in Malaysia. The company said the unit trusts are tailored for customers who want to invest and at the same time make a difference in the communities they live and work in. A portion of profits earned from the Socially Responsible Unit Trust proposition will be channelled to the Teach For Malaysia foundation. A contribution of RM10 will be made for every customer placement below RM50,000 into selected funds of the unit trusts and will double to RM20 for placement above or equal to RM50,000. Chief Executive Officer Rafe Haneef said the unit trusts may provide a good return on investment for customers while extending the benefit to children who suffer from education inequity in Malaysia.

The Islamic Research and Training Institute (IRTI) is pleased to announce the launch of the Malaysia Islamic Finance Report 2015, which is the latest in the Islamic Finance Country Reports (IFCR) series. You can download your copy of the Malaysia Islamic Finance Report 2015 here: http://www.irti.org/English/News/Documents/406.pdf You may also find the introductory video in YouTube: https://www.youtube.com/watch?v=IuJd-hTTnCE