IslamicFinance.de

When the Occupy Wall Street (OWS) movement in lower Manhattan’s Zuccotti Park gathered thousands of dollars in surplus donations, its decision-makers agreed upon a deliberate strategy of placing those sums with the customer owned Peoples Federal Credit Union (Peoples).
In doing so, OWS adjusted itself with the principles of Bank Transfer Day. This is a separate movement the objective of which is to create a shift in banking attitudes among the American people in favour of taking deposits out of banks ‘too big to fail’ and transferring them to credit unions and bank like cooperatives that are much smaller and community oriented.

The Islamic Financial Services Board (IFSB) has launched Exposure Drafts (EDs) on liquidity risk management and stress testing for a three-month public consultation period lasting until the end of 2011. The suggested document on liquidity risk management aims to describe a set of guiding principles for the robust management of liquidity risk by institutions offering Islamic financial services (IIFS).
These guiding principles outline among others:
1. the salient characteristics of the liquidity risk management process to be undertaken by IIFS including identification, measurement, monitoring, control, reporting and mitigation;
2. the role of various components in the governance structure as well as that of different functional and business units in ensuring robust and effective liquidity risk management by IIFS;
3. the liquidity risk implications of various Islamic financing contracts during different stages of operations;

Al Rifai International Holding closed a strategic deal with Doha based Qatar First Investment Bank (QFIB). Arranger and financial advisor on this deal was ProFinance International.
The agreement states that the Qatari bank acquired a 15% stake in the leading manufacturer of nuts, kernels, light snacks and delicacies in the Middle East and Europe. Al Rifai International Holding remains the only Lebanese industrial group that a foreign business entity has ventured in during 2011.

TuranBank, in cooperation with the Islamic Corporation for Private Sector (ICD, Islamic Development Bank Group) since 2008, has begun using "Islamic financing" instrument Ijara.
According to the agreement made with ICD, this financing instrument has the purpose to finance the transport sector. Under the terms of the instrument, project funding provided for 5 years including one year as a grace period.

A major GCC workshop on consumer protection has authorized Saudi Arabia’s proposal to set up Supreme Council for Consumer Protection in the GCC states. According to Dr. Nasser Al-Tuwaim, chairman of the Saudi Consumer Protection Association (CPA), the recommendations of the workshop, recently concluded in Doha, will be introduced to the next summit meeting of the Supreme Council of GCC leaders for approval.
Al-Tuwaim made the proposals while addressing the workshop on best practices to distinguish between original and counterfeit products that closed in Doha. The four-day event was set up by the Consumer Protection Department (CPD) under the Qatari Ministry of Business and Trade.

The Pakistan Economy Watch (PEW) noted SECP’s move to push Sharia compliant risk coverage in Pakistan is to benefit millions. The move could triple insurance density and penetration in which Pakistan ranks lowest in the region.
Takaful, for example, has been growing 15 per cent annually. Furthermore, in 2011 it grew 31%. Contrary to conventional insurers who charge money to cover the risks, Takaful spread the risk and rewards among all participants.
Dr. Murtaza Mughal, President of the PEW, requested SECP to supervise and ensure cost-effective and competitive financial protection to the people, push companies to focus small cities and towns and initiate efforts for flow of information aimed at community development.

Investment risk will still be the major rating constraint for Middle East insurers in the next 12 to 18 months. The statement came from Moody's Investor Services.
Moody's highlightes that the key driver behind this constraint on insurers' ratings is that those insurers' appetites for real estate exposure will probably remain strong despite the downturn in certain GCC property markets, and the elevated credit risk associated with real estate in the region.
Analysts anticipate insurers to keep up their relatively high exposure to real estate and equities.

The Shari'ah Board of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), in view of the increased use of Sukuk worldwide, the public interest in them, and the observations and questions raised about them, analyzed the subject of the issuance of Sukuk in three sessions.
The results were the following:
1. Sukuk, to be tradable, must be owned by Sukuk holders, with all rights and obligations of ownership, in real assets, whether tangible, usufructs or services, capable of being owned and sold legally as well as in accordance with the rules of Shari'ah.
2. Sukuk, to be tradable, must not symbolize receivables or debts, except in the case of a trading or financial entity selling all its assets, or a portfolio with a standing financial obligation, in which some debts, incidental to physical assets or usufruct, were included unintentionally.
3. It is not permissible for the Manager of Sukuk to undertake to offer loans to Sukuk holders, when actual earnings fall short of expected earnings.

Ireland has conducted its first Malaysian-managed fund platform. The Central Bank of Ireland has approved the establishment of CIMB-Principal Islamic Asset Management (Ireland) Public Limited: a joint venture between Kuala Lumpur headquartered CIMB Group and Principal Global Investors.
The newly created joint venture will uphold a range of international Islamic funds on the platform from its Dublin domicile. Three equity UCITS are being registered: Islamic Global Emerging Markets Fund; Islamic Asia-Pacific ex-Japan Fund, and Islamic ASEAN Equity Fund.
Once registered the funds will be spread in the UK, Switzerland, Germany, Saudi Arabia, UAE, Bahrain and Singapore.

Although Central Bank of Qatar (CBQ) set the deadline requiring the country's conventional banks which have opened Islamic banking windows to close them down to be Dec. 31, 2011, it has passed almost without being noticed.
Some Islamic bankers are now stating that the move was required to prevent the alleged rampant co-mingling of conventional and Islamic funds at some of the Islamic banking windows, and that the Qatari Islamic banking sector has been successfully re-aligned and consolidated.
The clear message of the directive is that dedicated standalone Islamic banks are favored to half-way houses where co-mingling and all sorts of compromises are possible if not the norm.
The affected banks included the Al-Islami window of Qatar National Bank (QNB), the largest bank in the emirate; Commercial Bank of Qatar; Doha Bank; HSBC Amanah; Ahli Bank; Al-Khaliji Bank and International Bank of Qatar (IBQ), which between them had 16 Islamic banking branches in Qatar.

The Islamic Financial Services Board (IFSB) is at the moment in the process of revising its Capital Adequacy Standard for institutions offering Islamic financial services (IIFS), which was launched in 2005.
Mr. Jaseem Ahmed, Secretary-General at IFSB, noted that their revision process started in January 2011. He highlighted the fact that the adoption of components of capital proposed by the Basel III for IIFS need further deliberations by the stakeholders of the Islamic financial services industry.
The final draft of the revised document is forseen for issuance by the IFSB Council in 2013.

Dr Asutay critically analyzed the points of departure of the modern Islamic finance industry from the value system and aspirations of the Islamic moral economy. He also talked about the sources of and underlying reasons for this observed deviation and its impact on the wider acceptance of this industry.
Dr Asutay began the lecture with the statement that against the backdrop of global financial crisis, Islamic banks and financial institutions (IBFIs) have succeeded to achieve modest growth in their asset base and also in other institutional and financial variables.
He also hoghlighted that there seems to be an overwhelming convergence of IBFIs with conventional banks and financial institutions in terms of operations and products.

The 3rd annual thematic workshop coordinated by the Institute of Islamic Banking and Insurance (IIBI) and the International Shari’ah Research Academy for Islamic Finance (ISRA) occured on 12 December 2011. The workshop was sponsored by SNR Denton – an international legal practice and held at their London office. During the Eurozone summit on 10 December, as European nations tried to decide how to find a way out of the darkness created by unsustainable levels of debt financing, it was maybe particularly appropriate to revisit the foundational concepts of Islamic finance.

One of the most controversed issues in Islamic finance is around the initial capital of Islamic banks and takaful companies, especially when initiated by a conventional parent company.
Some people doubt the purity of the capital in Islamic banks and takaful companies and as therefor question whether these organisations are truly Islamic when their capital is not completely halal.
There are two points to be made in relation to this problem:
1. Money itself is not unlawful, but becomes prohibited through the way it is procured, if it's not in line with the Shari’ah law. Sin does not move with the money from one party to another.
2. Capital earned by the parent companies of Islamic banks may not be all from prohibited businesses. Part of the capital is supplied from individuals and permissible government and private organisations, therefore, it is possible that the funds arised only from permitted sources even if combined with prohibited income.

Experts stated that Islamic financial institutions (IFIs) should develop more products for them to handle better risks, in light of the recent financial crisis that has affected public image and trust in the global banking sector.
The secretary-general of Islamic Financial Services Board (IFSB) noted that Islamic banks were more conservative than their mainstream counterparts and generally had the capital required under the new Basel III framework, which started the implementation last year.

Russia's Finance Ministry is acting on legal acts to sign an unusual investment agreement with the United Arab Emirates. Mutual investments will avoid taxation, whereas the Arabs will not have their profit taxed.
The agreement between the government of the Russian Federation and the UAE "About taxation of the income from the investments of the contracting states and their financial and investment institutions" was signed in Abu-Dhabi on December 7, 2011, but no information about the act was given until recently.
According to the document, tax privileges will be guaranteed only to state economic agents of the two countries. The agreement showed central banks and state-run pension funds, as well as central and regional governments and the organizations that they control. As for the UAE, it goes about the Investment Administration of Abu Dhabi and the Emirate Investment Administration.

Mazen Dajani, chief executive of Jordan's CTI Group, states that Arab Spring pushed his company, one of the world's largest shippers of cement, into the red.
The company is calculating only about 12 to 14 percent of its business will come from the Arab world in 2012, compared with at least 30 percent in normal times.

It seems that Egypt is laying the groundwork for a debut sovereign Islamic bond. The statement came from a person familiar with the matter.
The person added that the government is studying a new legal structure that will allow them to launch a sovereign sukuk.
Egypt this week began negotiating $3.2 billion in support from the International Monetary Fund and talks could take 2-3 months.

The Moroccan Bank 'Chaabi' intends to launch a Sharia compliant account in June 2012 in Brussels, Belgium, the capital of the European Union according to newspaper 'La Libre'. The project is under review and the regulatory authoritz FSMA will be contacted according to Mr. Semlali, a representative of the bank.

GLOBAL CALLS FOR ECONOMIC JUSTICE: THE POTENTIAL OF ISLAMIC FINANCE

Date: Wednesday 22 February 2012

Time: 6.30-8pm

Venue: Hong Kong Theatre, Clement House, London School of Economics

Speakers: Mukhtar Hussain, Professor Volker Nienhaus

Chair: The Hon. Mr Justice Cranston