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Al Baraka Banking Group is targeting the sale of capital-boosting sukuk worth $300 million in the first quarter of 2017. The announcement was made on the sidelines of an Islamic banking conference by the group's CEO Adnan Ahmed Yousef. He also added that the issue would enhance the bank's core Tier 1 capital. Al Baraka had a total capital adequacy ratio of 15.15 percent as of June 30, according to a regulatory disclosure on its website.

According to the Thomson Reuters Islamic Finance Development Report 2016, Bahrain leads the GCC’s Islamic finance development for the fourth consecutive year. The report is jointly produced by Thomson Reuters and the Islamic Corporation for the Development of the Private Sector (ICD). Bahrain ranks first globally in terms of Governance due to its well established regulatory environment and governance mechanisms. The regulations cover Islamic financial institutions including Islamic asset management and Sukuk. Bahrain is among the top ten countries for the other indicators as well. For the Knowledge indicator, its Islamic finance ecosystem is supported by 17 providers offering Islamic finance related education including universities and institutions. Meanwhile, its Islamic financial institutions continue to contribute socially, with US$ 18.5 million charity, zakat and Qardh al Hasan funds disbursed in 2015.

GFH Financial Group (GFH) has signed a final Sukuk restructuring agreement with Gulf Holding Company (GHC) and Al Rajhi Bank. The agreement allows for the rescheduling of the Villamar project’s finances and officially marks the re-launch of the project located in the Bahrain Financial Harbour. Villamar @ The Harbour is one of the flagship projects of GHC and is valued at $700 million, being a residential complex spread over 35,900 square meters. As per the agreement, GFH will participate in financing completion of the project with an amount up to $50 million. The restructuring will have a positive impact on GFH’s shareholding in Gulf Holding Company.

Reconciling accounting standards and religious principles is challenging the Islamic banks and their regulators as they adapt to new international book-keeping rules due to come into force in 2018. The new rules, known as IFRS 9, will leave their mark on all major products used by Islamic banks - from simple savings accounts to Islamic bonds - and impact their bottom-lines. Banks around the globe are gearing up to implement IFRS 9 from January 2018, posing a particular challenge for many Islamic finance contracts as they change the way financial assets are classified and measured, requiring lenders to book expected losses in advance. The problem for most Islamic financial products is that their accounting treatment can often diverge from the actual economic substance of a transaction, a key concept behind IFRS 9. This has prompted the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) to set up a working group to look at ways to revise its rules

The Shari’ah Board of AAOIFI held its annual meeting from 17 to 19 November 2016 in the Kingdom of Bahrain. The meeting was concluded with issuance of a number of resolutions as well as the adoption of two new Shari'ah standards. The new standard on the Liability of Investment Manager defines the concepts of transgression and negligence and breach of contractual stipulations on the part of the investment manager. The standard also sets out the Shari'ah rulings pertaining to investment manager's liability or volunteering to bear liability. AAOIFI has also approved a new standard on Gold and it Trading Controls. The standard will be officially launched at a press conference whose date will be announced shortly. It will also be published together with other standards in the new edition of AAOIFI's standards.

The initial public offering of the Eskan Bank Realty Income Trust (REIT) has opened today. The BD 14.4 million offering represents 72.9% of the Trust’s total size of BD 19.8 million, and has a target of 6.5% in net distributable income payable semi-annually. This Sharia-compliant offering is reserved for Bahraini and GCC nationals and is open to individual and institutional applicants. Securities & Investment Company (SICO) is the mandated lead manager, while Bahrain Islamic Bank (BisB) has been appointed as the receiving bank. According to Eskan Bank's General Manager Dr. Khalid Abdulla, the REIT enables investors to share in a diversified portfolio of properties, namely Segaya Plaza and Danaat Al Madina, offering diversification within the real estate sector. The properties currently have an occupancy rate of over 85%, and the Trust intends to increase its Sharia-compliant property portfolio.

Organised jointly by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI), the Central Bank of Bahrain (CBB) and the World Bank Group, the 11th AAOIFI-World Bank Conference has started on Monday. CBB Governor Rasheed Al Maraj said in his keynote address that the CBB would introduce a set of new regulations for the Islamic Financial Industry. He added that the industry also needs to invest in the training of the human capital in addition to working on succession planning. Participants discussed the challenges, opportunities and development of Islamic finance in the changing economic climate. The main take away of the day was about the future prospects, innovation, differentiation between the capitalism and the Islamic finance as a whole.

Bahrain-based Al Baraka Banking Group plans to expand its network in Pakistan following its merger with Burj Bank. CEO Adnan Ahmad Youssef said the Group's strategy in the Pakistani market was built on expansion in all Pakistani cities. Burj Bank’s 74 branches will be added to those of Al Baraka Bank (Pakistan) to form a network of 224 branches. Al Baraka Bank (Pakistan) aims to increase the number to 300 branches in the next four years. The merger is expected to take effect from the last quarter of this year, and the Bahraini bank will be the major shareholder in the merged institution. Al Baraka Banking Group is also setting up in Morocco after the North African nation introduced legislation allowing Islamic banks into the domestic market. With this entry the Group completes its network in almost all Arab Maghreb countries.

Mumtalakat, Bahrain’s sovereign wealth fund, is planning to invest heavily in the country’s real estate sector in the coming years. According to CEO Mahmood H Al Kooheji, new hotels, shopping malls and spas will be constructed to boost tourism and the the total investment in the projects will be about $500 million (Dh1.84 billion) over the next five years. The new projects are being planned despite low oil price environment in the Gulf region that has impacted the revenue of the government. On profits of the company this year, Al Kooheji said he expects to cross $100 million. The company is now looking for investments in Saudi Arabia, but also for new markets in the Far East, the US and Europe.

Bahrain-based Ibdar Bank has announced the acquisition of a $78-million multi-family housing property at Montgomery county in Maryland, USA. The area boasts the third-largest commercial downtown in the USA, being home to the headquarters of the White House, World Bank, and the International Monetary Fund. Ahmed Al Rayes, acting chief executive of Ibdar Bank, said the acquisition was the Bank's first successful foray into the USA and was aligned with the Bank’s strategy to diversify its international real estate portfolio. Bassam Kameshki, the director of Real Estate at Ibdar, said the Bank has selected a straight forward asset class in a strategic location. The investment holding period will be up to 5 years. Besides real estate, Ibdar Bank is also engaged in private equity, capital markets and investment advisory activities.

#Bahrain's Finance Minister Shaikh Ahmed bin Mohammed Al Khalifa has met with the new President of the Islamic Development Bank (IDB) Group, Dr. Bandar Hajjar. The meeting was held on the sidelines of the minister's participation in the annual meetings of the Boards of Governors of the IMF and the World Bank Group held in Washington. Ways to broaden the close cooperation between the two sides were discussed. The minister praised the IDB's distinguished standing, which plays a vital role in promoting the development movements in Arab and Islamic countries.

The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) plans to finalize several new standards by the end of the year. Bahrain-based AAOIFI has published a draft sharia standard for gold-based products with a one month consultation period ending on Nov. 9. AAOIFI's sharia board also discussed work on a new sharia standard covering credit cards, while a final draft of a sharia standard covering liability of investment managers would be issued during its next meeting. Standards for murabaha, sukuk and ijara are also underway with a working group expected to finalize them by the end of the year. A revision of the existing standard on sukuk will cover issues including the asset-backed and asset-based nature of sukuk, capital boosting instruments, beneficial ownership and non-viability clauses.

Fitch Ratings has affirmed GFH Financial Group’s (GFH) Short-term Issuer Default Rating (IDR) at "B" and revised its outlook upward from stable to Positive with a Long-term IDR at "B-". The positive outlook reflects the steps GFH’s management have taken to strengthen its balance sheet by paying down debt, reshaping the business model with focus on income-generating investments, and consequent improvement of profitability. GFH said it believes that this upward revision of the outlook is the result of its new strategy and in developing new recurring steams of income through income yielding investments.

Diyar Al Muharraq has announced the signing of a Murabaha contract worth $366 million with a consortium of banks including Al Salam Bank-Bahrain, Kuwait Finance House, Bank of Bahrain and Kuwait and Al Baraka Islamic Bank. The participating banks will part fund the Deerat Al Oyoun Social Housing project; total costs are estimated at $700 million. Diyar Al Muharraq will bear the responsibility for financing and constructing all units of Deerat Al Oyoun as well as the initial infrastructure and public utilities. The anticipated date for the project’s first phase completion is February 2018. Al Salam Bank Deputy Group CEO Anwar Murad commented on the agreement being a milestone in terms of organizing a project of this magnitude, stressing the cooperation between Islamic and conventional banks in the region.

Bahrain's central bank has proposed new governance rules that would require Islamic banks to conduct external sharia audits of their operations, representing a shift away from the long-held practice of self-regulation. Islamic banks in the Gulf have traditionally used in-house boards of Islamic scholars to determine whether religious principles are being obeyed. Some scholars argue that this decentralised approach allows more flexibility and diversity in Islamic finance. Bahrain's central bank said that a public consultation period for its draft rules would close on Oct. 16. These provisions could place Bahrain among the strictest jurisdictions for sharia scholars.

Fitch Ratings has assigned Bahrain's proposed US dollar-denominated sovereign global sukuk trust certificates, to be issued by CBB International Sukuk Company 5 (CBB5), an expected 'BB+(EXP)' rating. Fitch has also assigned Bahrain's proposed US dollar-denominated bonds an expected 'BB+(EXP)' rating. The expected ratings are in line with Bahrain's Long-Term Foreign Currency Issuer Default Rating (IDR), which was downgraded to 'BB+' with a Stable Outlook in June 2016. Certain aspects of the sukuk transaction will be governed by English law while others will be governed by laws of Bahrain. Fitch's rating on the certificates reflects the agency's belief that the Bahraini government would stand behind its obligations.

The relationship between capital structure and performance in Gulf Countries Banks, came under the spotlight in a comparative study between Islamic Banks and Conventional Banks. The study was conducted by Associate Professor in Finance and Banking at Kingdom University Dr. Abdelrhman Meero. According to Professor Meero, it is imperative to conduct continuous studies and research in this field, especially as new trends and regulations are periodically introduced by governing authorities in this sector. Results of the study show that there is a similarity of capital structure of Islamic banks and Conventional banks in Gulf Countries. The similarity of capital structure could be the result of the regulation system of the Gulf Countries, which controls the two types of banks by the same capital adequacy regulations.

Qatari Islamic banks’ short-term high quality liquidity assets to cover monthly net cash outflow is comparable to those of their conventional peers and their funding pressures are to some extent mitigated by frequent bonds and sukuks issuance by the government, according to Moody’s, a global credit rating agency.

“In Qatar, the LCRs (liquidity coverage ratios) of Islamic banks are comparable to those of their conventional peers. This situation reflects the absence of sizable retail deposit franchises among the Qatari banks, coupled with heightened systemic liquidity pressures that had led to banks relying more heavily on market funding,” Moody’s said in a report. The funding pressures are mitigated somewhat by the frequent issuance of bonds and sukuk by the Qatari sovereign, a situation, which provides local Islamic banks with the same good access to HQLAs (high quality liquid assets) as their conventional peers, it said.
The rating agency found that five of the six GCC countries are Basel III compliant and have introduced LCRs, namely Saudi Arabia, Qatar, Kuwait, Bahrain and Oman; only the UAE has yet to adopt a LCR framework for its banks.

Switching from conventional ‘Western’ financial practices to Islamic banking gives distinct advantages to banks, with the change improving the liquidity and value of stocks. Researchers at the Universities of Birmingham and Brighton studied a merger that took place in Bahrain, between an Islamic bank and a conventional bank in the wake of financial crises that rocked the world between 2007 and 2009.

Their study showed that the 2009 acquisition of Bahrain Saudi Bank by the Islamic institution Al Salam Bank Bahrain (ASBB) prompted a significant increase in the liquidity of ASBB after adopting an Islamic banking system. Published in the Journal of International Financial Markets, Institutions and Money, the study looks at how the amalgamated bank operated after the merger, concluding that Islamic banking offered the institution significant advantages.

The existence of interest, variation of charges on the basis of amounts of cash withdrawals using the cards and the fact that the default rates with quite punitive charges are some of the features that makes the conventional credit cards non-compliant from the Islamic perspective.
In order to comply with the Shariah principles and guidelines, Islamic banking has embraced the needs of customers by repackaging and reimagining existing conventional banking products or engineering innovative products. These help regulating human interactions and transactions to promote transparency, fairness, justice and accountability to each other. The provisions of interest, the financing of business ventures involving alcohol, arms trade and undertaking excessive risks as well as ambiguous contractual obligations that end up benefiting some parties in transactions at the expense of others, form part of the Shariah’s prohibitions. Credit cards are therefore considered offensive to the Shariah standards