IslamicFinance.de

The programme, fully sponsored by Kuwait Finance House-Bahrain (KFH-Bahrain), is a joint initiative of KFH - Bahrain, Young Arab Leaders Organization (YAL) and InJAz Bahrain.
The main objective of the annual mentorship programme was for Bahraini students to gain in-depth insight into a leading entrepreneurial ecosystem in Sophia Antipolis.

Dear Reader,

Many times I read, and on all conferences we debate on the issue of form over substance - is their a simple solution?

Let's revisit:

Form over substance means that contemporary Islamic finance takes more emphasize on the form of the contracts (in their Arabic terminology like Murabaha, Musharaka etc.) as in their substance, especially their economic substance, which often looks the same after conducting a sequence of Arabic named contracts.

Scholars have to judge the appearance of the form, meaning the contracts in front of them. A judge shall not guess the intentions of the contractual parties but typically has to rely on the text itself to come a decision. Different schools of Islamic law have different degrees on reliance on the form and considering or rejecting to assume 'intentions' . The hesitance to guess about 'intentions' is based on the fear to commit injustice to the parties and a procedural cause to get evidence about them.

North east company International Innovative Technologies (IIT), UK, issued a Sukuk. The 4-year, USD 10 mn musharaka sukuk – small by international capital markets standards – was placed privately with Millennium Private Equity and regulated by Dubai Financial Services Authority.

THE Jeddah-based Islamic Development Bank will be preoccupied with two developments in 2011 apart from its established plan of action. This is the progress toward the launch of its mega bank project and the other is the continuation of its trust certificate (sukuk) program.
The mega bank project was promoted by Saleh Kamel, head of Dallah Albaraka Group, who has been trying to get it launched for the last few years. But his failure to get the project started off through the support of both government and private investors saw the project somehow passed on to the IDB. The plan is to launch a mega bank that will effectively be an Islamic Interbank bank, with the aim of providing short-term liquidity to the global Islamic banking market and of promoting the trading of sukuk in the secondary market by acting as a market maker.
CIMB of Malaysia, Citigroup, HSBC and Standard Chartered Bank acted as joint lead managers and joint book-runners, and NCB Capital of Saudi Arabia acted as co-lead manager for this transaction. The success of IDB's transaction was underpinned by a comprehensive international road show covering Asia, the Middle East and Europe.

On 18 November 2010 the "Islamic Finance Conference" will be held in Frankfurt am Main as part of the 13th EURO FINANCE WEEK (EFW) taking place from 15 to 19 November 2010 under the auspices of Dr. Wolfgang Schäuble, Minister of Finance of the Federal Republic of Germany.

The conference is organised in cooperation with the Union of Arab Banks. Institutional partner is the Institute for Islamic Banking and Finance.

The conference focuses challenges and opportunities of the Islamic Finance in Germany and in Europe and discusses investment trends, Sukuk’s opportunities as well as Islamic Wealth Management and last not least an Islamic Finance outlook.

Information about the event can be found under www.eurofinanceweek.com/islamicfinance

The organizer of the event, the Maleki Group, has offered a limited number of “Guest Ticket” exclusively for Islamic Finance group. Please note, admission upon the special guest ticket is very limited and the registrations will be processed on a first-come, first-served basis.

Gatehouse Bank plc (Gatehouse), a wholesale Shariah compliant investment bank in the City of London, recorded another successful property acquisition with the completion of the £32.65 million acquisition of the InterContinental Hotels Group Global Headquarters in Denham, Greater London, UK; to bring Gatehouse’s total property acquisition value to more than £160million.
In association with GSH Kuwait, Gatehouse has acquired the InterContinental Hotels Group headquarters building, a 97,340 sq. ft. property that is fully occupied by InterContinental Hotels Group until July 2022, providing a 12 years term certain income with no breaks.
Gatehouse continues to provide client service excellence through its nimble ability to respond to client requests for annualised returns with low risk.

Until recently the issuance of Islamic bonds, or sukuk, was confined to the Muslim world. But now a number of international borrowers are tapping the markets, including Nomura Holdings in Japan and Europe's first corporate borrower, International Innovative Technologies.
The ratings agencies Moody’s and Standard & Poor’s say they expect to see a rise in the number of sukuk issues by new players over the next 12 months, including issues by borrowers in Singapore, Australia, Luxembourg, Thailand, Hong Kong, France and Russia.
While the Islamic Financial Service Board and the accounting and auditing organization have defined standards for sukuk, defaults over the past year have shown that new guidelines must be set as problems arise, particularly as sukuk start to generate global attention.

Swiss insurer Zurich Financial Services AG (ZURN.VX) will continue to eye bolt-on acquisitions in emerging markets and sees Islamic insurance, or takaful, as key to growing its Middle Eastern business.
Zurich earlier in October said it bought privately-owned Lebanese insurer Compagnie Libanaise D'Assurances and recently set up a management unit dedicated to the wider Middle East and Africa region.
The insurer is betting on sharia-compliant insurance sector, corporates and large commercial businesses to grow its presence in the wider Middle East.
Analysts expect the sharia-compliant insurance sector to grow nearly 15 percent annually in the next five years and exceed $7 billion in premium income.
With a penetration rate of around 1 percent of gross domestic product (GDP), the overall Middle Eastern insurance sector lags mature markets but its enormous growth potential has already attracted global heavyweights such as AXA (AXAF.PA) and Allianz AVLG.DE.

Bank of London and The Middle East plc , London's leading wholesale Sharia'a compliant bank, today announced the launch of BLMEFX, one of the world's first Sharia'a compliant web-based FX trading platform to provide clients with direct access to multiple currencies in order to undertake overseas transactions.
In a Sharia'a compliant environment, currency trading is used to support cross-border transactions rather than to realise a profit. Under Sharia'a all currency transactions must be backed by a commodity, which has historically made currency trading, as well as related transactions, complex and expensive. Through BLMEFX, corporate and private clients have instant access to a large number of currencies as easily as if they were using a conventional system, thereby making the process much simpler and more cost effective.
BLMEFX, which uses the latest secure Java-based technology with full audit-transparency, has been designed with the emphasis on ease of use. Once a client has been permitted access they can trade on the platform using any of the major Internet browsers available today.

Abu Dhabi Islamic Bank, or ADIB, the emirate’s largest Islamic lender by market value, is planning to sell five-year benchmark Islamic bonds, or sukuks, this week, according to people familiar with the matter.
Company officials, who have been on a series of investor meetings in Asia, Europe and the Middle East since Oct. 20, end their roadshow Tuesday. Benchmark-sized bond deals are those worth at least $500 million. The securities are expected to price later this week.

HSBC Amanah, the Islamic banking window of banking giant HSBC, is planning to launch its Islamic banking services in full scale in Bangladesh, a visiting top official of HSBC said Tuesday.
With the re-launch, HSBC Amanah in Bangladesh will be the largest presence in South East Asia, the deputy CEO said. Currently HSBC Amanah is operating in the UK, Malaysia, Middle East countries, Indonesia and other countries.
HSBC Amanah products are rigorously audited and approved by HSBC central Shariah committee.

Al Baraka Banking Group has confirmed its plans to open in France, saying it will open up five branches in metropolitan France from 2011.
Press reports in France claim that Al Baraka Chief Executive Adnan Yousif confirmed the bank's intentions to establish a presence in the country. The news that Al Baraka Banking Group plans to set up in France follows two years of activity by the French authorities aimed at attracting Islamic banking institutions.
Al Baraka has selected Deutsche Bank and Standard Chartered as advisers.

Kerala offers huge potential for setting up financial institutions based on Islamic tenets, given its strong historical ties with West Asia and a large Muslim population that adheres to investment norms prescribed by Sharia. Islam prohibits giving or receiving of interest, which it categorises as usury. It does not prohibit trading and investment but advises followers to share risks. It tells the investor to share the loss, just as he would have shared the profit, in case the investment makes a loss. The West has successfully repackaged this investment process as Islamic banking. Kerala is trying to follow that path.

Noor Islamic Bank expects to close a “healthy number” of Islamic syndicated loans and Islamic bonds in the first half of 2011, with Turkey emerging as an active market for Islamic finance.
Aamer Zaidi, head of corporate banking at Noor Islamic Bank, said on Wednesday that the company is involved in a few sukuk issuances in the Gulf region and is also working on syndicated loans within the UAE.
The Gulf sukuk market is poised for a revival as large corporate and supra-national issues come to market following Dubai World’s restructuring accord with 99 percent of its bank lenders as well as Dubai’s successful $1.25 billion conventional bond issue in late September.

From Australia to Britain and even France, which recently banned the face-veil, Western economies are adjusting their laws to encourage growth in the Islamic finance sector they hope will attract wealthy Gulf investors.
Enthusiasm in the US has been tempered by politics, however, which could slow the growth of Islamic finance and push business from the oil exporting Gulf elsewhere. Islamic finance has faced scrutiny in the US, with critics suggesting the $1tn industry was a front to funnel funds to terrorists or a plot by Muslims to spread Shariah principles, which include a ban on interest.
The US Federal Reserve has launched an Islamic finance study group and is seeking consultants within the Islamic finance industry.
The US Treasury has launched the Islamic Finance 101 programme to teach government agencies about Shariah-compliant business.
The programme is run with Harvard’s Islamic Finance Project, which was created in 1995 to study Islamic finance from a legal perspective and foster collaboration among scholars inside and outside the Muslim world.
But these initiatives have also been politicised.

Abu Dhabi Islamic Bank (ADIB.AD) will kick off a non-equity investor roadshow in Asia, Europe and the Middle East on Oct. 20, it said on Monday, amid talks that the lender is planning to issue an Islamic bond, or sukuk.
Last week, sources said ADIB, the second largest Islamic lender in the United Arab Emirates, had mandated three banks to arrange a sale.

France has now a tax neutrality regime in place for facilitating Islamic financial products including Islamic bonds and certificates; cost-plus-financing; leasing and construction industry forward financing.

The measures were passed at end July 2010 but were published in the Bulletin Officiel des Impôts n° 78 on Aug. 24. They supersede the instructions published by the French government on Febr. 25, 2009, relating to sukuk and Murabaha transactions only.

The text in original can be found here: http://www11.minefi.gouv.fr/boi/boi2010/cadliste.htm

Customers who are eager to be Sharia compliant are flocking to Islamic banks. Yet as Islamic lending boasts that it charges no interest, crunching the numbers churns out something of a surprise. Some Islamic mortgages charge more than already high interest-based traditional mortgages. You could even argue that an Islamic mortgage is, in some cases, so expensive it is akin to usury. And the terms are often less favourable.
Take the current murabaha rates in Syria and Lebanon. Murabaha is an Islamic equivalent to a mortgage or car loan. Instead of lending the customer money and charging interest, the bank purchases the asset and resells it for a profit to the customer. This profit is the murabaha rate.
Unlike, say, in the UK, there are no regulatory laws in Syria that require Islamic banks to quote their product in a way that is equivalent to an interest-based traditional mortgage to allow comparison shopping. The only way the average customer can convert murabaha to interest-based is with the help of a financial calculator and a professional.

Egypt, home to the Arab world’s largest Muslim population, will issue its first Islamic debt guidelines in 2011 to catch up with the Persian Gulf and Southeast Asia and help spur sales.
Al Baraka Bank Egypt ESC, a Cairo unit of Bahrain-based Islamic lender Albaraka Banking Group, may sell dollar- denominated Islamic bonds, known as sukuk, in the second half of 2011.
Al Baraka, Faisal Islamic Bank of Egypt and National Bank for Development are the nation’s only Shariah- compliant financial institutions.

Moody's Investors Service has today assigned an Investment Manager Quality (MQ) rating of MQ2 to Jadwa Asset Management, a division of Saudi Arabian investment bank Jadwa Investment. This is the first MQ rating in the Middle East region and reflects Moody's opinion of the firm's very good investment management capabilities, financial profile and investment performance. At the same time, the rating also takes account of the firm's limited operating history, exposure to "key man" risk and the challenges the firm may face in managing growth.
Moody's believes that Jadwa's challenge to grow is primarily personnel-driven. A shortage of local investment talent and the challenge of retaining key members of the intestment team are likely to test Jadwa's ability to maintain the high standard of its personnel.
However, Moody's notes that Jadwa has been successful in attracting talent both locally as well as from outside the GCC. Moreover, the firm also reinforces the team's capabilities through internal and external training, and offers equity-based incentives to align interests and minimize turnover of key staff.