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National Bank of Kuwait announced the launch of its “Islamic KD Ijara Fund II”. This fund is the eighteenth edition of the Islamic Ijara funds and the second from the Kuwaiti Dinar series and is will offer Private Banking clients an investment product that generates monthly income of 6.25% throughout the Fund’s term.

The Fund is entirely compliant with the laws of Islamic Shariah as approved by the independent Shariah board for Islamic funds marketed by NBK in Kuwait, comprised of Sheikh Dr. Khalid Mathkor Al-Mathkor, Sheikh Dr. Essa Zaki Shakra and Sheikh Dr. Abdul Aziz Khalifa Al-Qassar.

6.10.2010: Report is update and again free for download

3.9.2009:
Funds at Work, a strategy consultant for the fund industry, updated its analysis on Shariah scholars' engagement in financial service organisations in the GCC countries and now internationally covering companies with 956 (498) Sharia Board positions and 180 (121) scholars.

The study shows that the Top 5 scholars make up at least 30.15 % of the entire univese of almost 956 board positions. The Top 5 scholars internationally (ex GCC) out of 70 scholars active beyond the GCC - make 58.21 % of all positions (201 board positions).

The detailed summary of the study is free for download.

Press Release

PARIS, September 2, 2009--New issuance of sukuk (bonds compliant with Islamic law) topped $9.3 billion in the first seven months of 2009 compared with $11.1 billion during the same period in 2008, said Standard & Poor's Ratings Services in a report published today, "The Sukuk Market Has Continued To Progress In 2009 Despite Some Roadblocks."

"The smaller amount of issuance was due not only to the still-challenging market conditions and drying up of liquidity, but also to the less-supportive economic environment in the Gulf Cooperation Council countries, particularly in the United Arab Emirates," said Standard & Poor's credit analyst Mohamed Damak. "The medium-term outlook for the sukuk market remains positive, though, in our view, given the strong pipeline--with sukuk announced or being talked about in the market estimated at about $50 billion--and efforts to resolve the major difficulties impeding sukuk market development."

The first Islamic bank in India with involvement of the Kerala government is likely to start operations in Kochi next year as the bank’s registration formalities are currently being fulfilled on a war footing, reported George Joseph in Business Standard. Kerala State Industrial Development Corporation (KSIDC), which is the designated agency for the formation of the bank, will have 11 % stake, which will be registered as a non-banking finance company (NBFC) in the beginning and later get transformed into a full-fledged Shari’ah-compliant bank.

The project proposes to raise an initial capital of Rs 500 crore from leading non-resident Indians (NRIs) and Indian business houses. According to sources close to the development, leading NRI businessmen such as Mohammed Ali, MA Yusuf Ali, CK Menon and other Kerala-based industrialists such as Azad Mooppan have shown keen interest in the venture.

Tariq Al Rifai joined Dow Jones Indexes as Director for Islamic Indexes. He previously worked for Unicorn, a Bahraini investment bank. The former global director, Rushdi Siddiqui, moved on to ThomsonReuters as previously reported, spearheading the Islamic finance efforts.

The workshop was made up of a group of influential Islamic legal scholars, academicians, economists, and bankers, who were welcomed by the Directors of IFP and LSE, Dr. Nazim Ali and Sir Howard Davies, respectively. The inancial crisis, which was the backdrop of the discussions, and the need to revisit risk management practices were underscored in the opening addresses. The crisis, at its core, demonstrates the dangers of “group think” and overoptimism in clouding corporate decision-making and risk reigning. In this regard, risk managers and board members of risk committees would have better served institutions as contrarians in their assessment approach. Understanding risk is key to managing risk. Undermining this key tenet was the complexity of financial instruments, which managers failed to understand. The resulting underassessment fed into misaligned models concerning the true risk interactions of various securities within portfolios, causing misleading enterprise risk measures and hedges.

The summary report is free for download

Lack of capitalisation of banks, households and the state is a key policy issue according to Professor Willem Buiter, who wrote a blog in the Financial Times online. Instead of defaults and bankruptcy with all its associated costs he suggests to turn debt to equity as the more efficient economic solution; calling explicitly the application of Islamic finance principles for this purpose as a possible solution.

Press Release

DUBAI, July 22, 2009--Standard & Poor's Ratings Services found the exposure to the Saad and Algosaibi groups of 30 commercial banks it rates in Gulf Cooperation Council (GCC) countries to be significant but manageable, according to its report "Special Standard & Poor's Survey Shows That Rated Gulf Banks Are Significantly Exposed To The Saad And Algosaibi Groups."

The two prominent Saudi Arabian groups recently ran into severe and unexpected difficulties and have entered debt restructuring discussions with their respective creditors.

"Total exposure net of tangible collateral to the two groups is significant but manageable for sampled rated GCC banks," said Standard & Poor's credit analyst Goeksenin Karagoez.

Information related to each individual Gulf bank's exposure is confidential--and as such can not be disclosed by Standard & Poor's--but our survey enabled us to arrive at various opinions:

Exposure to the groups varies significantly among the sampled GCC rated banks, from no exposure to net exposure of more than 20% of a few banks' adjusted total equity.

Funds at Work, a strategy consultant for the fund industry, analysed the Shariah scholars' engagement in financial service organisations in the GCC countries covering 131 companies with 498 Sharia Board positions and 121 scholars from 19 different countries.

The study shows that the Top 10 scholars (15 or more positions) share 253 positions leading to 25.3 positions per scholar. The numbers indicate taht about 54.18 % of all Sharia Board positions throughout the GCC are shared by only 11 of the active scholars if board positions of the Top 10 are summed up.

The detailed summary of the study is free for download.

Yasaar Human Capital, is launched in the Dubai International Financial Centre, as a specialist executive search and human resources firm working within the Islamic finance sphere. The team behind Yasaar Human Capital focuses on executive search, talent management and advisory.

Majid Dawood is Chief Executive of Yasaar Limited, which is already active in the field of Sharia consultancy and media.

Fuwad Beg is CEO of the new entity, Yasaar Human Capital.

A new McKinsey Report is released reviewing the performance of the so-called "new power brokers" being sovereign wealth funds, private equity and hedge funds during the financial crisis.

The power brokers' collective performance in the financial crisis, though better than the sharp declines in wealth of most institutional investors, masks an important shift: Asian sovereign and petrodollar investors emerged as more influential than ever, while hedge funds and private equity saw their previously rapid growth interrupted.

In a 2007 report, MGI labeled these four groups of investors the “new power brokers” because they had gained enough wealth and clout to influence global financial markets. MGI revisited the power brokers to examine how their fortunes diverged over the during the financial crisis that unfolded in 2008 and projects where they may go from here, using a scenario approach.

The full report can be downloaded for free after registration:

Press Release

Negative Rating Actions Taken On Four Dubai-Based Banks On Expected Asset Quality Deterioration

Standard & Poor's has concluded its review of Dubai-based banks, which has resulted in various negative rating actions.

We are lowering the ratings on Emirates Bank International PJSC, National Bank of Dubai, and Mashreqbank to 'A-/A-2' from 'A/A-1'.

We are lowering the long-term rating on Dubai Islamic Bank to 'BBB+' from 'A-' and affirming the 'A-2' short-term rating.

The negative outlooks on all these banks reflect the deteriorating operating environment in Dubai and the impact we expect it to have on the banks' financial profiles.

The German regulator BAFIN is organising an Islamic finance conference on 29 October 2009. The announcement is in German, but the conference is held in English. The conference shall show different aspects of Islamic finance, and to determine the salient features. Further it shall discuss the developments in the insurance sector and capital markets. The aim of the conference is to sharpen the conscience about Islamic finance und its increasing role, the foundations of sharia compliant business, and the challenges involved herewith from the regulatory perspective.

Contact details:
Ricarda.Maier@bafin.de
jochenrobert.elsen@bafin.de

S&P:
-- We are affirming the ratings on Arcapita.
-- The outlook remains negative.
-- We are withdrawing the ratings at the issuer request.

PARIS (Standard & Poor's) June 29, 2009--Standard & Poor's Ratings Services said today that it affirmed its 'BB-/B' counterparty credit ratings on Bahrain-based Arcapita Bank. The outlook remained negative. Standard & Poor's then withdrew its ratings on Arcapita at the bank's request.

The ratings affirmation reflects our conclusions that the assumptions factored into the ratings are still holding up. The ratings on Arcapita reflect our opinion of the bank's high leverage in the context of a very difficult economic and investment climate, as well as its pressured liquidity position. In our view, positive rating factors are the corrective measures that Arcapita is implementing and the support that the bank is receiving from shareholders. The ratings reflect our opinion of Arcapita's stand-alone credit profile and do not include any uplift for extraordinary external support.

VTB Capital said that it has mandates to manage the sale of at least three Sukuk for Russian companies, each of which could raise USD 200 million to USD 500 mn. The sale shall start soon according to Yury Solovyov, VTB Capital's president and chief executive, said in an interview in Dubai.

Saudi Electricity Co, the state- controlled power producer, may raise as much as USD 1.87 bn, SAR 7 bn, in the largest sale of Sukuk.

The 5-year Sukuk, which is expected to be rated AA- by Fitch rating service, may pay between 90 basis points to 100 basis points over Saudi interbank rates a market expert is quoted.

The spread above the London interbank offered, or Libor, on corporate and government sukuk has narrowed to 7.6 percentage points from an all-time high of 12.3 percentage points in February, according to HSBC-Nasdaq Dubai indexes.

The Ninth Harvard University Forum on Islamic Finance is scheduled to be held at Harvard Law School in Cambridge, Massachusetts on 27-28 March, 2010.

The theme of the conference will be “Building Bridges across Financial Communities.” Papers are requested in the four following areas:

* FAITH AND FINANCE;

* SOCIAL RESPONSIBILITY;

* ISLAMIC FINANCE AFTER THE GLOBAL FINANCIAL CRISIS;

* CURRENT ACADEMIC RESEARCH

Candidates are requested to e-mail by 1 September 2009, in a Word document, the following to ifp@law.harvard.edu: 150-word abstract of the proposed paper, Biographical sketch up to 200 words, Single-page list of presenter’s relevant publications.

Mushtak Parker covered the controversy regarding the decision to abolish Organised Tawarruq of the International Council of Fiqh Academy (ICFA) in Arab News.

Badlishah Abdul Ghani, CEO of CIMB Islamic Bank seeks further clarification whether the decision covers only the so-called organized Tawarruq and reverse Tawarruq on the one hand or the classical commodity Murabaha contract likewise. In the classical Tawarruq, the third party has to be identified and cannot have any link with the financier or bank. In a commodity Murabaha this is not necessarily the case.

Tawarruq has been practiced in most countries except perhaps in Qatar where the Shariah scholars have discouraged its use per se. More and more Islamic banks in countries including Saudi Arabia, Malaysia, Kuwait and UAE, are now shunning Tawarruq, even the accepted form.

Organised and reverse tawarruq comply with Sharia, in the opinion of Engku Rabiah Adawiah Engku Ali who advises the central bank of Malaysia provided they involve the actual sale and delivery of goods.

Syndication of the two-year murabaha facility has launched to the senior phase of selldown via bookrunners Banque Saudi Fransi, Calyon and Al Rajhi Bank and is being targeted at a small number of close relationship banks including Saudi and international banks. The margin is said to be 425 bps.