IslamicFinance.de

Malaysia-based International Islamic Liquidity Management Corp (IILM) has reissued $860 million of its three-month Islamic bond. The three-month sukuk, rated A-1 by Standard and Poor's, was priced at a yield of 0.52 percent. The issuance was fully subscribed by nine banks acting as primary dealers, including Abu Dhabi Islamic Bank, CIMB and Maybank. IILM last went to the market in May to re-issue $490 million worth of three-month paper, designed to meet a shortage of highly liquid, investment-grade financial instruments which Islamic banks can trade to manage their short-term funding needs. Shareholders of the IILM are the central banks of Indonesia, Kuwait, Luxembourg, Malaysia, Mauritius, Nigeria, Qatar, Turkey and the United Arab Emirates, as well as the Jeddah-based Islamic Development Bank.

Malaysia's largest Islamic bank, Bank Islam Malaysia Bhd, is revising its base financing rate (BFR)to 6.85% per annum from 6.6% per annum effective Friday. Bank Islam in a statement on Thursday said the revision is in line with Bank Negara Malaysia's recent move to increase the overnight policy rate (OPR) by 25 basis points to 3.25%. The last revision in Bank Islam's BFR was on May 16, 2011, when the rate was revised from 6.3 % to 6.6%.

Fitch Ratings has warned that a merger plan by Malaysia’s second largest bank CIMB Group with RHB Capital Bhd and Malaysia Building Society Bhd (MBSB) to create the country’s biggest lender is fraught with risks. Fitch said the merger could weaken capital buffers for CIMB if not funded by sufficient new equity, adding that any move to rationalise branches and staff could be “politically unpalatable”. Furthermore, weakening credit growth and asset-quality pressures in the overall banking system will not make the process any easier. On the other hand, a successful merger would provide a stronger domestic platform from which CIMB’s offshore aspirations could continue to expand.

CIMB Group Holdings Bhd, RHB Capital and Malaysia Building Society (MBSB) have received Bank Negara Malaysia's approval to start merger talks which would result in the creation of a mega Islamic bank. They announced in a joint statement on Thursday that under the corporate exercise, the proposal was to merge the businesses of both RHB and CIMB. The corporate exercise included plans to create an enlarged Islamic banking franchise with MBSB. The three parties have entered into a 90-day exclusivity agreement to negotiate and finalise pricing, structure, and other relevant terms and conditions for a proposed merger.

A Chittagong court has sent Shahjalal Islami Bank’s Director Mohammed Solaiman to seven-day police remand in a case over misappropriation of bank money. Shahjalal Islami Bank authorities had filed the case against Solaiman with the Kotwali Police Station in Chittagong on Apr 13, alleging misappropriation of Tk 1.49 billion. Later, the Anti Corruption Commission (ACC) recorded the case. ACC officials arrested him on Jun 25 in a raid on Akram Tower at Bijoy Nagar in Dhaka. After being detained following an ACC probe, Solaiman claimed he had been victimised by AK Azad, the present back chairman.

The Government of Kyrgyzstan and the Islamic Development Bank (IDB) started elaboration of joint projects. The First Vice Prime Minister of the Kyrgyz Republic Taiyrbek Sarpashev held a working meeting on implementation of the agreements, reached at the end of a working visit to Saudi Arabia. He stressed that with the leadership of the IDB signed agreements for projects totaling $46.570 million. For improvement of energy supply of Arkinsky array of Lyailyak district of Batken province $16.25 million will be allocated. For the reconstruction of Osh - Batken - Isfana highway - $21,320 million. For sustainable rural development in the Kyrgyz Republic - $9 million.

There are at least 10 million Muslims in Russia, but the country lags behind in the industry. Russian Muslims are slow to change their financial habits, while nonbelievers are plagued by a deep-rooted distrust of Islam — as are, to some extent, the financial authorities, who are in no hurry to adapt economic legislation to facilitate Islamic banking. Still, an Islamic finance industry has been budding over the past decade in Russia, and analysts and players show cautious optimism about its prospects. The industry still has plenty of room to grow — Thomson Reuters forecasts that Islamic banking assets in Russia will reach up to $10 billion by 2018.

Indonesia’s sharia banking sector has recorded slow growth as it nears the end of this year’s second quarter, compared to the same period last year, according to a recent report from the Financial Services Authority (OJK). In order to lure more customers, banks have developed their own strategies. Bank BNI Syariah, for instance, has prepared special programs for Ramadan to anticipate the rise in spending that usually accompanies the fasting month. Meanwhile, the OJK disclosed its plan to issue a revised regulation on sharia banks’ minimum capital requirement to assist lenders in the face of a wider scope of risks. The revised regulation will contain two additional indicators to measure the capital sufficiency of each bank.

Turkish lender Turkiye Finans Katilim Bankasi plans to sell 3 billion ringgit ($933 million) of Islamic bonds in Malaysia. The bank will initially raise 800 million ringgit with a five-year sukuk on June 30 which will have an annual return of six percent. Sukuk under the programme will have a tenure of one to 20 years. Funds raised will go towards general corporate purposes. The so-called sukuk murabaha will be issued through TF Varlik Kiralama, a wholly-owned unit of Turkiye Finans. Malaysia's RAM Ratings has accorded the programme an indicative long-term rating of AA3. HSBC Amanah Malaysia and Standard Chartered Saadiq are joint advisers.

Bank Negara Malaysia is issuing two concept papers on Ijarah and Istisna' for public consultation. The concept paper aims to seek feedback from members of the public, Islamic financial institutions and related stakeholders on the Shariah and operational requirements for the application of ijarah and istisna' contracts.

Background
As part of the initiatives to strengthen the Shariah-compliance practices among Islamic financial institutions (IFIs), Bank Negara Malaysia is developing a Shariah-based regulatory policy with the objective to provide a comprehensive guidance to the lslamic financial industry to enhance end-to-end compliance with Shariah and therefore, ensure the integrity and sustainability of the IFI.

Maybank Islamic Bhd is optimistic of up to 12% growth this year, news that bode well for its parent Malayan Banking Bhd’s (Maybank) aspiration of 15% return on equity (ROE) for 2014. Maybank Islamic accounts for 40% of the group’s revenue and profit for the first-quarter ended March 31, 2014 (1Q14). In 1Q14, total income grew 26% to RM1.319 billion. Nevertheless, pretax profit and zakat for the same period dropped 7% to RM315.1 million, mainly due to the increase in the overhead expenses. This was disclosed at Maybank Islamic launch of its MasterCard Ikhwan Card-i, the bank’s first Mastercard offering.

MAA Group Bhd is caught between Bursa Malaysia’s PN17 rules (practice note) – which requires it to buy another business to lift the status – and the Islamic Services Act 2013, which only allows it to buy a financial services company. MAA has been granted an extension of time of up to July 31, 2014 to submit a regularisation plan to the regulator. The firm is now looking at the takaful market of the Philippines to strengthen its insurance business, and possibly pave the way towards exiting its PN17 status. Chief executive officer Muhamad Umar Swift said that MAA seeks a lifting of the PN17 status by virtue of having a takaful business instead of acquiring another business. He said the group has allocated RM177 million for capitalisation and expansion plans for this year, particularly in the takaful business.

Asia presents huge developmental potential for Islamic finance and is likely to be the main driver of Islamic banking growth in the near future, given the untapped potential in India, Bangladesh and Indonesia, a Kuwait Finance House Group report said. Islamic finance can be utilised for greater integration of financial markets with the real economy and for improvement of the economic balance between emerging and frontier markets, according to the report. However, the report did not provide details of Islamic banking operations in countries like India, Bangladesh and Indonesia. Driving the industry in the region is Malaysia, particularly in areas of Islamic banking, bonds and funds, it said.

Malaysia hopes to be the first country in the world to introduce Islamic wealth management and champion new products under the Islamic financial system, said Deputy Finance Minister Datuk Ahmad Maslan. According to him, Islamic wealth management is an attractive sub-sector and promises good returns in the financial services industry. Ahmad said, to boost Malaysia’s aspiration to be the center of intellectual excellence in Islamic finance, the government stepped up efforts in that direction. The Islamic wealth management is expected to evolve to the next stage in the Islamic finance industry with the availability of infrastructure in terms of human resource development for the Islamic financial institutions and expertise that is existing today.

Dubai Islamic Bank PJSC (DIB) has completed their first phase of accumulating shares in PT Bank Panin Syariah Tbk (Bank Panin Syariah) in Indonesia. As per the envisaged plan, DIB has completed the acquisition of 24.9% shares in Bank Panin Syariah by acquiring 2,427,750,000 shares. Afterwards, DIB will initiate formal regulatory approval process to obtain "Significant Shareholder Status" from the Financial Services Authority (OJK) to complete phase 2 of the share purchase plan by increasing its stake in Bank Panin Syariah to up to 40%. Bank Panin Syariah is currently controlled by PT Bank Panin and operates through a network of 10 branches. The bank is listed on the Indonesia stock exchange.

The Islamic capital markets in Malaysia might have seen fast expansion over the last years but a survey reveals that there is a pervasive lack of understanding of Syariah investments among the unit trust fund investors. Malaysian investors are also looking at alternative options such as Asian high dividend equities and Asian multi-asset income a survey by Eastspring Investments reveals. Asian multi-asset income unit trusts were also widely sought.

BTMU has plans to issue Sukuk in Malaysia and hoping to tap the demand in the fast-growing Islamic Capital markets. The bank is considering floating bonds denominated in dollars and yen, with target on Middle Eastern pension funds and Islamic insurance companies. This would mark the first issuance of yen-denominated Sukuk. BTMU expects demand from investors that seek to diversify. A growth in Sukuk could provide a channel for Japan to attract Islamic money.

A 10 percent growth in the Malaysian Sukuk market for this and next year is in line with the positive views on the long-term growth trends in the global Sukuk market according to Philipp Lotter, Moody's Managing Director for the Corporate Finance Group in ASEAN. Malaysia will remain the world's largest Sukuk market, says Khalid Howladar, Moody's Global Head for Islamic Finance. Singapore and Hong Kong are tapping into this fast-growing asset class although Saudi Arabia is showing strong domestic potential," adds Howladar.

DIB, the oldest sharia lender in the world, has now officially acquired shares within publicly listed lender Bank Panin Syariah from owner, Panin Bank. The statement was submitted to the Indonesia Stock Exchange shows Panin’s stake declining to 64.01 percent from 87.51 percent. Panin vice president Roosniati Salihin confirmed the deal.

Indonesia's capital market regulator is preparing a five-year roadmap for Islamic finance in an effort to expand the industry. The plan will help to boost the number of Islamic capital market products and expand the industry's investor base, Otoritas Jasa Keuangan (OJK), the financial services authority, said in a statement. The OJK said it was seeking market input for the roadmap and would set up discussion groups with stakeholders including the central bank, the finance ministry, the stock exchange and the country's national sharia board. It also said it was refining rules for the issuance of Islamic securities, which it expected to be completed this year. These would include details on the settlement of Islamic financial transactions, disclosure requirements for sukuk (Islamic bonds), and guidelines for sukuk trustees.