IslamicFinance.de

Encouraged by years of central bank easing, investors are ploughing too much cash into unproductive and increasingly speculative investments while shunning businesses building economic growth, the OECD warned on Wednesday. In its first Business and Finance Outlook, the Organisation for Economic Cooperation and Development highlighted a growing divergence between investors rushing into ever riskier assets while companies remain too risk-averse to make investments. It urged regulators to keep a close eye on investors as they piled into leveraged hedge funds and private equity and poured cash into illiquid assets like high-yield corporate bonds.

Saudi Arabian Airlines will take delivery of 50 aircraft from Airbus in the largest aviation deal to be secured via Islamic financing. Airbus announced the deal at the Paris Airshow earlier this month, which includes 30 A320neo planes and 20 A330-300 Regional aircraft worth around $8.2 billion based on list prices. Dubai-based International Airfinance Corporation (IAFC), an Airbus-backed sharia-compliant aircraft leasing fund, will buy the aircraft and lease them to Saudi Arabian Airlines, it said in a statement. IAFC, which exclusively finances Airbus aircraft for clients in the Middle East, Asia and Africa, was launched in June last year with seed capital from Airbus and the Jeddah-based Islamic Development Bank. The fund appointed Dubai-based Palma Capital and Quantum Investment Bank as arrangers to complete the deal, which consists of both equity and debt financing.

Maxis Bhd has issued the first series of its sukuk murabahah of RM840mil in nominal value pursuant to its unrated sukuk murabahah programme. The tenure is for 10 years from the issue date. The country’s largest mobile phone operator plans to raise as much as RM5bil from a 30-year sukuk for its capital expenditure (capex) and debt refinancing. The company said in a filing with Bursa Malaysia yesterday that the unrated sukuk murabahah programme would be available 30 years from the date of the first issuance, which should be made within two years of approval. The issue price as well as coupon rate and yield to maturity of the Islamic bond will also be fixed prior to each issuance.

Quantum Investment Bank Limited and Palma Capital Limited, both based in the Dubai International Financial Centre have been retained as the exclusive placement agents for the launch of a Shari’ah compliant aircraft leasing fund (ALIF Fund) to be managed by the International Airfinance Corporation (IAFC) with Airbus and the Islamic Development Bank (IDB) as anchor investors and strategic partners. With a targeted size of $5 billion from a combination of equity and debt, the fund will focus exclusively on Airbus aircraft. The objective of the Fund is to achieve a risk adjusted medium to long-term capital appreciation while generating a quarterly cash dividend to investors.

Fitch Ratings has affirmed the Islamic Development Bank (IsDB)’s Long-term Issuer Default Rating (IDR)’s at ‘AAA’ with a Stable Outlook. The Short-term IDR has been affirmed at F1+. The trust certificates issued by IDB Trust Services Ltd and guaranteed by IsDB have also been affirmed at ‘AAA’. The ratings reflect its strong capitalisation, high liquidity and low concentration risk compared with other regional multilateral development banks (MDBs). Even though some limits, such as leverage, have been relaxed, the risk framework remains stringent, and IsDB is progressively aligning it with that of other highly rated MDBs, for example through its liquidity policy. However, compared with other ‘AAA’-rated MDBs, provisioning is fairly low given the bank’s exposure to countries experiencing deep political troubles.

Dubai-based Islamic mortgage lender Amlak Finance has said it is in talks with Emaar Properties to launch a partnership to develop land in “distinctive locations”. Amlak's shares soared 15 percent, the maximum allowed in a day on the Dubai Financial Market, after the company announced the plans. Amlak chief commercial officer Adnan Al Awadhi told Al Khaleej newspaper that it is also in talks with the emirate’s Land Department to revive stalled projects. Last month, Amlak recorded a 77 percent plunge in first-quarter profit because of amortisation charges. Amlak reported that net profit fell to AED3.7 million ($1.01 million) from AED16 million in the same period last year.

A bitcoin startup based in the US is now helping Muslims get loans without breaking Islamic law. Matthew J. Martin, who converted to Islam five years ago while he was working fintech world, set up Blossom Finance which partners with microfinance institutions to make “investments” in small businesses then takes a 20 percent cut of the profits in order to still make money. In particular, Martin chose to use bitcoin since it doesn’t incur high transactions costs. Apart from that, the digital currency also features transparency, as the transactions are recorded in a public ledger called blockchain. Blossom is based in Indonesia, where there is a strong demand for financing that is compliant with Islamic law. The company has gotten its first investment from BMT Nusantara Condet, which help 10 to 20 micro businesses within Indonesia to expand.

Some countries have realised this opportunity regarding Islamic finance and are preparing for the golden age. More ports are being built in the Middle East to handle increase transshipment and trade, including Halal trade. According to the Global Islamic Economy 2014-2015 report by Thomson Reuters and Dinar Standard, the Islamic clothing and footwear industry alone will increase 82 per cent to $484 billion (Dh1.7 trillion) by 2019 from 2013. The big constraint is the lack of institutions educating the Muslim populace on how to deliver for such services and develop such industries. This lack of talent pipeline will impact the ability of product innovation, organic expansion and at the very base level providing of services to an expanded populace. The industry needs to come together to set up various international qualification boards to tackle this issue.

The Islamic Corporation for the Development of the Private Sector (ICD) secured a 13-month US$300 million Islamic Murabaha financing facility (the "Facility") from Dubai Islamic Bank PJSC , First Gulf Bank PJSC , Mizuho Bank (Malaysia) Berhad and Mizuho Bank Nederland N.V. in early June 2015. Dubai Islamic Bank acted as the sole Coordinator of the Facility, in addition to being the Mandated Lead Arranger along with First Gulf Bank, Mizuho Bank Malaysia and Mizuho Bank Nederland. The Facility, the largest to-date for ICD, is part of ICD 's US$1.2 billion global resource mobilization program for 1436H (2015). The proceeds of the Facility was deployed for use of ICD 's ordinary operations.

The response to the new Wills and Probate Registry at Dubai International Financial Centre (DIFC) was very positive, according to Mark Beer, the CEO and Registrar at the DIFC Courts. He said appointments to register wills are now fully booked until mid July. Non-Muslims with properties and investments in Dubai, regardless of whether they have a residency permit or not, began registering their wills at the DIFC on May 4, when the DIFC launched its new Wills and Probate Registry. The registry allow them for the first time in the region to register a will in English under internationally recognised law, which allows them to transfer their assets as they wish upon their death. The new rule also allows parents to appoint a guardian for their children in case of their death.

Globally, the Middle East and Africa (MEA) region has the largest share of private wealth booked offshore, thanks to the political and economic tensions in the region, according to the Global Wealth Report 2015 by BCG. The report showed that while the MEA region held 31 per cent wealth offshore, Latin America and Eastern Europe have 28 per cent and 19 per cent respectively. While economic and political instability is a key factor in driving assets offshore, shortage of onshore asset classes and management skills are driving demand for offshore domiciles. In 2014, Caribbean and Panama remained the preferred destinations for wealth originating from North America. For Middle East and Africa region, Switzerland was the top destination attracting 37 per cent of offshore assets booked from the region followed by UK 22 per cent and Dubai 12 per cent.

Demand for Islamic Finance in Canada at the retail level s increasing. Awareness is strongly rising and demand is following suite. So far, Islamic finance clients and interested potential clients are Muslims. As per Statistics Canada, the Muslim community is rapidly growing in Canada, the majority of Canadian Muslims being in the province of Ontario. So naturally, that's where the institutions are concentrating their marketing efforts with a few expanding to reach all the way to the province of British Columbia. The most popular product is hands-down real estate, be it residential or commercial.The technical knowledge of Islamic finance is, for the most part, basic. Islamic finance in Canada is in the calm before the storm.

Islamic finance could help Russian companies hit by Western sanctions to gain access to credit, Rustam Minnikhanov, President of the Russian republic of Tatarstan, said at the Kazan Summit Forum. According to Rustam Minnikhanov, Russian banks, including the country’s largest bank Sberbank, are currently showing an interest in Islamic finance. One of the advocates of the development of Islamic banking in Russia is the head of Sberbank, former Russian Minister of Economic Development, German Gref. Minnikhanov also said that the development of Islamic banking in Russia should be done on a federal level and that there is no talk of creating a unique financial zone in Tatarstan.

The Iranian banking industry remains completely regulated by sharia law and is by far the world’s largest center of Islamic banking. Yet its experience is unique within the global Islamic community, as it is inspired by Shia jurisprudence, which often diverges from mainstream Sunni jurisprudence. Sunni scholars have repeatedly questioned the “rightfulness” of Iranian banks. However, with Iran now seemingly closer than ever to an agreement with the West over its controversial nuclear development program, local financial institutions are poised to regain access to international markets and place their sharia-compliant products among emerging market enthusiasts. Yet instead of adding new momentum to the growing Islamic finance industry, Iran’s financial comeback risks opening a new chapter in the century-old clash of principles between Sunni and Shia Islam.

Bitcoin (https://bitcoin.org) started to make the idea of a cryptocurrency popular. What is missing so far is an intense discussion among Sharia scholars.

What makes Bitcoin unique is, that it is a) created by a computer program b) that it is created and verified by a decentralised process, the so-called 'Blockchain' technology (https://en.wikipedia.org/wiki/Block_chain_(database)), which is solving a practical problem for the first time: To enable trust and accounting without a central ledger, such as a central bank. c) that it faciliates payments quick, efficient and discreet - while the latter leads to accusation of misuse, e.g. for gaming, drugs, terror finance etc.

How it can be seen from an Islamic perspective is not widely discussed, despite it deserves the attention. What we find in search engines are some discussions and also an initiative, which calls itself a bank (https://bitcointalk.org/index.php?topic=21732.0).

A unit of Stanford Marine Group has closed a 1.2 billion dirham ($326.7 million) sharia-compliant loan deal with a group of banks to consolidate its debts into one facility at a cheaper cost, the arranging bank said on Monday. The murabaha-structured facility for offshore vessel operator Stanford Asia Holding Company was arranged by Dubai-based Noor Bank, with five other banks from the United Arab Emirates and Qatar taking part, it said. No pricing or length of the murabaha, a cost-plus-profit arrangement, were provided.

A string of innovative financial products from Indonesian start-ups are circumventing the traditional payment and investment system, helping to broaden financial inclusion and challenging the established banks. Indonesia’s tech-savvy youth have already given rise to pioneering start-ups with social and religious missions and the so-called FinTech industry is set to disrupt traditional banks by offering everything from Bitcoin remittances to mobile pawn shops and retail lending platforms. With a large swath of the population still unbanked – in part due to the country’s challenging geography – new technologies in banking, transactions and payments offer significant growth potential, with banks under increasing pressure to respond to the trend.

The Index of Philanthropic Freedom 2015 by the Centre for Global Prosperity at the Hudson Institute ranked Australia behind New Zealand, the USA, Canada, Japan and Spain in terms of barriers and incentives for individuals and organisations to donate money and time to social causes. Australia was ranked 13th overall for philanthropic freedom out of 64 countries, with the Netherlands, the USA and Germany taking out the top three places. New Zealand was ranked eighth while the UK was one place behind Australia at 14. Australia’s philanthropic environment is decidedly disjointed. On the one hand, Australia maintains the region’s most favorable environment for the operation and registration of CSOs (Civil Society Organisations), on the other hand, Australia has a variety of policies that are not necessarily designed to deter cross-border flows but do exactly that.

Bahrain based Ibdar Bank together with Dubai-based Palma Holding received the African Aviation Awards' "Aircraft Finance Deal of the Year" for their successful structuring of a 12-year agreement for acquiring four brand new Bombardier Q400 Next Gen aircrafts and leasing them to the Ethiopian Airlines. The African Aviation Awards were introduced by African Aviation Magazine in 1999 in order to give International recognition to those individuals, companies and organisations who have made significant contributions to Aviation Development in Africa. Valued at USD 100 million, Ibdar Bank contributed as investor with USD 22 million, while an amount of USD 78 million was secured through a funding agreement with Canada's Export Credit Agency "EDC".

Maxim Tafintsev, President of the Arab European Lawyers Association, speaks on why Russia’s authorities this year are seriously going into the issue of opening the door to Islamic banking under Shariah Islamic law. For the past five years a certain practice has formed in the framework of the existing legislation, the practice, which allows using and employing certain products. Installment selling and leasing are allowed now, insurance products began to work as well. Specifically Russia needs to modify its banking laws to conduct credit and deposit policies. Particular changes in the tax legislation are required to help Islamic financial products be less costly. By the number of Muslim population in Russia, which is 20 million, their engagement in legal financial turnover may bring from shadow avalanchine sums of money.