IslamicFinance.de

The Government Savings Bank (GSB) will continue to focus on supporting government projects, including possible mergers with the ailing Islamic Bank of Thailand and SME Bank. The bank has targeted non-performing loans (NPLs) at 1.15% of total loans this year. Moreover, it aims to achieve an increase in lending this year of 8.5% or 142.8 billion baht. According to the bank's president and chief executive Worawit Chailimpamontri, mergers with the Islamic Bank and the SME Bank have made no progress, but will be pursued if the government needs GSB as a solution to fix the problem. GSB also plans to open 90 new branches nationwide this year, and to launch new services while upgrading information technology and staff skills.

Albaraka Turk mandated four banks to secure a $200 million subordinated loan from international sukuk markets. Albaraka Turk is the Turkish subsidiary of Bahraini lender Al Baraka Bank.

Construction-based Eversendai Corp Bhd’s majority shareholder feels the company is undervalued and does not reflect the company’s true business potential and track record. Eversendai’s executive chairman and group managing director AK Nathan said that right now it is important to build up the base, build up the business. He also opined that the share price can not be suppressed for too long. However, construction stocks in Malaysia have been underperforming at the moment. Moreover, Eversendai’s lack of liquidity is also an issue in attracting fund managers to invest in the company.

Pakistan's Prime Minister Raja Pervez Ashraf emphasized the close relations between Bahrain and his country and praised the Gulf Finance House Bahrain for doing well financially. Moreover, he drew the attention of Esam Yousif Janahi, Chairman and Founder of Gulf Finance House, to huge investment potential in Pakistan and expressed the need to invest in energy. He said that there were a good wind corridor, hydel potential and coal reserves. Jahani said that his company was examining the possibility of investing in energy sector in Pakistan. He further said that the investment policies of Pakistan were conducive and attractive for foreign investors because of rewarding returns on investments.

Indonesia’s finance ministry raised Rp 760 billion ($78.30 million) at its March 5 sukuk auction, well below the target of Rp 1.5 trillion. The Finance Ministry sold 6-month, 9- and 14-year sukuk to help finance its budget deficit. Incoming bids were Rp 3.4 trillion. The G20 economy plans to raise Rp 57.5 trillion in the first quarter of the year.

According to CIMB Equities Research, mergers and acquisitions (M&As) are still high on Affin Holdings's agenda to support its future growth. Hence, Affin is still planning to acquire Bank Muamalat. The banking group has submitted the offer and is waiting for the response from the owner of Bank Muamalat. It could also be interested in bidding for HwangDBS Investment Bank. CIMB Research said Affin is now reportedly less keen to purchase Bank Ina Perdana in Indonesia due to the 40% shareholding cap imposed by the Indonesian central bank.

According to Bahrain central bank executive director Khalid Hamad Abdul Rahman Hamad, making Islamic Financial Services Board (IFSB) standard mandatory is essential to take Islamic finance to the next level which is internationalisation. Until now, the articles of association of IFSB is voluntary and does not require the member countries to adopt. With the standard being mandatory, situations or regulatory arbitrage can be avoided. Moreover, Khalid Hamad noted that growth for a certain industry would require proper regulations, good standards in accounting, practice, prudential and skilled resources. He added that Islamic finance must invest in syariah-compliant instruments that create value for the society.

The Turkish Economy Minister Zafer Ça?lyan signed a memorandum of understanding (MoU) with the members of the Islamic Development Bank (IDB) on March 2 during a recent visit to Saudi Arabia. Through the MoU, he is aiming to form new trade and investment ties with the Islamic world. It includes the detection of fields of cooperation between the countries to encourage bilateral trade and investments. Moreover, Ça?layan called for Turkish contractors to take a share from Saudi Arabian infrastructure investments in order to reach $1 trillion in 20 years.

Due to complete management failure, two state-controlled banks, the SME Bank and the Islamic Bank of Thailand, are now dealing with bad loans in excess of 80 billion baht. This management failure is collective, whether it be the executives and directors of the two banks, the political leadership which appointed both or the Finance Ministry officials tasked with supervising the institutions. The problems at the institutions are conflicts in terms of policy direction, internal fraud and corruption and management inefficiency at the board, senior executive and staff levels. The public didn't create the troubles at these banks, but now must shoulder the cost of fixing them.

Bank Islam Malaysia has defended its recent move to suspend its chief economist Azrul Azwar Ahmad Tajuddin after he had predicted a narrow win for Pakatan Rakyat in the upcoming general election. However, a bank source said predictions on the elections are personal opinions that don't in anyway affect financial institutions like Bank Islam. Nevertheless, the bank discovered evidence of violations of the bank's internal policies that were so serious that warranted the bank to lodge a report with the commercial crime division of the police. Further internal investigations by the bank also revealed that Azrul had sent out series of emails relating to the bank's official documents from his office to third parties, including confidential minutes of the bank's board meeting. Azrul is due to appear before the bank's disciplinary board in March.

Kuwait Finance House (KFH) Turkey maintained its growth in 2012 and increased its profits to TL250m, 28% increase compared to 2011, according to KFH CEO and KFH - Turkey Chairman Mohammed Sulaiman Al-Omar. Moreover, the bank increased its assets by 27% to TL19bn and its loans by 14% to TL12bn and capital adequacy ratio stood at about 14%. He added that the results achieved were in accordance with the plans, targeted shares, development projects and restructuring programme. The bank also targeted markets in the neighboring countries of Turkey and enhance cooperation and partnership relations with many economic and commercial activities, as well as presenting new products.

Great Eastern Takaful Sdn Bhd (Great Eastern Takaful) has appointed Zafri Abdul Halim as the CEO, effective from March 1, 2013. Before, he was the company’s chief financial officer. Zafri holds a Master of Science in Project Management from George Washington University and a Bachelors Degree in Accountancy in addition to being a member of Malaysian Institute of Accountant and a certified Chartered Accountant. He said, Great Eastern Takaful will pursue its main strategies in penetrating the local market with its dual agency approach and direct agency under Great Eastern Takaful Own Agency (GOA).

Recep Tayyip Erdogan, the prime minister of Turkey, reinforced his credentials as a political leader of the Muslim world at the Sharjah Government Communication Forum this week. Besides championing of political causes in the region, he used the forum for the enhancement of his country's economic and trade relations with GCC states. A memorandum of understanding signed by investment officials from Turkey and Sharjah aims to extend further the business relationship between Turkey and a UAE emirate. Mr Erdogan certainly seems to have pulled back from full-blown commitment to a Europe-orientated strategy. In contrast, trade and economic relations to the south-east are blossoming.

State-owned Export-Import Bank of Malaysia (Exim Bank) plans to sell Islamic bonds in the global market. They invited proposals from banks to arrange US$1bil (RM3.1bil) of dollar-denominated debt for a possible second-quarter offering. The lender aimed to increase the proportion of syariah loans to 30% of the total in two years from 20% now, chief executive officer Adissadikin Ali said. Exim Bank will become only the fourth Asian corporate to ever tap dollar sukuk investors.

The Pakistan Poverty Alleviation Fund (PPAF) has signed a memorandum of understanding (MoU) with Telenor Pakistan and Tameer Microfinance Bank (TMB) for extending financial services to poor and un-banked communities. Under the MoU, a pilot project is to be launched to extend financial services to select communities by establishing Easypaisa shops, which will provide services that include bill payments, money transfers, donations, international home transfers, withdrawals and deposits through mobile accounts. One Easypaisa shop will be set up in each PPAF community to cater to their banking needs. Once the pilot project is completed, it will be replicated nationwide, a press release stated.

The Finance Ministry raised Rp 14.9 trillion ($1.5 billion) from the sale of rupiah-denominated Islamic bonds to Indonesian citizens on Monday. The sale of the Shariah-compliant sukuk notes is intended to plug its budget deficit but also to spur growth in the Islamic finance sector in the country. The sukuk is called Sukuk Retail Indonesia (Sukri) and was sold to retail investors. Indonesia also plans to sell dollar-denominated sukuk and conventional bonds this year.

RAM Ratings has received confirmation from the facility agent that Al-‘Aqar Capital fully redeemed all the outstanding Class A Islamic Medium-Term Notes (IMTN), Class B IMTN, Class C IMTN and Islamic Commercial Papers (ICP) under its MYR 300 million Sukuk Ijarah Programme (2008/2013). RAM has withdrawn the respective AAA, AA2, AAA(bg) and P1 ratings of Al-‘Aqar Capital’s Class A IMTN, Class B IMTN, Class C IMTN and ICP, and no longer has any rating obligation on the debt facility.

The Islamic Bank of Thailand has experienced deposit runs due to worries about its financial stability. The state-controlled bank reported some 5 billion baht worth of withdrawals over the past two weeks following reports of its weakening financial status. The government is now to move quickly to reassure the public the bank will have full government support. Prawat Uttamote, a Pheu Thai party list MP and deputy chairman of the border affairs committee said the bank's restructuring plan estimates that 50% of the bad loans or 12 billion can be recouped within the next two years. Therefore, the bank is in no imminent danger, he added. Prime Minister Yingluck Shinawatra separately stressed that deposits in the banking system are fully protected under the Deposit Protection Agency.

Standard Chartered Saadiq Bhd (Saadiq), a wholly-owned Islamic bank subsidiary of Standard Chartered Bank Malaysia, launched its first branch in the state Sarawak. Saadiq chief executive officer (CEO) Wasim Saifi opened the branch located in Kuching, which was witnessed by Standard Chartered Malaysia consumer banking country head Sonia Wedrychowicz and government officials as well as the bank’s customers, partners and staff. Saadiq stated that the new branch opened seven days a week, extending its operations to weekends in order to improve customer access to the bank’s facilities and services.

Regulatory reforms are underway to help Malaysia’s Islamic banking industry expand further. According to the country’s master plan for capital markets development, Malaysia aims for a 40 per cent share of Islamic domestic financing by the year 2020 and intends to make the industry more international. Therefore, regulators are preparing to release a new legal framework for Islamic finance this year. However, private-sector banks need initiatives of their own, including steps to address a leadership vacuum and to strengthen their overseas strategies.