IslamicFinance.de

For Islamic banking in Africa, the potential pool of customers is vast while the significant liquidity available within Islamic finance presents an ideal source of funding for Africa's huge infrastructure needs. Despite this evident potential, however, standalone Islamic banks are still comparatively rare across the continent. This is a consequence of the logistical difficulties and high-risk involved in setting up a new bank in Africa, together with the strict regulations involved in offering a Shari'ah-compliant solution, which have presented a double barrier to start-up Islamic banks in the continent. Offering an Islamic solution within an existing bank is a lower-risk way to access Africa's market potential.

Speculation publicly expressed by President Recep Tayyip Erdo?an that Bank Asya doesn't have a sound structure and his obvious attempts to sink this bank constitute a crime under Turkish law, according to Selin Sayek Böke, the Republican People's Party (CHP) deputy chair in charge of the economy. Sharing her opinions about the current economic situation in Turkey, Böke stated that Turkey has further potential for growth, but its economy is currently in stagnation. She attributes this situation to structural problems. The current decline in the practice of democracy and the erosion of the rule of law will likely cause further trouble ahead, as investors are already unwilling to make big investments in a country with an increasingly authoritarian government and leaders.

Islamic Bank of Britain plc (IBB), has appointed Keith Leach to the newly created position of Chief Commercial Officer (CCO). Mr Leach’s remit is to grow IBB’s corporate and real estate business, focussing on higher value transactions. His appointment follows the Bank’s acquisition by Masraf Al Rayan (QSC) earlier in the year. A £75.8 million cash injection from IBB’s new parent company, provided in February 2014, will support its expansion plans. Appointed to the position from his role at the Arab Banking Corporation (ABC), Mr Leach has over 30 years of banking experience with Lloyds, Ahli United and ABC, 20 years of which has been spent in the UK Islamic finance industry.

Islamic International Rating Agency (IIRA) has lowered the foreign currency international scale and local currency credit rating of Bank Asya to respectively B+ and BB- (previously BB+ and BBB-), in response to the weakened financial profile of the institution. IIRA has also revised the bank's national scale rating to BB+ from A. IIRA said the bank's opportunities to raise fresh capital and to reach liquidity in the market have decreased. It can no longer endure this situation. The credit rating agency Moody's also adjusted the ratings of the bank downward in a statement released in the last week of August.

The Islamic banking industry needs to take more meaningful steps to benefit the poor, says Universiti Sains Islam Malaysia (USIM) Economics and Muamalat Faculty Dean Assoc. Prof. Dr. Amir Shaharuddin. Amir said although microfinance is still new in this country, in Indonesia, Sudan, Bangladesh and Pakistan it has given the poor a chance to take part in the Islamic banking system. He said many wakaf funds and parcels of wakaf land in Malaysia are not effectively managed, and the full potential of wakaf assets has yet to be realised. The situation could improve with with more professional management, he said, citing the substantially higher zakat collection now with better management.

Turkey’s stock exchange prolonged a freeze on Asya Katilim Bankasi AS’s shares, a day after it twice suspended trading in the Islamic lender. Bank Asya swung between losses and gains of as much as 11% before Borsa Istanbul called the halt because of “abnormal” buy and sell orders on Thursday. The shares had resumed trading on 15 September after a five-week suspension. The bank fell 48% in the three days through 17 September. Meanwhile, the president this week called for Turkey’s banking regulator to take action on Bank Asya, citing deteriorating finances. On the other hand, Bank Asya issued a statement earlier this week saying that it was facing an “economic lynching campaign” and continued to carry out its responsibilities to depositors and shareholders.

Backed by a good track record and triple A ratings IsDB issued a 1.5 billion sukuk as part of its ambitious program to raise 10 billion. The issuance was met with success despite the general market uncertainty. The value of sukuk offered is still small despite the fact the Islamic finance industry is believed to have grown to 2 trillion. Governments and institutions in the west and Islamic states are driving this lucrative business. However, existing regulations suffer from being incomprehensive and untested in most cases and that again could be traced to the lack of a central body with authority to enforce such regulation. Accordingly it is left to each individual country to come up with whatever it sees fit to adopt and apply.

Qatar has expressed its willingness to set up an Islamic bank in Tajikistan, which would be the first Shariah-based financial institution in the Central Asian country. The establishment of a full-fledged Islamic bank under Qatari-Tajikistan partnership was discussed when Ezdan Holding chairman Sheikh Dr Khalid bin Thani bin Abdullah al-Thani called on Tajikistan President Emomalii Rahmon in the country's capital Dushanbe last week. Sheikh Dr Khalid said the Qatari business community was viewing the Tajikistan market with great interest and willing to invest in the country, besides sharing its knowledge and expertise with local businessmen in different sectors, particularly Islamic banking. He termed as "extremely positive", the Tajikistan government's decision to enact necessary legislation required for Islamic banking.

As the bank will be soon marking its first year of operations, Alizz Islamic Bank's performance has been in line that of other Islamic banks operating in Oman. Alizz Islamic Bank last week signed an MoU with Pride Home and Max Electronics (Home Centre & Emax) for personal asset finance (goods murabaha) services. As a result of this MoU, Alizz Islamic Bank will be a preferred Islamic banking financier for personal asset finance, encompassing both home furniture buyers and electronic retail and corporate buyers. All account holders will be entitled to home finance at Home Centre and Emax at an interest rate of 5.25 per cent, on purchase of good worth over RO 1,000. Besides, the bank also plans to have agreements with hospitals and travel agencies and this is the first step in this direction.

Turkey’s stock exchange halted trading in Asya Katilim Bankasi AS (ASYAB) twice today, deepening concern about the Islamic lender that has lost almost half of its market value this week. Istanbul-based Bank Asya swung between losses and gains of as much as 11 percent before Borsa Istanbul halted trading, saying “abnormal” buy and sell orders warranted the decision. The stock resumed trading on Sept. 15 following a five-week suspension imposed on the heels of a failed takeover bid by Qatar Islamic Bank SAQ and amid speculation the government will seize the lender. It fell 48 percent in the three days through yesterday. The lender is “just trying to stay afloat,” Erdogan said today.

Improving asset quality and declining credit losses will add up to healthy third-quarter earnings for the region’s banks, says Standard & Poor’s. With the release of quarterly results coming soon, S&P predicted in a report yesterday that the banks will sustain their strong performance – and should continue to do so into 2016. The ratings agency said in a report yesterday that even though interest rates are low, the reductions in banks’ non-performing assets should offset the contraction in net interest margins. Besides, the many infrastructure projects planned in the Gulf should translate into sustained streams of corporate lending.

The Islamic International Rating Agency (IIRA) has reaffirmed the ratings of Bahrain-based ABC Islamic Bank at A+/A-1 on the national scale (long-term and short-term respectively), and A-/A-2 on the international scale with a 'Stable' outlook. The ratings agency said the overall fiduciary score of the bank has been assessed to be in the range of '76'“80' and indicates a well developed governance structure and strong fiduciary capacity, wherein rights of various stakeholders are well-protected. As the bank's business prospects continue to improve, enhancement in earnings is likely to be sustainable, the IIRA said. The bank's balance sheet has remained strong, sustained by sound capitalisation related indicators, it added.

Indonesia's financial services authority, Otoritas Jasa Keuangan (OJK) is preparing a five-year blueprint aimed at industry issues such as sector consolidation, a lack of scale and foreign ownership limits. OJK said it was now preparing draft regulations for Islamic pension funds, after Indonesia's national sharia council issued a ruling approving the overall concept in November last year. Under a "moderate" scenario, the OJK projects Islamic banking assets will grow by 14.4 percent in 2014, down from 24.2 percent in 2013 and 34 percent in 2012, although these figures would remain above those for conventional banks. The OJK said challenges faced by Islamic banks were mainly internal, rather than related to external pressures such as falling commodity prices or lower export demand.

Shares in Bank Asya plummeted by nearly 20 per cent on Tuesday, reaching a new low, after Turkey's president Recep Tayyip Erdogan urged the country's banking watchdog to “make a decision” on the beleaguered Islamic lender's future.

Turkish Islamic lender Turkiye Finans Katilim Bankasi plans to establish a presence in Bahrain. No details were given on the timeframe to start operations or what type of licence was being sought. Turkiye Finans, in which Saudi Arabia’s National Commercial Bank is the largest shareholder, announced the plans during a visit by bank officials to the Gulf state. The move would help rekindle Bahrain’s Islamic banking sector, which includes six retail banks and 18 wholesale banks. As of June, they held a combined $24.6 billion in assets, a 5.2 per cent drop from a year earlier. Turkey Finans is one of four Islamic banks in Turkey, and has a predominant focus on corporate banking.

Turkey's stock exchange on Monday lifted the ban on trading Bank Asya shares that it imposed on Aug. 7 amid a smear campaign conducted by pro-government media outlets about the ownership status of the lender. The stocks of the private lender slumped 20.16 percent to TL 0.99 at the end of the second session. According to a statement made before the first session by the Public Disclosure Platform (KAP), the shares of the bank has been opened to trade at the base price of TL 1.23 within a price margin of plus or minus 10 percent.

Dubai Islamic Bank PJSC (DIB) has raised loan growth forecasts for 2014 as it increases its corporate and real estate businesses amid the fastest economic expansion in the lender’s home market for at least seven years. The bank expects lending to grow 15 percent to 20 percent in 2014, more than the 10 percent to 15 percent it had previously forecast, according to Chief Executive Officer Adnan Chilwan. The company will continue to expand to take advantage of the emirate’s buoyant property market, while keeping its proportion of total lending at about 25 percent. Besides, the lender is exploring the option of setting up a new bank in Kenya by the end of the year to add to its presence in Pakistan, Jordan, and Bosnia, Chilwan said. It also expects to increase its stake in Indonesia’s Bank Panin Syariah.

Empower, the district cooling company, has secured a $127.8 million (Dh469.4 million) loan from Dubai Islamic Bank (DIB). The loan facility, to be paid back over half yearly instalments over five years, will be used to fund Empower’s district cooling area in Dubai’s Business Bay area. Empower said that the loan is a cost-effective measure to sustain company growth. The loan is the first Islamic financing facility taken out by Empower.

Kuwait Finance House (KFH) announced that the debut Gold Account it had launched last year, has become available for clients at 7 branches as of today. The branches are; Al-Fiahaa, Al-Shaab, Al-Salmyia, Mubarak Al-Kabeer, Alfahaheel, Alqaser, and the headquarter branch. The expansion of the product aims at facilitating the efforts of clients and expanding the service. The gold biscuits each weigh 100 grams and has a purity value of 999.9, the purest form of gold. Each gold biscuit is issued and certified by KFH and the Ministry of Commerce.

The state-run Anadolu Agency cited last week an official from the Banking Regulation and Supervision Agency (BDDK) as saying the Islamic lender Bank Asya had been put under the scope of Article 70 of Turkey's Banking Law, a move that gives the BDDK the power to restrict or temporarily halt the bank's operations, as well as to merge it with another bank. Bank Asya reacted strongly to the report, saying the bank will file lawsuits against the BDDK and media outlets that spread the speculative news report. Market observers criticized the Anadolu Agency for sharing exclusive details - the authenticity of which cannot be verified - regarding a privately run financial institution, suggesting that such reports are in violation of laws regulating and protecting banks in Turkey.