IslamicFinance.de

Bahrain-based Ibdar Bank has announced the appointment of Mr. Basel Al-Haj-Issa as the Bank's new Chief Executive Officer, with effect from 1 September 2014. Mr. Al-haj-Issa is a senior banker with over 20 years of international exposure in Islamic Investment and Commercial Banking in the GCC and MENA, CIS and South East Asia. Prior to joining Ibdar Bank, he was the Chief Executive Officer of Saba Islamic Bank - Republic of Yemen. Prior to that, he was the Director of Financial Institutions Development Dept. at the ICD - managing a portfolio of 25 financial institutions in over 20 countries. Mr. Al-Haj-Issa holds a Master degree in Business Administration and Bachelor of Science (Mathematics) from Marshall University, USA.

Kazakhstan is reviving plans to develop Islamic finance and is “fine-tuning” legislation for Shariah-compliant banking, central bank Chairman Kairat Kelimbetov said. Some lenders are seeking to convert into Islamic banks, he said. The drive by Kazakhstan comes two years after its debut sukuk, which was denominated in Malaysian ringgit. Abu Dhabi’s Al Hilal Bank opened a branch in Kazakhstan in 2010, and remains the only Islamic lender in the oil-rich nation. However, Al Hilal Islamic experienced difficulties in generating business because of a lack of understanding of Shariah-compliant products by customers. Moreover, Kazakhstan will face legislative hurdles as it seeks to promote the industry and the nation is experiencing the early stages of development.

Turkish Islamic lender Bank Asya, whose shares were suspended and removed from all indices on Aug. 7 amid political pressure, will ask the authorities to end a month-long trading suspension, CEO Ahmet Beyaz said. Beyaz's statement comes on the heels of reports in the media last week that Turkey's banking watchdog the Banking Regulation and Supervision Agency (BDDK) had put Bank Asya under close monitoring. The reports claimed this would give the BDDK the power to restrict or temporarily halt Bank Asya's operations. Bank Asya said it will file a lawsuit against the watchdog for remaining indifferent to a smear campaign against the bank. Beyaz also said that Bank Asya would consider selling stakes or subsidiaries in case of a capital adequacy problem.

Kuwait Finance House (KFH) has taken the top spot among banks locally and the 161st place globally, among the list of the top 1000 banks worldwide issued by "The Banker" international magazine. It’s worth noting that KFH’s leadership and the diversity of its investments through presence in various areas of investment as well as the global expansion provides the bank with investment opportunities. KFH posted in the first half of this year a gross profit of KD 144.032 million (USD 510.887 mln), and net profit for shareholders was KD 54.568 million (USD 193.555 mln) with an increase of 10% over the same period last year. Total Assets increased by 11 % over the same period last year to reach KD 16.7 billion (USD 59.3 bln), shareholders’ equity reached KD 1.7 bln (USD 6.1 bln).

The creation of a mega Islamic bank will push Malaysian banks to look beyond local shores should the proposed merger of CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd materialise. While the local market for Islamic finance remains lucrative, banks should not be content to remain in the local market as a market downturn could cause a reversal of fortunes. Low risk tolerance is why local banks are not expanding their reach overseas. Some attempts thus far to go abroad have been on a partnership basis contributing knowledge and technical expertise. In addition, local banks’ issuance of Islamic sukuk in the international arena is still low relative to international banks.

As more and more conventional banks are now discovering, the Small and Medium Enterprise (SME) sector provides a huge opportunity for increasing profitability and diversifying risks. Less well known is that a large number of SMEs, especially in the Middle East and North Africa (Mena) region, would prefer to deal with Islamic banks rather than conventional ones. These SMEs are often unable to access banking services, since few Islamic banks have stepped up to the challenge of catering to their needs. Once Islamic banks have put in place the requisite infrastructure and capabilities, there is little doubt that the SME sector will be able to provide them with a profitable and sustainable revenue stream.

Holders of accounts with the Islamic lender Bank Asya have reportedly been subjected to threats about making deposits, while being urged to withdraw money from their accounts. Individuals said they had received calls from blocked numbers who had mysteriously obtained information regarding their bank account. The aim of the government seems to be to create panic among depositors of the bank and to frighten them so that they will rush to withdraw their money, throwing the bank into a liquidity crisis that would eventually justify the nationalization of the bank. Observers have called on BDDK head Mukim Öztekin to step down because the watchdog's reputation as an independent institution has become highly questionable since these recent developments.

Turkey's private Bank Asya has said it will fight authorities for not taking action even though a "massive smear campaign" against the financial institution has been ongoing for nine months. The private Islamic lender said in a statement on Thursday that it is going to fight the country's bank watchdog at court due to its silence amidst daily attacks on the bank. The statement came on a day when the Banking Regulation and Supervision Agency (BDDK) has reportedly taken over a wide range of powers at Bank Asya. The move gives the BDDK watchdog the authority to restrict or temporarily halt Bank Asya's operations, as well as to merge it with another bank.

International ratings agency Fitch on Thursday upgraded Al Hilal Bank and affirmed 8 other banks and one non-bank financial institution rating. Fitch said it had upgraded Al Hilal Bank's (AHB) Viability Rating (VR) and affirmed the VRs of the other seven banks and all other ratings. The affirmation of the banks' Long-Term IDRs, Support Ratings and Support Rating Floors, reflects the extremely high probability of support available from the UAE authorities and governments, if required. Abu Dhabi Islamic Bank, Al Hilal Bank, Dubai Islamic Bank, Mashreqbank, Commercial Bank of Dubai, RakBank, Sharjah Islamic Bank, Bank of Sharjah and Dunia have been rated in the report.

Turkey's banking watchdog placed Asya Katilim Bankasi AS under watch and armed regulators with broad powers over the beleaguered Islamic lender. The move brings the bank one step closer to state seizure, as capital outflows and a ratings downgrade exacerbate damages from a political fight embroiling the lender, which has fallen from the largest of Turkey's four Islamic banks in December to third in terms of assets.

Bank Islam Malaysia expects a 20 per cent growth in its financing activities this year, says Managing Director, Datuk Seri Zukri Samat. He said this would be slightly lower compared with the 25 per cent growth registered last year. Zukri added that this was probably impacted by some of Bank Negara Malaysia's measures to slow down the debt growth in the household sector. On its aim to become Malaysia's first mega Islamic bank, he said the bank was open to any merger and acquisition proposal but is not in talks with any party at this point in time. Towards this end, he said the bank was looking for synergies to complement the areas that the Islamic bank is lacking, for instance, corporate banking.

CIMB Islamic said it will pursue a larger balance sheet to help win more business, regardless of whether a proposed merger with two smaller peers happens. In July, CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd secured regulatory approval to begin merger talks. The enlarged entity aims to compete against conventional banks that dominate larger and more lucrative deals in Islamic finance and could prompt further consolidation in the domestic market. The lenders have until Oct 8 to finalise the pricing, structure and other terms of the merger. Earlier this week, Maybank dismissed rumours that it was considering a merger with Bank Islam, the country’s largest, full-fledged Islamic bank.

As banks around the world gear up to meet tough Basel III regulatory standards, Islamic lenders face a source of uncertainty that could prove expensive for them: how regulators will treat their deposits. Because interest payments are not allowed by sharia principles, Islamic banks obtain deposits mostly through profit-sharing investment accounts (PSIAs), which are generally considered to be more volatile than conventional deposits. Islamic banks are expected to be required to offset that volatility under Basel III by increasing the amount of high-quality liquid assets (HQLAs) which are in short supply. The PSIA issue may increase pressure on central banks and governments around the Islamic world to address some longstanding problems in Islamic finance. One is the small supply of HQLAs.

Morocco's Economic, Social and Environmental Council (CESE) weighed in on the Islamic bank bill on August 28th, proposing two changes. Two negative remarks were made by the CESE. The first related to a lack of consumer information necessary to avoid unfair marketing by Islamic banks. The second dealt with the need to clarify the roles of the National Council of Ulema and the central bank in the oversight of the sector. However, civil society activist and CESE member Hakima Naji opposed the intervention of the High Council of Ulema in the financial sector. She criticised the idea of religious management of finance and said that the central bank had the necessary ability to both traditional and Islamic banks.

CIMB Islamic said it will pursue a larger balance sheet to help win more business, regardless of whether a proposed merger with two smaller peers happens. In July, CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd secured regulatory approval to begin merger talks. The lender's chief executive Badlisyah Abdul Ghani said that scale is important in being effective in business, so whether that scale is achievable under the current proposed merger talks or something else, the bank will continue to pursue it. The lenders have until Oct. 8 to finalize the pricing, structure and other terms of the merger. Details have yet to be ironed out, but the new Islamic bank could have assets worth 122 billion ringgit ($38.3 billion).

Maybank Islamic Bhd has dimissed speculations that it is in talks with Bank Islam Malaysia Bhd over a potential merger and acqusition (M&A). Its chief executive officer Muzaffar Hisham said the proposed merger of three local financial institutions to create a mega Islamic bank has not prompted Maybank Islamic to rush into M&A for expansion. Muzaffar said Maybank Islamic will continue to focus on its key objective, namely humanising financial services, which has been the driver of the bank’s outstanding track record over the last three to four years. Meanwhile, Muzaffar said Maybank Islamic is optimistic of maintaining its growth momentum in the second half of the year after recording an encouraging performance in the first half.

Dubai Islamic Bank has ruled out seeking a controlling stake in Bank Panin Syariah, and its plans are limited to raising its stake in the Indonesian lender to 40 percent from 25 percent now, its chief executive Adnan Chilwan said. Dubai Islamic bought 2.42 billion shares in the listed sharia-compliant lender in June, its first foray into southeast Asia. In May, the bank said it hoped to reach 40 percent before the end of the year, using its own cash to fund the purchase. Under Indonesian rules, foreign ownership of local lenders requires regulatory approval to go above 40 percent. Last month, Indonesia's financial services authority said it was preparing a five-year industry blueprint that would address foreign ownership limits.

Kazakhstan's Al Hilal Islamic Bank may expand into neighbouring countries as legislative efforts to develop Islamic finance gather pace across the region. Legislation is being redrawn in Kazakhstan, after the first set of Islamic finance rules in 2009 failed to spur much activity. Almaty-based Al Hilal, whose parent is wholly owned by the Abu Dhabi government, is considering increasing its geographical presence as part of its 2015 business plan, chief executive Prasad Abraham said. A draft amendment, currently awaiting discussion in Kazakhstan's parliament, would provide the bank with a clearer framework that could translate into better commercial opportunities, Abraham said.

Bank Muamalat Malaysia Bhd expects to launch Islamic Private Banking within a year to cater to the growing demand for the service. Chief executive officer Datuk Mohd Redza Shah Abdul Wahid said the bank is currently studying the product concept and expected to complete the framework in the next six months. Mohd Redza signed a memorandum of understanding with the Bank of London and the Middle East to penetrate the new segment in a wholesome approach. He also said that the Bank of London and the Middle East had the expertise in dealing with private banking customers, therefore it was a good opportunity for Bank Muamalat to work together with the bank.

The creation of a mega Islamic bank must fulfill the objectives of being able to undertake international business and facilitate cross border financial flows, said Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz. She said that such a mega bank must also be able to support international trade and cross border investment activity. She was responding to a question about the license for the proposed mega Islamic bank as a result of a merger between CIMB Group Holdings Bhd, RHB Capital Bhd and Malaysia Building Society Bhd. Dr Zeti said Bank Negara wanted to see the internationalisation and enhancement of Malaysia’s financial and economic connectivity with other countries.