IslamicFinance.de

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.

Noor Investment Group and Awqaf and Minors Affairs Foundation (AMAF) have signed a memorandum of understanding (MOU) to establish 'Noor Awqaf LLC' in the UAE. Noor Awqaf will complement the work of AMAF in offering enabling financial services to Awqaf entities around the world. The MoU was signed by Ahmed Kalim, Deputy Group CEO, of Noor Investment Group and Tayeb Abdel Rahman Al Rayes, Secretary General of AMAF.
Noor Awqaf has been set up as an independent limited liability company, with an initial issued and paid up share capital of Dhs10m. Noor Awqaf is 60% owned by Noor Investment Group and 40% by AMAF.

Safa Investment Services received this week its official certification for Shari'a compliance from Shariyah Review Bureau. It makes Safa Investment Services the first Islamic global asset management business in the world. Safa permits customers to benefit from global asset diversification of their managed accounts, but with a complete respect for the principles of Islamic law. This includes not only selecting securities that meet global regulatory standards, but also the process to manage accounts and the contracts under which they are managed.

Differences seen in interpretation of syariah compliance among various Islamic finance markets are disappearing as there has been inter-market convergence of respective interpretations on a global scale moving forward. According to the chief executive officer of Standard Chartered Saadiq Bhd (Saadiq) Wasim Saifi, convergence between Middle East interpretation of syariah compliance and the interpretation seen in Islamic finance institutions in Malaysia is happening. Many transactions are being structured using Islamic structures which have strong Middle Eastern acceptability. Furthermore, convergence is also happening regarding the syariah-compliant filters announced by the Securities Commission for equities.

The International Organization of Securities Commissions (IOSCO) has published today the Report on Investor Education Initiatives Relating to Investment Services. This report was written to provide IOSCO members and the public with an overview of the different approaches that supervisory authorities and self-regulatory organizations take to educate retail investors on issues relevant to financial products that are distributed by intermediaries. It sets out the results of a fact-finding survey of members of the IOSCO Committee on Market Intermediaries. These findings show a wide range of approaches, though they also indicate that supervisory authorities share common approaches and face some common obstacles to determining the most effective educational measures.

The Kenya Reinsurance Corporation is planning to venture in sharia-compliant business and confirmed that it will start ReTakaful insurance in the country and the areas where it already has a presence in West Africa and the Middle East markets. According to the firm’s managing director, Mr Jadiah Mwarania, the development is part of Kenya Re’s 2013-2017 core strategic areas that touche on market expansion and development of products. The firm elected a sharia-based supervisory board last year to advise the firm on acceptable aspects of the ReTakaful.

The Investment Corporation of Dubai (ICD) is in talks with banks to launch its first Islamic bond, in order to diversify its funding sources. The deal will reportedly be completed this year. A source at ICD said the fund had no plans for a sukuk, but is turning to the Islamic bond market because of potential legislation capping lending by local banks to government related entities. Separately, ICD is also talking to bankers over a US$2bn loan due to mature in August, with refinancing the likely option.

The markets for Islamic banking, insurance and sukuk bonds have all seen solid growth in recent years, but the sharia-compliant fund industry remains tiny. According to Hasan Al Jabri, chief executive of Saudi Arabia’s Sedco Capital, the growth of sharia-compliant investment has been stunted by a reputation for a lack of diversity, poor performance and high fees. Since May 2012, Sedco Capital has been building what is believed to be the largest sharia-compliant fund platform in Luxembourg. Its five vehicles hold $900m of assets. Sedco is currently launching two more vehicles. Mr Al Jabri emphasized that their investments are responsible, help creating value for the economy and jobs.

The CMA Board has issued its resolution approving Bank Albilad’s request to increase its capital from SAR (3,000,000,000) to SAR (4,000,000,000) through issuance of bonus shares. One bonus share will be issued for every (3) existing shares owned by the shareholders who are registered in the shareholders registry at the close of trading on the day of the extraordinary general assembly. Such increase will be paid by transferring an amount of SAR (1,000,000,000) from retained earnings account to the Company's capital. Consequently, increasing the Company's outstanding shares from (300,000,000) shares to (400,000,000) shares, by an increase of (100,000,000) shares.

Following approval from the Securities and Commodities Authority, Dubai Islamic Bank (DIB) has published its formal offer for the shares in Tamweel. Tamweel shareholders will receive 10 new DIB shares for 18 Tamweel shares. They will receive a copy of the offer, the offer statement and the acceptance form by mail and can accept until 5pm on Saturday, March 16. DIB’s offer is subject to final approval from its shareholders and will be presented to them at an extraordinary general meeting to be held on March 3.

Political tensions after the Arab Spring still weigh on Bahrain's banking industry which is deterring some investment and inflows of money, and making it harder for Bahrain to compete with other centers such as Dubai. However, a mass exodus of financial firms from Bahrain has not happened and local banks are proving resilient. Moreover, Bahraini authorities have mounted an active campaign to persuade financial institutions to stay in the country. The central bank of Bahrain has also been active in recent months in trying to strengthen financial institutions, asking them to increase capital, encouraging revenue diversification and, in some cases, merge. Nevertheless, the future health of Bahrain as a banking market will not be assured as long as the political unrest continues.

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.

Alderman Roger Gifford, the Lord Mayor of The City Of London, said that London is becoming increasingly important in the Islamic finance world. A lot of infrastructure exists to service Islamic finance, however it is nothing more than a niche product in London which represents less than 1 per cent of the entire market. Gifford is therefore promoting further cooperation between Dubai and the wider UAE market with London. This can help Dubai to become a global capital of the Islamic economy, according to the Lord Mayor.

The seminar titled "Islamic Microfinance - Approaches & Practices: A Case Study of Akhuwat" was held in Pakistan last Wednesday. Various initiatives of Islamic microfinance in Pakistan, their philosophies and methodologies were highlighted in the seminar and the case of Akhuwat Foundation was discussed as a case study. It was also observed that Islamic microfinance was still in its evolution, and speakers therefore gave recommendations for further growth and strengthening the operations of Islamic microfinance institutions.

During the last ten years, Pakistan-based Akhuwat, the world’s first completely interest-free microfinance program, has disbursed $30 million to over 1 million people, without charging any interest. The company now has more than 1,000 regular employees and offices in 105 cities of Pakistan across the country. Their mission is to challenge the interest based system and challenge Islamic finance to evolve out of its current complacency with interest-mimicking products towards products based on the foundational principles of equity, sharing, and gifting and therfore fight poverty.

Al Khonji Real Estate & Development (Aqar) signed today that it has hired the services of Shariyah Review Bureau (SRB), to advice and supervise its future course of actions and transactions in light of Shari'a principles. Mohamed Al Khonji, Chairman/CEO, said that it has decided to spread its wings in the real estate market while ensuring it is truly Shari'a compliant. The assignment of Shariyah Review Bureau is expected to help developing an enterprise-wide Shari'a compliant framework, which will cover compliance with Islamic finance across all function streams in Aqar.

Shariah-compliant exchange-traded funds (ETFs), which provide low-cost exposure to conventional equity markets while strictly adhering to Shariah investment principles, are benchmarked to indices that apply a series of trade activity and financial screens to weed out non-compliant companies. The screening process is typically overseen by leading Islamic scholars and results in a portfolio of securities in adherence with Shariah law. The major difference compared to conventional indices is the application of financial/leverage screens. By excluding companies with high levels of debt, the resultant portfolio has lower financial risk and superior credit fundamentals.

The Libyan General National Congress (GNC) looks to amend regulations of the financial services sector and to introduce Islamic financing into Libya for the first time. Currently there are a number of discrepancies between a new law about Islamic finance and some of the existing supervisory legislation. This has resulted in confusion that is likely to put a brake on the development of this sector, as investment companies will not be willing to develop new products. Clear common objectives, separation of powers and clarity of written rules and regulations are necessary to raise the competitiveness of Lybia's domestic banking markets, develop new Shariah-compliant financing products and provide a secure approach to the growing needs of the Libyan customers.

The Qatar Financial Centre (QFC) has a tax system that enables sukuk transactions to be carried out without excessive tax costs, according to a study conducted by the experts Mohamed Amin, Salah Gueydi and Hafiz Choudhury. The study reviewed the tax treatment of four common Islamic finance structures ‘murabaha’, ‘sukuk’, ‘salaam’ and ‘istisna’ in the eight Mena countries. Mr. Amin said the study shows clearly that the additional transactions required by Islamic finance are at risk of being subject to taxes, and can make Islamic finance transactions prohibitively expensive. Only Turkey and the QFC have modified their tax laws to facilitate Islamic finance.