IslamicFinance.de

Islamic banks are becoming increasingly popular with non-Muslim savers due to their attractive rates and their ethical principles. In the UK, Islamic banks come under the same governance as high street branches and other private banks, offering the same statutory protections under the Financial Services Compensation Scheme (FSCS). This scheme means savers get their money back if a bank or building society goes bust, although there is a cap of £85,000 per lender. According to Robert Parker, founder of Holborn Assets, with Islamic finance profit schemes, after-tax return needs to be compared between schemes to judge potential before making decisions on return rates alone. Islamic banks offer competitive rates, although savers will have to be prepared to tie up their money for at least a year to access the best deals.

S&P Global Ratings believes that financial technology could reduce the profitability of some business lines of Gulf Cooperation Council (GCC) banks. S&P's credit analyst Mohamed Damak said fintech could impinge on retail banking, particularly money transfer and foreign-currency exchange. This would push some banks to adjust their operations through increased digitalization, branch network reduction, and staff rationalization. He added that fintech alone is not expected to have a significant influence on GCC banks ratings in the next two years. He believes that banks will be able to adapt to the changing operating environment through collaboration with fintech companies and cost-reduction measures. Furthermore, regulators in the GCC will continue to protect the financial stability of their banking systems. Fintech is not yet a negative rating driver. However, it will increasingly become a force to be reckoned with.

The Islamic Development Bank (IDB) plans to use blockchain technology to develop sharia-compliant products to support financial inclusion in its member countries. The bank's Islamic Research and Training Institute signed an agreement with local firm Ateon and Belgium-based SettleMint for the development of the project. Blockchain involves a shared electronic ledger that allows all parties to track information, removing the need for third-party verification. The IDB said such features would allow for instantaneous clearing and settlement of transactions and asset exchanges, while helping eliminate counterparty risk.

Dagong Global Credit Rating and Islamic International Rating Agency (IIRA) have jointly maintained the ratings of AlBaraka Banking Group (ABG) at BBB+/A3. At the same time, IIRA has re-affirmed the national scale ratings of ABG at A+/A2. Outlook on the assigned ratings has been revised to 'stable' from 'negative' indicating the macroeconomic and political stability in ABG’s core countries. ABG operates through a globally diversified franchise spread across 11 jurisdictions in Europe, Africa and Asia. ABG’s ratings derive strength from the recent tier 1 Sukuk issuance this year. While the Group’s subsidiaries are individually governed by their supervisors, the Group maintains close coordination and oversight. Furthermore, Bahrain's institutional framework for Islamic banks ensures adherence to a strong framework for Shari'ah governance.

In this interview David Parker, Executive Director of Bahrain's Economic Development Board, talks about the kingdom's efforts to position itself as a fintech hub. He recognizes that certain regulatory requirements can make it more challenging for firms to experiment. To mitigate this, the Central Bank of Bahrain launched a regulatory sandbox to help enable innovation. A number of accelerators and incubators have also launched operations recently, including the region’s first cloud accelerator, operated by C5 and powered by Amazon Web Services (AWS). When determining the structure of the regulatory sandbox, the Board was in close consultation with the industry. An agreement was signted with the Singapore Fintech Consortium and advisory firm Trucial Investment Partners to support the local Fintech ecosystem. The Central Bank also issued directives on crowdfunding for both Shariah compliant and non-Shariah compliant platforms and launched a national e-wallet.

#Kuwait's Warba Bank announced its financial results for the first nine months of 2017. Net profits increased by 442% reaching KD 4.752 m compared to KD 877 K for the same period last year. The increase in the Bank’s total revenues was driven by strong performance of all business units. The total revenues reached KD 42.66 million at an increase of 63% compared to the first nine months of 2016. Moreover, the operating revenues increased by 70%, amounting to KD 26.800 million by the end of September 2017 compared to KD 15.741 million for the same period of 2016. Warba Bank's CEO Shaheen Hamad Al-Ghanem said that the Bank has successfully accomplished a number of deals most notably a strategic financing deal in the aviation sector in Kuwait. Warba Bank also participated in Sharia -complaint co-financing for the Ziraat Participation Bank of Turkey amounting $236 million. The Bank also participated in arranging the $400 million Sukuk issuance of the Dubai-based Miraas Holding for Real Estate Development.

Arab Petroleum Investments Corporation (APICORP) has mandated banks to arrange a series of fixed income investor meetings ahead of a potential sukuk sale. The sale is that of a potential five-year benchmark US dollar-denominated sukuk. Meetings will start on October 19 in Riyadh and end on October 24 in London. Apicorp has hired Bank ABC, Crédit Agricole Corporate and Investment Bank, Emirates NBD Capital, First Abu Dhabi Bank, HSBC, KFH Capital and Standard Chartered Bank as joint lead managers and bookrunners for the planned deal.

Dubai-based entrepreneur Com Mirz is set to launch a new Shariah-compliant cryptocurrency called Habibi Coin. The startup has already seen a staggering 750-member syndicate that is willing to invest in Habibi Coins with a $100-million initial coin offering (ICO). That is in addition to $3 million dollars raised by Mirza. In the same way that Bitcoin works as a decentralized payment system of digital currency with peer-to-peer transactions, Habibi Coin is essentially the bitcoin of the Middle East as it involves no intermediary. There is a significant rise in technology and digital currency that is paving the way forward in the Middle East. The Middle East is set to undertake one of the largest Shariah-compliant tokens, the Habibi Coin.

#Bahrain-based Ibdar Bank has acquired a prime office building in Boston, USA. The deal is a collaboration with US property manager Lincoln Property Company and asset manager Ritz Banc Group and the total size is $48 million. The Boston property is a single-let building leased to Amazon Robotics, a wholly-owned subsidiary of Amazon Inc. The area is regarded as the "technology corridor", and is home to many well-known technology-related companies making it the epicentre of robotic innovation. The bank’s head of real estate, Bassam Kameshki, said the Boston metropolitan area has witnessed substantial growth within the technology and medical sectors. He ensured that Ibdar Bank will be working to add further value to the property and ensure a profitable exit scenario.

The #Malaysian Ministry of International Trade and Industry (MITI) has approved funding totalling RM1.595 billion under the Shariah-compliant SME (Small and Medium Enterprises) Financing Scheme. Deputy Minister Datuk Ahmad Maslan said since the scheme was started in 2012, 1,181 applications had been received but only 971 applications had been approved. He added that the scheme would be administered by 13 participating Islamic banking institutions and the Federal government would bear 2.0% of the profit rate. The rebate is specifically to assist the SMEs which carry out business activities in all Shariah-compliant sectors. Ahmad said in Penang some RM112.6 million had been approved to-date to 76 SMEs which were Shariah-compliant.

Dubai Aerospace Enterprise (DAE) intends to tap the Islamic bond market within the next nine months to diversify the company's funding. DAE Chief Executive Firoz Tarapore confirmed that the company intended to issue a sukuk very soon, but did not specify how much the company could raise. According to Tarapore, DAE wants to change its capital structure to include a higher percentage of unsecured debt. The company intends to be a benchmark issuer in the U.S. debt market. DAE has already raised $2.3 billion in the United States through a senior bond issue this year to finance its acquisition of AWAS.

The Islamic Research and Training Institute (IRTI) signed an agreement with Ateon to build a Blockchain-based financial product to support financial inclusion in IDB member countries. Saudi Arabian Ateon will be working on this project with SettleMint, which is a Belgium-based software company. Blockchain smart contracts enable the automation of the entire contractual process for Islamic institutions, alleviating the additional administrative and legal complexities associated with Sharia compliant financial products. Not only that, smart contracts are easy to verify, immutable and secure. The International Fiqh Academy has approved contracting through electronic means since 1990.

AAOIFI has issued its Governance Standard No. 8 "Central Shari’ah Board", which also marks the issuance of 100 standards so far. Standards have been issued in areas of accounting, auditing, governance, ethics as well as Shari’ah. According to Chairman Dr. Ishrat Hussain, this standard will support the regulators for establishing and operating Shari’ah boards at jurisdiction level. A survey with experts was conducted and public hearing sessions were held in Bahrain, United Arab Emirates, Turkey, and Pakistan. Although the standard encourages the creation of Central Shari’ah Boards (CSB) at national levels, the guidance provided would standardise the global regulatory practices in this respect. The standard also presents a country-level approach for regulating the Islamic Finance Industry. It provides detailed guidance on the definition, scope of work, responsibilities, appointment, composition, independence and terms of reference of a Central Shari’ah Board.

The Islamic Financial Services Board (IFSB) has announced new country-level data on growth of the Islamic banking systems for Q4 of 2016 and Q1 of 2017 from 17 IFSB member jurisdictions. IFSB Secretary-General Zahid ur Rehman Khokher said the IFSB’s Prudential and Structural Islamic Financial Indicators (PSIFIs) database project has reached 14 quarters, and that it would soon be extending to four new jurisdictions. He added that the IFSB also plans to release sector level balance sheets of entire jurisdictions for the Islamic banking market starting next year. The PSIFI project currently compiles data from 17 member countries: Afghanistan, Bahrain, Bangladesh, Brunei, Egypt, Indonesia, Iran, Jordan, Kuwait, Malaysia, Nigeria, Oman, Pakistan, Saudi Arabia, Sudan, Turkey, and the United Arab Emirates. The IFSB is now in the process of collecting Islamic banking data from these new contributors: Qatar Central Bank, Bank of England, Central Bank of Lebanon and Palestine Monetary Authority.

Taqwaa Advisory and Shariah Investment Solutions (TASIS) has been appointed as Shariah Advisor for Tata Group Shariah Mutual Funds. They include Tata Ethical Fund (TEF), which is a domestic fund and Tata Indian Shariah Equity Fund (TISEF), which is an offshore fund. TASIS claimed that TEF was the only Shariah compliant fund in which charitable trusts are allowed to invest without attracting tax. Under the current agreement, TASIS is supposed to ensure that the investment and operations of TEF and TISEF are Shariah compliant. In India there is low awareness about investment in securities. The availability of options such as TEF would help this section of the society to become part of the mainstream financial system and hence contribute to the goal of financial inclusion.

The Islamic Financial Services Board (IFSB), Bank Indonesia and the Financial Services Authority of Indonesia (OJK) organised an Industry Engagement Session. The event was entitled "The Global Islamic Finance Industry and the IFSB" and took place on 2 October in Jakarta. Anwar Bashori, Head of Islamic Finance at Bank Indonesia, shared his optimism that there is strong potential for further growth of this sector in Indonesia. He also touched on the importance of Halal tourism and food industry, and the various challenges and opportunities related to Fintech. In the panel discussion Prof. Volker Nienhaus commented on the emerging trend which is expected to enhance financial inclusion through the greater use of fintech. Ahmad Buchori shared the current issues of Islamic finance in Indonesia. Dr. Rifki Ismal’s presentation focused on developing the Islamic social sector to enhance the Indonesian economy. The session ended with discussions between the participants, where the industry players reaffirmed the important role of regulators. There was a request for more platforms to address and discuss key issues and concerns of the Islamic finance players.

Al Rajhi Bank #Malaysia outgoing chairman Datuk Seri Dr Nik Norzrul said his successor would continue with the plan to expand the bank’s operation, targeting neighbouring markets like Singapore and Indonesia. Nik Norzrul has been with Al Rajhi Bank since the bank established its wholly-owned subsidiary in Malaysia in 2006. He has been a board member of Al Rajhi Bank Malaysia since 2006 and its chairman since 2015. Today the bank has assets worth a total of RM9bil, compared with RM291mil in 2006. In the retail segment, the bank continues to see growth in the demand for current account/savings account services. In the corporate segment, Nik Norzrul said Al Rajhi Bank Malaysia was working on strengthening its presence targeting owner-led enterprises as well as SMEs.

First National Bank of #Botswana is re-launching products and service offering to the local Muslim community. Held at the Travel Lodge Conference Centre in Gaborone, the re-launch seeks to sensitize patrons and attract new customers. FNB Botswana CEO, Steven Bogatsu, said the re-launch has been long coming since the product was launched ten years ago in 2007. According to FNBB Islamic Banking Representative, Tahera Mhaisker, the offered services encompass transactional banking, vehicle and asset financing, as well as property finance for both residential and commercial properties. Mhaisker added that the re-launch was the culmination of an exciting journey for the bank.

According to the Hongkong and Shanghai Banking Corporation (HSBC), #Philippines infrastructure can benefit from the Islamic bond market. HSBC Philippines President Wick Veloso stated that Islamic finance can be a good infrastructure investment vehicle for developing economies such as the Philippines. Earlier this year, Finance Secretary Carlos Dominguez III said the government plans to venture into the panda bond market and Sukuk debt papers. The Philippines intends to spend over P8 trillion on infrastructure and the bulk will be financed through tax revenue. For its part, the cental bank is advocating for the Islamic Banking Act which will effectively allow Islamic Banks to function.

Qatari banks have met investors in Europe and Asia to gauge their interest in potential U.S. dollar bond issues. Access to international debt markets has become problematic since the diplomatic crisis has erupted. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt cut diplomatic and transport ties with Qatar, accusing it of supporting terrorism. Cross-border deposits accounted for about a quarter of Qatar's total deposits, so banks started to look for alternative funding. Al Khalij Commercial Bank, Doha Bank, Qatar International Islamic Bank and QNB have all met investors in recent weeks. Feedback was positive, but investors also made clear that issuers would have to pay premiums in order to attract sufficient demand. According to an international portfolio manager, the premium that Qatari banks would have to pay is about 30-40 basis points. A second fund manager said Qatari banks would have to pay up not only because of the increased political risk, but also because of general market conditions in the region.