IslamicFinance.de

Islamic banks in Gulf Cooperation Council (GCC) nations need to expand abroad to maintain their pace of growth in the future, according to Al-Baraka Banking Group, which operates in 15 countries from the Middle East to Asia. Expansion of market share for Shariah-compliant lenders within the six-member GCC may be limited as conventional banks constrain the pace of growth. Thus, lenders need to consider consolidating, and to target corporate business deals to gain market share. A point of maturity has been reached in some markets and this is why Islamic finance needs to reach out to a new market segment and continue to identify new innovations to help it grow further.

Bahrain's central bank is setting up a central sharia board to help oversee Islamic finance products in the kingdom and will introduce new rules to strengthen governance in the sector, central bank governor Rasheed al-Maraj said. Traditionally, Islamic banks have practiced self regulation to ensure the sharia-compliance of their products, but a centralised model is increasingly being favoured across the global industry. The central bank will introduce new sharia governance rules to expand the internal sharia review and audit functions, while making it mandatory for banks to have an independent external sharia audit.

The National Bank of Kazakhstan, the central bank and financial services regulator, has taken up membership in Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The signing ceremony to commemorate the membership was held on December 2 at WIBC 2014. The agreement was signed by National Bank of Kazakhstan deputy governor Nurlan Kussainov and AAOIFI secretary-general Dr Hamed Hassan Merah. Dr Merah said the membership would allow AAOIFI to work more closely with the National Bank of Kazakhstan and the finance industry in the country to support continuing development of Islamic finance.

Bahrain-based Ibdar Bank successfully concludes the structuring of a 12-year agreement expiring in 2026 for acquiring four brand new Bombardier Q400 Next Gen aircrafts and leasing them to the Ethiopian Airlines. The agreement that was structured under a joint venture with Dubai-based operating lessor Palma Holding, includes options for an additional four Q400 NextGen aircraft, which Ibdar Bank intends to exercise in the near future. Valued at USD 100 million, Ibdar Bank contributed as investor with USD 22 million, while an amount of USD 78 million was secured through a funding agreement with Canada’s Export Credit Agency “EDC”.

The Bahrain-based International Islamic Financial Market (IIFM) will develop contract templates for sharia-compliant corporate finance and trade finance transactions, as the industry body expands its mandate. IIFM is aiming to double the number of its standards by as early as next year. The new standards would help broaden the scope of IIFM, as the body works to harmonise industry practices, said Khalid Hamad, executive director of banking supervision at Bahrain's central bank and IIFM chairman. Trade finance has remained a marginal business for Islamic banks even as other areas have boomed in recent years, partly because of a lack of scale and expertise compared to larger and more established Western banks.

Global law firm White & Case LLP has advised Abu Dhabi Islamic Bank (ADIB), as sole bookrunner and initial mandated lead arranger, and a group of other lenders on a US$420 million Islamic financing provided to Zakher Marine International Inc. The financing, which was two times oversubscribed, also included Abu Dhabi Commercial Bank, Al-Hilal Bank, MashreqBank, Ajman Bank, Arab Bank, National Bank of Fujairah and Noor Bank. The facility arranged by ADIB will fund Zakher Marine's new shipbuilding programme that includes 15 vessels and three self-elevating accommodation barges.

Malaysian financial services firms have an excellent opportunity to play a role in the growth of Islamic finance in the Gulf region, said Mohammed Ayman Al Tajer, director of financial institutions supervision directorate in Bahrain. Vast opportunities in the Gulf are helped by strong economic growth and demand for more sophisticated financial services. There are also opportunities in areas such as insurance and fund management as the financial sector in the Gulf continues to diversify. He added that standardisation remains the key challenge in the industry, as well as lack of trained professionals and scholars and awareness of Islamic finance.

Bahrain's Gulf Finance House (GFH) plans to up its stake in Khaleeji Commercial Bank (KCB) to gain majority ownership, its chairman Ahmed al-Mutawa said. The investment firm will increase its stake in KCB to between 52 percent and 54 percent once it has received regulatory approval from the Bahraini authorities. GFH currently owns 47 percent of KCB. Increasing its stake to the range indicated by Mutawa would cost GFH between 2.65 million dinars and 3.72 million dinars ($7.03 million-$9.87 million). KCB and unlisted Bahraini lender Bank Al Khair dropped merger plans in March after they failed to agree terms for the tie-up.

Bahrain’s role in expanding the global reach of sharia-compliant financing looks set to broaden further through three developments firmed up recently. In July, a joint venture was formed between the kingdom’s Economic Development Board (EDB) and the Islamic Corporation for the Development of the Private Sector (ICD), to promote the sector by offering training, software and sharia-compliant financing. Moreover, a second partnership offering training programmes and research was announced between the UK-based consultancy Islamic Finance Advisory and Assurance Services (IFAAS) and the Bahrain Institute of Banking and Finance (BIBF). Finally, the International Islamic Financial Market (IIFM) is working on a contract template for sukuk, due in early 2015.

The private sector arm of the Jeddah-based Islamic Development Bank plans to tap Islamic capital markets to raise as much as $1.2 billion in long-term funds during its current financial year, its chief executive Khaled Al-Aboodi said. The Islamic Corporation for the Development of the Private Sector (ICD) will also explore a capital increase as it expands its economic development activities, with a proposal to be presented to shareholders in June 2015. Fitch Ratings has assigned an AA credit rating to the ICD, which has a low level of leverage but which is expected to grow as the institution increases its lending activities. The ICD will consider both syndicated Islamic loans as well as issuance of sukuk, or Islamic bonds, Al-Aboodi added.

Dubai Trade, the cross-border trade facilitator, has signed an agreement with Noor Takaful that will give Dubai Trade customers access to an Islamic insurer for the first time, and an even wider choice of marine and cargo insurance providers online through its Tradeshield platform. Tradeshield allows customers to complete the end-to-end process of purchasing cargo insurance online through the dedicated website www.tradeshield.ae. Noor Takaful will go live on the site for customers in the New Year.

FlyDubai's debut Islamic bonds are signalling growing appetite for sukuk from aviation companies in the Gulf as they spend on airports and fleet expansion. The budget carrier raised $500 million this month in the first sale of the debt by a regional airline after Emirates. The issue received bids for more than six times the amount offered. Boeing forecasts Middle East airlines will need more than 2,600 new aircraft over the next 20 years, worth $550 billion. Sukuk is exptected to be part of the financing mix. FlyDubai's five-year sukuk pays a profit rate of 3.776 per cent, or 200 basis points above the five-year mid swap rate.

"The Oman Islamic Finance 2014: Building on a Strong Start" is written and produced by Thomson Reuters, Islamic Research and Training Institute (IRTI), and the General Council for Islamic Banks and Financial Institutions (CIBAFI). The report provides substantive due diligence on the opportunities for Islamic financial services in Oman.

The UAE was ranked first in Islamic trading among members of the Organisation of Islamic Cooperation (OIC) in 2012, with trade valued at $91.3 billion. The UAE accounted for 13.40 per cent of the volume of trade between member countries, said Ambassador Hameed Opeloyeru, Assistant Secretary General for Economic Affairs of OIC, in a statement on the sidelines of the preparatory meeting for the Standing Committee for Economic and Commercial Cooperation of the Organization of the Islamic Conference (COMCEC).

Abu Dhabi-based Khalifa Fund for Enterprise Development will provide $200 million in loans for microfinance projects in Egypt, a move it said would create more than 120,000 jobs by 2020. The UAE state investment fund has signed the loan agreement with the Egyptian government in Cairo. The loan will be directed towards microfinance development in remote and disadvantaged areas and pockets of poverty throughout Egypt. It will also help Egyptian women in rural areas find work. Egypt issued its first law regulating microfinance services last week, seeing the provision of extremely small loans could help to create jobs by giving individual entrepreneurs a start.

Abu Dhabi Islamic Bank (ADIB) has signed an agreement with Zakher Marine International Inc. to arrange a US $420 million (AED 1.55 billion) financing for its new ship-building program, including 15 vessels and 3 self-elevating accommodation barges through one of its group companies (QMS Holding Ltd.). ADIB was the Sole Book-runner and initial Mandated lead Arranger. The deal was 2 times oversubscribed by banks including ADCB, Al-Hilal Bank, MashreqBank, Ajman Bank, Arab Bank, National Bank of Fujairah and Noor Bank. ADIB established a Specialized Financing Unit in 2013, through which it has structured and arranged various syndicated facilities for shipping / offshore clients.

Barwa Bank's profit reached QR641mn in the third quarter of this year, up by 43% on this time last year. The bank registered a third-quarter net profit of QR447mn in 2013, with total assets increasing to QR36.6bn, a 28% rise over the same period in 2013. Financing assets showed a 31% growth to QR22bn in the third quarter and customer deposits grew by 30% to QR22.1bn. Earnings-per-share improved to QR2.12 compared with QR1.9 for the same period last year. The bank's acting group chief executive officer, Khalid Yousef al-Subeai attributted the growth to improvment in processes and managment practises, which has led to greater efficiency and improved profitibilty.

Qatar's Barwa Bank has been appointed by the International Finance Facility for Immunisation Company (IFFIm) as Joint Lead Manager (JLM) and bookrunner for a benchmark medium term sukuk issue. Rated AA by Standard and Poor's, Aa1 by Moody's and AA+ by Fitch, IFFIm, for which the World Bank acts as Treasury Manager, has mandated Barwa Bank , amongst four other banks, to arrange investor meetings in the Middle East, with a sukuk expected to follow the roadshow. The proceeds of the sukuk will be used to provide free vaccines and related health system strengthening support to many of the world's poorest nations.

The total value of investment revenues of Arab Orient Takaful Insurance within the first quarter of the fiscal year 2014/2015 inched by 38% to EGP5.8 million in compared to EGP4.2 million within the same period of the previous year. Mohamed Akef, deputy executive director of financial and administrative affairs of the company explained that the allocated investment revenues reached EGP3.971 million at the end of September while the unallocated investment revenues were EGP1.821 million in the same period. The total value of premiums which attained by Arab Orient Takaful in the first quarter of the fiscal year of 2014/2015 reached EGP63.8 million in compared to EGP52 million in the same period of the previous year, he asserted.

A bond with an Issue Amount of $500 million priced on Wednesday. Borrower is Al Shindagha Sukuk Limited, Obligor Dubai Aviation Corporation. Its Maturity Date is 11/26/2019. Following are terms and conditions of the bond: Coupon 3.776 pct; Reoffer price Par; Spread 200 basis points; Underlying govt bond Over the midswaps, equivalent to 212.7 basis points over the 1.5 pct October 2019 UST; Payment Date November 26, 2014; Lead Manager(s) ENBD Capital , Credit Agricole & HSBC; Listing Nasdaq Dubai & Irish Stock Exchange.