IslamicFinance.de

Standard & Poor's (S&P), one of the world's leading rating agencies, has reaffirmed the Islamic Development Bank 's ( IDB ) 'AAA' rating with a stable outlook. The first AAA rating report on IDB was issued in 2002. S&P recognized IDB as having an extremely strong financial profile underpinned by robust capitalization and high liquidity levels; as well as a very strong business profile emanating from the Bank's important policy role in promoting social and economic development across member countries and Muslim communities in non-member countries. The report emphasized the strong relationship, extraordinary support and preferred creditor treatment which IDB enjoys from its member countries.

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 authorities haven't responded to pleas by Bank Asya that they act to prevent what the bank has called unfair attacks on it, Chief Executive Officer Ahmet Beyaz said. The lack of action risks setting a dangerous precedent about the independence of regulatory agencies, he said. In his first interview since Thursday, when a spokesman for Turkey's Banking Regulation and Supervision Agency said that the bank had been put under review under a law that gives the regulator broad powers over the lender, Mr. Beyaz accused BRSA officials of improperly revealing that the bank was under review.

Twitter user @fuatavnifuat claimed in a series of tweets sent on Tuesday that Deputy Prime Minister Ali Babacan and the Banking Regulation and Supervision Agency (BDDK) are sabotaging the Turkish economy in order to sink Bank Asya. Avni - who claims to be one of President Recep Tayyip Erdo?an's advisors - said Babacan authorized the BDDK to put 10 Turkish banks under close monitoring in order to make it seem as if it was not attempting to target only the Islamic lender Bank Asya. The unidentified Twitter user correctly predicted the second wave of arrests of police officers allegedly close to the Fethullah Gülen-inspired Hizmet movement last month. Avni had tweeted on a Monday night that raids would be conducted against the officers early the next day in the morning. The raids took place accordingly.

Until recently the banking and financial services sector and business in Uzbekistan have had limited exposure to and understanding of Islamic finance. The key laws such as the Civil Code, the Tax Code and laws on banking and investment do not refer to Islamic finance or to Islamic finance instruments. It is therefore important that Islamic finance and Islamic banking instruments are first recognised as a legislative concept before any regulatory mechanisms are put in place. Foreign banks including Islamic banks may open representative offices or set up subsidiary outlets in Uzbekistan provided they comply with minimum criteria and qualify under requirements imposed by the CBU in accordance with the Regulation on the Procedure for Registration and Licensing of Banking Operations.

Saudi Islamic investment firm Itqan Capital plans to expand its investment and advisory activities in the kingdom after it received regulatory approval to boost its capital. The firm will increase its capital by 100 million riyals ($26.6 million) to 173.4 million riyals by the end of October, said Adil Dahlawi, managing director and chief executive of Itqan Capital. Itqan currently manages four sharia-compliant funds: a money market fund and three real estate funds. New product launches are scheduled this year with two funds in the pipeline, the first of which is a private equity fund investing in the Saudi education market, Dahlawi said. About half of all assets under management in Saudi Arabia follow Islamic investment principles.

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.

XL Group has extended its support for Shariah compliant managing general agency, Cobalt Underwriting, by adding fine art & specie coverage to its suite of products. The insurer already provides cover for property, construction and financial lines. The coverage, which spans precious metals, cash, fine art and rare collectibles, particularly complements XL Group’s Shariah compliant Financial Lines offering. In practice this means financial institutions and collectors can now buy cover with significant limits for a range of assets and their exposures, including gold and other valuable assets both in situ and transit. XL sees growth in the arts market in the Middle East and Asia with the opening of new galleries.

Iran has eight state-run and 19 “privately owned” banks – although these are frequently subject to interference from the state, with their shares bought by entities affiliated to power centres, which then influence banking policies and exploit funds - all of which have invested heavily in the ownership and management of commercial entities outside the banking sector. The central bank, state-run Bank Melli and privately owned banks of Ansar, Saderat, Mellat, Pasargad and Parsian refused to comment. Pasargad and Parsian are considered the leading private banks in non-banking operations.

Goldman Sachs Group Inc. (GS) will probably succeed in its latest attempt to sell sukuk as investors clamor for Islamic bonds. GS will meet investors in the region this week before potentially selling a dollar-denominated, benchmark-sized issue through its unit JANY Sukuk Co. The New York-based lender’s first foray into the Islamic capital markets three years ago ended without a sale amid criticism from scholars about the structure of its sukuk program and the use of funds raised. This time the planned security will be a Sukuk al Wakala. Goldman Sachs along with Abu Dhabi Islamic Bank PJSC, National Bank of Abu Dhabi PJSC, Emirates NBD Capital Ltd. and NCB Capital will manage the new offering.

The Employees Provident Fund (EPF) stressed it has the right to vote on the proposed merger between RHB Capital Bhd (RHBCap) and CIMB Group Holdings Bhd as it is the major shareholders of both entities. The pension fund’s chief executive officer Datuk Shahril Ridza Ridzuan reminded that it has the interests of 14 million members at stake. Some within the board of RHBCap were against allowing the pension fund to vote in the merger deal. The dissented parties thought that it was “inconceivable” that the EPF had not been engaged in prior discussions relating to the proposed merger between RHBCap and CIMB in which the pension fund holds a 41.34% and 14.46% stake respectively.

Naushad Virji's firm Sharia Portfolio is a financial-planning practice. Virji, CEO of the firm, helps clients to calculate the right amount of their Zakat. He also constructs portfolios of individual stocks, mutual funds and bonds that adhere to Islamic law. And he researches mortgages that don't violate Islam's prohibition against interest and helps clients find suitable investments in their 401(k) plans. When he started his firm in 2003, he reached out to his own network as potential clients and soon found that the Muslims he knew didn't have much experience working with a financial advisor. There are more and more financial options for observant Muslims, choices that didn't exist just a few years ago.

SWIFT, in collaboration with The Association of Islamic Banking Institutions Malaysia (AIBIM) and the Malaysian Islamic financial community, has announced that it will launch a new rulebook for the usage of SWIFT MT messages for Islamic finance. This rulebook will provide greater clarity around SWIFT MT message usage based on Islamic principles in order to enable straight-through processing (STP), thereby improving efficiency as well as reducing risk and cost. It will provide an efficient platform for exchanging Islamic finance messages and further promote the usage of message standards. The SWIFT Islamic Finance Rulebook will be available to the Message User Group (MUG) by the end of 2014.

Deyaar Development is planning to build a Sharia-compliant hotel and furnished apartment tower in the Al Barsha area of Dubai. The company confirmed the project, estimated to cost around AED450 million (US $123 million). Deyaar owns two adjacent plots of land in Al Barsha spanning a total of 71,000 square feet. The project is in the preliminary design stage. Earlier this week, Deyaar launched a new project in Dubai called Montrose, featuring a hotel apartment tower and two residential towers. In March, the company said it had allotted up to one million square feet for hotel and serviced apartment projects in prime locations in the city in the coming years.

For the second year in a row, Bahrain has been named the GCC's leading Islamic finance market and second out of 92 countries worldwide. This is according to the Islamic Corporation for the Development of the Private Sector-Thomson Reuters Islamic Finance Development Indicator (IFDI). As well as being highly-ranked in terms of the kingdom's commitment to research and training and local awareness of the industry, Bahrain was also ranked as having the best governance in Islamic finance in the world. The report praises the well-established regulatory framework covering all sectors, and high levels of disclosure. The IFDI is a measure of five key components to evaluate Islamic finance in 92 countries - quantitative development, governance, corporate social responsibility, knowledge and awareness.

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.

The launch of "Murabaha" through equities programme by the Bahrain Bourse (BHB) has moved closer to implementation with the exchange appointing Dr Shaikh Osama Mohammed Bahar as its Sharia adviser. His scope of work will include the review and approval of all Sharia-compliant securities, funds, and other investment instruments. The role will also include the review of all Sharia-based products to ensure compliance with underlying Sharia principles. In addition, he will be responsible for the issuance of Sharia statements (fatwa) with regards to Sharia-compliant securities listed on the bourse, and supervising its operations to ensure their compliance with underlying Sharia principles. BHB's strategy aims at enhancing market liquidity, and providing a wider range of products and solutions.

An eight-month rally in Islamic bonds showed its resilience as an Indonesian sukuk drew record bids before debuts by Luxembourg, Hong Kong and South Africa. A Bloomberg index tracking dollar-denominated Shariah-compliant debt from 43 sovereign and corporate issuers rose to an all-time high this week, as supply was limited amid the worst quarter for new issuance since 2010. Luxembourg and Hong Kong have hired arrangers for their sales planned for September. South Africa has hired banks for its debut offering of Shariah-compliant notes, while Bangladesh and Tatarstan are also planning maiden sales. While the average yield on debt that complies with Muslim tenets has dropped to a three-month low, it’s almost twice that available on U.S. Treasuries.

Malaysia and the Gulf Cooperation Council (GCC) countries remain the leaders in the Islamic finance industry, despite the emergence of new participants vying to get a piece of the pie. Bahrain Economic Development Board chief economist, Dr Jarmo Kotilaine, said an established financial industry required many component parts for its sustained development and the Islamic finance architecture was much more developed and complete in the Gulf and Malaysia than any other part of the world. Other centres can support the global growth of Islamic finance but are unlikely to challenge the established role of Southeast Asia and the Gulf, he said.

Malaysia-based International Islamic Liquidity Management Corp (IILM) hopes to widen its membership base as it seeks feedback from the market on its Islamic bond issuance programme. The IILM's short-term sukuk programme now has $1.65 billion of sukuk outstanding and could eventually grow to more than $2 billion; nine countries are directly represented in the IILM and it is keen to add more. A wider membership would boost demand for the IILM's sukuk, since Islamic banks in certain countries cannot hold IILM sukuk without permission from their local regulator. One potential new member is Oman; that country's central bank governor told Reuters last October that it was considering whether to join the IILM or allow its banks to hold IILM sukuk.