IslamicFinance.de

As a China state-owned enterprise (SOE) issued its first ringgit sukuk in the domestic bond market, many are wondering if other China companies would be doing the same. Beijing Enterprises Water Group (BEWG) issued RM400mil worth of medium-term notes on July 19 to finance its water treatment project in Kemaman, Terengganu. The sukuk issuance also marks the first ringgit-denominated sukuk by a China state-owned company for water infrastructure funding in Malaysia. According to analysts, China-based entities do not prefer to tap into the domestic sukuk market, as they are backed by strong financing sources from their home country. BEWG chief executive officer Datuk Vence Ong Kian Min noted that this was BEWG’s first-ever debt capital market instrument and the issuance has enabled the group to diversify its funding sources. The RM687mil project is expected to be completed in 2018.

In Iran, concerns are growing that banks may be facing the fate of credit and financial institutions (CFIs) that are on the verge of collapse. The Central Bank of Iran (CBI) is under rising pressure from the parliament to immediately regulate these nonbank credit institutions, as an increasing number of depositors protest delays. Now, there are fears that banks could be next. To avoid this scenario, pundits are suggesting that the CBI be granted more autonomy by the parliament so that it will take more serious disciplinary measures. The administration of President Hassan Rouhani has been trying to pass the bill in the parliament, but certain influential bodies have blocked the legislation. The huge government debt is putting excessive pressure on the banking system, but the Iranian public still trusts banks, even as many CFIs have collapsed.

Deux banques islamiques ou ''participatives'' ont démarré mercredi 26 juillet 2017 officiellement leurs activités au Maroc. Le takaful n’existant pas encore sur le marché, explique Adnane El Guetari, le directeur général d'Umnia Bank. Si les Umnia Bank et Bank Assafa se sont engagées dans ce créneau pour des opérations de base, toute la profession attend cependant la réaction de la Banque centrale du Maroc, Bank Al Maghirb, et les modèles de contrats contrat ijara et au placement des dépôts d’investissements. Selon l’agence américaine de notation Standard & Poor's, la finance islamique pourrait représenter entre 10 et 20% du système bancaire du Maroc.

Dubai Islamic Bank (DIB) has plans to solidify its foundations in the East African Islamic banking sector. Chairman Mohammed Ibrahim Al Shaibani confirmed confirmed the information last weeek. DIB was granted permission to enter the market by the Central Bank of Kenya in May 2017. The regulator used the new entry to highlight Kenya’s growing status as a regional finance hub. Until the DIB entry, Kenya had only two full-fledged Islamic institutions: Gulf African Bank and First Community Bank. The country also has one takaful Islamic insurance firm, a Shari’ah-compliant mutual fund and two cooperatives. Kenya's treasury ministry recently unveiled new plans to make mainstream Islamic finance a major part of the country's growth strategy. Finance minister Henry Rotich said in March that the government would propose alterations to financial law and issue new regulations to facilitate Shari’ah finance.

Kuwait Finance House (KFH) is considering expanding into China and Egypt as the region’s banking sector nears saturation. According to bank's CEO, Mazin Saad al-Nahedh, there are opportunities for a Kuwaiti bank to operate in China. He added that the bank was looking at options to buy a license to operate in Egypt as well. KFH is cautiously optimistic about its operations in Turkey. Its subsidiary Kuveyt Turk contributes 22% to the group’s bottom line as of the end of June. The bank expects credit growth of no less than 20% to 25% over the next three to four years as long as base rates remain where they are. As KFH continues its restructuring and sale of non-core assets, the bank is studying offers for its stake in Aref Investment Group, which it aims to sell by the end of the year. KFH is also planning to buy Bahrain’s Ahli United Bank, but hasn't started negotiations yet.

As the World Trade Organisation (WTO) reaffirmed commitment to its Aid for Trade initiative, the outlook for global trade over the next two years is indeed mixed. WTO is forecasting that global trade will expand by 2.4% this year and between 2.1 to 4% next year, reflecting the continued uncertainty of the global economy. In Malaysia, Bank Negara Malaysia (BNM) Governor Muhammed Ibrahim wants Malaysia’s Islamic finance industry to boost trade finance to increase largely untapped business opportunities using technological capture. BNM is keen for Syariah-compliant trade financing to support 10% of total trade in the next three years. Malaysia’s Islamic finance industry has assets under management totalling RM742 billion. BNM wants the industry to leverage this pole position and to account for 40% of total financing in Malaysia by 2020.

Gatehouse Bank has appointed former Shawbrook Bank director Tim Blease as its new chief operating officer (COO). Tim Blease’s previous roles include new business strategy and innovation director at Shawbrook and head of retail credit risk at Metro Bank. The bank has also appointed Sharron Harvey as its executive vice-president head of HR. Sharron has previously worked for Habib Bank Zurich and has 20 years of HR experience, mainly in the financial sector. Both Tim and Sharron will report to Charles Haresnape, CEO of Gatehouse Bank. The appointments come after Gatehouse revealed a number of changes to its board last week.

Robo-advisers are seen as a more transparent, convenient and low-cost alternative to human financial advisers. However, these platforms have limited options when it comes to shariah-compliant investments. To solve this problem, Malaysian Farringdon Group has recently launched its new robo-adviser called Algebra. According to CEO Stuart Yeomans, the company’s Virtual Mutual Fund Technology (VMFT) allows robo-advisory services for shariah-compliant investments to be offered at a lower price. Algebra can offer a wider range of investments and asset classes than other robo-advisory platforms. It adopts a smart beta strategy, which uses algorithms to derive its active equity portfolio before blending with fixed-income ETFs or sukuk funds. The shariah-compliant strategy used by the platform has been approved by Kuala Lumpur-based shariah advisory firm Amanie Advisors.

#Nigeria's Jaiz Bank has grown its capital base in five years from the initial N5 billion to over N15 billion. The bank disclosed that it is growing at an annual rate of 30% which makes it one of the strong players in Nigeria’s banking industry. CEO Hassan Usman said the management of the Bank grew Deposit Base from Zero to over N60 billion, and Asset Base increased from zero% to N40 billion. He added that the bank plans to grow its network through opening of additional new branches across the country. Jaiz Bank currently has a staff of 500 and has concluded plans to open new branches in Jos, Nassarawa, and Minna, as well as additional branches in Lagos. Commenting on the plan by the Debt Management Office (DMO) to float Sukuk, Usman described the move as a welcome development which is expected to go a long way in boosting the operations of the bank.

Kuwait Finance House (KFH) disclosed that it is studying a merger with Bahrain-based Ahli United Bank. Although the merger would present significant integration challenges owing to the banks’ geographically dispersed asset bases, it would be credit positive for KFH. If successfully completed, the transaction would create the sixth-largest bank in the Gulf Cooperation Council (GCC), with approximately $85 billion in total assets as of year-end 2016. The merger is at an early stage of evaluation, with financial analysis underway. The merger would expand KFH’s banking operations, which are primarily focused in Kuwait and Turkey, and include relatively small operations in Malaysia and Bahrain. In addition to Bahrain, AUB has principal subsidiaries in the UK, Kuwait, Iraq, and Egypt, and has an associate in Oman.

Dubai Islamic Bank (DIB) has signalled intention to enter the budding East African Islamic market. DIB chairman, Mohammed Ibrahim Al Shaibani, said that the lender would expand and consolidate its reach in East Africa after solidifying its Kenya base. The Central Bank of Kenya (CBK) in May opened the door for Dubai Islamic Bank to enter the local market after more than a year of waiting. DIB intends to exclusively offer Shariah-compliant banking services in the country. Kenya has recently unveiled a package of initiatives aimed at developing a policy framework for Islamic finance in the country. Authorities intend to make Kenya a hub for Islamic finance in Africa with ongoing reforms expected to drive the growth of Islamic-finance operations.

Malaysia remains a frontrunner in Southeast Asia's Shariah fund market, with $24 billion in Islamic mutual fund assets under management for the year ending May 2017. Global analytics firm Cerulli believes that Malaysia will preserve its pole position in Southeast Asia, while Indonesia will take a longer time to catch up, given the bias toward domestic investments. Malaysia's lead is largely due to its government's support of expertise in regional and Shariah investments. In January 2017, the Malaysian Securities Commission unveiled a five-year Islamic and wealth management blueprint to become an international Islamic finance center. Global firms have been encouraged to set up Islamic units in Malaysia through tax incentives and signing mutual recognition agreements with Dubai, Hong Kong, Ireland, and Luxembourg. The country is also embracing financial technology with new initiatives and regulatory support. Kuala Lumpur-based Farringdon Group recently launched a Robo-adviser service which follows Shariah investment guidelines.

Saudi Arabia's ministry of finance has established a program to issue local currency sukuk, as the government covers a large budget deficit caused by low oil prices. The program has been submitted to the Capital Market Authority, the ministry said without specifying when the first sukuk issue would take place. Saudi commercial bankers said they expected the first issue in the next few days and believed 10 billion riyals ($2.7 billion) would be offered. The ministry noted that 13 domestic banks had qualified to participate in the sukuk issues. The Saudi government issued its first international sukuk in April and raised $9 billion.

According to a new report by the International Islamic Financial Market (IIFM), sukuk sales are set to continue to rise this year as issuers refinance debt and sovereigns continue to tap the Sharia-compliant fixed income markets. Maturing global sukuk, with a ticket size of US$100 million and with a tenor of more than a year, will stand at around $66bn during this year and 2018. About 86% of the $367bn outstanding sukuk are held by a small group of countries, including Malaysia, Saudi Arabia, the UAE and Indonesia.Other countries, like Turkey and Pakistan are forecast to boost their market share in the next few years. IIFM’s prediction of greater sukuk issuances is in line with forecasts from S&P Global Ratings. The rating agency expects sukuk sales this year to range between $75bn and $80bn, higher than its previous estimate of $60bn to $65bn. This year’s sales will be exceptional and are unlikely to be repeated next year, the agency said.

Hong Leong Islamic Bank (HLISB) has appointed Jasani Abdullah as chief executive office. HLISB said Jasani has been acting CEO since December 2016. He has been in the financial industry for more than 30 years and his contribution towards the Islamic banking sector is very much valued. Jasani has been with HLISB since 2007 when he first joined as the head of shariah and product development. Jasani graduated with a Diploma in Public Administration from MARA Institute of Technology Malaysia, Bachelor in Business Administration from Ohio University, USA and has a Post Graduate Diploma in Islamic Banking and Finance from International Islamic University Malaysia.

Astana International Financial Center (AIFC) has gained the support of technology financier Malaysia Debt Ventures (MDV) to develop both green and Islamic finance in Kazakhstan. Under a newly agreed MoU, AIFC and MDV will work closely with each other to share best practices, expertise and knowledge in these two areas. Apart from sharing knowledge, both parties will also explore financing green projects using Islamic financing tools. While not fully operational yet, AIFC is keeping busy by setting the groundwork. Green finance received a huge boost earlier in January when the European Bank for Reconstruction and Development agreed to launch the Green Financial System for Kazakhstan project, financed by Finland. With eyes on a comprehensive green financial system, engaging MDV could culminate in a variety of Islamic financial products for sustainable eco-friendly projects including green Sukuk.

Qatari banks may need more cash injections from the state because of the risk of investor withdrawals. Banks have been feeling the fallout of the feud with Saudi Arabia, the United Arab Emirates, Bahrain and Egypt, which cut diplomatic and transport ties with Qatar on June 5 and imposed economic sanctions. They accuse Qatar of financing Islamist militant groups and allying with their regional adversary Iran. Because of the sanctions, several Qatar banks have seen an outflow of deposits. Fitch Ratings estimates that the majority of deposits in Qatar from other Gulf Cooperation Council countries are Saudi and United Arab Emirates' deposits, and that they are being withdrawn as they mature. Analysts expect funding challenges for the Qatari banks, considering the government would still intend to continue their project plans for FIFA 2022.

The Dubai Islamic Economy Development Centre (DIEDC) announced the commencement of nominations for the fifth edition of the Islamic Economy Award (IEA). The award is a joint initiative of DIEDC and Dubai Chamber of Commerce and Industry under the directives of Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum. The eight key categories of the Islamic Economy Award 2017 are: Money and Finance, Food and Health, Media, Hospitality and Tourism, Waqf and Endowments, SME Development, Islamic Economy Knowledge Infrastructure and Islamic Arts. In addition to the eight main categories, the Lifetime Achievement Award recognizes a notable individual, whose work over several decades, has inspired others and had a major positive impact on the Islamic economy.

In this interview Abdulmohsen Al-Fares, CEO of Alinma Bank, discusses the growth in the company's balance sheet, credit growth, their Sukuk issuance and competition from other banks. Alinma Bank has maintained its growth pace and Al-Fares is optimistic about the upcoming Saudi Arabian government sukuk. It is an opportunity not only for companies and banks, but also for the secondary markets. Timing and size of the sukuk has not been decided yet. In his opinion, competition from other banks will not affect Alinma Bank, as they will compete only in very small segments, not in retail. He added that the stand-off with Qatar would not have a negative impact on the Saudi economy, as the kingdom's economy is strong and the economic relationship with Qatar is small in size.

The government of Bosnia's Una-Sana Canton said it has signed a deal with Bosna Bank International (BBI) to fund business entities in the area. Under the deal BBI will provide financing to businesses in the canton under favourable conditions at a subsidized rate of 2.3%. BBI has secured 12.49 million marka ($7.4 million/6.4 million euro) for the project. The maximum amount that can be approved per business is 1 million marka, with a repayment period of three to seven years depending on the size of the loan.