IslamicFinance.de

Qatari banks plan to borrow more than $6 billion to finance a construction boom ahead of the 2022 soccer World Cup as slumping oil prices constrain government deposits. Shareholders in Al Khaliji Commercial Bank approved a $2.5 billion bond program, and Qatar National Bank said it arranged a $3 billion loan. Qatar International Islamic Bank may issue sukuk. Government deposits at Qatar’s banks more than tripled in the five years ended February 2014 before declining 4 per cent the following year. Qatar is spending $182 billion, or 90 per cent of its 2013 gross domestic product, on roads, stadiums and other facilities by 2019 to play host to the World Cup.

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.

The Cyprus Investment Funds Association is calling for the government to sell sukuk to lure investment from the Middle East. In addition, the Cyprus Stock Exchange wants to encourage the listing of Shariah-compliant bonds and sees potential for the nation of 1.2 million to become a “gateway to the European Union” for Islamic investors, Chief Executive Officer Nondas Metaxas said. The island, where Muslims make up 18 percent of the population and Turkey has kept troops since the 1974 conflict, is being asked by the European Union to tackle a bad-loan ratio of 45 percent after a joint bailout with the International Monetary Fund in March 2013. However, the government isn’t currently looking into developing an Islamic finance industry, Finance Minister Harris Georgiades.

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.

Takaful Insurance of Africa Ltd. plans to expand its operations into Ethiopia, Tanzania, Uganda, Somalia and the autonomously governed enclave of Somaliland under its five-year plan 2013-2017. In Kenya, Takaful Insurance has four outlets and 80 agents in Nairobi and Mombasa. The company plans to add at least two more outlets this year and double the number of agents, according to its CEO Hassan Bashir. Takaful’s premiums totaled 430 million shillings last year.