IslamicFinance.de

Additional costs for issuing an Islamic bond no longer have to be paid - the "sukuk premium" is gone. As a senior executive at Deutsche Bank explained, this will result in a hige increase in sukuk issuance. At the same time, tenors will become longer. Until last year, the reasons of common premium payment were that issuers catered to a smaller investor base. Also, in comparison with conventional bonds, investors were little familiar with sukuk structurs. This is now not the case any more since a heavy investor demand for sukuk this year can be observed.

It seems that small and medium-sized Islamic banks may need to merge if they want to evolve into bigger regional players capable of filling the funding hole left by shrinking Western banks. This statement came from Salah Jaidah, the head of Islamic finance at Deutsche Bank.
He added that whilst Islamic banks might not immediately be able to face the challenge, within time they will be able to reposition themselves.
The Gulf Co-operation Council area has over 100 Islamic banks, aligned from Al Rajhi Bank of Saudi Arabia with a $25 billion market cap to small unlisted lenders.
The idea of a so-called Islamic "mega-bank" has already been promoted in the region by Bahrain-based Al Baraka banking group.

Salah Jaidah was appointed chairman of Islamic finance at Deutsche Bank. Also, the new head of Islamic finance structuring is Ibrahim Qasim.