IslamicFinance.de

Ivory Coast plans to complete a sale of 150 billion CFA francs ($263 million) worth of Islamic bonds, following Togo's debut sale of sovereign sukuk launched last month. The two West African nations join Senegal in tapping the market for sukuk, expanding the use of Islamic financing options outside the Middle East and Southeast Asia. The Ivory Coast will sell the 7-year sukuk using ijara with the subscription period closing on Aug. 31. This represents the second phase of a 300 billion CFA franc sukuk programme set up last year by the Ivory Coast. Togo plans to complete the sale of its sukuk later this week, aiming to raise 150 billion CFA franc with a 10-year maturity and a 6.5% yield. The lead arranger for both the Togo and Ivory Coast sukuk is the Islamic Corporation for the Development of the Private Sector (ICD).

The Islamic Development Bank's annual meeting was held on Monday in Jakarta, Indonesia. At the meeting Finance Minister Bambang Brodjonegoro said sukuk played a significant role in promoting resilient infrastructure and sustainable economic development, and therefore should be boosted in the future. Indonesia has been active in sukuk markets since 2007. This year, Rp 110.9 trillion (US$ 8.33 bn) in sukuk was issued in the domestic and international markets, according to ministry data.

Daud Vicary Abdullah, President of the International Centre for Islamic Finance discusses the role of education and specifically higher education programs in Islamic finance. Islamic finance has been growing to where it is today because it has used conventional tactics or conventional instruments. Now there is a big opportunity to use new risk-sharing instruments. The idea is that people get education early and see this not as a religious threat but as a set of options about which they can make realistic choices.

The Sharia-compliant banking industry is in dire need for highly skilled and talented human capital because the sector is growing faster than educational institutes can provide professionals. Experts say emerging markets would require at least 50,000 Islamic finance professionals in the next few years to keep the sector moving. Producing Islamic finance specialists presents challenges, though. Islamic banking, in principle, is of higher complexity than its conventional counterpart, and the expertise where Islamic finance talent is needed includes Sharia-compliant financial engineers and product developers who structure innovative financial solutions tailored for both Muslim and non-Muslim markets.

Turkey's cabinet has approved Murat Cetinkaya as the next central bank head, giving some initial relief to investors who had feared a battle between Erdogan, who equates high interest rates with treason, and Prime Minister Ahmet Davutoglu's more orthodox economic team. Despite the initial relief in markets, the 40-year-old Cetinkaya remains something of an unknown quantity, lacking the experience of his predecessor, Erdem Basci, an engineer turned economics Ph.D. whose term as governor expires next week. The new Central bank governor must now convince investors that he can tame inflation while resisting political pressure to cut rates.

Oman’s market watchdog Capital Market Authority (CMA) has announced its new sukuk regulation, which includes stipulation on establishing a trustee structure and an LLC company as a special purpose vehicle for issuing sukuk. The regulation, which is effective from Wednesday, also allows structure of the sukuk subject to the approval of respective Sharia Supervisory Board issuer and the choice of the board is left to the issuer. The regulation made rating optional for the issuer and there is no restriction on the sukuk amount to be raised based on the company’s capital. The regulation will complement the existing bond regulatory framework.

The Islamic Research and Training Institute (IRTI) and the General Council for Islamic Banks and Financial Institutions (CIBAFI) have signed a deal for a joint project to establish the first-of-its kind Islamic financial industry data repository. The online repository, to be named the ‘Islamic Financial Industry Intelligence (IFII)’, is aimed to be a one-stop shop for comprehensive and reliable Islamic financial and non-financial data and information. IFII would comprise several integrated databases covering all the components of the Islamic finance industry—including banking, insurance, and social finance.

Tunisian Islamic bank Zitouna was the first to succeed in placing on the national financial market in December 2015 the Islamic bonds sukuk for a value of 22.5 million euros. The result exceeded expectations - set at 20 million euros - the management of Zitouna said. at a Forum on Islamic finance held at Kram in Tunis. The Forum was attended by several protagonists of the Tunisian economic and financial scenario like central bank governor, Chedly Ayari, the president of Cmf, Salah Sayel and former finance minister, Jalloul Ayed. Zitouna bank, on behalf of its president Ezzedine Khoja, has announced it is launching a new business plan in 2016-2020 with the objective of becoming the bank of reference in Tunisia and a leading Islamic bank in Africa.

Ivory Coast offers inaugural CFA 150 billion Sukuk. The Sukuk is an amortising Sukuk al-Ijara and is targeted at local banks and institutional investors. It mirrors the Senegal Sukuk that Hogan Lovells advised on in 2014. Hogan Lovells' team was led by Global Head of Islamic Finance, Rahail Ali and Partner Imran Mufti. They were assisted by Partner Baptiste Gelpi, International Debt Capital Markets, Paris and Lina Bugaighis, Dubai. Hogan Lovells worked togehter with ICD for the issue. Imran Mufti commented that more sukuk from African issuers are expected in the near future. Zaky Sow, Sukuk Project Manager for ICD added that the Sukuk opens up a whole new stream of investment into the country.

The World Gold Council is exploring the creation of a Shariah Standard on Gold, which will provide guidance from the Shariah perspective on the usage of gold in financial and investment transactions for Islamic financial institutions and participants. The Standard also aims to increase transparency and harmonisation regarding the use of gold in various market practices. A draft of the Standard has been prepared for the Council by Amanie Advisors, a DIFC-based consultancy and training agency specializing in Islamic finance. The World Gold Council is calling for interested parties active in Islamic financial services to submit their responses to the development of a Shariah Standard on Gold since their participation in the development of the Standard is vital. The deadline for feedback has been extended to 31st January 2016.

Without any doubt the introduction of Islamic Banking will be a challenge to Malta. There can be no doubt that the Government looked at the matter from a purely commercial point of view without paying any attention to certain core values. But the attacks by ISIS are bringing the issue of core values to the fore again. Currently Malta is seen as one of the top countries in the fight against money laundering and terrorism funding. With the introduction of Islamic Banking, the biggest preoccupation would be whether such a position would be negatively affected. Another concern is on the role of the Regulator. Despite a long Budget Speech, such an essential issue was not tackled by the Minister of Finance and MFSA is far from being prepared for such a proposal.

China remains a major market that Islamic finance has not yet reached. But this could be set to change in the coming years – and one province in particular is leading the way. Ningxia, in the north-west of China, is an autonomous region where 35% of the population is Muslim and there has recently been talk of establishing an Islamic Financial Centre there in the next five to seven years. Local laws and tax regulations need to be modified to permit shariah-compliant investments. However, the effort could be undermined by cultural insensitivities such as allowing Muslim restaurants to serve alcohol alongside halal food. The growth potential of Islamic finance in China is huge given the country’s 1.3 billion population.

Turkish state-run lender Halkbank has decided to establish an Islamic finance unit, in line with a government effort to develop the sector and tap a pool of investors in the Gulf and southeast Asia. The bank said its management would seek regulatory approval for the Islamic unit, known locally as a participation bank, but gave no further details on the plans. The Halkbank board has mandated the general management for the establishment of a participation bank, and to carry out the required processes for legal and administrative permissions, it said in a stock exchange filing. Since 2012, the Turkish government has pushed the development of Islamic finance by regulatory moves and issuing sukuk.

Orix Leasing Pakistan Limited (OLPL) plans to tap the high growth Islamic finance market. The company has entered into a non-binding Memorandum of Understanding (MoU) with Standard Chartered Bank (Pakistan) Limited (SCBPL) with regard to a prospective merger/amalgamation of Standard Chartered Leasing Limited (SCLL), a subsidiary of SCBPL with and into OLPL or acquisition of SCBPL’s 86.45 per cent equity stake in SCLL. The MoU further provides the acquisition of SCBPL’s 100pc stake in Standard Chartered Services of Pakistan (Private) Limited and acquisition of SCBPL’s 20pc stake in Standard Chartered Modaraba. There is no certainty that the MoU would result in a binding transaction.

Prospects for the 2022 World Cup in Qatar are unsettling bond investors already rattled by political turmoil between the country and its neighbors, with its sukuk on course for its worst month in more than a year. FIFA Executive Committee member Theo Zwanziger told Germany’s Bild this week that Qatar probably won’t host the world’s biggest soccer event in 2022 because of the summer heat. While Qatar dismissed his comments, it’s creating more market turbulence for the country, which has been at odds with Saudi Arabia and the United Arab Emirates over its support for the Muslim Brotherhood in the region. The bond due January 2018 will drop further if its neighbors continue to isolate Qatar and this FIFA situation isn’t resolved.

Harris Irfan is an insider on two fronts. He is a Muslim and also an expert in finance and commerce. He has worked as an investment banker in Europe and the Middle East and been head of Islamic finance at Barclays; he also founded Cordoba Capital, an Islamic finance advisory firm. Mr Irfan wants to show that Islamic finance might be able to make a real contribution to our economic woes. He asks the reader to consider whether the Islamic world can bring something of benefit to the Western world, and vice versa. While this book isn't full of jargon, it helps to know something about how the investment industry works. The last chapter ponders the future of Islamic banking after some sharia-compliant finances were unfairly equated with funding terrorism, Worth reading.

The Saudi Ministry of Social Affairs is warning Saudis seeking to fulfil their zakat duty during the holy month of Ramadan against donating funds to those who solicit money via social networking tools. Those who wish to donate money are encouraged to give to the more than 700 licensed charitable organisations in the kingdom, to social security offices or to organisations involved in the Al-Khair al-Shamel (Global Goodness) project, the ministry said. These groups document donations in a transparent fashion under the state's auspices, it added. In Saudi Arabia, cash donation boxes are not allowed in mosques, markets and malls, as cash donations are accepted only at banks.

CIMB Group Holdings Bhd, RHB Capital and Malaysia Building Society (MBSB) have received Bank Negara Malaysia's approval to start merger talks which would result in the creation of a mega Islamic bank. They announced in a joint statement on Thursday that under the corporate exercise, the proposal was to merge the businesses of both RHB and CIMB. The corporate exercise included plans to create an enlarged Islamic banking franchise with MBSB. The three parties have entered into a 90-day exclusivity agreement to negotiate and finalise pricing, structure, and other relevant terms and conditions for a proposed merger.

There are at least 10 million Muslims in Russia, but the country lags behind in the industry. Russian Muslims are slow to change their financial habits, while nonbelievers are plagued by a deep-rooted distrust of Islam — as are, to some extent, the financial authorities, who are in no hurry to adapt economic legislation to facilitate Islamic banking. Still, an Islamic finance industry has been budding over the past decade in Russia, and analysts and players show cautious optimism about its prospects. The industry still has plenty of room to grow — Thomson Reuters forecasts that Islamic banking assets in Russia will reach up to $10 billion by 2018.

Asia presents huge developmental potential for Islamic finance and is likely to be the main driver of Islamic banking growth in the near future, given the untapped potential in India, Bangladesh and Indonesia, a Kuwait Finance House Group report said. Islamic finance can be utilised for greater integration of financial markets with the real economy and for improvement of the economic balance between emerging and frontier markets, according to the report. However, the report did not provide details of Islamic banking operations in countries like India, Bangladesh and Indonesia. Driving the industry in the region is Malaysia, particularly in areas of Islamic banking, bonds and funds, it said.