IslamicFinance.de

Dubai Investments will lead a consortium of investors to launch Arkan Bank. Arkan Bank is now applying to the Dubai Financial Services Authority for approval for a licence to operate as an Islamic financial institution. It plans to offer sharia-compliant banking services and investment products to serve ultra-high-net-worth individuals, corporates, and institutional clients. The bank has an initial paid-up-capital of $100 million and will have an authorised share capital of $500 million. Arkan Bank chairman Khalid Bin Kalban said the bank would initially focus on the GCC region and subsequently build scale to become the top-tier Islamic wholesale bank. The bank plans to list its shares on NASDAQ Dubai within 12 months of its establishment.

The Dubai Islamic Economy Development Centre (DIEDC) signed a Memorandum of Understanding (MoU) with The State Bank for Foreign Economic Affairs of Turkmenistan (TFEB) to exchange knowledge, experience and best practices in Islamic economy. The MoU was signed by Sultan Bin Saeed Al Mansouri, UAE Minister of Economy and chairman of DIEDC, and Rahimberdy J. Jepbarov, chairman of TFEB. The centre aims to organise workshops and training courses and share professional research. In addition, the two parties have set up a joint committee to oversee the collaboration. Al Mansouri said this partnership between DIEDC and TFEB would strengthen synergies between the two countries. He further highlighted sukuk as an effective tool to finance projects in infrastructure, education and health care, as well as in other vital sectors of the economy.

The Government of Sharjah has issued a $1 billion (Dh3.67 billion) dollar sukuk on a 10 year maturity. The lead arrangers for the issue were Sharjah Islamic Bank, Dubai Islamic Bank, HSBC and Standard Chartered. Walid Al Sayegh, Director-General of Sharjah Finance Department, pointed out that the timing behind the issuance makes this the first sovereign sukuk issued in 2018 in the region. It is also the largest sukuk issuance by the government of Sharjah, which previously carried out two issuances. Al Sayegh said that the revenue from these sukuk would be used for infrastructure projects, as well as urban and financial development of Sharjah.

According to experts, the adoption of Islamic fintech will soon see a global increase as nations focus on financial inclusion across emerging economies. At the 11th edition of Innovation Arabia, Mohamed Roushdy, founder of Fintech Bazaar, revealed that traditional fintech has been existing for long as a service provider supporting financial services, but not customers. When it comes to fintech adoption today, adoption is highest in Asia in emerging economies. China leads the way with 69% adoption, followed by India at 52%. In terms of financial inclusion, Roushdy said the situation looks rather bleak across many Muslim nations. According to the Global Findex Database, 71% of Muslims have no bank account. Professor Nabil Baydoun, vice-chancellor at Mohammed Smart University (HBMSU), said the importance of the Islamic economy is seen as a vital resource and a contributing factor in the transition to the post-oil economy. The 11th edition of the event is being held under the patronage of Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai.

Dubai Airport Freezone Authority (DAFZA) has announced the launch of Goodforce Labs, a startup incubator focused on supporting ethical startups in the fields of Islamic economy and Halal industries. Goodforce Labs will select a group of startups and small and medium enterprises and support them towards a $50 million in annual revenues and measurable social impact. Most Islamic economy startups face many problems and struggle to grow and survive. A number of startups have joined the incubator like Growmada, an e-platform for selling handicrafts from developing countries, Waqf 2.0, a cloud-based platform for managing Awqaf, Zileej, a company specializing in disciplined entertainment products and Rabia Z, which designs modest women’s clothing.

Emirates airline mandated local and international banks to arrange a global investor roadshow ahead of a possible sukuk issuance. The carrier mandated Citi and Standard Chartered Bank as global coordinators and joint lead managers, alongside BNP Paribas, HSBC, J.P. Morgan, Abu Dhabi Islamic Bank, Dubai Islamic Bank, First Abu Dhabi Bank, Emirates NBD Capital, and Noor Bank as joint lead managers. Proceeds from the issuance will be used for general corporate purposes. Emirates did not disclose the size of the possible sukuk, but said it will be of benchmark size. The company has tapped the debt capital markets with four issuances since 2011 raising over $3.65 billion, over 50% of which has been from sukuk. The most recent aircraft order was for 36 Airbus A380s worth $16 billion and was made in late January. Delivery of the aircraft will begin in 2020.

The Rental Disputes Center (RDC) has received a generous donation of AED 500,000 from Emirates Islamic Bank to support insolvent tenants in rental claims disputes. The RDC has already set up the "Yad Al Khair Committee" to study the cases that require support from the donation. Awatif Al Harmoodi, General Manager of Operational Quality & Processes at Emirates Islamic Bank, said Emirates Islamic Bank is keen to expand its corporate social responsibility strategy to cover all segments of the UAE and will continue to cooperate with the RDC.

Al Hilal Bank has announced the dividend payout of the Al Hilal Global Sukuk Fund. The Fund, which was launched in March 2012, distributed a 3.93% dividend to all registered unit holders. Al Hilal Bank CEO Alex Coelho said the Fund had registered excellent cumulative total returns since its inception in 2012. Al Hilal Bank currently offers 3 open-ended mutual funds inclusive of the Global Sukuk Fund. In 2017, Al Hilal Global Sukuk Fund was awarded the title "Best Fund over 3 years", while the GCC Equity Fund received the "Best Islamic Fund" award in 2013 and 2014. The bank plans to continue launching investment products as part of its ongoing efforts to create value and increase diversification for its clients.

Dubai Airport Freezone Authority (DAFZA) has partnered with Dubai Islamic Economy Development Centre and venture firm Technolera to launch a new start-up incubator. Goodforce Labs is launched to help Islamic small and medium enterprises to reach $50m in annual revenues and a measurable social impact. It will help start-ups to start, manage and develop their businesses while providing support in areas including design, marketing, operations management and technology. DAFZA said there are more than 2,500 companies in the ethical Islamic lifestyle market but many struggle to grow and survive. Start-ups that have signed up to the incubator so far include handicraft e-commerce platform Growmada, cloud-based charitable endowment manager Waqf 2.0, disciplined entertainment product specialist Zileej and modest women’s clothing firm Rabia Z. Financial literary firm iWealth and halal food e-learning platform Smart Halal are among the other entrants.

Abu Dhabi Global Market (ADGM) welcomes applications for the third cohort of its Regulatory Laboratory (Reglab) with special focus on the small-medium enterprise (SME) sector. ADGM therefore encourages all FinTech and RegTech companies, in particular those with a SME focus, to apply and be part of its RegLab. This includes technology startups which offer tools to both institutions and SMEs alike. The application period will close on 10 May 2018.

RegLab allows participants to explore and develop innovative solutions in a risk-appropriate and cost-effective environment. Moreover, participants will have access to a digital sandbox service provided by Temenos that enables them to integrate their solutions with banking data and functionality.

For further details of the ADGM RegLab programme, please visit www.fintech.adgm.com or contact fintech@adgm.com.

Dubai Islamic Bank (DIB) is celebrating the listing of a $1 billion Sukuk on Nasdaq Dubai. The listing is the first benchmark dollar-denominated sukuk from a GCC issuer in 2018. DIB's Group CEO Dr Adnan Chilwan said the bank's master plan was developed a decade ago and has yielded solid results so far. He added that the strong demand for the credit continues to grow across a diverse global investor base. This issuance is DIB’s sixth sukuk on Nasdaq Dubai, making the bank the largest UAE debt issuer by value on the exchange with a total of $5.25 billion. The total value of all sukuk listed on Dubai’s exchanges has now reached $53.47 billion, the largest amount of any listing centre in the world.

The International Innovative Platform for Islamic Economy Products (IIPIEP 2018) took place on 21 February in Dubai. The event was organized by Dubai Airport Freezone Authority (DAFZA) in cooperation with International Center of Islamic Economy (ICIE). The first product launched was the 'Exchangeable Sukuk', which has been created to mobilize resources using Sukuk that are tradable and don’t require the utilization of bank assets. The second product announced was the 'Awqaf Fund' which aims to create a new simple sustainable product for anyone who wants to put their money into waqf. The 'Flexible Credit Card' was the third product launched at IIPIEP 2018, which seeks to combine investment with funding. The customer gets balance in credit and at the same time an investment account. Held at Grand Hyatt Dubai, the event was attended by industry experts, innovators and decision-makers. It was supported by Alinma Bank, Islamic Development Bank and Dubai Islamic Economy Development Centre, sponsored by National Bonds and National Commercial Bank.

Dubai Islamic Bank (DIB) celebrates the listing of a $1 billion Sukuk on Nasdaq Dubai. The Sukuk is the first benchmark dollar-denominated Sukuk from a GCC issuer in 2018. It is DIB's sixth Sukuk on Nasdaq Dubai, making the bank the largest UAE debt issuer with a total of $5.25 billion. The latest Sukuk carries a profit rate of 3.625% with a five-year tenor. DIB's Group CEO Dr Adnan Chilwan said the master plan developed a decade ago has yielded solid results and the strong demand for the credit continues to grow across a diverse global investor base. He added that Nasdaq Dubai provided high visibility in the marketplace as well as close links to investors in the region and internationally.

Investment Corporation of Dubai (ICD) is seeking to raise a $1 billion loan to refinance its existing debt. The state-owned holding company aims to raise a five-year loan to partly repay a $2.55 billion facility that matures in June. ICD owns stakes in some of Dubai’s biggest companies including Emirates, Emaar Properties and Emirates NBD. The company raised the loan in 2013 and it includes a $875 million facility and a 6.15 billion dirham ($1.7 billion) portion. HSBC Holdings, Citigroup, Standard Chartered, Emirates NBD and Dubai Islamic Bank were among lenders that provided the original loan.

Tariq Bin Hendi, Ph.D., Executive Vice President of Emirates NBD, discussed the challenges that lie ahead for Private Banking. Bin Hendi said that approximately 200,000 ultra-high net-worth individuals are going to be passing down almost 30 trillion US dollars to their children. In addition, there will be millions of people passing down more moderate wealth, from the entrepreneurial and business fields. In the UAE, the older generation still prefer real estate and equities to the private equity and technology sectors that their children and grandchildren favor. Wealth management institutions are changing the way they interact with the new generation of clients. They need to better equip themselves with more nimble technology, from AI to Robo-advisors to ATMs, so as to not lose ground to the new startups. Bin Hendi suggests a new generation of products and services, which include a combination of human and AI interaction. Emirates NBD is spending 1 billion Dirhams over the next 3 years to bring about this technological revolution.

Africa represents a huge untapped market for Islamic Banking. The demand for Sharia-compliant products in Africa has been growing for both Muslims and non-Muslims. Most countries such as Senegal, Uganda, Morocco, Kenya, Gambia and Nigeria have already reformed banking laws to allow the setting up of Islamic institutions. While there is a large demand for Islamic Banking, the availability of Islamic Wealth Management Products is still relatively small, leaving a large opportunity for UAE banks. At Noor Bank, for example, each international client is assigned a dedicated relationship manager and customer service officer. Going forward, the African market holds great potential for the UAE Banking sector. Latest forecasts indicate that Africa’s GDP will grow to 3.7% in 2018, according to the African Development Bank.

The Dana Gas sukuk case illustrates the dangers of local country courts favouring domestic companies. Wherever possible, international investors should avoid local law. The most commonly used is English law, even for commercial arrangements that have nothing to do with the UK, because English law is well-developed and English courts have a deserved reputation for legal competence and impartiality. Dana Gas raised money from international investors by issuing sukuk. The money so raised was invested in a mudarabah agreement with Dana Gas, written under UAE law. Dana Gas also entered into a purchase undertaking, written under English law. Under UAE law, sukuk investors would have been sunk, having to litigate about whether the commercial arrangements were or were not Shariah compliant. However, they were saved by the purchase undertaking being under English law.

According to a survey by Bloomberg Intelligence, the UAE is ranked third in an analysis of Islamic Fintech start-ups. The analysis finds that tailored regulation and clarity on rules could aid the small and medium-sized Fintech outlook. Crowdfunding and peer-to-peer (P2P) financing could be a game-changer in Islamic finance, giving potential to close the gap for small and medium enterprises. The analysis suggests that new opportunities to invest in gold, integrated by Islamic Fintech blockchain technology, may revive its appeal and lift demand. Development of Shariah-complaint, gold-backed products following the introduction of the Shariah Gold Standard, may encourage investors to place their money in gold. The analysis also noted that the Islamic Financial Services Board has predicted that Shariah-complaint assets will expand by 261% compared to the 2015 figure, to represent US$ 6.5 trillion by 2020.

United Arab Emirates energy producer Dana Gas swung to a net profit of $83 million in 2017 after a $1 billion payment as part of a settlement with the Kurdistan Regional Government (KRG). However, Dana posted a net loss of $42 million in the fourth quarter of last year. Profits in the fourth quarter were affected by an impairment charge of $34 million against the Zora gas field in the United Arab Emirates. Dana, which has struggled to collect receivables from Kurdistan and Egypt over the past four years, collected $466 million from the KRG and $164 million from Egypt last year. Dana’s cash balance at the end of 2017 amounted to $608 million, more than double the $302 million it had at the end of 2016. Dana Gas is at the centre of a legal dispute with the holders of a $700 million sukuk that the company refused to redeem on the grounds that the notes were no longer sharia-compliant. Legal proceedings in English and UAE courts are continuing.

Nearly 5% of the UAE'S population is struggling with depression and it is expats that are hit the hardest. One of the most common side effects of stress incurred by debt was headaches. A study by The Priory Group found that young adults were suffering significantly from aches and pains caused by debt. The cost of buying or renting property, divorce, commuting and holiday costs, childcare, school fees and the rising cost of living generally can easily overwhelm, leaving people stressed out about money. According to psychologist Tanya Dharamshi, debt can arise from impulse control problems that can result in excessive behaviours, such as shopping, especially when it's online. Because there are creditors involved, money issues can exacerbate the symptoms of depression or anxiety. This may lead to alcohol or drug misuse and further abuse of the impulse control problem. Breaking that vicious circle is a major challenge in recovery.