IslamicFinance.de

The objective of Islamic wealth management is economic justice through equitable distribution of wealth. This by no means restricts private ownership and entrepreneurship but a wider circulation of wealth and invested in socially beneficial economic activity. To serve social justice, wealth is not considered legitimately earned unless the risk-and-rewards are both shared in a financial contract: so one-sided no-risk-sharing contracts are not permitted. Islamic wealth management involves wealth generation, accumulation, preservation, purification and distribution. Creation of wealth is defined more broadly than in conventional practice. A set of filters are applied to financial transactions that ensure permissibility. Impermissible gains are expected to be distributed to the needy as a method of purification or cleansing. The process of cleansing applies in corporate finance and investment as well.

According to the latest statistics by RAM Ratings, a total of $12 billion worth of Sukuk was issued in March 2018, bringing global Sukuk issuance to $30 billion in Q1 2018, a 44.4% surge from $20.8 billion for the same period last year. The increase is likely due to a boost from Saudi Arabia with issuance reaching $6.5 billion as at end-March 2018. Malaysia had issuances rising from $9.6 billion to $11.5 billion, accounting for the second-largest year-on-year increase, followed closely by Indonesia at $5.5 billion, the UAE at $3.3 billion and Turkey at $1.4 billion. Malaysia retained the top spot in terms of global Sukuk issuance with a 38.2% market share worth $11.5 billion as at end-March 2018. Saudi Arabia stayed in second place with a 21.7% share worth $6.5 billion, Indonesia closed on third place with 18.2% and the UAE with 10.8%.

Al Hilal Bank and Abu Dhabi Global Market (ADGM) have signed a Memorandum of Understanding (MoU) to develop a strategic collaboration. The MoU focuses on the utilisation of ADGM Academy, the newly established financial educational centre. The MoU provides Al Hilal Bank with The Academy’s network of trainers, internationally renowned curriculum and ADGM’s business ecosystem. Al Hilal Bank Senior Managing Director Sultan Al Mahmood said this partnership represents a unique learning and development opportunity for employees to develop a best practice financial education. The signing ceremony took place on Monday, 16 April 2018 at the ADGM Academy, located on Al Maryah Island. It was attended by H.E. Ahmed Ali Al Sayegh, Chairman of ADGM and H.E Khalaf Abdulla Rahma Al Hammadi, Vice Chairman of Al Hilal Bank.

Afghanistan’s central bank has granted a license to the Islamic Bank of Afghanistan (IBA). IBA Chief Financial Officer Faizan Ahmed said the bank had completed the conversion of its balance sheet. It plans to introduce wealth management products and launch new digital banking services in the coming months. Afghanistan’s banking sector is small, but Islamic finance is seen as an important feature that could help attract more people into the financial system. IBA estimates that only 5.7% of the population has dealings with the banking sector and the majority of the country in unbanked. Islamic banking has been offered in Afghanistan by a handful of firms through so-called Islamic windows, but there have been no full-fledged Islamic banks so far. Lenders with Islamic windows include Afghan United Bank, Ghazanfar Bank and Afghanistan International Bank.

Abu Dhabi Islamic Bank (ADIB) has arranged an Islamic financing transaction to fund the acquisition of The Hub, located at the Aztec West Business Park, Bristol. The transaction is worth GBP19.35 million and is arranged on behalf of a private Saudi-based client. The Hub is a regional UK office for Atkins, a multinational design, engineering and project management consultancy. The building has been awarded a BREEAM excellent rating, as overall carbon emissions are more than a third lower than expected for a building of its size. ADIB opened its office at One Hyde Park in London in May 2012 and was the first UAE-based bank providing Islamic financial services to be licenced to operate in the UK, being one of the six banks that are fully Shari'ah-compliant.

UK’s Gatehouse Bank has calculated that the value of Sukuk assets listed on the London Stock Exchange (LSE) would double to GBP57.8 billion in the next decade, if issues continue at their current rate of growth. Sukuk only began life in the UK in 2007, but their numbers have been swelling at an annual rate of around 5%, though they are still little understood. Gatehouse Bank CEO Charles Haresnape sees this growth as a huge opportunity for Britain. He urges the Government to capitalise on this week's summit on Islamic finance and make it more than just a single effort for one large oil company to list on the LSE. He believes an on-going trade mission is needed to make London the world centre for all Islamic finance.

The Saudi Capital Markets Authority has announced its resolution approving Bank Aljazira’s request to increase its capital by way of rights issue valued at SAR 3,000,000,000. The offering price and the number of shares will be determined after market closing of the same day in which the extraordinary general assembly meeting is held. After reviewing the bank’s application in light of the governing regulatory requirements, the CMA has issued its resolution approving Bank Aljazira’s capital increase request. The CMA’s approval merely means that the legal requirements as per the Capital Market Law and its Implementing Regulations have been met.

Dubai Islamic Bank (DIB) has announced the successful pricing of $1 billion Sukuk issued with a five-year tenor. The issuance carries a profit rate of 3.625% and is the first dollar benchmark Sukuk transaction from the GCC in 2018. The orderbook was driven by strong demand across the globe, including Middle East, Europe, Asia and North America, and across a broad spectrum of investors base. According to DIB's Group CEO Dr. Adnan Chilwan, the strong investor interest demonstrates not only the continued attraction of DIB, but also the resilience of the Sukuk market in general. Bank ABC, Dubai Islamic Bank, First Abu Dhabi Bank, HSBC, J.P.Morgan, KFH Capital, Sharjah Islamic Bank and Standard Chartered Bank acted as Joint Lead Managers and Joint Bookrunners while Union National Bank and Boubyan Bank acted as Co-Managers on the offering.

In this interview Ayman Sejiny, CEO of Ibdar Bank, speaks about the future of Islamic finance. Ayman Sejiny believes that fintech is going to be one of the biggest drivers of change in the new Islamic banking era. Fintech initiatives will not only improve existing customer’s banking experience, but also have the potential to bring the two billion financially-excluded individuals into the banking system. Malaysia, Indonesia, the UAE and Bahrain, driven by an influx of start-ups in the crowdfunding and payment space, have already positioned themselves to lead the field. They started to formally regulate crowdfunding and implement sandboxes or special fintech licencing schemes. These markets should therefore see huge growth in crowdfunding, P2P and payments platforms and even an increase in the use of AI in the form of robo-advisers. The UK and even the US will also see more investment in fintech startups to meet the demand for Shari’ah products in these markets. Ibdar Bank has set out a comprehensive plan for the engagement with fintech service providers.

Moody's estimates that total Sukuk issuance will reach around $95 billion by the end of this year, after more than $85 billion in 2016, including more than $50 billion of Sukuk issuance by sovereigns. According to Moody's Vice President Christian de Guzman, sovereign Sukuk issuance volumes will continue to grow in 2018 as governments look to diversify their financing mix and satisfy the liquidity needs of Islamic retail banks. A number of factors will support sovereign Sukuk issuance, including high borrowing needs for GCC sovereigns, which Moody's expects to reach around $148 billion in 2018. Malaysia remains the largest Sukuk market with an estimated 43% of total sovereign Sukuk outstanding, followed by Indonesia with 30%. Indonesia's issuance will likely grow with the government's efforts to develop the Islamic finance sector.

Nasdaq Dubai and the Nairobi Securities Exchange have signed a Memorandum of Understanding (MoU) to facilitate the creation of a Sukuk sector in Kenya. The MoU was signed in Dubai by Hamed Ali, CEO of Nasdaq Dubai, and Geoffrey Odundo, CEO of the Nairobi Securities Exchange. Hamed Ali assured that by cooperating and sharing expertise, the two Exchanges will provide powerful support for the growth of Islamic finance in Kenya. Geoffrey Odundo said the development of the Islamic capital markets can provide significant support for funding national development while strengthening international relationships. Other recent steps for the sector include a Sukuk transaction on Nasdaq Dubai’s Murabahah financing platform carried out by the Africa Finance Corporation.

The Board of Directors of Abu Dhabi Islamic Bank (ADIB) has accepted the resignation of Tirad Mahmoud from his position as Group CEO. Mahmoud has beon medical leave from March 2017. Khamis Buharoon, ADIB’s Vice Chairman, will continue as acting CEO. Mahmoud joined the bank as a CEO in 2008 and was able to grow ADIB from a domestic market player to a leading regional bank with presence in six countries and a customer base of around one million customers. ADIB has an asset base of more than AED121 billion. In its most recent quarterly results, ADIB reported a 13% rise in third-quarter net profit.

Abu Dhabi Islamic Bank (ADIB) held forums on the international regulatory environment for banks from Sudan and Iraq to support their increasing integration into the global economy. The forums followed the lifting of the United States' longstanding sanctions against the government of Sudan on 12 October 2017. Andreas Meletiou, ADIB’s Head of Global Financial Institutions, said the seminars were equally important for transfer of knowledge and experiences, as well as for deepening networks. The two separate forums gathered around 50 bankers from each country to discuss the evolving international regulatory environment for financial institutions. They addressed issues such as Basel III and IFRS 9 requirements as well as anti-money laundering measures. ADIB, which has a large retail and corporate banking operation in its home market of the United Arab Emirates, also operates a wide international network, including Egypt, Iraq, Sudan and the United Kingdom.

Nasdaq Dubai has welcomed the listing of a $500 million Sukuk by APICORP, the development bank of the Arab world’s oil and gas industries. The transaction is APICORP’s second Sukuk listing on Nasdaq Dubai, as the first was in January 2016. The Sukuk was issued under a $3 billion Sukuk programme and is aimed at diversifying its funding sources. APICORP’s activities include equity investment, debt financing, financial advisory and energy research services. Sukuk listings in the Emirate currently totals at $52.97 billion. 11 Sukuk listings have taken place so far in 2017 on Nasdaq Dubai with a total value of $10.25 billion.

Dr. Zamir Iqbal, Chief Financial Officer of the Islamic Development Bank (IDB), rang the market-opening bell to mark the listing of a $1.25 billion Sukuk on Nasdaq Dubai. 53% of the five-year Sukuk issuance was acquired by investors in the EMEA region, while 47% went to investors based in Asia, with an annual return of 2.261%. The IDB is one of the largest Sukuk issuers on Nasdaq Dubai, with a current total of eight listings valued at $10.25 billion. The bell-ringing ceremony was attended by Hamed Ali, CEO of Nasdaq, as well as Azahari Bin Abd Kudus, Capital Markets Manager of the IDB. Dubai is a leading international centre for Sukuk activity, with Sukuk listings in the Emirate currently totalling $52.47 billion.

Dagong Global Credit Rating and Islamic International Rating Agency (IIRA) have jointly maintained the ratings of AlBaraka Banking Group (ABG) at BBB+/A3. At the same time, IIRA has re-affirmed the national scale ratings of ABG at A+/A2. Outlook on the assigned ratings has been revised to 'stable' from 'negative' indicating the macroeconomic and political stability in ABG’s core countries. ABG operates through a globally diversified franchise spread across 11 jurisdictions in Europe, Africa and Asia. ABG’s ratings derive strength from the recent tier 1 Sukuk issuance this year. While the Group’s subsidiaries are individually governed by their supervisors, the Group maintains close coordination and oversight. Furthermore, Bahrain's institutional framework for Islamic banks ensures adherence to a strong framework for Shari'ah governance.

AAOIFI has issued its Governance Standard No. 8 "Central Shari’ah Board", which also marks the issuance of 100 standards so far. Standards have been issued in areas of accounting, auditing, governance, ethics as well as Shari’ah. According to Chairman Dr. Ishrat Hussain, this standard will support the regulators for establishing and operating Shari’ah boards at jurisdiction level. A survey with experts was conducted and public hearing sessions were held in Bahrain, United Arab Emirates, Turkey, and Pakistan. Although the standard encourages the creation of Central Shari’ah Boards (CSB) at national levels, the guidance provided would standardise the global regulatory practices in this respect. The standard also presents a country-level approach for regulating the Islamic Finance Industry. It provides detailed guidance on the definition, scope of work, responsibilities, appointment, composition, independence and terms of reference of a Central Shari’ah Board.

The Islamic Financial Services Board (IFSB) has announced new country-level data on growth of the Islamic banking systems for Q4 of 2016 and Q1 of 2017 from 17 IFSB member jurisdictions. IFSB Secretary-General Zahid ur Rehman Khokher said the IFSB’s Prudential and Structural Islamic Financial Indicators (PSIFIs) database project has reached 14 quarters, and that it would soon be extending to four new jurisdictions. He added that the IFSB also plans to release sector level balance sheets of entire jurisdictions for the Islamic banking market starting next year. The PSIFI project currently compiles data from 17 member countries: Afghanistan, Bahrain, Bangladesh, Brunei, Egypt, Indonesia, Iran, Jordan, Kuwait, Malaysia, Nigeria, Oman, Pakistan, Saudi Arabia, Sudan, Turkey, and the United Arab Emirates. The IFSB is now in the process of collecting Islamic banking data from these new contributors: Qatar Central Bank, Bank of England, Central Bank of Lebanon and Palestine Monetary Authority.

The Islamic Financial Services Board (IFSB), Bank Indonesia and the Financial Services Authority of Indonesia (OJK) organised an Industry Engagement Session. The event was entitled "The Global Islamic Finance Industry and the IFSB" and took place on 2 October in Jakarta. Anwar Bashori, Head of Islamic Finance at Bank Indonesia, shared his optimism that there is strong potential for further growth of this sector in Indonesia. He also touched on the importance of Halal tourism and food industry, and the various challenges and opportunities related to Fintech. In the panel discussion Prof. Volker Nienhaus commented on the emerging trend which is expected to enhance financial inclusion through the greater use of fintech. Ahmad Buchori shared the current issues of Islamic finance in Indonesia. Dr. Rifki Ismal’s presentation focused on developing the Islamic social sector to enhance the Indonesian economy. The session ended with discussions between the participants, where the industry players reaffirmed the important role of regulators. There was a request for more platforms to address and discuss key issues and concerns of the Islamic finance players.

Warba Bank participated in the launch of the Islamic Development Bank’s (IDB) most recent Sukuk issuance. The IDB has issued a five-year $1.25 billion Sukuk at an annual return of 2.661%. In terms of the final allocation, 53% of the issue size has been allocated to investors in EMEA, while 47% has been allocated to Asia. 57% of the issue size has been allocated to central banks and official agencies, while 43% has been allocated to banks and fund managers. Shaheen Hamad Al Ghanim, CEO of Warba Bank, said he was proud to participate in IDB's latest issuance, which came in addition to the Bank’s launch of its $250 million Sukuk earlier this year. That has been a key factor in making the bank the first option to manage Sukuk issuances. Al-Ghanim pointed out that Warba Bank would continue its strategy and explore investment opportunities in the regional and international markets that yield maximum returns.