The German banking regulator, BAFIN, held today a conference about Islamic finance with strong international participation and about 200 guests.
BAFIN president, Mr Sanio, says that Germany makes it easy to obtain a licence to sell the products, which are also compatible with the country's financial rules. He expressively welcomed "the first interested party that wants to start offering these products".
Saudi-based Ahmad Hamad Algosaibi & Bros Co (AHAB) said it was about to start talks with creditors, after a newspaper reported it and Saad Group are seeking to restructure USD 10 bn in debt.
Islamic banks first opened in Iraq in the 1990s and seven of the country's 42 banks are now Islamic. The central bank studies a new law for Islamic banks, but there is no time line.
Bilad has about 7,000 account holders, whose deposits rose to about 358 billion Iraqi dinars ($306 million) by the end of 2008 compared to 58 billion dinars a year earlier. Its capital had quadrupled to 100 billion dinars since its foundation, and it expects to hit 200 billion dinars in 2010.
Regulatory constrains the growth of Islamic banks.
Abu Dhabi-based Dolphin Energy has signed USD 3 bn of loans that will part refinance a USD 3.45 bn debt facility maturing in July, it is also finalising an Islamic tranche worth about USD 500 mn and is preparing to launch a bond worth USD 500 mn to USD 1 bn.
The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) will seek a mandate from its trustees to examine the degree of sharia financial products' compliance with its 40 standards, its secretary-general, Mohamad Nedal Alchaar, said according to Liau Y-Sing from Reuters.
Lack of common standards makes it difficult to sell products across borders, while possibly enhancing innovation.
Liau Y-Sing reported via Reuters on 4 March that Mohd Daud Bakar, a renown Malaysian Sharia scholar, says banks may charge fees for guarantees but cannot sell the risk to a third party.
Guardian reported based on Reuters on 7 January that market volatility wiped out all of the asset gains made by the Islamic fund management industry in the year to September 2008, citing US-based research and data provider Cerulli Associates. Sharia-compliant fund managers had assets of USD 65 bn at the end of the 3rd quarter 2008, including assets managed via discretionary mandates for institutions and high net-worth individuals and mutual funds. Assets invested in Islamic-compliant mutual funds rose by 50 % while the number of such funds doubled in the three years to 2008. Islamic mutual funds alone accounted for USD 35 bn-- up from USD 23.2 bn gathered in 2005. Sukuk funds remained a rare offering. Once markets stabilise this industry can potentially expand at a rate of above 10 % a year, the report said. Saudi Arabia is currently the largest domestic market for shariah investments. Challenges named in a poll by Cerulli were named the Sharia compliance costs, convincing investors of the Sharia compliance, the discrepancy in Sharia standards and the lack of 3rd party distribution.
Report order form: http://www.cerulli.com/pdfs/2008_Shariah_Info_Packet.pdf
The Guardian reported on 25 April that Pakistan appointed advisers for first domestic Sukuk, being Dubai Islamic Bank and Standard Chartered Bank Pakistan as Managers. The estimated size of the Sukuk might be 20 bn Pakistani rupees.
Ashfaque Hasan Khan is special secretary at the Finance Ministry.