#Turkey Wants #Islamic #Megabank in Istanbul as Jakarta Talks Loom

Turkey wants to set up a new Islamic megabank. Deputy Prime Minister Mehmet Simsek said the prime shareholders would be Turkey's Treasury and the Islamic Development Bank. Simsek prepares for talks with Indonesia in Jakarta next week on proposals to start a Shariah-compliant megabank that will lend to companies and infrastructure projects. Indonesia and Malaysia have long tried separately to establish a Shariah-compliant lender but faced obstacles until now. Turkey is ready to commit more than $300 mn for the lender as capital.

How #Digitization Could Impact #Islamic Finance

Hong Leong Islamic Bank's CEO Raja Teh Maimunah says the barrier of digitization is the fear of IT security and nervousness of regulators. But fintechs are here and have a high growth potential. The face to face service is an oldschool approach, what matters today is what banks can provide from a technology perspective.

#Investing In #Gold: a Game Changer for #Islamic Finance?

Mohammad Daud Bakar says gold will be a game changer as a commercial asset, investment asset and hedging asset as well. There is now an attempt to put Sharia standard on gold, this will remove the worries of the scholars and regulators. Mohammad Daud Bakar believes the asset classes have to be expanded and Islamic banking shouldn't rely so much on commodities.

Malaysia's microtakaful expands to rural areas

#islamicfinance - #Malaysia’s #takaful industry is set to double its growth rate this year as companies focus on selling cheaper policies in rural areas, according to the Malaysian Takaful Association. The number of policies will rise 10 % to 5.05 mn in 2016, compared with 4.3 % growth in 2015 and a 1 % estimated expansion of non-Islamic business, Ahmad Rizlan Azman, chairman of the Association, said.

Malaysian Pension Fund to Start $26 Billion Islamic Saving Plan

CEO Shahril Ridza Ridzuan announced that the Employees Provident Fund aims to open the Shariah-compliant plan in January 2017 and is targeting an initial size of as much as 100 billion ringgit ($26 billion). There’s strong demand and 1.5 million of its 6.7 million members should switch in the first year. EPF has a minimum guaranteed annual payout of 2.5 percent. The Islamic fund won’t have a minimum dividend as they can’t be guaranteed under Koranic rules.

Malaysia's Global Sukuk Seen Paying Premium Over Existing Debt

Malaysia may price its 10- and 30-year global Islamic bonds at 150 and 165 basis points over U.S. Treasuries. The data compiled by Bloomberg show that Malaysia’s existing sukuk maturing in 2025 yield 3.05 percent, while securities due in 2045 are paying 3.96 percent. According to Abu Dhabi’s sovereign wealth fund International Petroleum Investment 1MDB and Malaysia’s finance ministry are in credit-default, but the state firm’s President Arul Kanda said the company is in dispute with IPIC and he sees an amicable resolution.

Saudi Arabia Telling Foreign Banks to Disclose Finances

Saudi Arabia’s investment banking regulator is telling international banks to publicly disclose financial statements for the first time as the kingdom seeks to boost transparency. The Capital Markets Authority is requiring financial institutions it regulates to publish the information on their websites from April 1. The CMA has said firms must also disclose senior executives’ pay and significant risk factors. The only banks which need to disclose financial statements now are the 12 publicly traded domestic lenders regulated by the Saudi Arabian Monetary Authority. The disclosure will give insight into how much money banks are making amid a slowdown in economic growth, as well as the cost of employing top executives.

Looted Lender for Sale as Afghanistan Seeks Buyer for Kabul Bank

For sale: One bank with 114 branches in war-torn country; defrauded out of almost all its money; occasional target of terrorists. Ready to bid? That’s what Ashraf Ghani, president of Afghanistan, is hoping. He’s seeking a buyer for Kabul Bank, once the country’s largest. The government took it over in 2010 after its owners were accused of embezzling $825 million. The privatization is a test for Ghani, who wants to show the foreign donors who provide most of his budget that he’s committed to fighting corruption. Mohammad Aqa Kohistani, director general of Afghanistan’s Treasury Department, said he has received four expressions of interest since starting the sales process in October, including three from foreign firms. He wouldn’t identify them.

Hong Kong Closes on Indonesia in Dollar Sukuk as Silk Road Alive

Hong Kong’s possible third Islamic global bond in three years brings it closer to Indonesia and Malaysia in terms of sovereign sukuk presence, a boost to the market that coincides with China’s Silk Road revival. The finance center has already raised $2 billion from sales in 2014 and 2015, which attracted $6.7 billion in total orders, while Indonesia plans to tap investors for the sixth year running and Malaysia is returning for its seventh offering. Hong Kong, which is losing its role as a gateway to China as Shanghai’s financial market opens, is keen to become the launchpad for the global ambitions of Chinese companies.

Saudi Arabia Said to Ease Lending Rules to Boost Liquidity

Saudi Arabia is reportedly easing rules on bank lending to stimulate growth in the largest Arab economy. Banks were told they can lend the equivalent of 90 percent of their deposits, up from an earlier limit of 85 percent, by the Saudi Arabian Monetary Agency on Sunday. The move followed a request from the country’s committee of treasurers to ease liquidity constraints. Saudi Arabia is seeking to revive its economy and stimulate credit as the slump in oil and government spending strain the banking system. The three-month Saudi Arabia Interbank rate rose to 1.73 percent on Feb. 3, its highest in about seven years. Bets for a devaluation of the riyal reached their highest in about two decades in January, even after the country pledged to keep its currency peg.

Ten-Year Conversion by Malaysian Bank Shows Islamic Hub Hurdles

It took a Malaysian lender more than 10 years to complete its conversion to a fully-fledged Islamic bank, highlighting the challenge for countries such as Indonesia in their bid to become Shariah funding hubs. Agrobank would have given up its ambition to be Shariah-compliant had there been no commitment from employees and directors, said Chief Executive Officer Wan Mohd Fadzmi Wan Othman. The process was “grueling,” involving numerous meetings with staff and customers, and redoing all documentation, he said. The plan was first announced in 2004, derailed and then revived in 2012. Agrobank’s experience with complex approvals and legal hurdles brings to focus the uphill task for nations seeking to become financial centers for the $2 trillion industry.

Griffon Starts $108 Million Fund to Invest in Iranian Stocks

Griffon Capital, a Tehran-based firm set up by a group of international and Iranian investors in anticipation of Iran’s nuclear deal, is seeking to raise 100 million euros ($108.2 million) by the end of the year for a new offshore fund specializing in the country’s stocks. Griffon’s Iran Flagship Fund, domiciled in the Cayman Islands, is an open-ended vehicle investing mainly in the Tehran Stock Exchange and Iran Fara Bourse, the company said. Griffon will start pitching the fund in the U.K. next month. Iran is opening up to foreign investors after the lifting of international sanctions earlier this month ended a decade of isolation. Last week Charlemagne Capital Ltd. and Turquoise Partners started an institutional fund to buy Iranian securities.

Oil-Squeezed Malaysia Seen Selling Sukuk as $1.2 Billion Matures

Malaysia will face pressure to sell global sukuk next year as $1.2 billion of Islamic debt matures in July and plunging oil prices erode fiscal revenue and currency reserves. RHB Investment Bank Bhd. and Union Investment Privatfonds GmbH see demand for a new Islamic bond holding up because of a scarcity of dollar sukuk and longer-term prospects for Malaysia’s finances. Prime Minister Najib Razak repeated a warning last week that government revenue for Asia’s only major net oil exporter could fall short of the official target by the equivalent of about $7 billion next year. Standard & Poor’s rates the nation A-, with a stable outlook on its credit rating.

Indonesian Islamic Megabank Merger Plan Shifts From 2015 to 2017

The difficulties in forming a megabank in the $2 trillion Islamic finance industry are becoming clear as Indonesia pushes back deadlines for its plan after failures in Malaysia and the Middle East. Financial Services Authority Director Dhani Gunawan Idat is the latest official to repeat Indonesia’s goal for such an entity after two years of trying, with a plan to merge the Shariah-compliant units of PT Bank Mandiri, PT Bank Negara Indonesia, PT Bank Rakyat Indonesia and PT Bank Tabungan Negara. He put the time frame as 2017 in an interview Friday, while his Chairman Muliaman Hadad said in January it may happen this year. Gatot Trihargo, deputy minister for government-run enterprises, said in June that 2016 was the target.

Islamic Finance Institute Goes Global to Fill a Skills Void in $2 Trillion Industry

The Chartered Institute of Islamic Finance Professionals in Kuala Lumpur is going global as it seeks to fill a void of experts with specialties such as insurance and law. The institute aims to increase membership of qualified practitioners to 3,000 in three years, from 400 now, its president Badlisyah Abdul Ghani said. The CIIF, which changed its name and geographical focus in 2015, is in talks with associations and regulators stretching from the Middle East to Indonesia as part of that campaign, he said. CIIF plans to start offering specialized courses next year to address the shortage of professinals, which is hindering development. The Kuala Lumpur-based Finance Accreditation Agency estimates 56,000 more qualified experts will be needed to fill positions in the next five years as growth accelerates.

DIB Sees India as Emerging Islamic Finance Market, CEO Says

Dubai Islamic Bank is exploring an entry into India as it seeks to benefit from the funding needs of one of the world’s fastest-growing economies. India presents huge opportunities as an emerging economy because of infrastructure development and growing trade with the Middle East, Chief Executive Officer Adnan Chilwan said. Indians make up nearly a quarter of the U.A.E.’s population, and India is its biggest trading partner, with combined exports and imports of $63.7 billion in 2014. The two countries plan to create a $75 billion fund to invest in Indian infrastructure, according to a joint statement at the end of Prime Minister Narendra Modi’s visit to the U.A.E. in August.

QNB Said to Bid for Kuwait Finance House's Malaysian Operations

Qatar National Bank is among suitors that submitted final bids for Kuwait Finance House KSC’s Malaysian operations, people with knowledge of the matter said. Kuwait Finance House is evaluating offers from Qatar National Bank and at least one other party, according to the people. It may not proceed with the sale unless it can agree on a high enough price, one of the people said. Kuwait Finance House’s Malaysian unit had a book value of 1.7 billion ringgit ($395 million) and total assets of 10.5 billion ringgit at the end of December, according to its 2014 annual report. Offers for the business were affected by the difficult economic environment in the country, one of the people said.

Malaysia Islamic Yield Seen Rising to Record as Bond Funds Flee

Malaysia’s benchmark Islamic borrowing costs are seen rising to a record as global investors exit the nation’s government and corporate bonds at the fastest pace in three years. The yield has climbed 16 basis points to 4.20 percent since July 3, when a Wall Street Journal report into Prime Minister Najib Razak’s finances plunged the country into political turmoil. Manulife Asset Management Services Bhd. says the unprecedented 4.5 percent is in sight this year, compounded by falling commodity prices and a potential U.S. interest-rate increase. Pheim Asset Management Asia Bhd. also sees that level being reached as the ringgit slides.

What Global CEOs Will Encounter as They Seek to Profit in Iran

Iran’s $415 billion economy is the second-largest in the Middle East after Saudi Arabia. Unveiling his nation’s economic plan for the next five years, Supreme Leader Ayatollah Ali Khamenei said last month that Iran must aspire to average annual growth of 8 percent. The economy may grow 4 percent this Iranian financial year, double the pace expected before the nuclear deal, according to the deputy governor of Iran’s central bank. An OPEC member, Iran holds 10 percent of the world’s oil reserves. Revenue from crude sales represents just 15 percent of Iran’s GDP. Investors may prefer the car industry, manufacturing, energy and agriculture.

Hedge Fund’s Tehran Trip Shows World’s Ready for Iran Bonds

In the aftermath of Iran’s deal earlier this month with international powers to end sanctions, investors like Hans Humes are anticipating new bonds from Iran. As Iranian officials were in Vienna hammering out terms of the nuclear accord, Humes, a New York-based hedge fund manager, said he’d be a buyer when the nation starts selling debt to finance projects that weren’t viable under the sanctions. Before Iran can access overseas markets, the U.S. and European Union will need to lift a complex web of sanctions, which mainly include a ban on its lenders from dealing with Iran and Iranian banks’ access to the leading global financial-messaging system known as Swift.

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