Standard Chartered Said to Pick U.A.E. CEO, Islamic Head

Standard Chartered Plc has selected global head of audit Julian Wynter as its chief executive officer for the United Arab Emirates. Wynter’s appointment has yet to be announced officially. Wynter, based in London and previously CEO of the bank’s Malaysian business, will replace Mohsin Nathani, who resigned in April. The bank has also appointed Sohail Akbar as CEO of its Islamic banking unit, known as Saadiq. Akbar is currently based in Malaysia as group chief operating officer of consumer banking and group Islamic banking. Standard Chartered is experiencing a management exodus after Bill Winters took over as CEO from Peter Sands last month.

Abu Dhabi Islamic Bank Exploring Expansion Into SE Asia, Africa

Abu Dhabi Islamic Bank PJSC is considering entering markets in South East Asia and Africa to tap demand in countries with a large Muslim population. The bank has “looked closely” at Indonesia and Malaysia as well as Algeria, Morocco and Jordan, Chief Executive Officer Tirad Mahmoud stated. The bank may consider an acquisition next year as part of the plan, he said. ADIB in 2014 acquired the retail banking business of Barclays Plc in the U.A.E. for 650 million dirhams ($177 million). The bank was also among lenders that bid to buy the retail banking assets of Citigroup Inc. in Egypt this year, losing out to Commercial International Bank Egypt SAE last month. ADIB expects lending to grow by four percent to six percent this year, Mahmoud added.

Indonesia Accepts Islamic Megabank Challenge Shelved by Malaysia

The Indonesian government plans to merge the Shariah-compliant units of state-owned PT Bank Mandiri, PT Bank Negara Indonesia, PT Bank Rakyat Indonesia and PT Bank Tabungan Negara with paid-up capital of more than 15 trillion rupiah ($1.1 billion) next year, Gatot Trihargo, deputy minister for government-run enterprises, said. Financial Services Authority Chairman Muliaman Hadad said in January that the plan may materialize this year. In the Indonesian plan, the government will ask the four lenders to provide 5 trillion rupiah to 10 trillion rupiah of capital to their Shariah banking units before the planned merger, Trihargo said. The combined entity will help manage about 70 trillion rupiah and this would be used to fund infrastructure projects, he said.

Turkey Not Goldman to Manage Sale of Bank Asya After Seizure

Turkey’s government said it plans to find a buyer for Bank Asya after completing the nationalization of the Islamic lender with the seizure of its shares on Friday. The bank may now be sold whole or in parts, according to an announcement in the Official Gazette on Saturday, which didn’t give more detail on the potential sale. Twelve months ago Goldman Sachs Inc. was hired to manage a sale. The New York bank set up exclusive talks with Qatar Islamic Bank SAQ., only for these to fall apart after Deputy Prime Minister Ali Babacan said that the government preferred that the Istanbul-based lender be acquired by a Turkish state bank. The regulator has wide discretionary powers after a takeover, including to partially or completely transfer the bank’s assets to another bank, or sell to a third person.

Turkish Bank Watchdog Seizes Remaining Bank Asya Shares

Turkish regulators seized the remaining shares in Bank Asya, the Islamic lender taken over by authorities this year amid a political dispute. The move against the bank was announced late Friday on the website of the bank watchdog. The aim was to protect savers and ensure “stability and confidence in the financial system,” it said. Deputy Prime Minister Ali Babacan denied that the seizure was politically motivated in an interview late Friday. The seizure comes before parliamentary elections on June 7 and about two weeks after the cabinet appointed Mehmet Ali Akben, a career Islamic banker and board member of the state Savings Deposit Insurance Fund, to head the Banking Regulation and Supervision Agency.

Turkey’s PM Says Seizure of Bank Asya Shares in Line With Law

Denying any political motives, Turkey Prime Minister Ahmet Davutoglu says regulators’ action purely based on “technical, fiscal and financial” evaluation. Turkish regulators on Friday seized remaining shares in Bank Asya. Appeals process is open on Bank Asya seizure: Bank Asya went beyond “normal banking” due to ties with "parallel state,” Davutoglu says in reference to supporters of Islamic preacher Fethullah Gulen, accused of plotting to overthrow the government.

Saudi Politics Blamed as Market Asks Where Did All the Sukuk Go?

King Salman has reorganized his cabinet, removed princes from government roles, merged ministries and realigned succession since ascending to the throne in January. As a consequence, Saudi companies have yet to market a single security in 2015, making it the country’s quietest start for Islamic sales in nine year. The companies need some stability before they start looking at sukuk-type issuance. Saudi Arabia is pursuing a $130 billion spending plan to diversify its economy away from oil, and has vowed to invest in major infrastructure projects. King Salman’s changes will impact many areas, especially financial markets.

RHB Adds Shariah Funds in Hong Kong Seeking Greater China Access

A year after debuting an Islamic investment fund in Hong Kong, RHB Asset Management Sdn. plans two more as it seeks to develop awareness in the Chinese market. The first of the new funds, which will target Shariah-compliant stocks and bonds, is due to start this month and the second by the end of September, Ho Seng Yee, chief executive officer of the Kuala Lumpur-based company, said. The existing RHB-OSK Islamic Regional Balanced Fund, which invests in Islamic equities and fixed income, has 15.5 million ringgit ($4.3 million) of assets. While China presents significant opportunities for Islamic financial institutions, there are challenges including the need for changes to the tax laws.

Khazanah Debuts Ethical Islamic Bonds With Annual Sales Planned

Khazanah Nasional Bhd. will start marketing as much as 150 million ringgit ($42 million) of the seven-year sukuk on Monday, Chief Financial Officer Mohd Izani Ghani said. The offering will fund 20 schools in Malaysia, he said, adding that future sale options may include healthcare and affordable housing. While it would be a challenge convincing investors to buy because the concept is new, the offering will be a catalyst for further issuance in an area that’s still nascent. The SRI sukuk will pay fixed, periodical profit rates throughout the bond’s term, with principal repayments linked to the individual school’s performance in terms of the quality of education provided. Before maturity, the profit rate will be adjusted lower, he said.

Ivory Coast Signs $490 Million Islamic Bonds Deal

Ivory Coast has signed an agreement for Islamic-finance bond as it seeks to raise money for infrastructure. The Islamic Corp. for the Development of the Private Sector (ICD) will oversee the 300 billion-CFA franc ($490 million) sukuk. The program will be implemented in two tranches, each worth 150 billion francs, between this year and 2020. The sukuk will be an “alternative financing means for developmental” projects, Ivorian Minister Delegate to Finance Niale Kaba said, without giving details on what the funds will be used for. Ivory Coast joins a growing number of sub-Saharan African nations tapping Islamic finance debt markets seeking cash for development projects.

Bank Asya Extends Rally on Optimism Government May Cede Control

Bank Asya climbed to the highest in seven months, extending last week’s record rally, amid optimism the lender may be released from government management. Shares in the company advanced 3.8 percent to 1.09 liras at 3:39 p.m. in Istanbul, the highest level since September. Bank Asya has gained more than 60 percent since April 9, when it said 152 shareholders, representing about 90 percent of Class A shares, delivered documents to the banking regulator proving they’re qualified to be founding partners. Bank Asya has been trading in a markets watchlist since September. Companies on the list trade under conditions of heightened surveillance, and trading is limited to the afternoon only.

Saudi Silence Frustrates Foreigners on Eve of Bourse Opening

Investors are no closer to understanding how the opening of Saudi Arabia’s stock market will work than they were in August, when the country published draft rules on the plan. Eleven weeks before the deadline that the Middle East’s largest bourse set itself to give foreigners direct access to the market, the Riyadh-based Capital Market Authority has yet to explain how it will square the new rules with existing restrictions on foreign involvement in Saudi businesses. The lack of clarity underscores the difficulty the world’s biggest oil exporter has in giving outsiders greater influence. The kingdom is seeking to attract increased investment to the $521 billion stock market without angering conservatives dedicated to preserving the nation’s Islamic roots.

Indonesia Shariah Insurance Growth Attracts AIG

Indonesia’s Islamic insurance industry is expanding three times as fast as Malaysia’s, prompting American International Group Inc. and Sun Life Financial Inc. to seek a broader presence in the nation. AIG is considering offering retakaful in Indonesia in two years. The initiative would complement an Islamic insurance business it started in the Southeast Asian nation in 2010. Meanwhile, PT Sun Life Financial Indonesia will add to its 35 outlets in the country, while Reinsurer PT Reasuransi Internasional Indonesia plans to make all its branches fully Shariah-compliant. As Islamic insurance becomes more prominent, that should increase demand for Shariah-compliant bonds as insurers try to match liabilities with their investments.

Turkey’s Erdogan Exerts Power with Seizure of Bank Asya

Turkey’s banking regulator took control of Bank Asya, stepping up a year-long campaign against the Islamic lender a day after self-exiled Muslim cleric Fethullah Gulen criticized the government from his base in the U.S. The Savings Deposit Insurance Fund, or TMSF, the agency responsible for resolving failed banks, appointed a new chief executive officer and board of directors late Tuesday, the bank said in a filing. Its activities will continue without “any disruption” under the new management. The government’s move against Bank Asya has been expected for quite some time now. The timing of the Bank Asya move intends to minimize the damage of the decline in investor confidence.

Stalled Merger Puts the Brakes on Malaysia's Islamic Megabank Dream

The planned amalgamation of CIMB Group Holdings Bhd., RHB Capital Bhd. and Malaysia Building Society Bhd. has stalled as tumbling oil prices wreak havoc on the economy. The merger would have been the nation’s largest ever M&A transaction. Central bank Governor Zeti Akhtar Aziz first raised the idea of an Islamic finance megabank more than five years ago. A license slated to be awarded in 2011 for a multinational lender to be formed between Asia and the Middle East didn’t materialize, depriving the $1.7 trillion global industry of a growth engine. Nevertheless, RHB said in a statement that the parties were still in discussions.

In the crisis the Russian Banks look to the Shariah

Russian lenders would like to tap Islamic finance just as the international sanctions and a low oil price brings their country to the brink of a recession. The Vnesheconombank is currently seeking advice from Middle East lenders on how to sell Islamic bonds. Banks and companies are seeking Shariah financing after the Russian currency recently weakened to an all-time low.

Malaysia Tax Plan Makes Funds Wary of Inflation: Islamic Finance

Malaysian sukuk investors are designing strategies for 2015 that will profit as a new tax both pushes up inflation and forces central bank rate increases. Malaysian consumer-price increases will average 4 percent in 2015, the highest in seven years, as a new consumption tax starts in April. One-year interest-rate swaps climbed to a six-year high of 3.87 percent this week. Experts recommend buying Islamic bonds in the middle of the so-called yield curve, which are less exposed to losses from inflation and interest-rate moves. The government will implement a 6 percent goods and services tax as part of efforts to cut the fiscal deficit that included scrapping fuel subsidies.

Sukuk Record Scuppered as 1MDB Delays 2014 Sale: Islamic Finance

Global Islamic bond sales look set to miss out on a record year after Malaysia’s sovereign wealth fund postponed what would have been 2014’s biggest offering. The top underwriter is also cautious over the coming year. Issuance to date is $2.1 billion shy of the unprecedented $46.8 billion in 2012 and more than last year’s $43.1 billion total. Bond issuance will likely taper off now as bankers and investors go on their year-end holidays. It's expected to be a challenge for sales to test new highs next year as the slump in crude oil prices may deter issuance. Most of the issuance is expected to still come from Malaysia and some from the Middle East.

Dreams of Record Year Being Dashed as Sukuk Sales Slump

Global Islamic bond sales, which had the busiest first three quarters on record, are mired in what’s set to be the worst end to a year since 2008. Borrowers have raised $1.9 billion in the fourth quarter so far, 73 percent less than in the same period a year ago. Issuers have also sold the fewest number of securities in six years. During the first nine months, the U.K., Luxembourg, South Africa and Hong Kong were among debut issuers of Islamic bonds. Some borrowers probably accelerated sales on concern borrowing costs may rise as the Federal Reserve ended its bond buying program. Sales this quarter may have slowed after crude prices declined 14 percent.

Fatwa No Barrier to Saudi Arabia’s $6 Billion Bank IPO

Not even a fatwa against National Commercial Bank’s initial public offering could derail the biggest-ever share sale in the Middle East. Saudi Arabia’s largest bank said in a statement today it attracted 311 billion riyals ($83 billion) of bids from about 1.26 million investors. While that pales by comparison with the almost 9 million who subscribed for Alinma Bank’s IPO in 2008, NCB’s offering to sell 300 million shares was 23-times oversubscribed, signaling investors pitched for larger blocs of shares. The IPO is considered un-Islamic, as criticism deepened over the bank’s non Shariah-compliant assets. To mitigate the controversy, NCB pledged to divest about $38 billion of assets to become fully Shariah-compliant in five years.

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