IslamicFinance.de

Pakistan's central bank has adopted the "investment sukuk" guidelines of the Bahrain-based Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). Issuers will have to comply with this global standard for sukuk, or face penalties. The action could help Pakistani issues attract investment by foreign institutions from the Gulf and elsewhere. Around the world, the industry commonly refers to AAOIFI standards but they are mostly used as guidelines rather than manadatory rules. Pakistan's regulators are rolling out new rules in an effort to increase Islamic banks' share of the total banking sector to 15 percent by 2017. In May, the country's securities commission established a sharia advisory board to oversee Islamic financial instruments, while last year it announced rules for sukuk, takaful (Islamic insurance) and Islamic deposits.

Saudi-based Al Rajhi Bank posted a slight rise in its second-quarter net profit. The bank made 2.12 billion riyals ($565.3 million) in the three months to June 30, compared with 2.09 billion riyals in the same period a year earlier. Profit for the opening six months of the year was 4.17 billion riyals, up from 4.10 billion riyals in the corresponding period of 2012. The results are in line with analysts' forecasts that expected the bank, on average, to post a net profit of 2.13 billion riyals for the second quarter.

The General Council for Islamic Banks and Financial Institutions (CIBAFI), a Bahrain-based non-profit organisation, plans to expand beyond the Gulf, so that it can shape rules and practices in new markets as they grow. Addressing a major weakness in Islamic finance, the lack of well-trained professionals, CIBAFI plans to expand its training and certification programmes. The body also plans to hold forums in new markets for Islamic finance, including events in Morocco and Libya later this year. One of CIBAFI's key messages is that Islamic windows need to operate under clear rules to improve the perceptions of consumers. Therefore, Omar Hafiz, secretary-general of the body, said that for its long-term health, the industry should focus as much on improving the regulatory environment as increasing its size.

Kuwait Finance House (KFH said its 20 percent capital increase had been oversubscribed by shareholders, without providing specific details. The bank was raising 319 million dinars ($1.12 billion) from the sale of 639 million new shares at 0.5 dinars each - a 35.9 percent discount to the closing price at the start of June, when the offer period was announced. The share sale, which ran for two weeks from June 5, will boost KFH's paid-up capital by 64 million dinars and would fund the bank's expansion and strengthen its balance sheet. The sale will push the bank's Tier 1 ratio towards its 17 percent target for the end of 2013. It currently stands at 13.6 percent, below the 15.5 percent average for the Kuwait banking sector. The capital increase is part of the bank's five-year strategic plan, with shareholders giving assent to the move in April.

Bahraini lender Al Baraka Bank's Turkish unit is working on the issue of a $200 million sukuk, Al Baraka Turk general manager Fahrettin Yahsi said on Wednesday. Yahsi explained the sukuk would be issued when market conditions allowed and added that the bank would renew its $450 million murabaha syndication with a higher volume at the end of September.

Fitch Ratings has affirmed HSBC Amanah Takaful (Malaysia) Sdn Bhd's (HSBCAT) Insurer Financial Strength (IFS) rating at 'A-' with Stable Outlook and has simultaneously withdrawn the rating. The rating of HSBCAT is no longer considered by Fitch to be relevant to the agency's coverage. The rating reflects HSBC group's franchise value, distribution channel and management support. HSBC Holdings Plc (AA-/Stable) has a strong ability and willingness to provide it with continuing support. The rating also incorporates HSBCAT's conservative investment mix, healthy capitalisation, and prudent management. The rating is constrained by the takaful operator's modest size, and a limited track record amid a competitive and evolving takaful operating environment. Additionally, the company is challenged to manage its expenses effectively as it builds up its business portfolio.

European Islamic Investment Bank PLC Deputy CEO Keith Mcleod is to leave the board with immediate effect.

London-based firm Cobalt has developed a sharia-compliant insurance platform that uses a syndication model to help spread risk across a panel of underwriters. Cobalt allows multiple insurers to pool their capacity and each can subscribe to the desired level of risk though individual Islamic Windows. The company aims to address capacity constraints in the takaful industry. The platform allows each insurer to have a takaful window, where policyholder funds are segregated from conventional funds, without affecting their rating levels and helping price the risk competitively. The risk is priced by a lead insurer and other firms must then subscribe under similar terms, a similar approach to the subscription model used in London's insurance market.This novel format could boost capacity in the sector.

Shares in Turkey's Gozde Girisim were up 9.49 pct to 4.50 lira, its upper limit for the session, after it mandated asset manager Unlu to sell its 11.57 percent stake in Turkish Islamic lender Turkiye Finans. Turkiye Finans is majority owned by Saudi Arabia's National Commercial Bank, and Gozde by Turkish conglomerate Ulker.

Saudi Basic Industries Corp (SABIC), the world's biggest petrochemicals group, will issue a sukuk late this year or next year to fund coming projects. SABIC has 40 billion riyals ($10.7 billion) worth of projects over the next few years and the company prefers to fund these with sukuk. Its Chief Financial Officer Mutlaq al-Morished said the timing of the sukuk would depend upon both the development of the projects and conditions in financial markets. It is too early to give the size of the sukuk, he added.

Indonesia's finance ministry raised 1 trillion rupiah ($102.88 million) worth of sharia bonds on Tuesday, below its target of 1.5 trillion rupiah. The ministry only sold the 30-year, project-based sukuk with the yield at 6.82781 percent. There were no winning bids for the rest of the bonds, which included 5-, 14- and 24-year project based sukuk. According to the debt office, total incoming bids were 2.43 trillion rupiah.

Turkish Islamic bank Turkiye Finans issued a $500 million dollar-denominated sukuk, at a price of 3.95 percent on Wednesday. The bank, majority owned by Saudi Arabia's National Commercial Bank, had mandated Citigroup, HSBV, NCB Capital and Noor Islamic Bank for the issue last week.

The Kuala Lumpur-based International Islamic Liquidity Management Corp (IILM) plans to issue $500 million through its sukuk programme in the second quarter of this year. The long-awaited announcement was overshadowed by the unexpected pull-out of Saudi central bank, selling its shareholding to Qatar and Malaysia. According to industry executives, the pull-out would not necessarily deter Saudi commercial banks from buying the IILM sukuk - and that even if it did, demand in other countries would be more than ample. A key factor will be the yield that the IILM sukuk pays versus the cost of funds at individual banks.

Fitch Ratings has assigned Turkiye Finans Katilim Bankasi A.S.'s (Turkiye Finans) forthcoming Sukuk issue an expected rating of 'BBB(EXP)'. Turkiye Finans as the managing agent will actively manage this portfolio and ensure that profits are in line with the entire expected return on the Sukuk. The sukuk are asset-based not asset-backed. The 'BBB(EXP)' expected rating assigned to the Sukuk is driven solely by Turkiye Finans' Long-term foreign currency Issuer Default Rating (IDR) of BBB' as the Sukuk structure is viewed as an originator-backed/asset-based structure.

Turkiye Finans mandated Citigroup, HSBV, NCB Capital and Noor Islamic Bank for a dollar-denominated sukuk issue. Turkey's Capital Markets Board approved last week the bank's application for a sukuk issue of $500 million and 100 million lira ($55.78 million). ($1 = 1.7929 Turkish liras). Turkiye Finans is majority owned by Saudi Arabia's National Commercial Bank.

Ajman Bank appoints Mohammed Zaqout as chief executive officer. Zaqout's appointment will be effective on April 21 pending regulatory approval.

Turkey's Bank Asya has raised USD250m through a 10-year non-call five subordinated Islamic bond. The notes priced at par to yield 7.5%, in line with initial price thoughts of mid-seven percent. The issue carries a Ba3 rating by Moody's, one notch lower than Bank Asya's senior unsecured rating of Ba2. Bank of America Merrill Lynch, Emirates NBD, HSBC and National Bank of Abu Dhabi are joint lead managers on the Reg S transaction.

Creditors of bankrupt Arcapita say the investment bank should not be allowed to foot the legal bills of lawyers from Linklaters and Freshfields who ran a failed initial public offering last year of Arcapita's real estate assets. Arcapita has so far paid $1.5 million in professional fees associated with the IPO, but last month submitted court papers looking to pay another $6.8 million to Linklaters, $1.1 million for Freshfields Bruckhaus Deringer, and $2.76 million to KPMG, which served as auditor on the IPO effort. However, Arcapita's creditors argue that the IPO's failure prevented anyone from benefiting from the professionals' work. A hearing on the matter, initially scheduled for March 18, was postponed until April 30.

Islamic endowments, known as awqaf, receive donations from Muslims to operate specific social projects, such as mosques, schools and welfare schemes. Over the past few decades, awqaf have amassed a vast array of assets, from real estate to cash holdings, equities and even valuable books. However, the management of these assets has failed to keep up with their expansion. Basic changes in asset management methods could improve awqaf yields globally by between 1.5 and 2 percentage points. It can therefore be a source of long-term liabilities that the industry is desperately seeking.

Turkish Islamic bank Turkiye Finans is in the final stage of preparing a sukuk issue which is planned to have a volume of around 100 million lira ($55 million). The bank, majority owned by Saudi Arabia's National Commercial Bank, could make the issue within several weeks if market conditions are right. Is Investment is mandated for the issue.