Archive for August 2008
Bank Asya keeps a finger on pulse of economy
Points of Essence:
- Bank Asya an Islamic bank known as a participation bank in Turkey, has emerged leader of the Islamic financial services sector in Turkey. It operates on Islamic principles and provides financing to merchants and leases machinery and other business capital for business start-ups. It however, does not trade government bonds and securities.
- The industry looks set for a bright future with the establishment of four participation banks from among a total of 50 banks in Turkey. Over the last few years, it has seen the strong growth of the sector, which has outperformed its conventional counterpart.
- Bank Asya is an Observer member of the Islamic Financial Services Board.
Parallel to the growth in the Islamic finance industry worldwide, Turkish participation banks, formerly called special finance houses, have also been expanding and attracting new customers, with Bank Asya having emerged as a leader in the sector.
“We take the pulse of the economy every second,” said Ünal Kabaca, general manager of Bank Asya, the largest participation bank in Turkey. Speaking to Today’s Business in an exclusive interview, Kabaca explained the risks and advantages associated with the industry. “Since we are on the frontline when the tides of the economic change, we have to be able to monitor the real market very closely,” he pointed out. Bank Asya, like other participation banks in Turkey, operates on Islamic principles and does not trade government bonds and securities. It extends loans to merchants and leases machinery and other business capital needed to start or expand businesses. “This pushes us to be very vigilant and to be able to sense what is going to happen in the market before it happens,” he explained.
The Islamic Credit Card Controversy!
Points of Essence:
- The author stated that there had been allegations of impropriety regarding Islamic credit cards where customers complained about the excessive fees and charges.
- Some scholars had doubts about the business modules of the Islamic credit cards which might be tainted with usury elements.
In recent years, the competition between Islamic banks has increased over offering Shariah-complaint credit cards – once a controversial subject among Islamic jurists. However, the prevalence and popularity of Islamic credit cards is also accompanied by customer complaints about the expensive costs charged by some Islamic banks that offer them. In fact; such credit cards have become even more expensive than the ones offered by conventional banks.
Customers have reported that they were surprised to learn about the charge fees required to obtain the credit cards offered by some banks as ‘Shariah-compliant’ and which have been approved by the Shariah committees of the banks in question. Many of the complaints revolve around the fact that despite the cards being Shariah-compliant, they end up deceiving and exploiting customers in Saudi Arabian banks and those who prefer to undertake usury-free transactions.
HSBC Amanah Malaysia now open for business
Points of Essence:
- The Islamic banking outfit of HSBC Bank Malaysia has commenced its business. Set up under the HSBC Amanah brand and licensed by BNM, the subsidiary will the full range of activities for Islamic banking business. This complements the existing banking solutions offered by HSBC Bank by offering retail and corporate customers a full suite of Islamic products and services.
- HSBC has been offering Islamic financial services in Malaysia since 1994. Globally, the HSBC Amanah brand was established in 1998 with the aim of making HSBC the leading provider of Shariah-compliant banking services worldwide.
- The new institution is expected to strengthen Malaysia’s bid to become an international Islamic financial centre.
HSBC Amanah Malaysia Berhad (HSBC Amanah Malaysia) is now open for business. The new fully fledged Islamic Bank, a wholly owned subsidiary of HSBC Bank Malaysia Berhad (HSBC Bank) and licenced under the Islamic Banking Act 1983, commenced its operations on 24 August 2008.”This licence allows HSBC Amanah Malaysia to undertake the full range of activities for Islamic banking business, and we will open our first standalone branch later this year with more to follow in the coming years,” said Ms Irene M Dorner, Chairman of HSBC Amanah Malaysia and Deputy Chairman and CEO of HSBC Bank.
Prior to the opening of the Islamic Bank’s first branch, customers of HSBC Amanah Malaysia can continue to conduct banking transactions in HSBC Bank’s 40 branches nationwide and enjoy the use of and access to the existing Internet banking and Call Centre.
Pakistan: The causeway for Islamic Finance
Points of Essence:
- President Musharraf’s resignation has turned a new leaf in Pakistan’s economy with it poised to be an emerging market alongside Vietnam, Egypt etc.
- With its total population of 170 million people and a GDP per capita of around $2,900, growing about 7% annually since 2004, Pakistan is keen to reevaluate the role of Islamic finance as its main engine of growth. Currently, there are only 5 Islamic banks and 21 conventional banks with Islamic windows in Pakistan apart from foreign Islamic banks. Obviously, this has to change.
- Dow Jones Index regarded Pakistan as an Islamic finance causeway between the Gulf Cooperation Council (GCC) and the Far East. However, it remains to be seen as to what other institutions may think of Pakistan.
With General Pervez Musharraf having stepped down as president of Pakistan, analysts are waiting to see what effect this has on the country’s economy. Pakistan could play a key role in the Islamic Finance sector.
New hopes came up regarding the future of the Islamic Republic of Pakistan when President Pervez Musharraf stepped down.
As former US-president Richard Nixon did in 1974, Musharraf avoided being taken out by parliament through impeachment with his preemptive move.
But although Pakistan is mainly seen by outsiders as a country shattered by social unrest and fighting on its border with Afghanistan, its economy has been booming in recent years.
Pakistan, with a total population of 170 million people and a GDP per capita of around $2,900, has been growing about 7% annually since 2004.
Malaysian mortgage firm eyes Gulf Islamic market
Points of Essence:
- As competition has become more intense at the home ground, Cagamas has joined the fray in venturing out overseas for possible business expansion. The oil money factor and growing appetite for Islamic bonds in the Middle East were simply irresistible.
- The mortgage outfit will explore ways to create Islamic products that are acceptable to Middle East investors. It was among the world’s 10 largest issuers of Islamic bonds last year.
Malaysian mortgage firm Cagamas Bhd may help set up secondary Islamic mortgage companies in the Middle East and securitise loans from Gulf banks to tap rising demand for Islamic products in the region, its chief executive said on Tuesday.
Islamic banking players in mostly Muslim Malaysia are seeking overseas markets as a growing number of institutions compete for a modest market of 27 million people at home.
Malaysian firms are especially eager to court an estimated $300 billion of petrodollars from the Middle East, but some Gulf investors have shunned Malaysian Islamic products, saying they do not fully meet sharia, or Islamic law, standards.
Qatar launches first dedicated investment bank
Points of essence:
- Qatar’s very own investment bank looks set to bring investment opportunities to Qatar and to invest in lucrative projects internationally. Licensed in 2007, the bank specializes in local and international Sharia’a compliant investment banking opportunities.
- With Qatar Islamic Bank as the largest single shareholder, the bank aims to tap the market potentials in the UK, France, the GCC, Asia and Southeast Asia, MENASA including exploring for opportunities in the booming China.
QInvest, the largest financial establishment to start operations in the Qatar Financial Centre (QFC), was licensed in April 2007 with a capital of US＄1 billion.
The bank specializes in local and international Sharia’a compliant investment banking opportunities, and is 25% owned by Qatar Islamic Bank (QIB), 15% by Gulf Finance House (GFH), and the remaining 60% of equity is held by other strategic, institutional and private investors from Qatar and other GCC countries.
According to Chief Investment Officer Philippe Jouard, “By 2012, there will be 5 trillion dollars looking for a home from the GCC countries. China is a natural absorber of this liquidity surplus. China should see QInvest as a unique way to attract the wealth of the Gulf.”
Islamic Banking in Egypt
Points of Essence:
- The author opined that a lack of interest from the policymakers may have cost Egypt its pioneer status for Islamic finance.
- He pointed out that Egypt had Islamic banking started in 1963 with the establishment of Mit Ghamr Saving Bank with 53 branches at one time, which paved the way for the setting up of other Islamic financial outfits. Now, the numbers have been on the decline with only two institutions, Faisal Islamic Bank of Egypt and the Egyptian Saudi Finance Bank as well as the Islamic window of conventional institutions.
25/08/2008
By Lahem al Nasser
Egypt, the land of the Kinana Tribe, is the country that paved the way for Islamic banking through Dr. Ahmed El Najjar (may God rest his soul). It is the country in which this idea first practically came into existence in the form of Mit Ghamr Savings Bank in 1963, which at one point had 53 branches.
The Islamic banking experience then shifted from Egypt to other parts of the Islamic world by the early founding fathers such as Dr. Ahmed El Najjar and Dr. Isa Abdu whose efforts were combined with those of businessmen interested in Islamic values.
Private Islamic banks such as the Dubai Islamic Bank (DIB) in 1975, the Kuwait Finance House [KFH] in 1977 and the Faisal Islamic Bank of Egypt in 1979 were established. Today, the number of Islamic financial institutions is estimated at approximately 396 throughout 53 countries with a growth rate that ranges between ten and 15 per cent.
SBP to include SMEs, agri, micro finance in Islamic Banking soon
Points of Essence:
- The State Bank of Pakistan will soon include SMEs, agriculture and micro finance to enhance its existing regulatory framework on Islamic finance in Pakistan.
- The new approach will aptly apply its 5 regulatory principles to focus on evolving a regulatory framework, enhancing the spectrum of Islamic Banking, strengthening Shariah compliances mechanism, consulting internal and external stakeholders for better liaison and strengthening human resources.
- SBP targets to enhance market share of Islamic Banking to 12 percent by the year 2012.
By Nauman Tasleem
LAHORE: The State Bank of Pakistan (SBP) would soon include Small and Medium Enterprises (SMEs), agriculture and micro finance to regulate and strengthen Islamic Banking.
This was stated by Pervez Said, Director Islamic Banking Department and Advisor to SBP Governor during the 2nd International Conference on Islamic Banking and Finance held at Aiwan-e-Iqbal on Monday, which was arranged by Al Huda Centre for Islamic Banking and Economics. Bankers from different countries participated in the international conference held to promote Islamic Banking in the country.
He said, “SBP would broaden the horizon of Islamic Banking and agriculture, while SMEs and micro finance would be given special attention in the new policy.”
Dubai’s crackdown on corruption
Points of Essence:
- A string of high profile cases in Dubai involving the alleged financial irregularities by the senior management of Dubai’s top financial institutions may have shocked the global financial fraternity.
- It was not immediately known how the alleged scandals may have an impact to the overall regulatory and supervisory infrastructure in Dubai.
By Andrew White on Sunday, 24 August 2008
White-collar crime rarely captures the imagination as easily as its garden-variety counterparts.
It seems you have to bring down a bank, hide billion-dollar losses or at least plunder a pension plan in order to secure column inches alongside the murder du jour.
Part of the reason is in the telling – after all, it’s unfortunately far easier to picture a grisly death, than it is to follow how the judicious use of special purpose entities might scupper a $111bn energy giant, or how one city whiz-kid with delusions of grandeur could blindside a 144 year-old Swiss bank with an alleged $75bn in unauthorised trades.
However, the summer of 2008 will be keenly remembered for a string of high-profile investigations into alleged financial irregularities by senior executives at both Dubai Government-owned and private entities.
Halal’ Personal Finance is another first from Islamic Bank of Britain
Points of Essence:
- Islamic Bank of Britain now offers the sole Shariah compliant unsecured personal finance in UK.
- This financing will operate under the Islamic principle of Murabaha with deferred payments to generate cash funds between £1,000 and £20,000.
Islamic Bank of Britain, the UK’s only totally Islamic British bank, has launched a Sharia’a compliant personal ‘loan’ facility, making it the only provider of ‘Halal’ unsecured finance in the UK.
The new unsecured facility allows customers to generate cash funds between £1,000 and £20,000 using the Islamic principle of Murabaha with deferred payments. The end result is that consumers can get a finance facility similar to a conventional loan but in accordance with the Muslim faith which prohibits the use of interest.
DMDI In Final Stages Of Setting Up Finance House
Points of Essence:
- The Kuwait Finance House has inspired the establishment of DMDI in Malaysia. The finance institution was mooted at the recommendation by BNM, the country’s central bank.
- At this stage, it was not clear about the operating framework of DMDI and neither on the benefits it would offer to its members organisations.
By: Ramjit
ACEH, Aug 22 (Bernama) — Dunia Melayu Dunia Islam (DMDI) will be setting up a finance house, DMDI Finance House, in place of an earlier proposal to set up a bank, its president Datuk Seri Mohd Ali Rustam said.
He said the setting up of the finance house was suggested by Bank Negara Malaysia (BNM) and that it was currently in the final stages of establishment.
“BNM had given its view that it would be better to form DMDI Finance House in the mould of Kuwait Finance House in Kuwait,” he told reporters after chairing the DMDI supreme council meeting in Banda Aceh here Friday.
Tamweel’s former CEO Adel Al Shirawi faces investigation for fraud
UPDATES: 22 August 2008
Point of Essence:
- Tamweel denies it being implicated under the current probe against its ex-CEO, Adel Al Shirawi.
- This statement was issued amid concerns that the probe may be linked to the company which has seen its share prices plummeted ever since the investigation started. The company clarified that the probe was related to the personal wrongdoings of the former CEO.
Tamweel says it’s not under investigation
Thursday, 21 August 2008 12:07
Dubai-based Islamic mortgage lender Tamweel is not under investigation by the public prosecution as part of a corruption probe in which two former senior executives have been detain, the company said on Thursday.
Tamweel said that “to the best of the company’s knowledge” the investigation was limited to former chief executive Adel Al Shirawi and former head of investments Feras Kalthoum and will not hit profits.
“…there is no investigation into the activities of the company itself.” Tamweel said in a statement.
“Tamweel therefore reassures its shareholders and sukuk holders that this investigation has no negative impact on the profitability and operations of the company.”
The statement follows comments made by chief financial officer Gaurav Agarwal earlier in the week in which he said Tamweel has no plans to change its 2008 profit growth target and that the possibility that an investigation could lead to cash losses was “remote”.
Since the beginning of the month Tamweel’s share price has dropped 22.63 percent to Wednesday’s close.
The investigation into Al Shirawi and Kalthoum was first made public last week by Tamweel’s biggest shareholder Istithmar World, part of a broad corruption crackdown by the Dubai government.
State-owned developer Nakheel has also confirmed one of its staff is being questioned by police and analysts say there is more to come.
Investigations are also underway into former employees of Deyaar Development, including its former CEO, and Dubai Islamic Bank.
Source: www.arabianbusiness.com
Points of Essence:
- Tamweel’s ex-CEO, Adel Al Shirawi, is currently probed for embezzlement and mistrust by the Dubai investigating authority.
- While this will cause a dent to the reputation of the companies associated with the CEO, it does affect the well being of the overall Islamic finance industry.
Al Shirawi stepped down as head of Tamweel in January and is currently vice chairman of Istithmar World.
Dubai: Tamweel PJSC’s former chief executive officer Adel Al Shirawi is under investigation by the Dubai public prosecution’s office for alleged financial wrongdoing, a Dubai police official said.
Al Shirawi is being investigated for alleged embezzlement and mistrust while employed by the UAE’s biggest mortgage provider, Saleh Hamed, head of Bur Dubai police, said in a telephone interview on Thursday.
The Dubai police have referred the case to the emirate’s public prosecution office, he said.
PIDM Expects Islamic Deposits To Increase To 10 Percent This Year
Points of Essence:
- PIDM forecasts Islamic deposit to increase 10% this year due to more establishment of Islamic banks in the country.
- The Islamic deposits which totaled RM21.7 billion this year will provide protection to depositors against the loss of insured deposits placed with an Islamic member institution or in the unlikely event that it is unable to meet financial obligations. This will instill public confidence and promote financial stability.
KUALA LUMPUR, Aug 18 (Bernama) — The Perbadanan Insurans Deposit Malaysia (PIDM), expects Islamic deposits to increase slightly to 10 percent this year from 8.0 percent in 2007.
This follows the establishment of more full-fledged Islamic banks in the country.
PIDM general manager, insurance, risk assessment and monitoring, Md Khairuddin Arshad said the trend showed that more people were investing in Islamic Banks.
“Previously, some commercial banks operated through Islamic windows.But now they seem to have full-fledged Islamic banking services,” he told reporters after presenting a paper entitled, Islamic Deposit Insurance: The Malaysian Experience, at a seminar on Islamic deposit insurance here today.
Bank launches Islamic product
Points of Essence:
- QNB Islami of Qatar National Bank has launched Tawlia which offers zero profit Islamic financing or at purchase or cost price for commodity sales or services to its customers.
- The financing is the first of its kind in Qatar.
DOHA • QNB Al Islami, the Islamic branch of Qatar National Bank (QNB) recently, launched Tawlia, the first Islamic finance promotion of its kind in Qatar.
Tawlia involves the sale of a commodity or service to the customer at its purchase or cost price with zero profit for the bank. Although, it is an Islamic finance formula that has always existed, QNB Al Islami is the first to launch the product in the local banking market. Tawlia has been launched after obtaining approval from the Shariah Advisory Board.
China banking: Rolling with the times
Points of Essence:
- As China experiences a tremendous growth and immense potential of their banking industry, it has also set to join the fray in the booming Islamic finance to tap on the wealth sources from the Middle East.
- The rapid expansion of the domestic industry and a significant Muslim population in China provided a ready platform for China to aggressively pursue Islamic finance to meet the requirements of the industry and the people.
By KFH Research Ltd
China’s banking industry has witnessed rapid growth over the years, riding on the coat-tails of the country’s economic boom. In 2007, the industry grew by 19.7% vs 17.3% in 2006, underpinned by the country’s strong economic performance and continued liberalisation of the industry.
For the first time, the weighted average capital adequacy ratio of the banking sector exceeded the minimum regulatory level of 8%, while the non-performing loans (NPL) ratio of commercial banks was reduced to a historically low level of 6.2%. We expect China’s banking industry to continue to post commendable growth over the medium term, underpinned by the country’s healthy economic growth, huge population and growing middle class.
CIMA becomes first accountancy body with Islamic finance certificate
Points of Essence:
- CIMA plans to offer Certificate in Islamic Finance to meet the global demand for an Islamic finance certification.
- The certificate will be the first qualification offered by a professional accounting body and offered in collaboration with the Malaysian International Institute of Islamic Finance (IIIF).
The growing demand internationally for Islamic finance has ventured CIMA to be the first professional accountancy body globally to offer a ‘Certificate in Islamic Finance’ that covers Islamic commercial law, Islamic banking and Takaful, Islamic capital markets and instruments and Accounting for Islamic financial institutions.Mr Faizal Salieh, Managing Director/CEO of Amana Investments Ltd, spoke to an enthusiastic cross section of members and passed finalists of the Chartered Management Accountants body (CIMA) CIMA Students and members on “ISLAMIC FINANCE AND BANKING: THE FIRST PRINCIPLES” at a programme organised by the Management Information and Resource Centre of the CIMA Sri Lanka division.
