Archive for September 2008
Abu Dhabi Islamic Bank Postpones Personal Customer Installments During Ramadan
Points of Essence:
- Abu Dhabi Islamic Bank recently announced that it will defer installments for its Murabahah customers as a goodwill gesture to provide them relief in meeting their other liabilities during Ramadhan and Eid al Fitr festivals. A tradition observed since the last 10 years, it is not known whether the other UAE based banks will follow suit.
Abu Dhabi Islamic Bank (ADIB) has confirmed that it will postpone installments for Murabahah customers during the Holy Month of Ramadan, waiving its rights to profits generated through the purchase of a number of its banking services.
The move, which has been designed to help customers save money during a month that may prove one of the most costly this year for many, has been agreed as a goodwill gesture on behalf of the Bank as part of its ongoing Ramadan and Eid Al Fitr celebrations.
Islamic finance shows banks the way forward
Points of Essence:
- Being an industry based on principles of equity and financial justice, Islamic finance imposes strict principles which limit the use of derivatives and prohibit short-selling. Pure speculation and gambling are also forbidden besides require certainty and clarity in transaction agreements, thus we cannot sell something which we do not own. This had saved the IFIs in the aftermath of the financial disaster engulfing prominent US financial institutions.
By Nadeem Haq
THE spectacular collapse of Lehman’s, the problems at AIG and the takeover of HBoS by Lloyds TSB have led to central banks injecting liquidity into the markets and governments bailing out certain institutions, often at taxpayers’ expense.
The question is: are taxpayers and governments subsidising flawed institutions or indeed propping up an inherently flawed financial system which survives merely on the basis of confidence?
Islamic finance and banking will win
Points of Essence:
- The US financial turmoil has stimulated more interest for Islamic products in Europe as investors shifted for a more conservative approach to financing, where the risks are shared with the investor, much like the private equity model and where the risk profile of IFIs is lower as the institutions do not use leverage.
Stoy Hayward says financial turmoil puts Islamic products in strong position.With the financial markets in the most volatile state since the 1930s, and the London Stock Exchange experiencing more highs and lows than a rollercoaster ride, increasing numbers of individuals and corporations will now invest in Islamic banking and Sharia compliant products than ever before, predicts accountants and financial advisers BDO Stoy Hayward.
Morocco develops Islamic financing
Points of Essence:
- Dismissing criticisms on a clampdown of Islamic financial services in Morocco, the Moroccan financial authorities have now upped the ante on developing a more conducive platform for Islamic finance in the country.
- Currently, Morocco does not allow full fledged Islamic institutions and only conventional banks are permitted to offer Islamic financial services products, albeit, with a higher tax than conventional banking products. This will change soon.
Morocco financial authorities, criticised by powerful Islamist opposition for the slow start of Islamic banking, are determined to develop Islamic financial services, Morocco’s central bank chief on Thursday.
“We have begun the experience of Islamic finance. We are assessing the result and will build on that to expand further Islamic banking services,” Abdellatif Jouahri told a news conference. Last year, Morocco authorised segments of Islamic finance partly to lure investment inflows from Gulf Arab states on which on their fast-growing tourism and real estate sectors depend.
Thailand to offer Islamic insurance and Islamic bonds
Points of Essence:
- Islamic Bank of Thailand appears to have geared itself to introducing comprehensive Islamic financial services products in the country. Started with a Shariah compliant banking services, now the Bank teamed up with Muang Thai Group to offer insurance services to Thailand’s Muslim population as well as planning to issue Islamic bonds to fund the Government’s infrastructure projects.
By Darana Chudasari
The Muang Thai Group has teamed up with the Islamic Bank to offer insurance services to Thailand’s over eight million Muslims.
Eight types of Muang Thai Takaful life insurance policies will be promoted by the group’s sales agents and through all 28 branches of the Islamic Bank.
According to Muang Thai Life Assurance president Sara Lamsam, the group also plans to launch Islamic non-life insurance products under Muang Thai Insurance.
Deutsche Bank to launch sharia hedge fund range
Points of Essence:
- Deutsche Bank AG is poised to launch an advisory unit on shariah compliant hedge funds which will offer techniques for existing hedge funds to adopt Islamic investment rules alongside their current investments. This is following the launch of the similar platforms by Barclays Capital’s Al Safi and Newedge, the broker joint venture of Credit Agricole’s Calyon and Societe Generale.
- BANK’S FORT: Deutsche Bank’s headquarters in Franfurt. (Getty Images)
Deutsche Bank AG’s prime brokerage business is preparing to launch a sharia-compliant hedge fund platform within the next month, as part of its Middle East expansion plans, a senior official said.
Deutsche Bank will expand an existing service on a selective basis, regional head for Middle East Structuring Geert Bossuyt told newswire Reuters, and the platform – or range of financial products – will offer techniques for hedge funds to adjust to Islamic investment rules.
“It is a bit like the case of the chicken and the egg, you will never have demand if there is no offer. So Deutsche Bank, and others, offer product,” he said.
More Islamic finance firms in Kuwait than conventional ones
Points of Essence:
- The latest report data released by the Central Bank of Kuwait showed 3 significant developments:
- There are 48 Sharia-compliant finance companies and 45 conventional companies in Kuwait;
- The volume of assets managed by Islamic companies still much lesser than of conventional companies as it stood at $39.8 billion at the end of July 2008 compared to $29.7 billion held by the IFIs;
- There was a noticeable growth in assets of Islamic investment companies since January this year by 18.7 % compared to the 14 % growth rate registered by conventional companies during the same period.
Dubai, Sep 25 (IANS) There are more Islamic finance-compliant investment companies in Kuwait than conventional institutions, new figures have revealed.Analysis of data released by the Central Bank of Kuwait showed that there are 48 Sharia-compliant finance companies and 45 conventional companies in that Gulf city-state, the official Kuwait News Agency (KUNA) reported.
However, the volume of assets managed by Islamic companies still remained less than that run by conventional companies.
IFC announce Islamic financing solutions for small and medium enterprises
Points of Essence:
- Dubai based Islamic Finance Company has commenced offering shariah compliant financial services to SMEs to tap the highly potential business area yet greatly underserved industry. This will give avenues for the institution for its portfolio diversification, opportunities to cross sell products, and a source of stable income.
Islamic Finance Company (IFC), head quartered in Dubai, announced the commencement of full scale shariah compliant financing solutions to the small and medium enterprises commonly referred to as SMEs.
IFC has spent a lot of time researching and studying the financial needs of this growing segment and has a new dedicated department to serve this niche market.
IFC has qualified resources and technical capabilities to offer fully shariah compliant financing solutions to SME’s in order to meet all their working capital, trade and Capex needs.
Dubai Bank plans $5bn Islamic bond programme
Points of Essence:
- Dubai Bank plans to raise $500 million in Islamic bonds this year as part of a $5 billion notes programme to finance growth. Swiss investment bank, UBS and Standard Chartered have been appointed as lead arrangers. The bonds would be listed on the London Stock Exchange and the Dubai International Financial Exchange.
DUBAI INC.: Dubai Bank is a unit of Dubai Banking Group which is owned by Dubai Holding which is owned by Dubai's Ruler Sheikh Mohammed bin Rashid Al-Maktoum (pictured). (Getty Images)
Dubai Bank plans to sell about $500 million in Islamic bonds this year as part of a $5 billion notes programme to finance growth as it looks to become a global Islamic lender by 2013.
The unlisted bank, a unit of Dubai Banking Group (DBG), could sell its first tranche in the next “couple of months”, depending on market conditions, Chief Executive Officer Salaam Al-Shaksy told newswire Reuters on Wednesday.
The Islamic lender, which appointed Swiss investment bank UBS and Standard Chartered as lead arrangers, had received a good response from potential investors for the sukuk sale, Al-Shaksy said.
“We are talking about an Islamic bank sukuk, which has not been issued for quite some time,” Shaksy said when asked whether he was concerned about difficulties in the regional debt markets.
Thailand Plans First Islamic Bonds to Tap Arab Wealth (Update1)
Points of Essence:
- Thailand plans to issue a series of Islamic bonds in the third quarter of 2007 as it seeks to tap the Middle East petrodollars. $600 million will be raised from the first issuance of the seven-year Islamic bonds to finance projects by the state corporations in Thailand.
By Suttinee Yuvejwattana
Sept. 24 (Bloomberg) — Thailand plans to raise $600 million from its first sale of Islamic bonds as it seeks to attract funds from the Middle East to pay for public works.
“We want to tap petrodollars as Middle East countries have lots of money,” Dheerasak Suwannayos, president of the state- owned Islamic Bank of Thailand, told reporters in Bangkok today.
Islamic Bank plans to sell seven-year Islamic bonds in the third quarter of 2009, Suwannayos said. State companies will use money raised from the securities, known as sukuk, to help finance their projects.
Credit crisis gives Islamic finance a chance to shine
Points of Essence:
- The current credit crisis befalling prominent investment banking in the US had the attention shifted to the more prudent governance of Islamic finance. This was when Islamic banks were seen unscathed from the chaotic financial turbulence caused by the subprime lending fallout. Islamic finance requires stricter rules imposed on lending which includes banning some of the structures and financing methods which were the root problems for the mortgage crisis.
- Islamic finance practices were conservatively observed which promoted active participation by investors and denounced parking assets in off-balance-sheet vehicles. Strictly ruled by the Shariah, the gains had to be derived from ethical and socially responsible investments and interest-based banking and investments in sectors like pork, gambling and pornography were forbidden.
By Umesh Desai, Reuters
HONG KONG:The global credit crisis presents the $1 trillion Islamic finance industry with an opportunity to expand its appeal beyond Muslim investors, as a haven from speculative excess.
The message may have particular resonance in the West after the crumbling of the U.S. mortgage market left banks holding hundreds of billions of dollars of nearly worthless credit instruments tied to home loans by a web of complex structures.
While conventional banks worldwide are nursing losses of more than $400 billion from the credit crisis, Islamic banks are virtually unscathed. And they are playing up the contrast to scalded shareholders, bondholders and borrowers and fearful depositors.
AIA first to get international takaful operator licence in Malaysia
Points of Essence:
- Amid the financial turbulence grappling its parent, American Insuran Group, the Malaysian incorporated AIA looks set to expand its takaful business as it enters the growing takaful global market and makes Malaysia as a launching pad for its takaful solutions. Having obtained an international takaful operator licence from Malaysian central bank, it will allow AIA’s wholly owned subsidiary AIA Takaful International Bhd (ATIB) to conduct composite (family and general) takaful and re-takaful businesses in international currencies.
PETALING JAYA: American International Assurance Bhd (AIA) has received Malaysia’s first international takaful operator (ITO) licence from Bank Negara.
The licence would allow AIA’s wholly owned subsidiary AIA Takaful International Bhd (ATIB) to carry out composite (family and general) takaful and re-takaful businesses in international currencies.
ATIB has been operational since Sept 15.
Qatari banks’ foreign assets rise to $20bn
Points of Essence:
- Qatar announced the jump in profit of foreign assets owned by Qatari banks by $20.1bn in April from $15.7bn in 2007 gained from their overseas expansion. The profit for its local banks continues to grow. It was also revealed that the profits of the Shariah-compliant Islamic banking sub-sector rose last year, but the share of total assets remained at 16%. This was influenced by a greater business competition in Qatar where all leading commercial banks have started offering Islamic Islamic products through their subsidiaries.
By Pratap John
DOHA: Foreign assets of Qatari banks have climbed to $20.1bn in April from $15.7bn in 2007 as they expanded their lending portfolios and investments abroad, the Institute of International Finance has said.
Official reserves held by Qatar Central Bank have risen to $13.4bn, equal to over four months of the country’s import cover, the Washington-based global body of financial institutions said.
Dubai vies to be world Islamic finance centre
Points of Essence:
- Dubai based Islamic financial institutions under Dubai Group are all in aggressive expansion mode to position Dubai as a premier international Islamic center.
By Karen-Remo Listana
Soud Ba'alawy
Dubai Group, a conglomerate of seven private financial institutions, is banking on Islamic finance for its expansion plans, Emirates Business has learned.
“It is important for us to be the Islamic centre,” said Soud Ba’alawy, Dubai Group’s Executive Chairman. “Islamic banking is growing. There are more opportunities and it means it has room for more banks. We see Dubai together with Dubai International Financial Centre will become the Islamic centre and we have the chance to become so.”
Ba’alawy, who is also the chairman of DIFC, said the group’s Shariah-compliant subsidiaries – Dubai Banking Group (DBG) and Noor Investment Group (NIG) – are in an aggressive expansion mode in Islamic banking arena to catapult Dubai on the premier league.
HSBC Amanah convenes its Global Advisory Shariah Board in Makkah
Points of Essence:
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HSBC Amanah held the 3rd bi-annual meeting of its Global Shariah Advisory Board recently to discuss Islamic financial industry issues, including the role of Islamic debt and equity modes of finance, legal infrastructure for Islamic financial products and the importance of increased awareness and education of the public with regards to Islamic Finance.
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The meeting intended to gather scholars and business people regularly to discuss the impending issues encountered by the industry and subsequently provide appropriate solutions. Attended by senior Shariah scholars from different geographies, it will promote harmonization of Shariah standards and practices that apply to Islamic finance.
- The Shariah governance at HSBC Amanah consists of two structures:
- Global Shariah Advisory Board which comprises independent Shariah scholars advising the bank on concepts and structures used for Shariah compliant products and services; and
- Central Shariah Committee, which reviews institutional transactions and new products and conducts annual Shariah audits to ensure that all HSBC Amanah operations are Shariah compliant.
As part of its continuous efforts to engage both Islamic scholars and bankers in constructive dialogue about the pressing issues and challenges facing Islamic finance, HSBC Amanah, the global Islamic banking division of the Islamic division of the HSBC group, held the 3rd bi-annual meeting of its Global Shariah Advisory Board, in the Holy City of Makkah, on 4th September.
Zaid Ibrahim & Co becomes first South East Asian legal firm to operate in DIFC
Points of Essence:
- Malaysia’s largest law firm, Zaid Ibrahim & Co (ZICO) obtained a license from the DFSA to provide legal services to local, regional and international clients in and from the DIFC.
- With its established track record of structuring Islamic finance and banking deals and cross-border M&As, ZICO targets clients from MENA region to attend to their Middle East interests as well as clients based in MENA region to cover their ASEAN interests.
Malaysia’s premier law firm, Zaid Ibrahim & Co has become the first South East Asian law firm to receive a license from the Dubai Financial Services Authority (DFSA) to provide legal services to local, regional and international clients in and from the Dubai International Financial Centre (DIFC).
The firm’s operations in Dubai is headed by Senior Associate Farid Hussain and supported by the firm’s team of corporate lawyers from the Corporate, Projects and Islamic Banking practices. Marking a new phase in its international expansion plans, the Dubai office will be the firm’s sixth office outside Malaysia and will serve existing and potential clients from or with interests in the Middle East.
