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Archive for June 2008

DIB investment banking arm arranges more than AED 20 billion in sukuk and syndication transactions in first half of 2008

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Points of Essence:

  • Dubai Islamic Bank has arranged in excess of AED 20 billion of sukuk and syndication transactions
  • DIB acted as lead manager, arranger and book runner on over 90 per cent of all sukuk transactions as well as over 60 per cent of Islamic syndication transactions
  • DIB had pioneered various sukuk in the region such as sukuk with equity warrants, convertible sukuk, musharaka sukuk, sukuk under the EMTN program and dirham-denominated sukuk.

Dubai, June 24, 2008: Dubai Islamic Bank’s (DIB) wholly-owned investment banking arm, Millennium Capital Limited, announced today that it has arranged in excess of AED 20 billion of sukuk and syndication transactions since the beginning of this year. DIB has risen to second place in the GCC Islamic Bonds League Tables, up from sixth place in 2007, according to the Bloomberg Underwriter Rankings published in June 2008.

The largest GCC-based banks such as DIB, the world’s first Islamic bank, have seen increasing competition from the leading global investment banking firms for a share in this fast-growing Sharia-compliant market space. Despite the stiff competition, DIB has successfully managed to further strengthen its leadership position in this sector.

Khaled Kamda, Group Managing Director & CEO, Dubai Islamic Bank, said: “UAE issuers such as DIB, continue to receive a strong response from the markets. Since the successful AED 7.5 billion closure of the first rated sukuk for the Jebel Ali Free Zone in Dubai in November 2007, DIB has continued to play the lead role in channeling the vast liquidity of the region into the sukuk and syndication market. This channeling has improved asset allocation and provided scale and depth to the domestic capital markets in a very meaningful way.”

Since the beginning of the year, within the UAE, DIB has acted as lead manager, arranger and book runner on over 90 per cent of all sukuk transactions within the market, as well as over 60 per cent of Islamic syndication transactions.

“In addition, DIB is currently executing several significant transactions and expects to successfully conclude these transactions shortly,” said Saad Zaman, Deputy CEO of Millennium Capital Limited. “The success of DIB’s investment banking business is predicated on strong origination, structuring and a distribution track record that has served it well in deepening its already close customer relationships.”

DIB has had many firsts in the sukuk industry, such as the first sukuk with equity warrants, the first convertible sukuk, the first musharaka sukuk, the first sukuk under the EMTN program and the first dirham-denominated sukuk.

The overall suite of investment banking products continues to see strong demand from DIB’s client base, according to Zaman. Increases in outbound cross-border activity have provided DIB with significant business opportunities, focusing in areas such as infrastructure, financial services and real estate. Building on its asset management platform and the success of its asset-backed funds, DIB plans to continue rolling out new funds. The Sharia-compliant funds are based in several regions and cover several asset classes, including aviation, shipping and real estate.

Private equity is another area where DIB is keen to expand and create new successes within its investment banking platform. Recently, DIB and Millennium Capital partnered with Global Investment House of Kuwait to launch a US$ 500 million Islamic buyout fund.

Zaman concluded: “This is the first of an expected series of future private equity funds that will target different asset types and regions to provide investors with a wide range of private equity investment options.”


Written by Suapi Shaffaii

June 25, 2008 at 7:50 am

Indonesia passes Shariah banking law

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Points of Essence:

  • Indonesia’s new banking bill allows foreigners to establish Islamic banks in partnership with its citizens or local entities
  • It also offers commercial banks the option of converting their business into Shariah-compliant banks
  • Currently, Islamic banking comprises 2 % of the market share and less than 5% of the total banking assets
  • HSBC is the only foreign bank with Shariah operations

By Reuters  on Wednesday, June 18, 2008

Indonesia’s parliament passed a new banking bill yesterday opening up its Islamic banking sectors for foreign investment in a bid to tap the potential of the Islamic finance sector in the world’s most populous Muslim nation.

The new bill allows foreigners to establish Islamic banks in partnership with its citizens or local entities and offers commercial banks the option of converting their business into Shariah-compliant banks.

Around 85 per cent of Indonesia’s population of 226 million people are Muslim. But Southeast Asia’s largest economy has been slow to tap the fast-growing Islamic finance market.

“We hope this law can increase the turnover of Shariah banking in Indonesia… By 2013, Shariah banking is expected to reach 5-10 per cent of market share, compared to two per cent currently,” said legislator Dradjad Wibowo.

Wibowo, also a well-known economist, said the law would help Shariah banks increase loans to sectors with small collateral that are unable to receive loans from conventional banks, such as small and medium enterprises (SMEs). Shariah, or Islamic law, bans payment of interest, allowing money to be earned only from physical assets. It also bars investment in alcohol, tobacco or gambling.

The country’s Islamic banking industry is still less than five per cent of the total assets of Indonesia’s domestic banks. That compared with a ratio of more than 12 per cent in Malaysia.

Until now, HSBC is the only foreign bank that has Shariah operations in Indonesia, but there are several domestic banks with Shariah-compliant operations, in anticipation of a growing domestic market and to draw investments from oil-rich Middle East countries.

Three local banks – state-owned PT Bank Rakyat Indonesia (BRI), PT Bank Bukopin and PT Bank Negara Indonesia (BNI) – plan to open Shariah-compliant units this year.

Bahrain-based Islamic lender Albaraka Banking Group has also opened an office in Indonesia, as it seeks to stay ahead of rivals in tapping the growing global appeal of Islamic banking.

Global Islamic assets are growing at an annual pace of 20 per cent and are set to hit $2 trillion (Dh7.3trn) in 2010 from the current $900 billion, thanks to a flood of petrodollars, Ernst & Young said in February.

Written by Suapi Shaffaii

June 24, 2008 at 7:37 am

ABN Amro plans retail Islamic services

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Points of Essence:

  • ABN Amro Bank plans to launch retail Islamic banking services in the Middle East by the 2nd Q of 2009
  • It has issued issued 32 Shariah-compliant products and sold $2 billions (Dh7.3bn) in Shariah-compliant funds since the beginning of 2007
  • It plans to introduce between 5-10 new products every month and expects to launch at least 30 new Islamic products during the 2nd Q of 2008
  • It has structured products which have different themes such as the water, real estate, shipping, renewable energy, climate changes and commodities that suit different investment trends and risk appetite among high net worth individuals in the region

23 June 2008
ABN Amro Bank is planning to launch retail Islamic banking services in the Middle East region by the second quarter of 2009 to meet the increasing demand for Islamic products in the region, according to a senior executive.

Sudhanshu Garg, director of equity derivatives at the bank, said that ABN Amro would launch retail Islamic products within nine to 12 months after finalising preparations for Islamic services in the region.

He added that the bank achieved great progress in its Islamic structured solutions during the past 18 months as it issued 32 Shariah-compliant products.

“We sold $2 billions (Dh7.3bn) in Shariah-compliant funds since starting Islamic banking facilities from the beginning of 2007. This progress put ABN Amro among the top four banks in the Middle East region offering Shariah-compliant equity derivatives and structured solutions,” he said.

Garg told Emirates Business that GCC investors bought around 80 per cent of the total sales in the Middle East. He added that the bank plans to accelerate the introduction of Islamic products during the next stage due to the increasing demand.
“We plan to introduce between five and 10 new products every month. We expect to launch at least 30 new Islamic products during the second half of 2008. We work similar to wholesale style as we carry out research studies about the need in the Middle East markets and then we create structured products that suit different investment trends and risk appetite among high net worth individuals in the region. We sell these Islamic products through Islamic banks, investment companies and fund managers in the region. Our products succeeded because they are based on the needs of the market,” he said.

These products have different themes such as the water, real estate, shipping, renewable energy, climate changes and commodities. Also the products depend on sub-sectors in global equity markets, based on macro-economic analyses. For example, the water theme depends on the supply and demand of water around the globe and prospects of growth in this area.

“We invest in water supply companies in several markets which give growth for our investments even during the decline stages in the markets,” he said.

Garg said that the structured products also depended on geographies such as Asian and Central African markets, where Middle Eastern investors cannot access these markets.
“We offer them the ability to invest in such markets. Our Central African fund achieved 40 per cent growth during the first nine months of 2007. With this deep research in the market, we can offer varied products to our clients. Also the Dubai International Financial Centre is becoming essential for the growth in our business because we see companies in the DIFC as potential clients and distributors for our Islamic products. Also we have relations with international banks who are opening up offices in the centre and this will ease cooperation with them as we will be working from the same region.”

He added that the increasing Islamic deposits and the wealth generated in the Middle East region showed great potential growth for Islamic banking services.

“Expectations are high that the Islamic banking sectors will grow by 30 per cent annually and ABN Amro expects its Shariah-complaint products to grow at least at the same pace,” he said.

By Mohamad Al Kady


Written by Suapi Shaffaii

June 24, 2008 at 7:10 am

Case Study: Pioneering Islamic Banking in the US

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Points of Essence:

  • Chicago-based Devon Bank is a true pioneer when it comes to Shari’ah finance
  • The challenges have been meshing two legal systems and two financial systems together in a way that made sense apart from ensuring that the products were correct from a religious perspective while also commercially attractive
  • The banking regulators have been very supportive since they see the initiative to help bringing unbanked individuals into the banking system as a valuable community servic
  • Tax continues to be an issue with the Internal Revenue Service
  • Lack of liquidity is another challenge faced by the bank. The plan is to set up an independent entity called Devon Islamic Ventures Offshore (DIVO) to try to expand the bank’s Islamic financing programme through the creation of a Shari’ah-compliant investment vehicle and the provision of an investment conduit for other Islamic financing ventures.

The bank in the US that has a solid case for claiming pioneer status in Shari’ah finance in that country is to be found in Chicago, Illinois. Perhaps, at first glance, not the obvious place to look for such innovation. However, Devon Bank resides in one of the most ethnically diverse neighbourhoods in the country. The move into Shari’ah financing basically stemmed from customer demand, explains the bank’s corporate counsel, David Loundy. There have been plenty of challenges along the way, as is always the case with pioneers in any walk of life, and there are a fair few still outstanding. But what is clear, as the story unfolds, is that Devon Bank has been pretty good at finding ways around issues or, as Loundy puts it, forcing square pegs into round holes.

This ethnic diversity is reflected in the fact that the bank’s employees are conversant in some 33 languages. The neighbourhood is often a first staging post for immigrants, many of whom ultimately move on. There are large Indian and Pakistani communities, with others from Africa, central Europe and elsewhere.

The first approach to the bank regarding Shari’ah finance came six or seven years ago. This was from a customer who wanted to buy a store front up the street but did not want to pay interest. The customer wanted to know if the bank could help. At that point, the answer was ‘no’. In fact, the only bank in the US that could help at that time was United Bank of Kuwait.

After United Bank of Kuwait was bought out, the customer came back to Devon Bank and asked the same question again. There were beginning to be other enquiries along the same lines as well, so it was felt that this was something the bank should look into. There had been early moves towards developing a solution for these customers but it wasn’t going very quickly, says Loundy.

He was a lawyer and joined the bank at about this time; the bank is family-owned and David is a family member. Given his legal background, the Shari’ah finance challenge was handed over to him. Early and subsequent assistance has come from the Shari’ah Supervisory Board of America, which is conveniently placed just two blocks up the road from the bank. One of its founders helped Devon Bank to get started and also took a keen personal interest as he has a real estate business. At that stage, the Supervisory Board was going to banks to try to attract interest. ‘We were already interested,’ says Loundy.

As the initial products began to take shape, so the enquiries started to multiply. People began asking whether the bank could provide finance for houses and cars, could help with lines of credit, could ‘help their sister in Connecticut’, says Loundy. At first, Devon Bank’s emphasis was on its own neighbourhood, with this having been its sole area of activity prior to the Islamic Finance initiative, but it was quickly pulled into other states and now provides Shari’ah products across more than 35 US states finding itself one of the top providers in the country.

So what have been the challenges? The bank was trying to ‘mesh two legal systems and two financial systems together in a way that made sense’, says Loundy. Other dimensions to the complexity involved were ensuring that the products were correct from a religious perspective while also, of course, commercially attractive. There has been a lot of education required – of the regulators, title companies, attorneys, tax authorities and other relevant parties. With obvious exasperation, he admits that practically everything about every transaction requires explanation.

The banking regulators have been very supportive,’ says Loundy. In part, this is because they see the initiative as helping to bring unbanked individuals into the banking system. ‘They see it as a valuable community service.’ Less positive has been the response at the individual state level. ‘The Secretaries of State are the bane of my existence,’ he sighs. It is hugely difficult to register to do business in each state. This is often nothing to do with Islamic banking per se but rather that the request does not ‘tick any box’, by virtue of being unfamiliar.

Despite these issues, the bank has been able to develop a wide range of home finance products, with these including the equivalent of fixed rate, bridge financing and so on. However, tax continues to be an issue. It has been an ongoing battle to persuade the IRS (Internal Revenue Service) to respond to the questions being posed, says Loundy. ‘Essentially, they are refusing to answer.’ He says: ‘They know there is an issue, there is probably $1 billion of Islamic paper in the market’. However, for the time being at least, there is no sign of resolution. He feels there is a logical regulatory fix waiting to happen but there currently appears to be insufficient public outcry to bring about the change.

The situation is not as bad at the local tax level. There is the equivalent of the UK’s stamp duty (which needed adapting to pave the way for viable Shari’ah mortgages in the UK; see the interview with Lord Eddie George, ‘NewHorizon, April-June 2007′ issue) to contend with. ‘Fortunately, in many states, there are ways around it,’ says Loundy. However, where this is not the case, it just adds the basic expense of incurring the duty twice (this stems from the nature of the transaction under Shari’ah principles, which involves initial ownership by a financier).

Education is also needed on the customer side. This encompasses a broad spectrum: some customers have already had conventional mortgages but many have not. ‘A lot have never thought they would be buying a house so have never learnt about the process or about mortgage financing,’ says Loundy. The bank finds that, unlike with many mortgage applicants, the prospective customers will often come in, spend a considerable time talking to the bank, and then disappear for six months. The first point of contact comes not because they have a property in mind to buy but rather because they are exploring whether or not such a thing is feasible. Even on the commercial side, which constitutes a good part of the bank’s Shari’ah business, while the customers are typically ‘savvy business people’, Shari’ah finance still usually falls outside the reach of their expertise.

There has also been the challenge of how to reach a much wider geographical customer base. If a customer is in Chicago and wants a conventional mortgage, they may well turn to Devon Bank. If they are in Texas, they will turn to a bank there. But if they are in Texas and want a Shari’ah mortgage, then they are likely to turn to Devon Bank, explains Loundy. ‘The telephone is a wonderful device,’ he says. The bank has not made its Shari’ah products available via online banking largely because of technical reasons, particularly an inability to make the displays Shari’ah-compliant. Indeed, the bank has had an issue with technology as a whole, so there is more manual effort here than in the rest of its activities. It has developed some software itself but has struggled to find Shari’ah-compliant applications.

Of course, the competition has increased. In some ways, this is good for Devon Bank, because it builds the awareness and maturity of the market. Some areas have become highly competitive, some less so, says Loundy. Residential financing is in the former category, which is one reason for Devon Bank’s broader product set. The ‘800-pound gorilla’ is Fannie Mae, the shareholder-owned entity with a Federal remit to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates in support of home ownership and rental housing. Fannie Mae has decided to make this a focus area as part of its commitment to minority home ownership and is seeking to roll out a uniform product. When this has happened and such finance is available to everyone, then Devon Bank’s differentiators will need to be breadth of product, backed up by quality of service, as the mover benefits will be no more.

One challenge that Devon Bank is particularly trying to overcome at present besets everyone in this space – lack of liquidity. The bank is trying to launch an offshore investment company but this is an uphill task, exacerbated by the subprime meltdown. Any potential investor, says Loundy, can ‘pick up a newspaper and read the headlines’. In reality though, in four and a half years, Devon Bank has had no foreclosures and no write-offs. ‘We have an exceptional portfolio performance.’ The plan is to set up an independent entity called Devon Islamic Ventures Offshore (DIVO) to try to expand the bank’s Islamic financing programme through the creation of a Shari’ah-compliant investment vehicle and the provision of an investment conduit for other Islamic financing ventures.

‘We have got pretty much everything set up and ready except the money,’ he says. DIVO has close ties with the bank but is an independent entity so will have a wider remit, beyond the reach of an Illinois bank. The vision is for a portfolio of Shari’ah-compliant businesses, provided either directly by DIVO or an affiliate, but mostly through equity investments in other providers of such services or in funds operated by such providers. There is already a Devon Real Estate Asset Management company which will eventually have DIVO as a parent and which is focused on real estate-only finance business.

There is a final interesting twist to the story: the Loundys are a prominent Jewish family. The bank itself has been operating since 1945, set up by local merchants, and owned by the Loundy family since 1953. While it might seem a huge leap from the bank’s origins to today’s faith-based banking activities, the latter are in keeping with the caring community bank envisaged by its founders. As the bank says itself within its marketing: ‘There’s no one size fits all when it comes to banking services from Devon Bank.’ Nowhere can that ethos be seen more clearly than in its pioneering Shari’ah finance activities.

Source: New Horison Global Perspective on Islamic Banking and Insurance

Written by Suapi Shaffaii

June 24, 2008 at 4:10 am

Dubai bank probe sparks calls for compliance

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Points of Essence:

  • Dubai Islamic Bank and its affiliate Deyaar are under probe for embezzlement
  • This led to calls for better compliance and transparency in banks in the region

Mon Jun 23, 2008 5:40am EDT

By Jason Benham

DUBAI, June 23 (Reuters) – A police investigation into irregularities at Dubai Islamic Bank DISB.DU and a probe into the bank’s affiliate Deyaar DEYR.DU, have led to calls for better compliance and transparency in banks in the region.

Police in Dubai, a regional trade hub and financial centre, have detained seven people, two of whom were former employees of Dubai Islamic Bank, as part of an embezzlement investigation, according to police and public prosecution records.

The high-profile case has triggered an avalanche of local media coverage in the booming oil-exporting states of the Gulf and threatens to mar the image of the nascent Islamic finance sector, which follows the dictates of Sharia law.

“All these latest issues suggest that there should potentially be better compliance. We need better communication and visibility when these situations arise,” Raj Madha, director of equity research at Cairo-based EFG-Hermes, told Reuters.

Islamic finance has grown rapidly in the past few years due to high demand for investments and financial services that comply with Islamic law — which includes a ban on the receipt of interest.

“There should be better supervision over these things,” said Mohammed Yasin, managing director at Shuaa Securities.

Authorities in the United Arab Emirates have responded with several high-profile detentions that have captured the attention of the local media.

The two detainees who used to work for Dubai Islamic Bank are Rifat Usmani, former vice-president, and Omair Mooraj, managing director and head of Islamic banking in the region at JP Morgan Chase, formerly the managing director at a subsidiary of Dubai Islamic.

Lawyers for both Usmani and Mooraj denied any wrongdoing on behalf of their clients when contacted by Reuters.


Dubai has become the defacto financial centre for the Gulf and strives to build a reputation for clear regulations, transparency and low taxes.

“There is a new drive in the UAE which I have seen over the last three to four years, that no one is above the law,” said Essam Al Tamimi, founder and senior partner of Al Tamimi & Company, one of the largest law firms in the Middle East.

“The authorities have the power to investigate whoever breaks the law, whether they be local, British, whoever they are.”

DIB stock has fallen more than 13 percent in the past three months compared to an average 9 percent increase by rival banks in the UAE, according to Reuters data.

The clouds gathering over the Gulf’s third-largest Islamic-compliant bank risks affecting the Islamic finance sector on the whole.

Islamic finance is enjoying rapid growth due to Muslim interest and because some non-Muslim investors view it as ethical investing because of its ban on companies involved in pornography, for example, or alcohol.

“It may have some negative spillover into the Islamic banking brand in general,” Madha said, adding it is “far from clear what is going on”.

“If this is a case of usury, then customers might well ask what the difference is between Islamic and conventional banks,” he said.

Other investors say the impact could spread beyond the Islamic sector and into the quickly growing financial sector in the Gulf overall.

“Being Islamic or non-Islamic has nothing to do with embezzlement. What really matters is that it is a big financial institution which has a lot of presence in Dubai,” said Yasin.

Dubai Islamic assured its shareholders in a statement that the investigation would have no impact on the financial position of the bank. (Editing by Thomas Atkins)


Written by Suapi Shaffaii

June 24, 2008 at 3:43 am

First Islamic equity product launched in UK

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Points of Essence:

  • Arab Banking Corporation (ABC) launched “al-buraq” – the first retail Shariah-compliant capital-protected equity product in UK
  • A savings product which has a minimum subscription of just £500 and is a Shariah-compliant alternative to a conventional guaranteed equity bond
  • Offered in partnership with the Bank of Ireland which has a long history of providing guaranteed equity bonds to UK consumers.

23 June 2008

LONDON: The London-based ABC International Bank’s Islamic Asset Management (IAM) entity, both of which are subsidiaries of the Bahrain-based consortium bank, Arab Banking Corporation (ABC), has launched the first retail Shariah-compliant capital-protected equity product in the UK under its ‘Alburaq’ brand.

The savings product, which has a minimum subscription of just £500 and is a Shariah-compliant alternative to a conventional guaranteed equity bond, adds to an increasing number of retail Islamic financial offerings in the UK market, which now includes mortgages, Takaful (insurance), pensions, current and deposit accounts and even escrow accounts for money transfers. Other Shariah-compliant retail products in the process of being launched include ISAs (investment savings accounts) and child trust accounts.

The product was structured by ABC International Bank and is offered in partnership with the Bank of Ireland, which has a long history of providing guaranteed equity bonds to UK consumers. ABC GroupABC Group is one of the largest banks in the Arab world with assets totaling around $32.7 billion at the end of December 2007. The group announced net profits of $125 million for the year 2007.

The government of Prime Minister Gordon Brown has been very supportive of developing the Islamic finance sector under the Labor Party’s social and financial inclusion policies. At the same time, it is the stated policy of the UK to develop London into an international hub for Islamic finance, investment and trade. Only yesterday at the Jeddah oil summit, Brown reiterated that oil producers in the GCC states should divert some of their record liquidity surpluses to investment in the developed countries in renewable energy initiatives and other sectors. These funds could be channeled through sovereign wealth funds; through conventional or Islamic capital flows. Bahrain-based Arcapita BankArcapita Bank, for instance, was one of the first Islamic financial institutions to invest in alternative energy in the UK in a wind farm project developed by Innogy.

The UK Treasury and Financial Services Authority (FSA), however, are only too aware that the Islamic finance industry in the UK needs to improve customer access to and awareness of Islamic retail financial products. UK Economic Secretary and City Minister Kitty Ussher, who is effectively in charge of Islamic finance at the treasury, at a meeting of the Islamic Finance Experts Group (IFEG) at the treasury earlier this year, stressed that “the UK is at the forefront of developments in Islamic finance and London continues to seize new opportunities. We have made tremendous inroads in the wholesale markets…But there is also an important domestic market, which we want to be accessible and open.

“There are nearly two million Muslims living in the UK and, thanks in part to legislative changes introduced by this government, the Islamic mortgage market is now worth over £500 million. Going forward, the government and industry want to continue to do all it can to see the retail market flourish and ensure that everyone – regardless of faith – has equal access to competitive financial products,” he said.

ABC International Bank claims that the Alburaq savings plan provides a new way for those wishing to invest in accordance with their faith and provides savers easy exposure to potentially unlimited returns linked to shares in major companies, all with the added comfort of capital protection and Shariah compliance.

According to Keith Leach, head of Alburaq at ABC International Bank, said, “Alburaq is very excited to be the first to bring a Shariah compliant capital protected product to the retail market in the UK. Over the past few years the UK has seen an increase in the availability of Islamic home finance products, but there remains very few options for Muslims wishing to save money in accordance with their religious beliefs. This new account is also an easy way for Muslim savers to gain exposure to the equity markets, in a secure way. While it is considered permissible within Islam for Muslims to own shares, there are restrictions on the type of companies that are considered allowable. The companies must not be over-reliant on debt nor must they be engaged in activities that conflict with the principles of Shariah. Many of these principles will be similar to those required by ethical investors.”

Savers will be able to deposit funds with the Bank of Ireland for five years in an account structured under the Wakala contract. At maturity, savers will receive their initial capital back together with 100 percent of any gain in the performance of a basket of 20 shares in global companies selected from the Dow Jones Islamic Market (DJIM) Titans 100 Index.

Des Crowley, chief executive of the Bank of Ireland UK Financial Services, is confident that “this is a highly innovative product, which is the first of its kind and directly addresses the saving needs of the Muslim community. We have been working with Alburaq for four years providing Islamic Home Finance and (this product) should be seen as the next stage in our development of Shariah compliant products.”

The Alburaq fixed-term savings product offer closes on Sept. 5 2008 and investors will have their funds tied up for five years. The maximum opening deposit is £1 million and the promoters stress that there is no cap on the returns; in other words customer’s enjoy 100 percent of the calculated return.

Capital protected funds are not new in the market. Several institutions – such as HSBC, the National Commercial Bank, Al-Rajhi Bank, Deutsche Bank and others – have launched Shariah-compliant capital protected funds in the Middle East.

While this product is new in the UK, Islamic equity funds per se are not, although they have had a very mixed record. Al-Madina Equity Fund, the Al-Safa Equity Fund and the Parsoli Global Equity Fund, which were launched at different times over the last decade or so, have all dismally failed. The first two were closed soon after they were launched. The latter has failed to make any impact. The reasons are manifold – the wrong promoters, wholly inadequate marketing strategies and resources, and perhaps the wrong timing.

By Mushtak Parker

Written by Suapi Shaffaii

June 24, 2008 at 3:34 am

Al Hilal inaugurated in Abu Dhabi – Fresh thinking inspires “Financial Mall”, innovative products and cutting-edge service

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Points of Essence:

  • Al Hilal Bank is wholly owned by the Abu Dhabi Investment Council, which is an investment body of the Government of Abu Dhabi.
  • The Bank has an authorized capital of over AED 4 billion and is licensed to operate as an Islamic commercial bank.
  • Al Hilal Bank is committed to becoming the region’s leading financial institution, escalating the development of Islamic Banking with a fresh approach to the industry, new technology and service excellence.

Al Hilal, the freshest face in Islamic banking, has been inaugurated under the presence and patronage of His Highness Sheikh Mohammed Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, Deputy Supreme Commander of the UAE Armed Forces and Chairman of the Executive Council and of His Highness HH Sheikh Mansour Bin Zayed Al Nahyan, Minister of Presidential Affairs.

With a clear vision to become the region’s leading financial institution, Al Hilal has developed a completely new approach to Islamic banking by focusing on new products and technology while bringing excellence in service to the forefront.

The stated aim of this new concept is to set high standards of excellence in the UAE’s banking industry, and to maximise stakeholders’ value by acting as a catalyst towards the growth of local and regional economies. By doing so, Al Hilal seeks to offer contemporary and innovative financial services in accordance with Islamic Shari’a.

As a cutting-edge financial institution with a completely new outlook on banking, Al Hilal has placed great emphasis on recruiting the highest calibre of management staff.

His Excellency Eissa Mohamed Al Suwaidi, who serves as a director of the Abu Dhabi Investment Authority, serves as Chairman of Al Hilal Bank. In other roles, he holds a number of directorships in the UAE and in the Arab world.

Meanwhile, with a wealth of industry experience from around the region, Mohamed Jamil Berro heads up as the bank’s Chief Executive Officer; formerly the Global Head at the Personal Banking Group for Arab Bank, he has also been a board member at a number of prestigious institutions, including Arabian Insurance in Lebanon, Arab Islamic International Bank, Al Nisr Insurance and Visa, in Jordan.

The uniqueness of Al Hilal as a banking institution is matched by its revolutionary setting, and the inauguration took place at the main branch at the Al Sahel Tower. This “Financial Mall” is completely groundbreaking in its approach to business and customers.

The first of its kind in the Middle East, Al Hilal has brought a shopping mall feel to consumer banking by bringing its products and services into a retail environment that has been designed to be interactive and engaging for customers.

In this financial mall, customers are given the opportunity to feel the Al Hilal promise of “It’s all about you.” The 360-degree approach to banking here is divided into a variety of sections that specialize in each customer’s requirements.

Each line of business, such as real estate, automotive and personal banking, takes a separate area that is based on a “shop within a mall” concept. There is a main walkway with kiosks and displays with rest areas, similar to a commercial mall. Meanwhile, each product area has its own shop front and entrance archway.

A modular exhibition space has been built in to bring a third dimension to banking, to showcase local artists and act as an event venue.

There is a private area for ladies’ banking with a branded coffee shop and its own version of the art gallery. Children, too, are catered for with their own banking areas that are designed to be engaging and educational, alongside a separate area for youth banking that is sophisticated, trendy and technology driven.

Even a car showroom is available for customers who are interested in automotive finance, and a theatre has been installed for movie presentations, guest speakers and focus groups.

With this unique infrastructure in place, Al Hilal expects to enjoy enormous success very quickly. With its innovative approach to Islamic finance, customer service and location, it has already captured the imagination of customers and soon foresees growth beyond the national boundaries of the UAE.


Written by Suapi Shaffaii

June 23, 2008 at 4:58 am