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Posts Tagged ‘Financial Crisis

Qatar to prop up its banking system

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Points of Essence:

  • Qatari Government is on the offensive to boost a stalling financial system in the country to avert impact from the global financial crisis. The investment fund bail-out from 7 local banks has been in the pipe line to spur liquidity in the banking system and ensure solvency of the lender institutions. The International Herald Tribune has the report.

DUBAI: Qatari shares soared Monday after the government said it would buy investment funds from banks to help shield the financial system from the global credit crisis.

“Such procedures reflect the due concern of the government in the banking sector,” the government said.

Prime Minister Hamad bin Jasim bin Jaber of Qatar announced Monday that the government would buy investment funds owned by seven local banks to protect lenders after the benchmark stock index dropped 31 percent this year, ranking it among the world’s 10 worst performers with Iceland, Ukraine and Romania.

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Written by Suapi Shaffaii

March 10, 2009 at 12:47 pm

Opportunities lurk in financial gloom

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Points of Essence:

  • Hong Kong sees every opportunity to come its way despite the worrying global financial meltdown. It sets to boost its financial hub status by going aggresively to woo Islamic finance players to the island city. Providing appropriate tax incentives to bolster growth of the newest industry, other institutional and regulatory framework will certainly guide Hong Kong to reach out to a larger Islamic financial community. The address of Hong Kong’s Chief Executive says it all.

Chief Executive Donald Tsang

Donald Tsang The Asian Financial Forum was launched in 2007, partly to celebrate the 10th anniversary of Hong Kong’s reunification with the Mainland of China, and partly to address the challenges of a rapidly changing economic environment in Asia. At that time the sub-prime lending problem in the US was beginning to take hold, but no one could have predicted how deeply rooted the problem was or how quickly things would unravel in what some people like to describe as a “flat” world.

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Written by Suapi Shaffaii

January 21, 2009 at 4:33 pm

Islamic Banking in 2009, industry at a crossroads

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Points of Essence:

  • Islamic finance is facing a crisis of its own. The global financial downturn may have dragged down the industry to some extent but the most challenging thing is how to package Islamic financial products in accordance to the true Islamic values. The conventional product adaptation may have to take a back seat to spur innovation in Islamic finance for the Islamic financial industry’s survival.  Ameinfo has the report.

The drop in the issuance of Sukuk proved that Islamic banks could not escape from the financial crisis. The industry might therefore have to go back to its roots in 2009.

Islamic banks may have to adopt a 'back to basics' approach in 2009

Islamic banks may have to adopt a 'back to basics' approach in 2009

Noor Investment’s press conference on the sixth of January was set up to announce the creation of Noor Takaful, the latest Islamic insurance firm.

But in fact, Noor had to two messages, with the second no less important than the first: Noor Islamic Bank (NIB) will put its planned expansion abroad on hold in order to focus more on domestic affairs.

NIB was created almost a year ago, and it was announced at the same place, in the 27th floor ballroom of the Burj Al Arab.

But twelve months ago the future was looking much brighter. Stock indices were advancing on all fronts in the GCC. Conventional banking got into trouble step by step, but Islamic Finance did not follow.

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Written by Suapi Shaffaii

January 13, 2009 at 11:15 am

Moody’s sees slower Islamic banking growth

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Points of Essence:

  • Moody’s predicted a slower growth for Islamic banks despite them showing some resistance to the global financial crisis. The available data on the financial performance and liquidity in the 4th Q suggested a slow down next year. The fact that Islamic banking does not work in isolation from the crisis prone financial system, whatever issues boggling the financial system, the Islamic banking may be as well implicated. Zawya has the report.

Saturday, Nov 29, 2008

Gulf News

Dubai: Gulf-based Islamic banks, which have displayed resilience amid the current global financial turmoil, will see a slowdown in asset growth next year, ratings agency Moody’s said in a report.

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Written by Suapi Shaffaii

November 29, 2008 at 10:00 pm

Lessons Islamic finance can learn from current crisis

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Points of Essence:

  • Central Bank of Bahrain has urged the Islamic finance stakeholders to learn from the current financial crisis despite Islamic finance being sheltered from the impact. The in-built crisis resilient elements i.e risk diversification, effective liquidity management and sound corporate governance will need to be installed to ensure a stable Islamic financial system.

By Habib Toumi, Bureau Chief
Published: November 25, 2008, 23:15

Manama: The Islamic financial industry must remember the importance of risk diversification, good liquidity management, and sound corporate governance if it is to continue to enjoy a framework for stability against the background of global financial turmoil, the governor of Bahrain Central Bank has warned.

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Written by Suapi Shaffaii

November 29, 2008 at 12:03 am

Islamic banking: Sharia-compliant institutions buck trend

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Points of Essence:

  • Islamic banks in the UK continues to record growth while their conventional counterparts are in shambles in the aftermath of the credit crisis. Financial Times has the report.

By David Oakley, Capital Markets Correspondent

The banking community in the City of London has been hit hard by the economic crisis. But one area of the UK’s financial sector has emerged relatively unscathed from the credit crunch – the new Islamic banks.

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Written by Suapi Shaffaii

November 25, 2008 at 1:23 am

Posted in General Issue

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UAE intervenes in merger as property woes mount

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Points of Essence:

  • As the real estates in Dubai plunged deeper into crisis, the Government of the United Arab Emirates had to intervene in the recently announced merger of Amlak and Tamweel, the UAE’s largest mortgage lenders.  The Government-owned Real Estate Bank was set up to address the issues of funding, liquidity and solvency faced by the two troubled institutions. The new Islamic bank bank will boost real estate sector in the UAE as more housing loans will reach the UAE nationals. The bank can now solicit for deposits from the public and have access to the federal funding, the privileges mortgage lenders are not allowed. Reuters has the report.

By Lin Noueihed

DUBAI (Reuters) – Two of the United Arab Emirates’ largest mortgage lenders, already on track to merge, will be brought under a government-owned bank, the UAE finance ministry said on Sunday, in the first sign of federal government intervention in Dubai’s troubled property sector.

Trading in both Amlak AMLK.DU and Tamweel TAML.DU, which have been struggling amid the global credit crunch, was suspended after the finance ministry said it would supervise their merger under the government’s Real Estate Bank to ensure a fair valuation and protect shareholders.

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Written by Suapi Shaffaii

November 24, 2008 at 6:14 pm

Dr M: Look at All Ideas Including Islamic Finance

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Points of Essence:

  • Malaysian former premier, Tun Dr Mahathir Mohamed suggested that the current global financial crisis should be addressed to its core that what have been done so far were merely patchworks. Insisted that the current financial system needs reform, Tun Dr Mahathir urged all ideas to be adopted and adapted including the workings of Islamic finance to create a better system. Istock analayst has the report.

By Presenna Nambiar

THE world should not dismiss any idea, even that of adopting Islamic banking, in the process of trying to solve the systemic collapse of the global banking system, says former premier Tun Dr Mahathir Mohamad.

“We should examine all ideas, including how Islamic banking can help, not taken fully perhaps, but how it can be adopted and adapted, to create a better, more just system not so open to abuses,” he said.

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Written by Suapi Shaffaii

November 22, 2008 at 10:29 pm

Islamic finance: funding the ‘real economy’

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Points of Essence:

  • An opportunity presents itself for Islamic finance in this time of crisis as the ever prudent alternative finance is proven to be be resilient and can withstand the shock of a crisis, thanks to its strict Shariah compliance elements which prohibit deals of speculative nature and insist on clear assets ownership prior to making any transactions. With the heads are now turning to Islamic finance, efforts must be stepped up to promote Islamic finance. Unfortunately this is not the case. Insead has the report.

by Saher Latif, Kuala Lumpur

Daud Vicary Abdullah

Daud Vicary Abdullah

The global financial crisis presents an opportunity for the Islamic finance industry to show its credentials, say several practitioners in the field. Speaking to INSEAD Knowledge at the 6th International Islamic Finance Conference here, Daud Vicary Abdullah, COO of Asian Finance Bank, says “the biggest opportunity really is around getting the messages across about the value-proposition of Islamic products and the way in which Islamic finance is done.”

Vaseehar Hassan Abdul Razack

Vaseehar Hassan Abdul Razack

Wary investors would perhaps find the more prudent nature of Islamic financing attractive. Based on the principles of Shariah or Islamic law, Islamic banks are not permitted to charge interest; instead they form a partnership with their customer to invest in assets, and share the profits. As Vaseehar Hassan, Abdul Razack, chairman of Unicorn International Islamic Bank told INSEAD Knowledge in an interview on the sidelines of the school’s Leadership Summit Asia 2008, Islamic banks “will follow through exactly what you want to do and be your partner Read the rest of this entry »

Written by Suapi Shaffaii

November 22, 2008 at 10:14 pm

Sukuk market’s recovery not likely until H2 next year; volumes to stay

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Points of Essence:

  • The strong tide against sukuk may not be over yet as it still faces the challenging battle ahead. It is not expected to ride out of the slump in the second half of 2009 as the global credit crisis worsens.
  • CIMB Islamic Bank has re-prioritized its banking business to consumer banking due to the economic crunch and minimize its investment activities to project more growth in the upcoming years.

KUALA LUMPUR: Demand for Islamic bonds, or sukuk, may not recover until the second half of 2009 at the earliest, as the global credit crunch crimps appetite for such financing, the head of the world’s largest sukuk arranger has said.

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Written by Suapi Shaffaii

November 22, 2008 at 9:01 pm

Malaysians to study reforms of international financial system

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Points of Essence:

  • Malaysian central bank’s governor, Dr. Zeti Akhtar Aziz and economist Jomo Sundaram have been appointed to a high level panel under the auspices of the United Nations to study the current state of the global financial system and its machineries. This is to mobilize a coordinated effort at the international level to address the current global financial crisis. The Star has the report.

Zeti and Jomo appointed to UN taskforce

By JOSEPH CHIN

PETALING JAYA: Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz and Malaysian economist Jomo Kwame Sundaram have been appointed members of a high-level United Nations taskforce that would examine possible reforms of the global financial system.

The taskforce was formed as a result of the current global economic turmoil.

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Written by Suapi Shaffaii

November 16, 2008 at 9:06 pm

Malaysian PM: Financial crisis a chance for Islamic banking to shine

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Points of Essence:

  • The global financial crisis has sprung two faced effects. Whilst it was considered a misfortune to the conventional financial system fraternity, it has been smooth sailing for Islamic finance. The fact that it withstood the financial crisis is really an eye  opener. There’s something about Islamic finance that is worth checking out. Malaysia apparently shares this sentiment. The Star has the report.

KUALA LUMPUR: The global financial meltdown stemming from the US subprime woes actually poses an opportunity for the Islamic finance system to demonstrate its uniqueness, said Prime Minister Datuk Seri Abdullah Ahmad Badawi.

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Written by Suapi Shaffaii

November 12, 2008 at 9:22 pm

Financial Times: New Islamic banks grow steadily in UK

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Points of Essence:

  • Amidst global economic uncertainty, three Islamic banks in the UK are reportedly continue to grow. This is largely contributed to to the strict Islamic banking principles that shunned excessive speculation and highly leveraged activities that brought down reputable conventional financial institutions. Financial Times reported.

By David Oakley, Capital Markets Correspondent

Launching a bank in the face of the worst financial crisis in almost 80 years does not appear to make business sense.

But that is precisely what investors in two of Britain’s five Islamic banks did as demand continued to grow in Europe for financial products that avoided paying interest, in line with strict religious rules. These products pay profits from an underlying business or rent from a building used as collateral to raise money.

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Written by Suapi Shaffaii

November 10, 2008 at 11:24 am

Islamic banks face property prices blow

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Points of Essence:

  • Though not directly impacted by the financial turmoil, Islamic banks cannot escape from feeling the pinch as their business modules heavily hinged on the soaring prices of real estates and performance of the commodities and stock markets. Gulf Daily News has the story.

DUBAI: Islamic banks and financial institutions are not isolated from a global credit crisis, which is plaguing conventional lenders, although they have been barely bruised so far, bankers said.

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Written by Suapi Shaffaii

November 7, 2008 at 11:51 am

Structured derivative products to cushion impact of credit crisis

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Points of Essence:

  • Options market is being developed in Kuwait to bring stability to the GCC equity markets in this period of uncertainty as it will address investors’ liquidity concerns and provide investors with the ability to maneuver the markets.
  • Believed to be the cause for the current financial turmoil, structured derivatives products have since put under an intense scrutiny. However, products with solid credit origination and valuation standards like the Shariah-compliant financial instruments and structured products, will gain more credibility. This is in addition to stricter controls from regulators. Put options and ‘Arboun’ Contract were being developed to encompass all these features.

By Querubin J. Minas Saudi Gazette JEDDAH – Structured derivative products are currently in spotlight for their role in elevating the present global credit crisis, said Hussein Zeineddin, assistant vice president of the Equity Derivatives and Structured Products Department in Kuwait Financial Centre S.A.K. (Markaz), one of the leading investment banking and asset management companies in the Middle East, recently.

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Written by Suapi Shaffaii

November 6, 2008 at 11:52 am

Sharia shares ‘will be hit by slowdown’ – S&P

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Points of Essence:

  • S&P opined that Shariah stocks will not be spared from the economic crisis due to larger exposures to  the material and energy companies especially in the 3rd quarter of the year. They were saved in the first half of the year by a minimal exposure to the financial sector.
Shariah-compliant shares are just as likely to be hit by the global downturn as other types of shares. (Getty Images)

Shariah-compliant shares are just as likely to be hit by the global downturn as other types of shares

By Soren Billing

Sharia-compliant stocks are just as likely to be hit by a global economic slowdown as other shares are, the vice president of Global Equities at Standard & Poor’s Index Services has said.

“Sharia is not intended to be an outperformance strategy, it’s supposed to be a strategy as per religious beliefs and also as per good corporate governance,” Alka Banerjee said. “But that doesn’t necessarily translate into outperformance.”

Sharia compliant stocks were largely spared from the financial turmoil in the first half of the year due to their low exposure to the Read the rest of this entry »

Written by Suapi Shaffaii

November 5, 2008 at 11:11 pm