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Simmons & Simmons expands Dubai office with new finance partner appointment

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Points of Essence:

  • Simmons & Simmons is poised to eye a big chuck of Islamic finance legal jobs in the MENA region with the appointment of a leading banking lawyer, Eric Milde, to head up its new banking and finance practice in Dubai.

Leading banking lawyer Eric Milne has joined the international law firm of Simmons & Simmons as a partner to head up their Banking & Finance practice in the Middle East,and he will be based in Dubai, the firm announced today.

Eric Milne.

‘Eric is a top quality practitioner with a wealth of international and regional experience, his appointment will enable the Dubai office to take advantage of the significant opportunities in the banking and finance sector in this dynamic region. Eric’s expertise helps to consolidate the growth in the finance team and provides strong leadership for our conventional finance practice in particular.’

said Paul Simpson, regional managing partner, Simmons & Simmons.

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Written by Suapi Shaffaii

September 5, 2008 at 11:51 am

Islamic loans drop after sharia ruling

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Points of Essence:

  • Bahrain based prominent Shariah scholars have ruled unlawful Islamic bonds (sukuk) issued by  some banks in the Middle East causing a severe dent by 50% in the sukuk demand from the region ever since.
  • The scholars ruled that many sukuk are are unlawful as they do not involve a transfer of tangible assets. The Accounting & Auditing Organisation for Islamic Financial Institutions (AAIOFI) said only 85% of all Islamic bonds issued by global banks met their rigorous standards earlier this year.
  • The ruling was a strong reminder for banks not to take the Shariah approval for granted.

By Rowena Mason
Last Updated: 8:06pm BST 03/09/2008

Islamic loans thought to be compliant with strict sharia law on investment have dropped by 50pc in the Middle East since some services offered by banks were ruled unlawful by experts.

The Accounting & Auditing Organisation for Islamic Financial Institutions said only 85pc of all Islamic bonds issued by global banks met their rigorous standards earlier this year.

Muslims are not allowed to earn interest on loans or profit from money invested in gambling, alcohol or guns.

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Written by Suapi Shaffaii

September 4, 2008 at 2:40 pm

Malaysian mortgage firm eyes Gulf Islamic market

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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.

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Written by Suapi Shaffaii

August 26, 2008 at 3:08 pm

Islamic finance ‘needs tighter regulation’

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Points of Essence:

  • Dubai Financial Supervisory Authority insisted that tighter regulation for Islamic finance is a must to avoid problems plaguing conventional global financial markets such as the sub-prime crisis. It added that some quarters were confident that it will never fail due to the resilience of Islamic finance since it forbids speculative transactions and requires all deals to be based on underlying assets.
  • DFSA however believed that standards may slide if the industry is caught up in the euphoria of growth and that in fast -growing industry segment,human capital and the infrastructure are sufficient to ensure that the activities are conducted prudently.

by Liau Y-Sing on Monday, 11 August 2008

More regulation is needed in the rapidly growing industry, says Dubai Financial Services Authority. (Photo for illustrative purposes only - Getty Images) ISLAMIC FINANCE: More regulation is needed in the rapidly growing industry, says Dubai Financial Services Authority. (Photo for illustrative purposes only – Getty Images)

The booming Islamic finance industry needs tighter regulation to avoid the problems plaguing conventional global financial markets such as the sub-prime crisis, the Dubai Financial Services Authority said on Monday.

The $900 billion global Islamic finance industry has been touted as a safe haven as conventional markets falter, since it forbids speculative transactions and requires all deals to be based on underlying assets.

“When you’re caught up in the euphoria of growth, sometimes standards slide,” said Michael Zamorski, the Dubai authority’s managing director for supervision told Reuters on the sidelines of an Islamic finance forum.

“Whenever you have a fast-growing industry segment, they need to make sure that their human capital and the infrastructure are sufficient to ensure that the activities are conducted prudently.”

Islamic finance is based on the sharia which forbids investments involving interest payments, contractual uncertainty, gambling and weapons.

Demand for sharia-compliant assets has soared as record energy prices fuel a boom in Middle East petro-dollars and the September 11 attacks create a suspicion among some Muslims towards the West.

Islamic assets are growing at an annual pace of around 20 percent and are set to hit $2 trillion in 2010 from $900 billion now, Ernst & Young forecast in February.

Zamorski said the industry’s main challenges were the lack of sharia scholars and a global uniformity in sharia standards.

“The more harmonisation there is, the better the liquidity of products,” he said, referring to the need to synchronise the differing sharia standards. (Reuters)

Source: Arabian Banking & Finance.

Written by Suapi Shaffaii

August 12, 2008 at 7:33 am

New Islamic banks strain staffing stock

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Points of Essence:

  • The aggressive business expansion plans by Islamic banks and a flurry of new players in the market do not coincide with the scarcity of the Islamic bankers readily available to feed the talent needs.
  • A short term measure to employ conventional bankers with retraining modules being planned for them seemed to have be undertaken.

By Robin Wigglesworth

Published: July 8 2008 03:00 | Last updated: July 8 2008 03:00

When Sheikh Mohammed bin Zayed al Nahyan, the crown prince of Abu Dhabi, attended the opening of the main branch of Al Hilal Bank, the latest in a line of new Islamic banks being set up in the region, he also opened a bank account.

The bank declined to disclose how large the inaugural deposit was, and whether the crown prince’s bank account number was the same as his mobile phone – one of the services on offer at Al Hilal. But the government contributed Dh4bn ($1.1bn) in start-up capital, so the crown prince presumably had first choice of the numbers on offer.

Al Hilal Bank follows on the heels of another government-backed start-up, Dubai’s Noor Islamic Bank, where various government agencies and Dubai dignitaries contributed Dh3bn in initial capital. Both institutions have stressed that this is but the start and have talked of regional and even global ambitions.

“This could get very exciting,” says Sameer Abdi, head of Ernst & Young’s Islamic finance division. “Size matters. The smaller Islamic banks are doing well, but in niche markets and with niche products, not as universal banks.”

Yet the speed and scale of the start-ups is creating risks. The new entrants and the expansion plans of existing large Islamic banks, such as Dubai Islamic Bank, Kuwait Finance House and Al Rajhi Bank in Saudi Arabia, are straining the dwindling stock of bankers familiar with Islamic finance. “The new institutions are struggling, as are the older ones, which are losing talent to the newcomers,” says Mr Abdi.

Al Hilal Bank found it “very, very difficult to recruit” the staff it needed, admits Eissa Mohamed Al Suwaidi, the bank’s chairman. “There was some ‘bartering’ involved.”

Al Hilal and other banks have thus been forced to recruit staff from conventional banks, both regional and international, and to retrain them in the principles of sharia -compliant finance.

The global potential of the Islamic banking market is “conservatively” estimated at $4,000bn, according to Moody’s Investor Service, while the current market is estimated at only $700bn, most of it in the Gulf. With such potential it becomes clearer why governments, eager to please their Muslim populace, are encouraging more banks to start up and expand outside domestic markets.

But the Islamic banking industry brings with it a new set of risks for managers to manage. The institutions are hamstrung by the lack of a viable Islamic interbank market. While deposits may be redeemed immediately, Islamic bank assets are usually backed by real estate, and are therefore illiquid. This forces Islamic banks to hold more cash or liquid assets than conventional peers to pare illiquidity risks.

Al Hilal and Noor Islamic Bank are in a good position to attract staff and ease liquidity requirements thanks to the financial muscle of their backers, the Abu Dhabi and Dubai governments.

Due to this, they are likely to embark on an aggressive acquisition spree to expand in the region and elsewhere, says Mr Abdi. “Where there is a will there is a way, so they [the governments] might have to find their cheque books. A $20bn-$30bn bank in the next two or three years might be possible.”

Noor Islamic Bank and Al Hilal are not the only contenders. In Saudi Arabia, Alinma Bank has launched with SAR15bn ($4bn) in capital raised in an initial public offering. And in Bahrain, Saleh Kamel, who controls the Dallah Albaraka Banking Group, plans to found an $11bn bank called Ummar Bank next year.

Banks with such hefty balance sheets may not only gain more retail customers through extensive branch networks, which are often capped in the Gulf for international banks such as Standard Chartered and HSBC, but also capture a larger slice of the vast infrastructure finance projects planned in the region.

“There’s an indirect but powerful link between the Islamic financial industry and the performance of the oil market,” says Anouar Hassoune, a banking analyst at Moody’s. “As long as oil remains expensive, which is our base-case scenario, Islamic banking will keep on growing successfully.”

Source: The Financial Times

Written by Suapi Shaffaii

July 9, 2008 at 3:25 am

Posted in Human Talent

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