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1100 Cybersecurity UAE eases rules Sukuk sector Sovereign
1050 1,035.42 locks down for SME sector a sees surge Sukuk:
1,036.02 Islamic fine opportunity for as second Togo makes
950 0.05% banking digital Islamic finance?..7 half looks headway...13
900 innovation...6 promising...8

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COVER STORY 27th July 2016 (Volume 13 Issue 30)

Irans inward investment environment:

Will a watched pot never boil?
A year has passed since the Iran nuclear is rife and dissatisfaction appears to clear guidance from the US as to what
deal and the lifting of international be spreading within the country in they can and cant do, agreed Kiyan
sanctions but where is the flood of April, US Secretary of State John Kerry Zandiyeh, the portfolio manager for
inward investment that the economy met with Iranian Foreign Minister Sturgeon Capitals Iran Fund. The
expected to see? Rumors have emerged Javad Zarif to discuss concerns over the Iranians see this as a stumbling block
of dissatisfaction within Iran at the implementation of the JCPOA, after Iran to getting benefit from the lifting of
slow progress of economic change, voiced frustration at the slow pace of the sanctions and they are exerting a lot
while foreign investors remain wary financial sanctions relief promised by of pressure to change the situation.
of the market and uncertainty over US the deal. Irans central bank governor, However, he warns that: There still is
secondary sanctions continues to inhibit Valiollah Seif, has already warned a level of mistrust between the Iranians
activity. LAUREN MCAUGHTRY takes that the agreement could be at risk if and their counterparts to the JCPOA, and
a closer look at what is really happening the US doesnt act to facilitate Irans vice-versa, with certain factions on both
in the worlds largest Islamic economy. reintegration into the global markets. sides having an interest in the deal not
being fully implemented.
Iranian concerns Slow progress
The Joint Comprehensive Plan of Action However, observers note that a This divergence between expectation
(JCPOA), an international agreement transformation of this magnitude will and reality has been reflected in the
on the nuclear program of Iran, always take time. Upon the lifting recent volatility of the market. Between
was agreed in Vienna on the of sanctions, the sentiment January (when sanctions were lifted) and
14th July 2015 and EU and in Iran arguably was one April, the market rallied just above 30%,
primary US sanctions of over-excitement, with noted Kiyan. However since then till
were lifted the following expectations of immediate the end of June, it fell 10%. So from initial
January. After an initial benefits, explained Clemente high hopes, we saw a dramatic lowering
surge of excitement Capello, the founder and of expectations.
however, the optimism chief investment ocer of
began to slow. US banks UK-based asset management Positive steps
and citizens are still firm Sturgeon Capital. The Recent months have brought good news,
restricted from engaging reality is, these benefits take however and the market is looking
with Iran, and the country a while to play out, and optimistic. Foreign direct investment
remains unable to process as such expectations are into Iran rose to US$4.5 billion in the
international financial adjusting. first quarter of this year the highest
transactions or repatriate growth in over a decade, according to fDi
assets from overseas What the European Intelligence.
accounts. Uncertainty banks are looking for is
continued on page 3

Opening doors to
PARTNER WITH US new opportunities
Contact for more information: Franois-Xavier Chenhalls-Walker Email:

Volume 13 Issue 30
DEALS 141% since 2013 with
15% of new financing
Amana Takaful Life floats
IPO to overwhelming
IFN Rapids ................................................... ..2 originating in January-May demand
Besraya (M)s Sukuk
IFN Reports: Mudarabah due and 2016 period

Cybersecurity locks down Islamic banking

payable on 28th July Regulator cancels the RATINGS
Mobarakeh Steel Company banking license of Bank
digital innovation UAE eases rules for SME Capital Intelligence arms
raises IRR1 trillion (US$33.2 Asya
Kuwait Finance Houses
sector a fine opportunity for Islamic finance? million) from Sukuk sale Clyde & Co looks to financial strength rating at
Sukuk sector sees surge as second half looks Togo launches XOF150 Southeast Asia for Islamic BBB
billion (US$250.99 million) expansion
promising Indonesia aims to enhance role Islamic International
10-year Sukuk Rating Agency assigns
of Shariah investment managers through new

rules Company Focus: Amana Takaful Life

AEON Credit issues ASSET BBB rating to AlBaraka
Insurance Company with a
expanding Takaful business in Sri Lanka with
RM20 million (US$4.92
million) one-month Sukuk MANAGEMENT stable outlook
Murabahah Bursa Malaysia to enhance RAM rearms AA2/
IPO oering The IDB to assist OIC countries
Jambatan Kedua issues framework for collective Positive rating on Encorp
to capture e-commerce opportunities through
RM2.6 billion (US$636.7 investment scheme; seeks Systembilts Sukuk
new global initiative Pakistans senate widens million) Sukuk Murabahah public feedback on key Murabahah
in multiple tenors proposals
regulations and facilitates growth of Shariah West Coast Expressway
Indonesian government AMMB Holdings acquires maintains AAA Sukuk
compliant financial products with amended bill
targets IDR4 trillion 100% shareholding ratings
Arab Monetary Fund aligning with global Islamic (US$305.6 million) via in AmIslamic Funds
Islamic International
finance bodies to facilitate integration of Shariah sovereign Sukuk auction Management and
Rating Agency withdraws
AmFunds Management
finance in Arab world Sovereign Sukuk: Togo Malaysias GII Murabahah Bank Asyas ratings
issuance oversubscribed Securities Commission
makes headway .......................................... 6 Moodys arms A3 long-
2.45 times Malaysia amends unit trust
term ratings of Export-
regulatory framework; new
Import Bank of Malaysia
IFN Analyses: NEWS initiatives to take eect on
15th August
(EXIM) Sukuk Malaysia
Palestine: Path to recovery .................................. 14 Uganda to introduce Rating agencies evaluate
Securities and Exchange
Islamic microfinancing by Turkey post-coup;
Islamic syndicated financing slowing down in Commission of
2017 downside risks for banks
Pakistan introduces new
the first half of 2016 ................................... 15 increase
Standard Bank to join calculation and disclosure
Case Study: Bangladeshs Islamic requirements for asset Omani banks credit growth
MB Holdings maiden Sukuk ..................... 16 banking community; central management companies materially outpaces deposit
bank approves license growth a credit negative,

Thinking big .............................................. 17

Bank Islam Malaysia inks TAKAFUL says Moodys

agreement to finance two Axiata Groups US$500

Great Eastern Takaful to
The blunt end ............................................. 18 Waqf land projects million Sukuk facility
launch new products
receives definitive Baa2
Country Correspondent: Bank Negara Malaysia to Capital Financial rating
Kazakhstan................................................. 19
release fintech regulatory Indonesia to set up Takaful
framework in fourth
quarter of 2016
unit and venture capital
fund with fresh capital from
Sector Feature: Alliance Financial Group its IPO MCB Bank appoints new
considering merging with director
Understanding syndicated finance ............. 20 Qatar Central Bank issues
parent company of Alliance circular allowing Takaful Clean Energy Business
Islamic Finance news ................................... 21
Islamic Bank and insurance operators to Council appoints new chair
Deal Tracker ................................................. 28 impose higher premium on and vice-chair; adds new
Bank Muamalat Malaysia
REDmoney Shariah Indexes ...................... 29 launches socially responsible risky drivers members to Green Sukuk
debit card; to contribute 20% Working Group
Eurekahedge Funds Tables........................ 31 Al Alamiya for
of debit card interchange fee Cooperative Insurance Four executive vice-
Dealogic League Tables .............................. 33 to Waqf collection Company receives approval presidents of Turkiye
REDmoney Events ...................................... 37 Al Rayan Banks expat from Shariyah Review Finans resign
property financing surges Bureau
Subscription Contact................................... 37

Disclaimer: IFN invites leading practitioners and academics to contribute short reports each week. Whilst we have used our best
endeavors and eorts to ensure the accuracy of the contents we do not hold out or represent that the respective opinions are
accurate and therefore shall not be held responsible for any inaccuracies. Contents and copyright remain with REDmoney.

2 27th July 2016


Irans inward investment environment: Will a watched pot never boil?

Continued from page 1

Although the volumes do not yet meet legal and regulatory framework is simply the relationships to penetrate, agreed
the stated government ambitions of not yet advanced enough to accommodate Abradat Kamalpour, a finance partner
US$30-50 billion in foreign capital per the influx. The barriers to entry are and head of the newly-created Iran
year, progress has been positive. KPMG notable foreigners need handholding desk at Ashurst. However, those that
recently released a report that found 12 and guidance, explained Payam. The have the relationships and the language
sectors for inward investment worth an integration of Iran back into the global and the cultural understanding are
estimated US$250 billion, while inward economy will take time. Currently, there doing very well. We are already deeply
FDI projects jumped from just three in is a rather [large] gap between Western involved in a number of transactions.
2013 to nine in 2015. regulatory standards and regulations
in Iran. SWIFT is on, but correspondent As impetus builds, there is increasing
banking relationships are a stumbling pressure on the US to clarify the situation
The block today. There are a lot of challenges and remove uncertainty. Right now
and most foreigners who want to work the restrictions are just a self-inflicted
expectation with or invest in Iran will need the help disadvantage by the US, said Capello.
and guidance of local experts. Its not getting anywhere in terms of its
that it would take stated political objectives, which are to
A question of perception create better understanding between the
off overnight after While there are very real obstacles to west and Iran. The sanctions are really

sanctions were development, much of the white noise just making life dicult for banks.
in the market appears to be a question
lifted was always of perception. There are two types However, progress is gradually taking
of challenges real and perceived, place. There is a lot of momentum

unrealistic these commented Capello. From an

infrastructure standpoint the market is
building up, noted Abradat. The
expectation that it would take o

things well developed. We have more than a

decade of experience in frontier markets
overnight after sanctions were lifted was
always unrealistic these things take

take time and Iran is the most developmentally

sound, liquid, diverse market that we
time. Any investor that wants to get in
needs to go and understand the market
have dealt with, so concerns around that first, meet people, understand the legal
Siemens in March signed a preliminary are misguided. The main concern for us framework. No one is going to put half
rail deal for US$2.3 billion while Airbus is that western and international banks a billion dollars in tomorrow. But the
and Boeing have reportedly received are still not keen to transact Iranian due diligence trips and the compliance
orders for US$27 billion and US$17.6 business because they are afraid of investigations are happening now.
billion respectively; and talks this month sanctions. Their compliance departments
with Japans Mitsui Chemicals and have not been updated and their internal A land of opportunity
French oil giant Total are expected to regulations prevent them from having For those early movers brave enough to
bring in a further US$60 billion in foreign anything to do with Iran. That has been dip a toe in the waters, the rewards look
investment. the biggest challenge for everybody. The to be worth the risk. Valuations are cheap,
most frustrating point is that it is not a with average PE ratios standing around
On the banking side, a report from the rational conversation, but a dogmatic 7, according to Grion Capital. Average
Financial Times claims that the financial one. dividends for the broader market are
services sector has also seen inward around 11-12% around 30-50% cheaper
investment of over US$60 billion. There
are current liquidity issues but once Moving forward than emerging markets and frontier
So how do you overcome these issues? markets, pointed out Payam. We think
these are resolved, banks will be the big this discount will close in the years ahead
winners. The Iranian economy is bank- Reputation is important, as is working
with a local partner. One of the so first movers will have an advantage.
based and when trade finance and LCs
return, you will find the better banks first things that Sturgeon
Capital did in the asset The returns are already validating
will have a very high return on equity entry. Between its launch on
and will benefit from that growth story, management space was
to set up an institutional the 4th April 2016 to the 28th
pointed out Payam Malayeri, the head June, Grion Capitals initial
of asset management at Grion Capital, grade, very transparent
and scalable platform for euro-denominated share series
a Cayman Islands-registered asset gained 3.6% despite a market
management and private equity group governance and industry
best standards. We spend correction of 8.2% in the TEDPIX
and one of the few investment firms fully (the main index of the Tehran
focused on the Iranian market. a lot of time on sanctions
compliance and what that Stock Exchange) and has thus far
means in terms of how you materially outperformed the
A challenging market invest, noted Payam. industry benchmark. We
All this sounds promising so whats expect our AUM [assets under
the bad news? Most significantly, Its a very hard market management] to be between
practitioners warn that Irans financial, for those that dont have continued on page 4

3 27th July 2016


Irans inward investment environment: Will a watched pot never boil?

Continued from page 3

EUR50-60 million (US$54.86- due diligence takes longer, changing perceptions. Everything in
65.83 million) by December but they are getting there Irans financial market must be Shariah
2016 year-end, noted Payam. slowly. compliant. Shariah compliance is done
Sturgeon has seen a similar based on the models developed in Iran
trajectory. Performance And while the standard and signed o by the relevant Shariah
has been positive from intelligence says that scholars in Iran. Other players in the
February to June, we are up US citizens are banned market will need to adapt to understand
13% in euro terms while the from engaging in Iran, their way of transacting, he explained.
market is up about 8%, IFN has learned that the You have the GCC model and the
Capello told IFN. opportunities may Malaysian model. Now there is another
nevertheless be too model in the market, and Iran has the
The improving tempting for some largest amount of Islamic banking assets
macroeconomic investors to pass up. in the world so it will behoove the
environment should only help matters We have seen dramatic interest from industry to take notice. If people want to
last month the countrys inflation high-net-worth investors and family access the Iranian market, they will need
rate dropped to single digits (9.7%) for oces including Americans, to understand how it works.
the first time in 25 years, which means revealed Capello. Americans are not
riskier assets like equity will benefit. allowed to decide whether to invest in Investors are already aware of the
The Tehran Stock Exchange in July Iran, but there are ways around that specific requirements of the Iranian
announced its approval by the World there are exceptions for certain types economy, and while not all funds
Federation of Exchanges, which should of investors. Without going into detail, investing into Iran define themselves
bring another boost. But its not just the we have found a lot of interest from as Shariah compliant to their investors,
equity markets that are tempting foreign investors that were a combination of they believe that they oer a genuinely
investors. At the moment, you can also two groups: [those with] 1) a certain Islamic opportunity. All investments in
invest in government treasury bills, amount of sophistication and 2) limited Iran are Shariah compliant. All the fixed
which are giving yields north of 20% bureaucracy in their organization. income is Islamic, so they all tick the
very attractive in a world where most Islamic boxes. It is an Islamic country
sovereign bonds are bringing in zero, so there are no non-Islamic sectors,
said Payam. Its a great choice for
yield-hungry investors and it also brings
Government Payam explained to IFN. The majority
of investors have been conventional
diversification to a portfolio. treasury bills investors looking for returns. However,
we have also talked to investors who
The key benefit of Iran is its already are giving yields focus on the Islamic side, and want

north of 20%
developed and diversified economy exposure to Iran because it complies
only around 10-20% of its GDP with their requirements. Even those

very attractive in a
comes from hydrocarbons, compared asset managers who have not yet
with around 45% for Saudi Arabia, for explored Shariah compliant options
example. Iran is not just an oil and
gas story. There are deals being done world where most are, through the opportunities in Iran,
learning more about the potential within
on solar, rail, auto manufacturing,
technology, mining and minerals, sovereign bonds are the Islamic market. Our mandate is
more generic, commented Capello.
pharmaceutical, technology and
aviation, noted Abradat. Its just a
bringing in We are at a stage where we would be
interested to learn more about Islamic
matter of time before the big guys can
start playing ball with confidence.
zero investors but we are still in the early

Islamic opportunity
Investor interest The elephant in the room is of course Looking ahead
So who has been brave enough to take the impact that all this interest So where next? Instead of being a
the first plunge? Unsurprisingly, the and activity could have on watched pot that never boils, Iran
first movers have been high-net-worth the Islamic finance industry. appears to be transforming before
investors and family oces. They are There have been concerns our very eyes into a vibrant and
the more intrepid and nimble investors that while Iran is ostensibly attractive investment destination
with less red tape and are faster to the worlds biggest Islamic and key players are starting
get comfortable, commented Payam. economy, its systems are to sit up and take notice. The
However, the investor profile is already so dierent that this may bigger financial institutions are
changing. We do have institutional not have a notable impact about six months to a year away
investors in our fund already and by on industry development. from entering the market and
the end of the year they will be the However, Abradat a lot of them are just getting
majority, he noted. They have taken believes that it is
more time to come online because their instead an issue of continued on page 5

4 27th July 2016


Irans inward investment

environment: Will a
watched pot never boil?
Continued from page 4

ready now, said Abradat. There is

a lot of interest in the Iranian market
from Asia especially Southeast
Asia as well as Japanese and Korean
institutions and these players are
going in aggressively and signing deals.
There are also a lot of European banks
already doing business there, and since
launching our Iran desk weve had a few
global banks approach us to make plans.
A few GCC entities are very interested
but they are in the early stages.

Its just a
matter of time
before the big guys
can start playing #IFNPakistan16
ball with
conidence IFN Pakistan Forum
26th September 2016
Learning Resource Centre,
And of course, all this interest will only The State Bank of Pakistan, Karachi
have a positive impact on the Shariah
compliant financial framework. These The Islamic banking industry in Pakistan has progressed considerably since its introduction to the South Asian
banks will have to develop Islamic nation, with its share reaching almost 12% of the overall banking industry in terms of its asset size. The branch
finance capabilities to get involved in network of Islamic banking is continuously expanding throughout the country at a rapid pace, and the strong
Iran, and that will act as a catalyst for demand for Shariah compliant banking products is reflective of the State Bank of Pakistan(SBP)s goal of having a
the global industry, Abradat confirmed. 20% market share by 2020.
The institutions that are getting in
now and building the relationships and The SBP and the Securities and Exchange Commission of Pakistan have played key roles in driving the growth of
taking measured and calculated steps to Islamic finance in the country by creating a facilitative environment. As a result, both the regulators initiatives over
move in will be in a very good position. the years have led to the stability and resilience of the Islamic finance industry, making it a worthy consideration to
The global Islamic finance industry the conventional finance and banking activities among investors and banking consumers.
could do with a bit more energy. Ever
since the financial crisis, innovation has With its population slowly but surely becoming aware of the competitive depth of Islamic finance, Pakistan remains
slowed and it needs a bit of impetus. a vital market in the eyes of investors in the growing industry.
Once Iran opens up, it will act as a
catalyst for the market, and it will be a
vital cog in the global wheel. REGISTER FREE NOW
At the end of the day, however, the
appeal will be in the performance and
institutions will follow where investors EXCLUSIVE LEAD PARTNER ACCREDITATION PARTNER
forge a trail. In a world where returns
are going down and investors are
hungry for yield, Iran looks very
attractive, concluded Payam. It is a
classic case of risk versus rewards but
the rewards are underestimated and the
risk is overstated. With time, that will
reverse. W: | E: | T: 603 2162 7800 ext. 43 | Twitter : #IFNPakistan16

5 27th July 2016


Cybersecurity locks down Islamic banking digital innovation

It is the digital era and banks,
including if not especially Islamic
banks, stand to lose out should they
not adapt and implement eective
digitization strategies. In previous IFN
coverage on the digital race, we have
focused primarily on the economics of
digitalization as the main impediment
for many Islamic banks; VINEETA
TAN this week however highlights
another aspect that could be a hurdle
for financial institutions to adapt in a
period of disruption.

Not moving fast enough

Over the next three years, it is likely
that four out of 10 retail banks would be
displaced by digital disruption this is
what is projected by technology services
provider Cisco which also posited
that retail banks are not optimizing the deep pockets of their conventional These fears have translated into the rate
their earning potential through digital parent), it is generally a struggle for of digital adoption by banks (or lack
services. It is estimated that consumer Shariah banks to develop such digital thereof): an overwhelming majority
banks have the potential to realize capabilities. of the 1,014 senior finance and line-of-
US$405.3 billion over the 2015-17 period, business executives worldwide surveyed
yet in 2015, less than one-third (29%) by Cisco attributed cybersecurity risks
managed to capture that opportunity; 60% are and threats as a major hindrance to
digital innovation in their organizations.
reluctant to
and as a result of not digitizing more
fully, a total of US$144 billion globally in The findings are alarming: 60%
are reluctant to jump on the digital
jump on the digital
opportunities have escaped retail banks.
bandwagon due to the perceived risks
while 39% admitted that mission-critical
With the pressing realities of agile
fintech disruptors, digital consumer bandwagon due to initiatives have been halted due to such
demands and complex regulatory
hurdles, the question of how retail banks the perceived
The Middle East, home to a large
can compete and capture the revenue
opportunity at hand has come to the risks concentration of Islamic financial
fore, commented Mike Weston, the institutions, is more susceptible to
vice-president of Cisco Middle East. such attacks. In 2015, Middle Eastern
Too many banks are moving slowly companies suered more losses than
Cost aside however, there is another
or not at all. By waiting to digitize their any other regions as a result of cyber
lingering issue that these banks face: the
business, or by delaying new technology incidents; a 2016 PwC report found 56%
threat of cyber attacks. Cyber attacks
initiatives, banks risk not only missing losing more than US$500,000 compared
are grave issues in the financial world
out on the potential value at stake, but with 33% globally, and 13% losing at
and if hackers are able to infiltrate and
are actually at risk for being put out of least three working days, compared
steal from central banks and mega
business altogether. with 9% globally. These cyber criminal
banks (US$81 million was stolen from
activities have created a booming market
Bangladeshs apex bank in February
for cyber security or cyber defence in the
Cyber threat while confidential information on
Middle East, which is expected to grow
Islamic banks are especially more JPMorgan Chases customers were
at a cumulative annual growth rate of
vulnerable due to economies of compromised as a result of a hack in
22.5% from 2016-22.
scale: generally speaking, Shariah 2014), it is no surprise that the financial
banks are smaller and therefore have community is extremely wary about
Already multiple cybersecurity start-ups
greater constraints when it comes to the digital game. After all, virtualized
have emerged from this time of
allocating resources to develop their delivery models, asset transfers,
uncertainty, and Islamic banks will also
digital oerings. Building mobile wealth management and omnichannel
need to make their move to assess and
applications, streamlining payment capabilities are all exposed to such
adopt the right measure to avoid making
systems, enhancing online gateways, and attacks which could very well trigger a
cybersecurity concerns a hindrance to
providing virtual tellers and video-based collapse of the banking system. The US
digital innovation, on which their
advisors are cost-intensive exercises, and Treasury is understood to have recently
survival in the competitive landscape
except for a few well-capitalized Islamic concluded a cybersecurity exercise to
banks (especially those with access to better safeguard the financial fraternity.

6 27th July 2016


UAE eases rules for SME sector a ine opportunity for Islamic
The Ministry of Human Resources SMEs, [and] one of the key reasons has play a significant role in closing the
recently issued a decree that exempts been the inability of banks to understand financing gap for SMEs by developing
SMEs from bank guarantees beginning who their customers are, and what they an enabling environment for asset-based
October this year, in what is considered want to do, KPMG commented. and equity-based finance, which would
a move to boost the growth of the allow markets to attract excess liquidity
industry in the Emirates. How will If the SME sector in the UAE has not in Islamic financial markets, especially
the new decree, DANIAL IDRAKI had much progress in securing funding in the Middle East, that are seeking
asks, present a prime opportunity for from banks over the years, how then attractive investment opportunities.
Islamic finance to fill the funding gap might the new relaxed ruling by the Irrespective of how Islamic finance
of the SME sector, which has been government provide an opportunity is labeled, based on the core values
underserved by banks in the past? for Islamic finance to flourish in the of promoting economic development
sector? Given the necessity of the through a portfolio of asset-based and
Minister of Human Resources and direct link between Islamic finance equity-based financing solutions, a clear
Emiratization Saqr Ghobash said recently and real economic activities as well as financing gap for SMEs can be tackled
that the bank guarantees had been in financial inclusion, funding SMEs meets and served through Islamic banking and
place to safeguard laborers rights, but Shariah requirements as it satisfies the non-banking financial services, the joint
after studying the level of commitment material and social needs of a particular report noted.
displayed by SMEs, the ministry decided community. With the SME sector now
to put in place the decree to exempt doing away with bank guarantees, The recent decree indicates the strategic
the businesses from bank guarantees. a requirement that has stifled the importance of the SME sector to the
The decision is considered a major sectors growth over the years, Islamic country and after having had a tough
step toward reaching a competitive financial institutions are presented time over the past year with tightening
knowledge-based economy that revolves with an incentive to develop specific liquidity among banks and plunging
around young Emirati talents. The decree products tailored to the needs of the SME commodity prices that have shaken
came in line with the ongoing future community for the growth of the sector. much of the GCC region, it is certainly a
government strategy which appreciates respite for the sector, and an opportunity
the empowerment of citizens in the labor According to a joint report by the World for Islamic financial institutions to make
market to enhance its productivity, Saqr Bank and the IDB, Islamic finance can further inroads.
noted in a statement.

A clear
inancing gap
for SMEs can be
tackled through
According to a report by KPMG, SMEs
make up 90% of employment in the
UAE and 40% of bank lending, as well as
contributing 40% to the countrys GDP.
It forms the backbone of the countrys
economic development, with over 282,000
companies currently operating in the
Emirati. The report noted that the SME
sector has been relatively underserved
by banks and other financial institutions
for some time, as it has always been
seen as more likely to fail than larger
organizations. Banks are more reluctant,
even in good times, to lend to SMEs.
Perhaps the biggest issue has been the
ability of financial organizations to
accurately assess the risk of financing

7 27th July 2016


Sukuk sector sees surge as second half looks promising

Since its stellar performance of 2012,
Sukuk volumes have struggled against
regional and economic headwinds
hampering their trajectory. The oil
price plummet of 2014-15 strained the
GCC and Southeast Asian markets
while ongoing financial pressures
have distracted attention away from
the burgeoning development of
this fledgling sector. However, as
commodities recover and oil bounces
back, 2016 looks considerably more
takes a birds-eye view.

The markets are approaching a more

stable setting, as activity picks up
after Ramadan and the post-summer
buzz looks positive. The Bloomberg
Commodity Index is up 7.62% year-to-
date (as of the 25th July) up from a
record low of 72.88 on the 20th January
this year while oil prices have also
firmed up this year and in June the US
Energy Information Administration
upped its crude forecasts to US$43 per
barrel in 2016 and US$52 per barrel in of 2016, underlining expectations of a foray into the capital markets this year,
2017. gradual recovery in the market after a the Sukuk sector could benefit from
disappointing performance the previous further sovereign interest. The decision
year. Total new Sukuk issuance (with whether to issue bonds or Sukuk, or
Investor maturity of more than 18 months) in
the key markets of the GCC, Malaysia,
a mix, depends on factors including
the target investor and funding base
appetite has Indonesia, Turkey and Pakistan rose
to US$21.74 billion compared with
(international or regional and local),
the existence of a Sukuk structure and
improved this year: US$19.54 billion in the first half of
2015. With an even spread over the
Islamic finance strategy, and the needs
and size of the Islamic finance industry,
beneiting from the two quarters (US$11.07 billion in the said Bashar.
first quarter and US$10.67 billion in the
hunt for yield in the second quarter), growth also looks to On a positive note, investor appetite

light of low rates

be consistent rather than boosted by big has improved this year: benefiting
outlying deals. from the hunt for yield in the light of

in mature markets,
low rates in mature markets, while
In fact, in the first half of the year Sukuk emerging markets appeal has been

while emerging represented 30% of total issuance in

these key markets, up from 28% in 2015.
renewed by the recent resurgence of
commodity prices. With downwards

markets appeal has The proportion would have been even

higher, noted Bashar Al Natoor, the
pressure on interest rates from the
recent UK decision to leave the EU
been renewed by the global head of Islamic finance at Fitch
Ratings, but for the return of Abu
and the upcoming elections in the US,
jittery investors have calmed down and
recent resurgence of Dhabi and Qatar to the sovereign bond
issuance volume should benefit from a
more stable environment.
commodity Sovereigns in the Gulf have primarily We expect issuance to be relatively
prices tapped the conventional market this
year as a quick way to raise easy funds
quiet in the third quarter due to the
combination of the summer and Eid
from international investors, with US$5 breaks, with a pick-up toward year-
On the back of this stability, the billion and US$9 billion from Abu Dhabi end, said Bashar. Overall, our
Sukuk sector is seeing a minor surge. and Qatar respectively. However, with expectation is for 2016 Sukuk issuance
According to the latest results from several more Gulf states including to at least match 2015 issuance of
Fitch Ratings, Sukuk issuance from Kuwait and Saudi Arabia considering a around US$32 billion.
key markets rose 11% in the first half

8 27th July 2016


Indonesia aims to enhance role of Shariah investment

managers through new rules
VINEETA TAN reports on the latest Chart 1: Indonesian Shariah mutual fund industry performance
regulatory eort by the Indonesian
Financial Services Authority to boost its IDR billion Total
Shariah capital markets.
12.000 120

The Indonesian financial services regulator 10.000 100

has released a draft regulation on Islamic
investment managers as part of the 8.000 80
Republics five-year strategy to position
itself as a center for Shariah finance, a title 6.000 60
held by its neighbor Malaysia.
4.000 40

Since the ive-

2.000 20

0 0
year roadmap Jan Feb Mar Apr May

was introduced last 2010 2011 2012 2013 2014 2015 2016

year, the Shariah Number of Shariah mutual funds NAV of Shariah mutual funds

compliant mutual Source: OJK

fund industry this year as outlined by the OJKs Islamic

Capital Market Roadmap (2015-19).
OJK statistics. However, in terms of
total net asset value (NAV), Shariah
has seen a steady The regulation details the licensing
funds have been experiencing a decline:
it reached IDR9.56 trillion (US$730.38
increase in the process and requirements of Islamic
investment managers among other
million) in May, dropping from IDR11.02
trillion (US$841.93 million) as at the
number of things. Under the proposed rules,
Shariah investment managers will be
end of 2015 which was a slight fall from
2014s IDR11.16 trillion (US$852.62
Islamic funds categorized under two classifications
based on paid-up capital: those with
million) a reverse trend is observed
for the conventional mutual fund
The Financial Services Authority or a paid-up capital of at least IDR25 segment. In terms of percentage to the
Otoritas Jasa Keuangan (OJK) over the billion (US$1.91 million) will be parked entire mutual fund industry, the NAV of
past year has taken steps to bolster its under Classification II, allowing them a Shariah funds have tumbled every year
Islamic financial legal infrastructure broader scope of product management from the 2013 high of 4.9% to 3.16% as of
including issuing new regulations on as compared to Classification I Islamic May 2016.
various Islamic products such as real investment managers who have a paid-
estate investment trusts and easing up capital of IDR10 billion (US$764,000). Measures have been taken to boost the
Shariah mutual investment rules as Islamic mutual fund industry including
well as allowing for Shariah hedging Since the five-year roadmap was new rules allowing investment managers
instruments. The latest draft regulation, introduced last year, the Shariah to have funds invested wholly in foreign
which is open to public feedback until the compliant mutual fund industry has Shariah compliant securities which
1st August, has been designed with the seen a steady increase in the number of encouraged a number of players
objective of enhancing the role of market Islamic funds, rising from 74 in 2014 to including Manulife Asset Management
participants in the Islamic space. The new 102 as of May 2016 (grabbing an 8.46% and BNP Paribas to launch global
rules are expected to come into eect total market share), according to latest Shariah funds.

Straight to Web Feature

Indonesia Shariah hedging rules for Islamic banking
On the 17th June, Bank Indonesia (BI), the Indonesian central bank, conducted a seminar on the circular BI External Circular Letter
18/11/DEKS on Hedging Transactions Based on Islamic Principles (the Circular). The Circular was issued to explain how the regulation
BI Regulation 18/2/PBI/2016 on Hedging Transactions Based on Shariah Principles (the Regulation) (which commenced on the 26th
February 2016) would be implemented. The Regulation was prepared in line with the National Shariah Board of the Indonesian Ulema
Council (DSN-MUI)s Fatwa 96/DSN-MUI/III/2015 on Shariah hedging transactions.

To read the full article, log on to

9 27th July 2016


Company Focus: Amana Takaful Life expanding Takaful

business in Sri Lanka with IPO offering
In a showcase of the growing insurance premium as a percentage of
importance of Takaful in the Sri Lankan GDP was 1.09%, reflecting a growing
market, Amana Takaful Life (ATLL), need for higher levels of penetration
a wholly-owned subsidiary of Amana to provide coverage in a population of
Takaful, recently announced that its approximately 20 million. The IBSLs
IPO of 50 million shares at LKR1.5 report stated that insurance penetration
(1.03 US cents) each on the Diri Savi is still at a lower level compared with
Board of the Colombo Stock Exchange many other economies in the Asian announcement of its IPO plans. The
amounting to LKR75 million region, and this indicates that there is a market is relatively untapped and we
(US$512,996) were oversubscribed, significant opportunity for insurers to see increased demand for life insurance,
as it seeks to expand its footprint in the expand their businesses. stemming from key economic activity
under-served market. DANIAL IDRAKI and infrastructure development. As we
takes a look at what is in store for the ATLL commented that its IPO, approach US$4,000 per capita income,
growth of the life Takaful provider in which represents a 10% stake in the there will be key segments that will
the South Asian nation. company, provides a growth impetus actively seek life insurance as opposed to
for the life Takaful provider, which has the current push strategy, he explained.
According to the Insurance Board of outperformed the industry for three
Sri Lanka (IBSL)s Statistical Review consecutive years in terms of growth. According to ATLL, it has grown at a
2015, the number of eective policies We see tremendous opportunity in compound annual growth rate (CAGR)
in force as a percentage of the total the growth story of Sri Lanka, ATLLs of 31% over the last five years and
population was 13.4% in year 2015, while CEO, Reyaz Jerey, noted during the recorded a gross written premium (GWP)
of LKR928 million (US$6.35 million)
Chart 1: Financial highlights of Amana Takaful for the financial year ended the 31st
December 2015, a 36.71% growth over
15,065 the previous year. ATLL was separated
from its parent company in 2015 as part
of an industry-wide regulatory directive
12,087 to segregate life and general insurance
companies in the country. In its first year
2,309 of operations as an independent entity,
the company recorded a profit after tax of
8,260 LKR18 million (US$123,119), according to
1,830 its annual report.
ATLL noted that it plans to grow at a
CAGR of 34% over the next five years,
1,296 supported by several initiatives that
1,130 include entering into bancassurance
arrangements with Amana Bank, in
750 928 which discussions are currently ongoing.
569 735 With the Sri Lankan insurance industry
679 as a whole posting a commendable
543 growth rate of 16.12% in total GWP in
318 365 2015 amounting to LKR122.39 billion
(US$837.14 million) ATLL is on a
2011 2012 2013 2014 2015 journey to realizing a great potential for
General Takaful General Takaful ...... Family Takaful ...... Family Takaful growth in a market that is slowly but
contributions net claims incurred   surely moving in a direction that utilizes
Islamic finance principles.
Source: Amana Takaful Life Annual Report 2015

Straight to Web Feature

Are the emerging markets from Africa, Saudi Arabia and the Red Sea tailwinds for Islamic finance?
Africa, being the home to 26 of the 56 IDB member countries, and the Kingdom of Saudi Arabia (KSA), the home of IDB, are
undergoing significant structural changes to position them for growth. JIM ALTENBACH explores two out of the 170 panel discussions
held during the 19th Annual Milken Institute Global Conference in the US, about how the KSA, the Red Sea market and Africa are
emerging and how these trends provide tailwinds for Islamic finance.

To read the full article, log on to

10 27th July 2016


The IDB to assist OIC countries to capture e-commerce

opportunities through new global initiative
VINEETA TAN explores how IDBs Germany and the UK, according to A huge divide is opening between
participation in the new global eTrade statistics from UNCTAD which also countries that are exploring those
For All is significant to Muslim reported that over 70% of the population opportunities and those that are not,
communities. in Denmark, Luxembourg and the UNCTAD Secretary-General Mukhisa
UK are shopping online; whereas less Kituyi confirmed.
Muslim countries, which generally than 2% of the populations of Muslim-
have relatively smaller participation majority countries such as Bangladesh Yet, despite countries with Muslim-
in the e-commerce market, will have and Indonesia engage in online retail majority populations such as Indonesia
greater access to the US$22 trillion transactions. and Malaysia having comparatively low
segment under a new global initiative online spending power and activity,
involving an alliance of international
entities, supranational organizations and The data from AT Kearney shows that the
e-commerce penetration growth rate in
businesses including the IDB.
participation the MENA region, where Islam is the
dominant religion, and Asia Pacific,
IDBs Islamic Trade Finance Corporation
(ITFC) has joined eTrade For All a
of ITFC in eTrade home to half of the worlds Muslims
(according to Pew Research), are highest
newly-launched initiative seeking to
facilitate developing countries access
For All could at 45% and 35% respectively as compared
with 15% in the US, 20% in Europe and
technical assistance and financial
resources needed to leverage online
narrow the gap and 30% in Latin America this represents
an opportunity for not only e-commerce
commerce to create new economic
opportunities. Other organizations
potentially create but Halal e-commerce as well.
engaged with the initiative include
the World Bank, the United Nations
opportunities for The participation of ITFC in eTrade For

cross-border Halal
All could narrow the gap and potentially
Conference on Trade and Development create opportunities for cross-border
(UNCTAD), World Trade Organization
and African Development Bank. trade, which would Halal trade, which would subsequently
open the door for Islamic finance. The
The e-commerce market has grown
exponentially over the last few years,
subsequently open idea is to leverage this global platform to
support member countries in seven
rising by 38% to US$22.1 trillion in 2015 the door policy areas: e-commerce assessments,
information and communication
from 2013. However, the geographic
growth is largely concentrated in non- for Islamic technology infrastructure, payment,
trade logistics, legal and regulatory
Islamic nations the top 10 e-commerce
markets include China, the US, Japan, inance frameworks, skills development and
financing for e-commerce.

Table 1: Top 10 B2C e-commerce markets in 2015, ranked by number of online buyers
B2C sales B2B sales Online buyers
Country US$ billions US$ billions Number in millions Annual spend per Source
buyer (US$)
1 China 623 2,078 413 1,508 Ministry of Commerce
2 US 511 6,072 166 3,072 Bureau of Census and eMarketer
3 Japan 114 2,380 57 1,994 Ministry of Economy, Trade and
4 Germany 52 966 41 1,270 Federal Ministry for Economic
Aairs and Energy
5 UK 174 709 38 4,539 Interactive Media in Retail Group
6 Brazil 12 112 33 376 E-bit
7 Russian Federation 23 700 30 756 E-commerce Europe
8 France 72 600 25 2,916 Federation du e-commerce et de la
vente a distance (Fevad)
9 Republic of Korea 48 969 22 2,120 Statistics Korea (Kostat)
10 India 20 298 22 891 Internet and Mobile Association of
Top 10 total 1,648 14,884 848 1,944
Global estimates 2,204 19,904 - - eMarketer (B2C) and UNCTAD (B2B)
Source: UNCTAD

11 27th July 2016


Pakistans senate widens regulations and facilitates growth of

Shariah compliant inancial products with amended bill
The Senate of Pakistan has approved the the requirements of the International regulatory authority in matters relating
Securities and Exchange Commission Organization of Securities Commissions to investigation and inquiries, given
of Pakistan (SECP) (Amendment) (IOSCO). According to the SECP, major that the current law does not provide
Bill 2016 which will facilitate better deficiencies of the current law SECP statutory provision to that extent. The
superintendence and control over the Act 1997 include limited financial SECPs mandate has continued to
countrys capital and financial services and administrative independence of be enhanced over the years through
market, corporate sector and insurance the regulator, lack of provision on various amendments involving the
industry. The bill, which was already the acting chairman, as well as the flotation, management and regulation of
approved by the National Assembly ineective enforcement powers to Modaraba (1999); insurance sector (2000);
with further amendments earlier in May, request for information. Furthermore, non-banking financial companies (2002);
also aims to widen the scope of powers the current law lacks proper process for commodity futures market (2003) and
and functions of the SECP regarding the the prosecution of cases and inadequate real estate investment trusts (2008).
regulations and facilitation of growth for investigating powers, among others.
Shariah compliant financial products, The regulator is stepping up eorts
and to ensure the healthy growth of the Additionally, in order to introduce to make the countrys capital markets
corporate sector and to promote good transparency, provisions regarding as attractive as possible, as it prepares
governance. DANIAL IDRAKI reports. disclosure of information in [the] public for the eventual inclusion in the MSCI
interest along with statutory powers to Emerging Markets Index in May 2017,
In a bid to raise the standards of the assess potential and emerging systemic which is expected to see an influx of
countrys capital markets to be on par risks in the capital market are also foreign funds that will be banking on its
with its international peers, the SECP introduced in the bill, the SECP noted. growth potential for maximum returns.
stated in a statement that the new law The bill will also provide the framework
seeks to provide protection to investors for the establishment of an independent Pakistan surprised many when it was
by ensuring the development of a sound audit oversight board to ensure the included in the upgrade from its current
regulatory framework to counter illegal quality of audit of public-interest Frontier Markets status, while economic
and unfair practices in the financial companies and an eective mechanism powerhouse China was left out from the
services market, as well as to control and and self-regulatory organizations to inclusion. The Pakistan Stock Exchanges
minimize market abuse, misconduct and ensure compliance with the regulatory main index, the KSE 100, soared to an
financial crimes in sectors that it regulates. regime of the regulated sectors. all-time high and became one of Asias
best performing indices this year after the
The law will meet the local and With the new law, the SECP will be MSCIs announcement in June.
international requirements for the able to seek international cooperation
corporate sector regulator, including and extend assistance to a foreign

Arab Monetary Fund aligning with global Islamic inance

bodies to facilitate integration of Shariah inance in Arab world
Islamic finance is top on the agenda of collaborated in the area of Islamic MoU with International Islamic Liquidity
the Arab Monetary Fund (AMF) as an finance; however, both the institutions Management Corporation to provide
instrument to develop the economies decided to take their cooperation to the technical support services to develop the
of Arab nations and the institution next level by formalizing it through a industry.
has aligned with the IFSB to meet this three-year MoU under which they will
objective. VINEETA TAN reports. jointly establish and promote Islamic Apart from building Islamic finance
finance development initiatives in the capacity in the Arab world, the IFSB is
Providing assistance to the development Arab region. This includes conducting also leveraging this new partnership with
of the Islamic finance industry and joint awareness programs, hosting joint the AMF to create a stronger presence in
supporting capacity development in training programs and expanding Islamic the region. This MoU provides an
the region have always been among our finance e-learning courses and the excellent platform for the IFSB to engage
top priorities, and we look forward to database as well as expanding the body and build relationships with its members
pursuing and intensifying this eort of Islamic finance research. in the Arabic-speaking jurisdictions,
to better tackle the needs of [the] Arab confirmed IFSB Secretary-General Jaseem
region to building up innovative, robust Recognizing Islamic finance as a potential Ahmed. It is an opportunity to benefit
and competitive financial systems at both tool to support its development goals, the from both institutions expertise,
domestic and regional levels, said Dr AMF has been forming strategic alliances especially for enhancing the outreach to
Abdulraman A Al Hamidy, the director with global Islamic finance bodies to member countries for awareness-
general chairman of the AMF board. accelerate the integration of Shariah building, exchange of information and
finance to boost financial inclusion. In knowledge-sharing.
The AMF and IFSB have for years October 2015, the AMF entered into an

12 27th July 2016


Sovereign Sukuk: Togo makes headway IFN Sector Correspondents

In what would be its sovereign debut intermediation of Togo (Togo SGI). Mezbah Uddin Ahmed, member of the Association of
Chartered Certified Accountants and associate researcher
issuance, Togo announced that it is Proceeds from the facility will be used to at International Shariah Research Academy for Islamic
Finance (ISRA).
launching a 10-year Sukuk oering finance the countrys economic and social
with the Islamic Corporation for the development projects. CROSS-BORDER FINANCING
Fara Mohammad, director of Islamic finance, Foot Anstey
Development of the Private Sector CAPITAL MARKETS:
(ICD) as the lead arranger for the deal. Malaysia Suhail Ahmad, CEO, Hikmah Capital Corp

Over in Southeast Asia, meanwhile, Malaysias government investment issue DERIVATIVES:

Suhaimi Zainul - Abidin, treasurer for Gulf-Asia Shariah
key sovereign issuers Malaysia and (GII) Murabahah issuance of RM3.5 Compliant Investment Association and advisor to 5Pillars
Indonesia kept the market busy with billion (US$856.96 million) with a profit GLOBAL ECONOMIC OUTLOOK:
Tariq Alrifai, expert, Islamic investment products and
their regular issuances. DANIAL rate of 3.74% was oversubscribed by market trends
IDRAKI brings you the usual updates. 2.45 times after receiving total bids LAW (EUROPE):
Ayhan Baltaci, attorney at law, Bereket & Baltaci Law Firm
of 211 with a total amount of RM8.59
Togo billion (US$2.1 billion), according to
Bishr Shiblaq, head of Dubai oce, Arendt &
Togo has launched a XOF150 billion an announcement on Bank Negara
(US$250.99 million) 10-year Sukuk Malaysias website. Youssef Aboul-Naja, Ijarah specialist, a supranational
banking institution
oering with a 6.5% profit margin,
according to its prospectus, and the Indonesia Tushar Garg, associate, bulge bracket investment
subscription period for this facility will The government of Indonesia is targeting MICROFINANCE (ASIA):
run until the 10th August 2016, with a to raise IDR4 trillion (US$304.8 million) Dr Mahmood Ahmed, executive vice-president and
possibility of early closing. The ICD is through the sale of its sovereign Sukuk
director training, Islami Bank Training and Research
the lead arranger while lead managers (SPN-S 27012017 and four project-based MICROFINANCE (AFRICA):
comprise SGI African Stock Exchange securities series) on the 26th July 2016 in a
Mansour Ndiaye, director of microfinance, Assistance and
Consulting for Development
(Attijariwafa Bank), BOA Capital bid to finance the Republics 2016 State PRIVATE BANKING & WEALTH MANAGEMENT:
Securities (BMCE Bank of Africa), Coris Budget, according to an announcement Thomas Woods, product development, wealth
management, The Islamic Bank of Asia
Bourse (Coris Bank International), on the Ministry of Finances website. PRIVATE EQUITY & VENTURE CAPITAL:
Ecobank Development Corporation Arshad Ahmed, partner, Elixir Capital
Anthony Coleby, head of corporate commercial
department, Said Al Shahry Law Oce (SASLO)
Upcoming sovereign Sukuk REAL ESTATE
Philip Churchill, founder partner, 90 North Real Estate
Country Amount Expected date Partners
Togo XOF150 billion TBA Intan Syah Ichsan , chief operating ocer, Samuel Aset
Mohammad Abdullah Malik Dewaya, head of Shariah
Senegal XOF150 billion July 2016 compliance and audit, Maisarah Islamic Banking Services

Iran IRR60 trillion 2016 RETAIL BANKING:

Chowdhury Shahed Akbar, ocer, Southeast Bank,
Nigeria TBA TBA
Jordan JOD175 million TBA Dr Ken Baldwin, lecturer in finance, Coventry University
Pakistan PKR79.1 billion TBA Nidhi Bothra, executive vice-president, Vinod Kothari
Athif Shukri, research analyst, Adl Capital
Kazakhstan TBA 2016
Kenya TBA 2016 John Dewar, partner and head of Islamic finance, Milbank,
Tweed, Hadley & McCloy
South Africa TBA 2016 SUKUK
Anthony Coleby, head of corporate commercial
Bangladesh TBA TBA department, Said Al Shahry Law Oce (SASLO)
Hong Kong US$500 million to US$1 billion TBA Damir Galiev, portfolio manager, AK BARS Bank

Ningxia Hui Autonomous Region US$1.5 billion TBA TAKAFUL & RE-TAKAFUL:
Dr Sutan Emir Hidayat, assistant professor and academic
advisor for Islamic finance, University College of Bahrain
Niger XOF150 billion TBA
Luxembourg TBA TBA Uwaiz Jassat, acting head of Islamic banking, Absa Islamic
Tunisia US$500 million TBA TAKAFUL & RE-TAKAFUL (EUROPE):
Ezzedine Ghlamallah, director, Solutions Insurance and
UAE TBA TBA Islamic Finance in France (SAAFI)
Shandong Province CNY30 billion TBA Anthony Coleby, head of corporate commercial
department, Said Al Shahry Law Oce (SASLO)
Sindh Province US$200 million TBA
Kuwait KWD5 billion Sept 2016 Nafith Al Hersh Nazzal, Islamic banking specialist,
certified financial and investment advisor
Maldives TBA TBA IFN Correspondents are experts in their respective fields
and are selected by Islamic Finance news to contribute
Sri Lanka US$1 billion TBA designated short sector reports. For more information
about becoming an IFN Correspondent, please contact

13 27th July 2016


Palestine: Path to recovery

After years of economic struggle, Palestine is finally showing signs of recovery. VINEETA TAN provides an
overview of Palestines Islamic banking and finance industry.

Economic and political followed by Cairo Amman Bank Islamic

(2005), AIB, ISBK and Al Aqsa Islamic
background Bank (2010); however, Cairo Amman
The Palestinian economy has long
Bank Islamic and Al Aqsa were absorbed
struggled and the Gaza conflict
by ISBK. Islamic National Bank in Gaza is
has strained it further; however, its
another Shariah bank; however, it is not
economy is on the path to recovery
licensed by the PMA.
due to reconstruction eorts which has
bolstered Gazas economy. According
Together, AIB and ISBK command about
to the World Bank, the Palestinian
10% of the total banking share, according
economy grew by 3.3% in 2015 and real
to shareholder Palestine Investment
GDP growth in Gaza hit 5%, driven by
Fund (PIF) which owns stakes of 21%
strong growth in the construction sector
and 34% in the respective banks.
as well as retail and wholesale trade.
The situation in West Bank is, however,
In March 2016, the Bank of Palestine
dierent as growth slowed in 2015 with
received shareholders approval to
real GDP dropping 2.5 percentage points
acquire an additional 31% stake in AIB,
to 2.8% in 2015.
which will allow them to become a
majority shareholder with a 51.98% stake.
The West Bank is divided into three
PIB in April 2016 also raised its capital
areas: A (self-rule), B (ruled by Palestine insurance in Palestine (2007) and
through a secondary public oering
and Israel) and C (governed by Israel). forms one-half of the Takaful operator
which was oversubscribed. PIB made a
Natural resources of the West Bank are community with the other being Gazas
pre-tax profit of over US$10 million in
primarily found in Area C and the World Al Multazem Insurance Company
the third quarter of 2015, 22.77% higher
Bank has stated that at least US$3.4 formed in 2012. Using Al Takafuls 2015
than the year before while total assets for
billion could be added to the Palestinian financial as a benchmark (Al Mutazems
the reported period surpassed US$635
economy if businesses were able to access records are not publicly available), the
million, referring to the increase in net
Area C, though currently the manner in Takaful market in Palestine is growing
equity of up to US$70.8 million.
which Area C is administered essentially steadily as the firm realized a production
precludes Palestinian businesses from growth rate of 26% on the back of a 2%
In addition to the three Islamic banks,
investing there. expansion by the whole insurance sector.
Shariah financing is also oered by
Al Takaful, which increased its market
other smaller specialized institutions
Regulatory landscape including microfinanciers. There is an
share to 14% from 11.7% in 2014, also
Palestine is governed under the Basic raised its capital to US$10 million and
Islamic leasing company in Palestine
Law, enforced in 2002 and based distributed 10% free bonus shares to
(established in 2013), set up by PIF and
loosely on the Islamic Shariah; however, shareholders after realizing a profit in
ISBK in partnership with the Islamic
the countrys banking system is a 2015 and is actively seeking to expand its
Corporation for the Development of the
combination of both conventional and branch network, which as at April 2016
Private Sector.
Islamic modes. There is not a separate stood at 21 branches.
legislation for Shariah compliant
Microinance Conclusion
financial transactions as all financial
Shariah compliant microfinance
activities, which are regulated by the Despite economic and political volatility
products are available in Palestine
Palestine Monetary Authority (PMA), as well as regulatory obstacles, the
through approximately nine institutions
fall under the same statutes, namely the Islamic finance and banking market of
including Faten, Asala, ACAD, IBDAA
Law of Jordan of 1966 and the Palestine Palestine is growing steadily as
and REEF. A majority of these fundings
Monetary Authority Law of 1997. demonstrated by the growth in the
are provided by non-governmental
number of participants, market share and
organizations such as the Palestinian profitability of these institutions. This
Banking and inance Businesswomens Association, the Arab reflects both the promising demand
There are currently three licensed Islamic Center for Agricultural Development, levels for Shariah compliant financial
banks in Palestine: Arab Islamic Bank Palestine for Credit and Development services as well as strong commitment by
(AIB), Palestine Islamic Bank (ISBK) and and the IDB-funded Deprived Families market players; however, for the industry
Al Safa Bank which joined in 2016. Economic Empowerment Program. to progress further, there is a need to
enhance the legal infrastructure, expand
Palestinian Finance House Corporation
Takaful the Islamic finance human capital pool
was the first Islamic financial institution and increase public awareness.
Al Takaful Insurance Company is the
to be established in Palestine (1994),
first to provide Shariah compliant

14 27th July 2016


Islamic syndicated inancing slowing down in

the irst half of 2016
Islamic syndicated financing witnessed a slight drop in the first half this year as compared with the same period
in 2015, although the market welcomed several debutants. DANIAL IDRAKI recaps recent transactions in this
specific area of the Islamic finance industry.

Overview Debut in the syndicated part-finance up to 75% of the total cost of

the development and construction of a
Data by Dealogic shows that total Islamic Islamic inancing market 14MW mini hydropower plant in Sungai
syndicated financing for the first half of Turkeys state-owned Ziraat Participation
2016 stood at US$6.79 billion, with deals Kerian, Perak, Malaysia.
Bank made its debut in the syndicated
done across the Middle East, the Indian Islamic financing market when it secured
subcontinent, Africa, Southeast Asia a US$155 million syndicated Murabahah Project and infrastructure
and Europe. Saudi Arabia, the UAE and dual-currency financing facility in April inancing
Bahrain were the top three countries in this year. The Shariah compliant bank In Malaysia, property developer UDA
total volume with a combined value of had increased the facility size from an Holdings signed a financing agreement
US$5.37 billion. The figure, however, initial US$75 million after receiving a to procure a syndicated Islamic financing
is less than half of the US$15.11 billion strong response from the market. The US facility of up to RM500 million (US$123
in deal value that was achieved in the dollar and euro-denominated facility is million) to part-finance eight projects
same period of 2015, suggesting that the structured with a three-month LIBOR/ with an estimated gross development
market is slowing down in tandem with EURIBOR plus 1.1% pricing. Bank ABC value of RM1.62 billion (US$398.52
the overall weakening of global economic Islamic, Dubai Islamic Bank, HSBC and million). An Hwang Investment Bank,
growth, as banks tighten their belts with Warba Bank were the initial mandated AmInvestment Bank and RHB Islamic
less risk appetite for financing. lead arrangers and bookrunners for the Bank were the joint mandated lead
one-year facility. Bank ABC, meanwhile, arrangers while Bank Pembangunan
For the entire year of 2015, total global acted as the coordinator for the facility. Malaysia and Kuwait Finance House
Islamic syndicated financing more The proceeds from the facility will be (Malaysia) were the co-arrangers for the
than doubled to US$23.41 billion from used to support the funding requirement syndicated facility.
US$11.57 billion in 2014.The UAE, Saudi of SMEs and the financing of trade-
Arabia and Malaysia led the pack in related businesses of its commercial Eastern & Oriental, through its
total deal volume, with US$8.12 billion, clients. subsidiary Tanjung Pinang Development,
US$5.77 billion and US$3.09 billion deals secured up to RM1.08 billion (US$265.68
recorded respectively. The investment arm of the Kingdoms million) in syndicated banking facilities
National Oil and Gas Authority, from Maybank Islamic Bank and RHB
Chinas growing appetite for Nogaholding, secured a US$570 million Islamic Bank in December in 2015.
Islamic inancing Murabahah syndicated financing in Maybank Investment Bank and RHB
The worlds second-largest economy is April this year from as many as 10 local, Bank were the joint principal advisors,
increasingly turning to Islamic financing regional and international banks. The mandated lead arrangers, underwriters
for major infrastructure projects. China Shariah compliant five-year deal with and bookrunners for the facility
and Pakistan recently got their hands the financiers is Nogaholdings first which will be used to part-finance the
in the game in one of the largest project syndicated financing since the holding reclamation and infrastructure works of
financing deals along the China-Pakistan company was formed in 2007. The facility the Seri Tanjung Pinang Phase 2 project
Economic Corridor under Chinese was increased by 60% from its original in the state of Penang.
President Xi Jinpings ambitious One size, and the 10 banks that participated in
Belt, One Road initiative. Worth the Murabahah deal were: Arab Banking Multi-tranche facilities
approximately US$1.95 billion, the dual- Corporation, Ahli United Bank, Arab Gulf Marine Services secured a US$620
currency multijurisdictional part-Islamic Petroleum Investments Corporation, million syndicated debt facility
financing package will be used to fund Gulf International Bank, National Bank combining Islamic and conventional
the development of the Thar Block II of Bahrain, Qatar Islamic Bank, Kuwait financing in November 2015.
coal mine and two associated 330MW Finance House, The Bank of Tokyo-
coal-fired power plants in Thar, Pakistan. Mitsubishi UFJ, BNP Paribas and HSBC. Emirates Global Aluminium launched
Some of the largest Chinese banks and the syndication for its US$4.9 billion
Pakistani banks were involved in the Bank Islam Malaysia concluded a seven-year corporate facilities comprising
rupee-dollar cross-border deal including RM121.44 million (US$29.87 million) a commodity Murabahah facility and a
the Industrial and Commercial Bank of Tawarruq financing for Kerian Energy in conventional facility in November 2015
China, China Construction Bank, state- August in 2015. The transaction marked to refinance existing project finance debt
owned China Development Bank as well its first involvement as a lead arranger facilities. The facilities are structured
as Habib Bank and Meezan Bank (the for a syndicated project financing facility with a three-year grace period and a 30%
largest Islamic bank in Pakistan) as part for a hydropower plant project. Proceeds balloon payment on maturity.
of a 13-bank consortium. from the financing were to be utilized to

15 27th July 2016


MB Holdings maiden Sukuk US$150 million

Multicurrency Sukuk program
Mohammed Al Barwani Holding Denton & Co, one of the legal advisors
(MB Holding) recently revitalized the of the Sukuk, told IFN that the US$76 million
Omani corporate Sukuk space, after introduction of the new Sukuk law
three years of hiatus, with a US$76 took place during the course of this
million Sukuk Wakalah facility, pioneering Sukuk transaction which
becoming the second corporate to issue required the documents to be reviewed
Sukuk and interestingly, the first to and amended where necessary to ensure 29th June 2016
tap the domestic Islamic debt market compliance with the new regulation.
pursuant to the newly-issued Sukuk
regulation. NURUL ABD HALIM Issuer Mohammed Al Barwani
explores the workings of this exciting There was Sukuk Issue
deal. Obligor MB Holding
a further Size of issue US$76 million

complication in
The facility was engineered using the Mode of issue Private placement
Wakalah structure given the nature of Purpose To settle certain

that the MSM does

assets tied to MB Holding (the obligor) outstanding financing
that were available for the transaction. arrangements, support

not currently have

certain MBH subsidiaries
According to the prospectus, assets
with regards to their
under the Wakalah portfolio include capital expenditure
real estate units used by MB Holding,
externally-leased real estate assets and
the capability to commitments and cash
requirements and for other
certain Shariah compliant shares which
meet specified eligibility criteria.
enable US dollar- Tenor
corporate purposes
Five years
denominated Issuance price 100% of the aggregate face
amount of the certificates
Proceeds raised from the Sukuk will
be used by the issuer to settle certain certiicates to be Profit rate
outstanding financing arrangements,
support MB Holdings subsidiaries Currency US dollars and Omani rial

capital expenditure commitments and Maturity date 29th June 2021
cash requirements, and also for the Lead National Bank of Oman
multinational conglomerates other managers and (NBO) and Standard
bookrunners Chartered Bank
corporate purposes. Prompt analysis of the new regulation Principal NBO and Standard
was undertaken, followed by a meeting advisor(s) Chartered Bank
Issued by way of a private placement, with the Capital Market Authority to Governing Omani law
the US dollar Shariah compliant discuss the impact on the transaction, law
certificates are part of the companys said the law firm adding that the Legal Dentons & Co, Oman
US$150 million multicurrency Sukuk exchanges inability to accept US dollar advisor(s)/ branch and Dentons &
program and had been listed, together certificates on the market also presented counsel Co (to the issuer and
with the Omani rial tranche, on the another hiccup. There was a further MBH), Trowers & Hamlins
Muscat Securities Market (MSM)s complication in that the MSM does not (to the issue manager,
joint placement agents,
Bonds and Sukuk Market eective upon currently have the capability to enable
collecting bank and sole
the publication of its prospectus on the US dollar-denominated certificates to structuring advisor as to
29th June 2016. This is the first Islamic be publicly traded. The certificates will the laws of Oman) and
debt issuance, and the maiden Islamic be traded over-the-counter until MSM Allen & Overy (to the joint
financing, by MB Holding, and also the is able to accept US dollar-denominated placement agents and sole
instruments to be publicly traded. structuring advisor)
second corporate Sukuk issuance in the
Listing MSM
Established in 1982, MB Holding is a Shariah Shariah Supervisory
multinational corporation and one of the advisor(s) Committee of Standard
Marking a significant milestone in Chartered Bank and
Omans Islamic capital market, the five- fastest growing and largest oilfield
Amanie Shariah
year unrated dual-tranche certificates services companies in the Middle East Supervisory Board
come on the heel of the newly-published with operations in over 15 countries.
Structure Sukuk Wakalah
The main activities of subsidiary
Sukuk regulation, which seeks to spur Tradability The certificates will be
companies within MB Holding include traded over-the-counter
further Sukuk issuances particularly
drilling and oilfield services, exploration until MSM is able to accept
from private sector players. While
and production of oil and gas, marine US dollar-denominated
the new Sukuk law may be a boon for
and engineering services, mining and instruments to be publicly
prospective issuers, it presented certain traded
challenges in MB Holdings case. Face value OMR100,000 (US$258,947)

16 27th July 2016


Thinking big
By Kavilash Chawla, a partner at boutique of comfort for both the population and building a vibrant democracy within a
management consulting firm Bton Global institutions in navigating the reality Muslim-majority country with strong
and a visiting scholar at Drake University. that Turkey is both a Muslim country institutions and even a stronger belief in
and a democratic one. Despite political secularism is a monumental challenge.
This month has been another one dierences that exist, the response clearly But it is a challenge that President Recep
for the ages, with global turmoil indicates a preference for accepting this Tayyip Erdogan must succeed at! The
everywhere we look. The most recent, multifaceted identity of being a Muslim inability to navigate this challenge
and perhaps the most directly relevant country with a democratic system of represents a very ugly scenario. The
to financial services at large and Islamic government. Thats good for Islamic values-based foundations of the Islamic
finance in particular is the coup attempt finance. finance industry reinforce the ethic that
in Turkey. Lets think big about the finance is a tool toward empowerment,
good, the bad, and the ugly of it all. The bad justice and service. Economic and
The bad is about what happens now. An financial returns are necessary conditions
The good increasingly autocratic response to the for success, but they are not sucient
While an attempted military coup is coup would be bad. Certain sectors of the conditions. Islamic finance is a system of
hardly a good thing, the aftermath of the Turkish economy, such as transportation capital allocation that balances financial
failed attempt does have some positive and tourism, are already forecast to and economic returns within a very
elements. The key good is that it shows have double-digit retractions this year. deliberate values-based framework.
the commitment of both the Turkish An increasingly insular response would
people and other Turkish public sector
institutions to democracy. This is no
cause further and broader economic
contraction, undoing the good that has
The values-
small thing, and is very positive, not
only for Turkey at large, but for Islamic
built a reservoir of trust and faith in
institutions and good governance in
finance as well. As a Muslim-majority
democratic state built around secular
foundations of the
public institutions, Islamic finance
(referred to as participation finance
The education sector in Turkey,
especially private institutions of higher
Islamic inance
in Turkey), has always
had to walk a bit of
learning have been a very attractive
investment target, including for
industry reinforce
a tightrope in
Shariah compliant investors.
Sweeping decisions to punish
the ethic that inance
About 15
an entire sector is bad for the
economy as a whole and for
is a tool toward
or even 10
years ago,
investors. empowerment,
navigating Moreover, the growth of justice and service.
and growing Islamic finance depends on
the industry a vibrant economy where Economic and
in Turkey businesses and individuals
was delicate. feel comfortable spending, inancial returns are
necessary conditions
Today, even have excess income to save
the Turkish and invest, and see value in

for success, but

government is building their society rather
robustly involved than disengaging.

they are not

in the industry.
A heavy-handed response will give
The good from the failed
coup attempt for Islamic
significant pause to investors and
businesses, as it creates uncertainty suficient
finance is twofold. Firstly,
the public response
and works toward undermining
market-based forces in dictating conditions
across Turkey reinforces economic activity and capital
a commitment to law, allocation and reinforcing a political
regulations and strong calculus in driving economic and Increasing civil unrest, internal instability
institutions, all of which are capital allocation decisions. and fractionalization within Turkey
critical to a vibrant financial represent a significant threat to the ability
to eectively employ that values-based
services industry. Secondly, The ugly framework while meeting the necessary
the public and institutional The ugly is that the divisions in
response, including from the conditions of financial and economic
Turkish society that the failed coup returns. In short, the good, the bad and
business community, helped bring to the forefront are
indicates a growing level the ugly of it will come down to how
increasingly real. Navigating and President Erdogan responds.

17 27th July 2016


The blunt end

By Mohammed Khnifer, an Islamic debt their recruiting process to the fact that
capital markets banker at a supranational The root of fi nancial education will ultimately raise
banking institution as well as an AAOIFI- standards as the pool of talent deepens.
certified Shariah advisor and auditor. the problem
seems to stem
It is usually the case that these HR sta
Europes top business schools are do not have an academic qualification
sending a message: MBA holders may
no longer be able to push the envelope primarily from in banking or fi nance which makes
the process of grasping what Islamic
of fi nancial innovation. The rapidly
changing spectrum of investment and the employment fi nance is all about more dicult.

wholesale banking requires its match

of Master of Science (MSc) specialized selection criteria of While the need for highly trained
human capital in the Islamic fi nancial
fi nance degrees.
HR who apparently services industry is well acknowledged,
the root of the problem seems to
The good old days when a human
resources (HR) manager is forced
are not instructed stem primarily from the employment
selection criteria of HR who apparently
to choose a graduate specialized in
economics to be placed in the corporate
to handpick are not instructed to handpick Islamic
fi nance graduates who hold specialized
fi nance division (which is not the
graduates exact discipline) should have
Islamic inance MScs.

gone by now. But apparently, they are graduates who hold With that being said, there are signs
not (at least in some jurisdictions). that HR in Wall Street are changing
specialized their methods, albeit slowly. Of US-
What the old generation of HR based professionals in possession of an
managers, who might not have a MScs MSc degree in fi nance on
proper banking academic background, eFinancialCareer.coms resume
should come to realize is that should change fundamentally the database, just 4.8% are working in
the fi nancial industry is in the way the recruiting process mergers and acquisitions, while 7%
process of being reshaped is being implemented work in a markets-related role. Let us
from top to bottom by these universal see how many years we will take to
by graduates who banks. An MSc change the recruitment methodology of
hold the so-called degree provides a HR.
specialized fi nance professional boost
degrees (SFDs). when it is arguably
As MBA holders most needed, @MKhnifer
were the hot helping students
trend for to get ahead right
the past at the start of their Are you receiving our daily
decade, MSc careers. In contrast, IFN Alerts?
holders with MBAs often stipulate
a specialized several years of work
fi nance experience as a pre-entry
background requirement.
should be
the winning These are the next No.
bet in the age generation of graduates
of fi nancial whom you should pay a
innovation as premium in order to recruit
their technical them. Unfortunately, many
expertise is poised of them are eliminated by
to take us to the a computer-based software
next level. Specialized while they are in the first stage
MSc degrees in of the recruitment process.
capital markets, They do not even reach the
corporate fi nance, scrutiny process by the HR
fi nancial engineering, sta. With the evolution of
Islamic investment progressive specialized MSc The Number ONE news service with
banking, fi nancial risk degrees, the stakeholders over 20,000 registered daily readers
management and even of the investment
international shipping banks should adapt

18 27th July 2016


Zaman Bank on course to be fully-ledged IFN Country Correspondents

AFGHANISTAN: Dr Alam Khan Hamdard

Islamic bank president, Afghanistan Islamic Finance and Consulting Co

AUSTRALIA: Dr George Mickhail
senior lecturer, School of Accounting, Economics and Finance,
University of Wollongong, Australia
BAHRAIN: Dr Hatim El-Tahir
KAZAKHSTAN The management had analyzed in director of Islamic Finance Knowledge Center, Deloitte &
detail the success story of retail Islamic BANGLADESH: Md Shamsuzzaman
By Timur Rustemov deputy managing director, Islami Bank Bangladesh
banks in 12 countries and prepared BELGIUM: Prof Laurent Marliere, CEO, ISFIN
a new strategy suitable for the local BERMUDA: Belaid A Jheengoor
In accordance with its annual general director of asset management, PwC
legal and tax industries and business BRAZIL: Fbio Figueira
meeting, Zaman Bank shareholders partner, Veirano Advogados
environment. BRUNEI: Dr Aimi Zulhazmi, Islamic finance consultant,
have consented to the voluntary Draznine Advisory
reorganization of the bank into an CANADA: Jerey S Graham
According to the National Bank of partner, Borden Ladner Gervais
Islamic bank. Within a few months of CHINA: Abdullah Han
Kazakhstan, on the 1st July the bank's partner, Al-Sadiq Consulting
the preparation of a high-level business EGYPT: Dr Walid Hegazy
assets totaled KZT15.7 billion (US$45.73 managing partner, Hegazy & Associates
plan for launching the new Islamic
million) which is 0.06% of the assets of FRANCE: Kader Merbouh
bank, Zaman Bank submitted an co-head of the executive master of the Islamic finance, Paris-
the entire banking sector, while the loan Dauphine University
application to the regulatory authorities. HONG KONG: Amirali Bakirali Nasir
portfolio was KZT12.7 billion (US$36.99 chairman, The Law Society of Hong Kong working party on
On the 13th July 2016, National Bank of Islamic finance
million). The deposit portfolio of the INDIA: H Jayesh
Kazakhstan approved Zaman Banks founder partner, Juris Corp
bank reached KZT2.8 billion (US$8.15 INDONESIA: Farouk A Alwyni
plan on the conversion process to be CEO of Alwyni International Capital and the chairman
million) where 85% are corporate of Centre for Islamic Studies in Finance Economics and
completed not later than October 2017. Development
deposits while equity capital is about IRAN: Majid Pireh
Islamic finance expert, Securities & Exchange Organization
KZT12.1 billion (US$35.24 million). of Iran

Having a
IRAQ: Khaled Saqqaf
Despite that, Zaman Bank is the 33rd partner and head of Jordan & Iraq oces, Al Tamimi & Co
bank out of a total of 35 regional banks ITALY: Stefano Padovani, partner and head of Banking &
Finance, NCTM Studio Legale Associato

strategic in Kazakhstan that has its headquarters

outside Astana and Almaty.
JAPAN: Kaoru Haraguchi
founding attorney, Haraguchi International Law Oce
JORDAN: Nafith Al Hersh Nazzal, Islamic banking specialist,

cooperation In addition, Zaman Bank does not have

certified financial and investment advisor
KAZAKHSTAN: Timur Rustemov, deputy chairman,
association for development of Islamic finance

with the Islamic any non-performing loans and external

debts to creditors. Being part of the
KENYA: Mona K Doshi
senior partner, Anjarwalla & Khanna Advocates
KOREA: Yong-Jae Chang, partner, Lee & Ko

Corporation for Zaman Group of companies, Zaman

Bank and Zaman Leasing are taking
KUWAIT: Alex Saleh, partner, Al Tamimi & Co
LEBANON: Johnny El Hachem
partner corporate, Bin Shabib & Associates

the Development of steps in developing the Islamic finance

industry in Kazakhstan. Prior to this,
LUXEMBOURG: Said Qaceme, senior manager of Advisory &
Consulting, Deloitte Tax & Consulting
MALAYSIA: Ruslena Ramli

the Private Sector,

head, Islamic finance, RAM Rating Services
MALDIVES: Aishath Muneeza
Zaman Leasing became a co-founder of deputy minister, Ministry of Islamic Aairs, Maldives
Kazakhstan Ijara Company the first MALTA: Reuben Buttigieg

Zaman Bank is company that provides Islamic leasing

president, Malta Institute of Management
MAURITIUS: Mohammad Akshar Maherally
Director (taxation), International Financial Services
services to SMEs and corporate clients.
expected to capture MOROCCO: Ahmed Tahiri Jouti
managing consultant, Al Maali Consulting Group
NEW ZEALAND: Mohamed Nalar

the retail Islamic

Zaman Bank is an active supporter of all trustee and board member, Awqaf New Zealand
NIGERIA: Auwalu Ado;
Islamic finance initiatives in the country. Shariah auditor, Jaiz Bank
OMAN: Muhammad Abdullah Dewaya

banking market Since the beginning of the year, hundreds

of SME entities and corporations had
Islamic finance scholar
PAKISTAN: Muhammad Shoaib Ibrahim
managing director & CEO, First Habib Modaraba

with a potential expressed their willingness to switch PHILIPPINES: Rafael A Morales

managing partner, SyCip Salazar Hernandez & Gatmaitan
from conventional to Islamic and become QATAR:Amjad Hussain

total share of
partner, K&L Gates
a client of the Islamic bank. RUSSIA: Roustam Vakhitov
managing partner, International Tax Associates

40% in Having a strategic cooperation with

the Islamic Corporation for the
partner, King & Spalding
SENEGAL: Abdoulaye Mbow
Islamic finance advisor, Africa Islamic Finance Corporation

Kazakhstan Development of the Private Sector,

Zaman Bank is expected to capture
SOUTH AFRICA: Amman Muhammad
CEO, First National Bank-Islamic Finance
SINGAPORE: Suhaimi Zainul-Abidin,
advisor, 5Pillars
the retail Islamic banking market SRI LANKA: Imruz Kamil
head of Islamic banking, Richard Pieris Arpico Finance
with a potential total share of 40% in SWITZERLAND: Khadra Abdullahi
Currently, the top management of the associate, Investment banking, Faisal Private Bank
bank is accelerating eorts to upgrade SYRIA: Gabriel Oussi,
general manager, Oussi Law Firm
the banks IT system, establish a Shariah TANZANIA: Yassir Masoud
Timur Rustemov is the deputy chairman of head, Islamic banking, retail banking, National Bank of Commerce
Supervisory Board and train the TURKEY: Ali Ceylan
the Association for Development of Islamic partner, Baspinar & Partners
banks personnel. Aiming to become UAE: Rima Mrad
Finance. He can be contacted at t.rustemov@ partner, Bin Shabib & Associates
a fully-fledged retail Islamic bank in UK: Fara Mohammad
the country, the Zaman Bank team is director of Islamic finance, Foot Anstey
US: Joshua Brockwell
working on the development of a wide investment communications director, Azzad Asset Management
YEMEN: Moneer Saif; head of Islamic banking, CAC Bank
range of Islamic financial products IFN Correspondents are experts in their respective fields and
are selected by Islamic Finance news to contribute designated
focusing on SMEs and individual short country reports. For more information about becoming
an IFN Correspondent please contact sasikala.thiagaraja@

19 27th July 2016


Understanding syndicated inance

Syndicated finance is a typical financing provided by a consortium of financiers by sharing the risk of the obligor
as the amount of the financing is such that it cannot be taken entirely by any single financier. OSMAN ARSLAN

SYNDICATED FINANCE from the interim cash flows or implement

an on-sale if there is an immediate need
By Osman Arslan
for cash.
For conventional banks, this is a
The introduction of Sukuk certificates,
straightforward structure governed by
apart from its expansion and ease of
a single financing agreement whereas
execution, however is again subject
the Islamic type of the syndicated
to further scrutiny from scholars.
structure becomes more complex with
Furthermore, the purchase and sale of
the inclusion of a commodity trade
Sukuk certificates in a syndicated finance
facility also depend on the availability
of Sukuk certificates which are subject
The structure also known as the
to the availability of adequate assets to
Tawarruq arrangement is simply based
serve as the underlying pool for Sukuk
on the spot purchase of commodities by fine with the expected profit and is sure
certificates being purchased and sold in
the investment agent on behalf of the that all investments made by the Wakeel
syndicated Murabahah facilities.
financiers and the deferred sale of such are Shariah compliant.
commodities to the purchaser, whereas
the purchaser would immediately turn
the acquired commodities through an Syndicated Nevertheless, as the study for market
acceptable alternative structures

inance and
on-sale into cash. continues, the commodity Murabahah
structure still appears to be the main

Sukuk issuance will

The benefit of the commodity Murabahah structure enabling Islamic banks to tap
is that it fixes the return to the investors Islamic syndicated markets to facilitate
without taking any inventory risk in the
subject commodities. This very structure, remain vital sources their cash financing needs. Islamic banks
have been demonstrating higher growth
however, has been subject to a lot of
controversy for years now as it is not a for Islamic banks as than their conventional peers for years
both in the GCC and elsewhere in the
genuine economic transaction since the
ultimate aim of the obligor is not to gain part of the expansion world. For Islamic banks to meet the
continuously increasing demand for
possession of the commodities but rather
to receive cash derived from it. of their investor base Shariah compliant products and services,
the mere reliance on equity and funds

Despite the fact that syndicated and globalization collected is definitely not sucient to
fuel further growth in the Islamic finance
commodity Murabahah are widely
applied financing tools among the
strategies beyond industry. That is why syndicated finance
and Sukuk issuance will remain vital
Islamic banks, we see that Shariah
scholars are not unanimously contented
their local sources for Islamic banks as part of the
expansion of their investor base and
with its extensive application in the
syndicated market.
markets globalization strategies beyond their local

The lack of alternative underlying assets Amid discussions on the Tawarruq

Having conventional banks as
in sucient amounts caused precious arrangement used in the syndicated
participants in syndicated Murabahah
metals traded in liquid markets to finance market, the requirement for an
facilities also stipulates the existence of a
become the adequate commodity in acceptable and decent economic
fixed return. Unfortunately, demand and
the syndicated Murabahah finance transaction to take place might force the
participation from the conventional side
market for years. However, we are also end of the product life of the Tawarruq
would severely shrink if Islamic banks
witnessing the emergence of alternative arrangement for Islamic banks if the
were to use a Wakalah-based syndicated
structures such as using Sukuk industry can come up with a globally
finance with an expected profit element
certificates listed in exchange markets accepted and applicable Shariah
envisaged for the participants. This,
instead of commodities. Contrary to compliant trading alternative to facilitate
however, might be mitigated through
the metal trade-based commodity the ongoing growth in the syndicated
additional steps such as the Wakeels
Murabahah, this seems to be a genuine finance market.
commitment not to place funds below
trade transaction where the bank has
a certain threshold rate. Wakalah-based
the option to either hold the Sukuk Osman Arslan is CEO of Ziraat
financing seems to have common ground
certificates in its portfolio with the Participation Bank. He can be contacted at
between fully-fledged Islamic banks on
anticipation of a capital gain and benefit
a bilateral basis where the Muwakeel is

20 27th July 2016


lead managers comprise SGI African Bank, Kenanga Investment Bank,
Stock Exchange (Attijariwafa Bank), BOA Maybank Investment Bank and RHB
Capital Securities (BMCE Bank of Africa), Islamic Bank acted as the lead managers,
Besraya (M)s Sukuk due Coris Bourse (Coris Bank International), principal advisors and bookrunners for
MALAYSIA: The principal redemption Ecobank Development Corporation the tradable facility.
and periodic payment for Besraya (M)s (ETI) and Management Company and
RM700 million (US$174.72 million)
Sukuk Mudarabah will be due and
intermediation of Togo (Togo SGI). Indonesia auctions Sukuk
Proceeds from the facility will be used to INDONESIA: The government of
payable on the 28th July 2016, according finance the countrys economic and social
to an announcement on Bank Negara Indonesia is targeting to raise IDR4
development projects. trillion (US$305.6 million) through
Malaysias website.
the sale of its sovereign Sukuk (SPN-S
AEON Credit sells Sukuk 27012017 and four project-based
Mobarakeh Steel Company MALAYSIA: AEON Credit made securities series) conducted on the
sells Sukuk the second issuance of the Islamic 26th July 2016 in a bid to finance the
IRAN: Mobarakeh Steel Company, commercial papers with a nominal value Republics 2016 State Budget, according
Irans largest steelmaker, has raised of RM20 million (US$4.92 million) and to an announcement on the Ministry of
IRR1 trillion (US$33.2 million) from the a tenor of one month on the 22nd July, Finances website.
sale of Sukuk Murabahah which pays a according to a bourse filing. Proceeds
20% profit rate per annum at quarterly from the facility will be utilized for the Malaysias GII Murabahah
intervals, according to Financial Tribune. companys Shariah compliant working
The Islamic certificates were sold via capital purposes. oversubscribed
the over-the-counter market of Iran Fara MALAYSIA: Malaysias government
investment issue (GII) Murabahah
Bourse. Jambatan Kedua issues Sukuk issuance of RM3.5 billion (US$866.49
Murabahah million) with a profit rate of 3.74% has
Togo to issue Sukuk MALAYSIA: Jambatan Kedua, the been oversubscribed by 2.45 times after
TOGO: Togo has launched a XOF150 concessionaire of Penangs second receiving total bids of 211 with a total
billion (US$250.99 million) 10-year Sukuk bridge project, on the 21st July issued a amount of RM8.59 billion (US$2.13
oering with a 6.5% profit margin, RM2.6 billion (US$636.7 million) Sukuk billion), according to an announcement
according to its prospectus, and the Murabahah program, the firm confirmed on Bank Negara Malaysias website. The
subscription period for this facility will with IFN. The unrated program was facility will mature on the 26th August
run until the 10th August 2016, with a oered in multiple tenors: seven, 10, 15 2021 and BNM may purchase up to 10%
possibility of early closing. The Islamic and 25 years, with profit rates ranging of the issuance size.
Corporation for the Development of the from 3.91% to 4.86%. AmInvestment
Private Sector is the lead arranger while

DEAL TRACKER Full Deal Tracker on page 28


August 2016 Republic of Togo XOF150 billion Sukuk 26th July 2016
August-September DanaInfra Nasional RM10 billion Sukuk 19th July 2016
TBA Ekovest RM3.64 billion Sukuk Wakalah 19th July 2016
September 2016 Government of Kuwait up to KWD5 billion Sukuk 4th July 2016
July 2016 Government of Senegal XOF150 billion Sukuk 30th June 2016
TBA Maxis Broadband TBA Sukuk Murabahah 30th June 2016
July 2016 Sarawak Hidro RM5.5 billion Sukuk 28th June 2016
TBA Iranian Mines and Mining IRR4 trillion Sukuk Musharakah 24th June 2016
Industries Development and
Renovation Organization
TBA Neelum Jhelum Hydropower PKR100 billion Sukuk 23rd June 2016

(MSC) in partnership with the IDB, will unit and is working together with the
soon introduce Islamic microfinancing Ministry of Finance, Planning and
models in the country as part of the Rural Economic Development in preparation
Uganda to introduce Islamic Income and Employment Enhancement for the launch of three Islamic
microinancing by 2017 Project (RIEEP) and will take eect in microfinancing models of Musharakah,
UGANDA: The government of Uganda, the 2016/2017 financial year, announced Mudarabah and Murabahah.
through the Microfinance Support Center the MSC. The MSC is the implementing

21 27th July 2016


ASIA Fintech regulation to be out in Nominees (Asing), and it is just a matter

of submitting applications to Bank
fourth quarter Negara Malaysia and other authorities
New Islamic banking player in MALAYSIA: Bank Negara Malaysia for approvals, according to The Edge
(BNM) will issue a consultative paper
Bangladesh on financial technology (fintech) this
Markets quoting AFGs chairman Oh
BANGLADESH: IFN understands Chong Peng. Oh also said that the
month, seeking industry comments and reorganization, which is expected to be
from a senior industry source that
feedback, according to state news agency done within a year, is unlikely to involve
Standard Banks Islamic banking license
Bernama quoting BNMs governor, any additional fundraising.
application has been approved by the
Muhammad Ibrahim. The regulatory
central bank of Bangladesh. An ocial
framework enabling the adoption of
announcement is expected to be made
fintech is expected to be released in the Bank Muamalats socially
within the next two weeks.
fourth quarter of 2016. responsible debit card
MALAYSIA: Bank Muamalat Malaysia
Bank Islam Malaysia to AFG plans merger with will contribute 20% of the interchange fee
inance Waqf projects banking unit
income from its newly launched Aisya
MALAYSIA: Bank Islam Malaysia has debit card to Waqf collection, according
MALAYSIA: Alliance Financial Group to a press release. The new debit card is
inked an agreement with Urus Maju
(AFG) is planning to merge with its said to be the first of its kind in Malaysia
Ehsan, a subsidiary of Perbadanan
wholly-owned subsidiary Alliance to incorporate spending with socially
Wakaf Selangor, to provide RM15.5
Bank Malaysia, which in turn wholly responsible features of Waqf, and the
million (US$3.8 million) in financing for
owns Alliance Islamic Bank, Alliance card also complies with the banking
two Waqf land development projects in
Investment Bank, Alliance Direct requirements advocated by Bank Negara
Selangor. The two projects, according to a
Marketing, AllianceGroup Nominees Malaysia.
press statement, consist of developing an
(Tempatan) and AllianceGroup
apartment, shop lots and shop oces.

GLOBAL Amana and Al Zaman

other possible locations are currently
under consideration. The firm is gaining
particular traction in Indonesia, where collaborate
Clyde & Co plans Islamic it already has an association with local GLOBAL: Amana Bank, an Islamic
bank based in Sri Lanka, has forged
expansion law firm LGS, according to head of
a partnership with Qatars Al Zaman
GLOBAL: Clyde & Co is looking Islamic finance Adil Hussein. We will
be focusing on developing our Southeast Exchange to launch an instant money
to Southeast Asia for expansion
Asian Islamic finance practice over the remittance service to Sri Lanka, according
possibilities. A new oce in South
next 12 months, he confirmed to IFN. to The Peninsula.
Korea has already been confirmed, and


(Murabahah) worth SAR200 million
(US$53.29 million) for the latter to
finance its working capital, according to
Al Rayan sees growth in expat Jordan looks to Islamic a bourse filing. The facility is backed by
market inance a promissory note from MEAHCO and
UK: Al Rayan Bank has seen a 141% JORDAN: The government of Jordan the repayment is over eight quarterly
increase in annual expat property will be using Islamic finance to support installments starting three months after
financing since 2013, with 15% of the Hashemite Kingdoms endowment the disbursal.
new retail property financing from projects and investment portfolios,
announced Minister of Planning
expats generated between January and
and International Cooperation Imad
Noor Investments pursues
May 2016, the Islamic bank said in a
statement. Fakhoury, as reported by Jordan Times. legal case against TID
This is among a raft of initiatives KUWAIT: Noor Investments of Kuwait
introduced by the government including has brought a case to the Court of Appeal
Bank Asyas license canceled developing a comprehensive program to have The Investment Dar (TID)
TURKEY: Following the suspension of to introduce people to the financing and declared bankrupt. The court will hear
Bank Asyas operations on the 18th July by loans available to Jordanians to start the review of its committee of experts
the Turkish Deposit Insurance Fund as SMEs. on the 26th October; meanwhile TID in
the sale of the participation bank failed a statement to investors said it is ready
to attract bids, the Banking Regulation to cooperate fully with investor groups
and Supervision Agency has canceled MEAHCO procures Islamic who wish to work toward a consensual
Bank Asyas banking license, the bank inancing facility solution to the Islamic investment firms
confirmed in a statement. SAUDI ARABIA: Samba Financial problems. Until a solution is found, the
Group and Middle East Healthcare management has the mandate from
Company (MEAHCO) have signed TIDs board to pursue all necessary
an Islamic credit facility agreement

22 27th July 2016


legal channels and structures in the best

interest of all stakeholders.

Meethaq opens 14th branch

OMAN: Meethaq, an Islamic banking
arm of Bank Muscat, has inaugurated
its 14th branch in Corniche, Muttrah,
according to the Times of Oman.

Islamic Holding Group
QATAR: Islamic Holding Groups first
half net profit came in 84% lower year-
on-year at QAR954,078 (US$261,920)
compared with QAR6.04 million

(US$1.66 million) for the same period of
the previous year, according to a bourse
filing. Earnings per share amounted to
QAR0.18 (4.94 US cents) compared with
QAR1.51 (41.45 US cents) in the first half
of 2015.
Takaful Oman Insurance
OMAN: Takaful Oman Insurance posted #IFNTurkey16
a profit of OMR1.62 million (US$4.2
million) in the first half of 2016, double
that of the OMR814,316 (US$2.11 million)
the company recorded in the same period IFN Turkey Forum
in the previous year, according to a filing 28th September 2016
to Muscat Securities Market. Its Wakalah Borsa Istanbul
fees came in at OMR2.7 million (US$6.99
million) for the period compared with
Turkey is another upcoming market for Islamic finance and one which many players have long had their eyes on.
OMR1.36 million (US$3.52 million) in the
first half of 2015. With a strong commitment from the Turkish authorities, the industry continues to flourish and IFN Turkey remains
one of our strongest and longest-running events.
Saudi British Bank
SAUDI ARABIA: Saudi British Bank, As the country steps up its Shariah compliant activities, new players, new regulations and new issuances make for
which oers Islamic financial solutions, a vibrant market driven by growing investor interest both domestic and international. With exceptional support
posted a net profit of SAR1.15 billion from the Turkish regulators making this a truly progressive event, IFN Turkey returns to the excellent facilities of
(US$306.45 million) during the second Borsa Istanbul for its 2016 incarnation.
quarter this year, a marginal 1.23%
increase year-on-year from SAR1.14
billion (US$303.79 million) the bank
recorded in the similar quarter in 2015,
according to a bourse filing.

National Bank of Fujairah

National Bank of Fujairah (NBF) saw
its net profit slide 9.4% year-on-year to
AED275.1 million (US$74.88 million) EXECUTIVE PARTNERS
while its net impairment losses expanded
to AED154.7 million (US$42.84 million)
in 2015, reflecting NBFs prudent loan
loss provisions in response to the more
challenging operating environment. MEDIA PARTNERS

According to a statement, NBFs

operating income, however, experienced
a growth of 8.5% while its net interest W: | E: | T: 603 2162 7800 ext. 43 | Twitter : #IFNTurkey16

23 27th July 2016


income and net income from Islamic the second quarter of 2016, 75.82% lower the previous quarters SAR7.43 million
financing and investment activities grew year-on-year compared with SAR736 (US$1.98 million).
by 5.8%. million (US$196.18 million) it posted in
the similar quarter of the previous year, Labuan IBFC
Saudi Hollandi Bank according to a bourse filing. MALAYSIA: Labuan International
SAUDI ARABIA: Saudi Hollandi Bank Business and Financial Center (Labuan
reported a decline by 2.49% in net profit Mashreq IBFC) saw Islamic financing increase
to SAR1.05 billion (US$279.81 million) UAE: Mashreq recorded a 1.4% quarter- by 55% to US$1.8 billion in 2015 against
for the first six months of 2016 against on-quarter growth in net profit to US$993.3 million the year before.
SAR1.08 billion (US$287.8 million) in AED539 million (US$146.71 million) According to its annual report, non-
the similar period in 2015, according in the April-June period of 2016 while residents dominated 77.3% of total
to a bourse filing. The bank, however, its net interest income, income from Islamic financing.
witnessed a 6.22% increase in total assets Islamic financing and interest earned
for the reported period to SAR108.64 on marketable securities rose 3.6% from Tawuniya
billion (US$28.95 billion). AED900 million (US$244.96 million) SAUDI ARABIA: The Company for
in the previous quarter, according to a Cooperative Insurance (Tawuniya)
Qatar International Islamic statement. The banks total assets for reported a 3.32% year-on-year decline in
the first half of 2016 declined 0.4% to
Bank AED114.7 billion (US$31.22 billion).
pre-Zakat net profit to SAR305.42 million
QATAR: Qatar International Islamic (US$81.41 million) in the first half of
Bank posted a net profit of QAR443 2016, according to its interim financial
million (US$121.62 million) in the first Alinma Bank results. Net written premiums for the
half of 2016, representing a 1.1% growth SAUDI ARABIA: Alinma Bank reported period were up 23.15% to SAR3.31 billion
year-on-year compared with QAR438 a 12.83% growth in net profit in the first (US$882.26 million).
million (US$120.24 million) it recorded six months of 2016 to SAR800 million
in the same period of the previous year, (US$213.24 million). According to its Sharjah Islamic Bank
according to a press release. Total assets interim financial results, the increase was UAE: For the first six months of 2016,
for the period grew 9.8% to QAR42.3 due to a 15% decline in total operating Sharjah Islamic Bank expanded its
billion (US$11.61 billion) from QAR38.5 expenses. Total assets were up 19.97% to net profit by 25.6% to AED257 million
billion (US$10.57 billion) for the same SAR98.19 billion (US$26.17 billion). (US$69.97 million) from AED204.6
period of 2015. million (US$55.7 million) in the similar
Arab National Bank period in 2015, with total assets for the
Samba Financial Group SAUDI ARABIA: Arab National Bank, reported period reaching AED29.8 billion
SAUDI ARABIA: Samba Financial which oers Islamic products, reported (US$8.11 billion). According to a press
Groups net profit for the first half of a 2.41% year-on-year drop in net profit release, the bank also repaid its US$400
2016 shrunk by 1.41% to SAR2.57 billion to SAR1.57 billion (US$418.48 million) in million Sukuk via its own sources,
(US$684.86 million) compared with the first six months of 2016 as a result of a highlighting its excellent liquidity
SAR2.61 billion (US$695.52 million) 3.4% increase in total operating expenses, position.
achieved in the similar period in 2015, according to a bourse filing. Total assets
according to a filing to Tadawul. Sambas edged up 0.09% to SAR166.58 billion Bank Islami Pakistan
total assets expanded 3.57% to SAR233.99 (US$44.4 billion). PAKISTAN: Bank Islami Pakistan in
billion (US$62.35 billion) as at the end of a bourse filing reported a net profit of
June 2016. Warba Bank PKR125.4 million (US$1.2 million) for the
KUWAIT: Warba Bank registered a quarter ended March 2016, a 76% jump
Abu Dhabi Commercial Bank 44% surge in net profit to KWD455,000 year-on-year from the PKR71.28 million
UAE: Abu Dhabi Commercial Bank, (US$1.5 million) in the first half of 2016 (US679,504) it recorded in the similar
which operates Islamic banking activities, against the same period in 2015 on the quarter of the previous year.
reported a net profit of AED2.15 billion back of a 50% growth in total revenues
(US$585.19 million) in the first half of to KWD16.7 million (US$55.17 million), Al Rajhi Company for
according to the state news agency.
2016, 15% lower year-on-year compared
Total assets for the Islamic bank stood at Cooperative Insurance
with AED2.53 billion (US$688.62 million) SAUDI ARABIA: Al Rajhi Company for
the bank recorded in the similar period KWD918 million (US$3.03 billion) at the
end of June 2016. Cooperative Insurance has expanded its
of the previous year, according to a second quarter net profit before Zakat
statement. Total net interest and Islamic by 179.04% to SAR24.43 million (US$6.51
financing income, meanwhile, was 2.52% Alinma Tokio Marine Co million) from the previous quarters
lower at AED3.1 billion (US$843.76 SAUDI ARABIA: Alinma Tokio Marine SAR8.76 million (US$2.33 million) on the
million) for the period compared with Co reported a net loss of SAR18.26 back of an increase in net contributions
AED3.18 billion (US$865.53 million) in million (US$4.86 million) for the six- earned of 11.24% and realization of
the first half of 2015. month period ending the 30th June 2016, policyholder and shareholder investment
an increase of 33.77% from last years income. According to a bourse filing, Al
Bank Aljazira SAR13.65 million (US$3.64 million). Rajhis net profit before Zakat for the first
SAUDI ARABIA: Shariah compliant According to a bourse filing, net loss for six months of 2016 stood at SAR33.19
Bank Aljazira reported a net profit of the current quarter expanded by 45.8% to million (US$8.84 million), up 49.73%
SAR178 million (US$47.45 million) for SAR10.83 million (US$2.89 million) from year-on-year.

24 27th July 2016


Sabana REIT of 2016, a decline of 10.9% from SG$25.41 in its net property income to SG$13.97
SINGAPORE: Sabana REIT reported million (US$18.69 million) in 2015, million (US$10.27 million) in the reported
a gross revenue of SG$22.63 million according to a statement. The trust also period.
(US$16.64 million) in the second quarter observed a 24.3% year-on-year decline

consideration for the transfer was based a statement has directed all asset
on the cost of investment of AIGB in management companies (AMCs) to
AmFunds and AIFM. calculate and disclose the total expense

MANAGEMENT SC amends unit trust

ratio (TER) of all mutual funds under
their management in a bid to bring
Bursa Malaysia to enhance CIS guidelines
about uniformity in the mutual fund
industry and provide investors with an
framework MALAYSIA: The Securities Commission opportunity to make informed decisions
MALAYSIA: Bursa Malaysia has Malaysia (SC) has amended the relevant based on enhanced disclosures. The
published a consultation paper guidelines for the unit trust industry as directive also requires AMCs to disclose
proposing to enhance the collective part of initiatives aimed at enhancing the TER in periodic financial statements
investment scheme (CIS) regulatory the competitiveness and eciency of the of the mutual fund and in a monthly
framework and is seeking feedback industry. According to a statement, key fund managers report.
from the public on the proposals until changes include an expedited approval
the 19th September 2016, according to a process for non-complex retail unit trust Separately, the SECP also urged the
statement. funds to reduce time-to-market and Mutual Funds Association of Pakistan
removing the need for prospectuses to be to ensure that retail investors are not
Internal reorganization for renewed on an annual basis for greater charged any upfront commission on
operational eciency. The amendments
AMMB to the relevant guidelines will take eect
investments in mutual funds, unless
MALAYSIA: AMMB Holdings on the these investors have first been fully
on the 15th August 2016. informed about it. The SECP will also
21st July acquired 100% shareholding in
AmIslamic Funds Management (AIFM) conduct a study on the sales practices of
and AmFunds Management from New standards for mutual the mutual fund industry, and will take
AmInvestment Group (AIGB) which fund industry strict action against any AMCs whose
is wholly owned by AMMB. AMMB PAKISTAN: The Securities and Exchange sales team is found to be mis-selling.
in an announcement noted that the Commission of Pakistan (SECP) in

20th September 2016 16th August 2016
DoubleTree Hotel, Kuala Lumpur DoubleTree Hotel, Kuala Lumpur
SIDC CPE - accredited: 10 CPE Points
As the Islamic banking industry continues to develop and mature, the occurrence of defaults and the need for rescheduling
and refinancing become inevitable. Given the lack of precedent in handling such cases, a clear legislative and regulatory
framework is required to ensure adherence and compliance to Shariah principles and other regulations. Shariah non-compliance risk has been defined as The risk that arises from the banks failure to comply with the Shariah rules and
principles determined by the relevant Shariah regulatory councils.(IFSB). This timely one day course sets out Shariah compliance
This one day multi-speaker seminar will provide bankers, lawyers and scholars involved in Islamic finance with a clear and governance requirements under Malaysian law. It also discusses the role of compliance and Shariah compliance functions,
analysis and understanding of the key regulatory and Shariah issues surrounding restructuring of Islamic finance facilities as as well as specifically the obligations, procedures, disclosure and reporting requirements and rectification options in the case of
well as crucial legal, procedural, documentation and accounting issues to consider when defaults occur. Shariah non-compliance.

BNM guidelines on Rescheduled and Restructured Financing t4IBSJBI$PNQMJBODFBOE(PWFSOBODF3FRVJSFNFOUTXJUIJOBO*'*
Shariah Parameters in a Restructuring or Rescheduling Exercise t3FHVMBUPSZ*TTVFTPG4IBSJBI(PWFSOBODFBOE4IBSJBI/PO$PNQMJBODF3FQPSUJOH
Key Legal Documentation for Restructuring and Rescheduling Facilities t1SPDFEVSFT 0CMJHBUJPOTBOE3FTQPOTJCJMJUJFTPG4IBSJBI/PO$PNQMJBODF3FQPSUJOH 4/$

Default and Recovery Procedures for Restructured and Rescheduled Facilities t3FDUJDBUJPO0QUJPOTJOUIF4JUVBUJPOPG4/$
Case Studies for Restructuring Islamic Finance Facilities
Workouts and Restructuring Sukuk and Islamic Syndicated Transactions Panel Speakers:
Associate Professor Dr Rusni Hassan Ahmad 'Arif Bin Mohd Arshad
Member, Head,
Panel Speakers: Shariah Advisory Council, Group Shariah Business Compliance,
Mohd. Johan Lee Dato' Mohd Arief Emran bin Arifin Bank Negara Malaysia and Deputy Dean, IIUM Group Risk, Compliance & Credit
Managing Partner, Partner, Institute of Islamic Banking and Finance Management, RHB Islamic
J. Lee & Associates Wong & Partners
Prof. Dr. Mohamad Akram Laldin
Executive Director,
International Shariah Research Academy for
Islamic Finance (ISRA)
W: | E: | T: 603 2162 7800 ext. 43
W: | E: | T: 603 2162 7800 ext. 43

25 27th July 2016


RATINGS Bank Asyas ratings The gap between credit and deposit
growth is widening and has increased
withdrawn the system average net financing/deposit
KFHs ratings afirmed TURKEY: Islamic International Rating ratio to 108.4% as of May 2016, compared
KUWAIT: Capital Intelligence in a Agency (IIRA) has withdrawn Bank with 95.8% as of May 2015 and 103.5%
statement confirmed the financial Asyas B-/B ratings on both the foreign as of December 2015, and this financing
strength rating of Kuwait Finance House and local currency international scale gap negatively aects banks funding
(KFH) at BBB supported by KFHs and its B+(tr)/B(tr) ratings on the and liquidity profiles, the rating agency
dominance of the Islamic banking sector national scale, due to the non-renewal noted. There are two Islamic banks
in Kuwait as well as its large overall of the rating agreement, according to a in Oman, and six conventional banks
market share in both deposits and statement. operating Shariah windows.
loans, and by the significantly improved
equity base following the June 2013 Moodys afirms ratings of Axiata SPV2s Sukuk facility
rights issue. The Islamic banks support
rating is maintained at 1 and its long-
EXIM Sukuk Malaysia assigned inal rating
MALAYSIA: Moodys has armed the MALAYSIA: The US$500 million
term foreign currency and short-term
A3 long-term ratings of Export-Import Sukuk facility issued by Axiata SPV2 (a
foreign currency ratings at A and A1
Bank of Malaysia (EXIM) Sukuk Malaysia subsidiary of Axiata Group) has been
respectively with all ratings carrying a
with a stable outlook, according to a assigned a definitive Baa2 rating by
stable outlook.
statement. The rating agency similarly Moodys. The paper is drawn down from
armed the A3 long-term foreign
Albaraka Insurance Company currency issuer and senior unsecured
its existing US$1.5 billion multi-currency
Sukuk program.
receives BBB rating ratings of EXIM, with a stable outlook.
SUDAN: The Islamic International
Sepangar Bays Sukuk
Rating Agency has assigned a Takaful Rating agencies evaluate
financial strength rating of BBB to reafirmed
AlBaraka Insurance Company with a
Turkey post-coup attempt MALAYSIA: Sepangar Bay Power
TURKEY: As a result of the attempted Corporations RM575 million (US$141.45
stable outlook, according to a statement.
coup in Turkey on the 16th July and the million) nominal value Sukuk
The fiduciary score was assessed in the
subsequent political polarization, the Murabahah program has been rearmed
range of 61-65, reflecting adequate
downside risks for Turkish banks credit at AA1/Stable by RAM based on the
fiduciary standards.
profiles and ratings have increased, companys robust cash flow-generation
according to Fitch. The rating agency
RAM reafirms Encorp continues to view the Turkish banking
to service debt obligations, supported by
the favorable terms of its power purchase
Systembilts Sukuk sectors as fundamentally sound. There agreement with its sole otaker, Sabah
MALAYSIA: RAM has rearmed has been little evidence of deposit Electricity, the rating agency said in a
the AA2/Positive rating on Encorp instability triggered by the attempted statement.
Systembilt (ESSB)s RM1.58 billion coup, and the central bank has indicated
(US$394.36 million) Sukuk Murabahah, its readiness to provide liquidity support
according to a statement. The to the sector, it said in a statement. RAM reafirms Batu Kawans
rearmation reflects the rating agencys Islamic notes
expectation that ESSBs debt-servicing The potential negative implications MALAYSIA: RAM has rearmed the
aptitude would continue to improve on Turkeys sovereign rating and AA1/Stable rating on Batu Kawans
on the back of cash accumulation via economy as well as the ratings on its Islamic medium-term note program
consistent concession payments from banks (particularly Kuveyt Turk Katilim of up to RM500 million (US$122.42
the government and a solid investment Bankasi and Turkiye Finans Katilim million), according to a statement. The
income performance. Bankasi) arising from the coup attempt rating agency noted that although the
are also being evaluated by RAM. The companys credit metrics had not met
rating agency said in a statement that the
RAM reafirms West Coast countrys account position and external
expectations and could remain soft over
the next one to two years, Batu Kawan
Expressways Sukuk reserves will weaken further and as a is suciently mitigated by the groups
MALAYSIA: RAM has rearmed the result, GDP growth is expected to drop robust cash reserves and still strong
ratings on Tranche 1 and Tranche 2 of from its previous 3.2% forecast. balance sheet.
West Coast Expressways RM1 billion
(US$249.59 million) guaranteed Sukuk
Murabahah program (2015/2036) at
Omani banks credit growth a Receive all the latest news via the
AAA(bg)/Stable and AAA(fg)/Stable credit negative No.1 Islamic nance based feed
respectively, according to a statement. OMAN: Moodys said in a statement that
The ratings reflect irrevocable and the 13.5% growth in total credit extended
unconditional Kafalah extended by by Omans conventional and Islamic
AAA-rated Bank Pembangunan banks over the last 12 months that ended
Malaysia and Danajamin Nasional, in May and that materially exceeded
which enhance the Sukuks ratings the low 0.4% growth in total deposits
beyond West Coasts stand-alone credit (according to the Central Bank of Omans
strength. May 2016 Monthly Statistical Bulletin),
is a credit negative for Omani banks.

26 27th July 2016


was reported as saying that the reason policyholder); compliance of shareholder
the majority of the funds raised will be and policyholder investments with
going to its life insurance subsidiary was Shariah guidelines; and review and
GETB to offer new products because it has big potential to grow amid amend the companys insurance policy
MALAYSIA: Great Eastern Takaful small insurance penetration of below which is to be submitted for final
(GETB) will be launching six new 2%. approval to the Saudi Arabian Monetary
products: three bancaTakaful products Agency. SRB will lead the ongoing
and three under agency distribution
channels, the Takaful operator confirmed QCB issues new circular for supervision and monitoring of the
companys aforementioned functions
to IFN. insurance industry and related processes from a Shariah
QATAR: Qatar Central Bank has perspective and will also conduct
Capital Financial to establish issued a circular allowing insurance Shariah audits to evaluate the extent
and reinsurance and also Takaful and
Takaful unit re-Takaful companies working in the
of its adherence with directed Shariah
INDONESIA: Capital Financial policies and guidelines and to report any
country to impose a higher premium on defective processes.
Indonesia plans to establish two new motorists who have caused accidents or
subsidiaries, namely Capital Life Syariah violated trac laws. The new initiative is
and Capital Global Ventura, with fresh expected to contribute toward improving Amana Takaful Lifes IPO
capital raised from its IPO, according to the conduct of road users and attaining successful
The Jakarta Post. The group is expecting trac safety on the road. SRI LANKA: Amana Takaful Lifes IPO
to raise IDR715 billion (US$54.63 million) has been oversubscribed, according to the
by divesting to the public its 5.5 billion
shares or 47.61% of its total capital with Al Alamiya gets SRBs companys chairman, Tyeab Akbarally,
reported Daily News. The company
92% of the funds raised via IPO to be approval floated 10% of its total stake, or 50 million
injected into its life insurance subsidiary SAUDI ARABIA: Shariyah Review ordinary voting shares, at LKR1.5 (1 US
as capital while 7.45% is to be used to Bureau (SRB) has granted approval to cent) per share on the Colombo Stock
build its Takaful unit and injected into Al Alamiya for Cooperative Insurance Exchange on the 21st July.
the venture capital. Capital Financials Company for the following functions:
president director, Hengky Setiono, separation of accounts (shareholder and

release. The appointment coincides with EVP of operations; Menduh Kara, EVP
the Green Sukuk Working Group adding of commercial banking; and Mustafa
several CEBC members namely Ashurst, Saglam, EVP of retail banking and
MCB Bank Latham & Watkins and National Bank distribution network.
PAKISTAN: MCB Bank, which owns
of Abu Dhabi to its membership, along
MCB Islamic Bank, has appointed Irfan
with Amanie Advisors, HSBC and S&P. The respective departments deputy
Ahmed Hashmi as a director with
The group is the first of its kind set up EVPs are currently standing in as acting
eect from the 14th July 2016, replacing
to finance renewable energy projects EVPs.
Sarmad Amin, subject to approval from
through the issuance of Sukuk in the
the State Bank of Pakistan, according to
an announcement to the Pakistan Stock
MENA region. Al Rajhi Bank Malaysia
Exchange. MALAYSIA: Al Rajhi Bank Malaysia
Turkiye Finans has appointed Dr Nik Norzrul Thani
TURKEY: Four executive vice-presidents Nik Hassan Thani as its new chairman,
CEBC (EVPs) of Turkiye Finans Katilim eective the 13th July 2016, according to
UAE: The Clean Energy Business Council
Bankasi have resigned, the Islamic a statement. Nik Norzrul was previously
(CEBC) has appointed Dr Nasser Saidi
bank confirmed with IFN. They are: the acting chairman and has served as a
and Mhairi Main Garcia as the chair
Erol Gorgun, EVP of risk monitoring, board member of the bank since 2006.
and vice-chair respectively for the next
collections and legal; Dursun Arslan,
two-year term, according to a press

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27 27th July 2016


Expected date Company's name Size Structure Announcement Date

August 2016 Republic of Togo XOF150 billion Sukuk 26th July 2016
August-September DanaInfra Nasional RM10 billion Sukuk 19th July 2016
TBA Ekovest RM3.64 billion Sukuk Wakalah 19th July 2016
September 2016 Government of Kuwait up to KWD5 billion Sukuk 4th July 2016
July 2016 Government of Senegal XOF150 billion Sukuk 30th June 2016
TBA Maxis Broadband TBA Sukuk Murabahah 30th June 2016
July 2016 Sarawak Hidro RM5.5 billion Sukuk 28th June 2016
TBA Iranian Mines and Mining IRR4 trillion Sukuk Musharakah 24th June 2016
Industries Development and
Renovation Organization
TBA Neelum Jhelum Hydropower PKR100 billion Sukuk 23rd June 2016
TBA Government of Oman US$2.5 billion Sukuk 20th June 2016
Second quarter of 2016 Bank Albilad up to SAR2 billion Sukuk 20th June 2016
TBA Tiga Pilar Sejahtera Food IDR1.5 trillion Sukuk 17th June 2016
Jul-16 Public Sector Home Financing RM25 billion Sukuk/Bonds 13th June 2016
TBA Almarai Company TBA Sukuk 10th June 2016
By the end of 2017 Ministry of Housing Saudi TBA Sukuk 9th June 2016
TBA Mahan Air IRR5 trillion Sukuk Ijarah 8th June 2016
TBA The Philippines TBA Sukuk 6th June 2016
Jun-16 Pengurusan Air SPV RM1.4 billion Sukuk 3rd June 2016
TBA GFH Financial Group US$150 million Sukuk 2nd June 2016
TBA Government of Sri Lanka US$1 billion Sukuk 27th May 2016
TBA Saudi Aramco TBA Sukuk 26th May 2016
TBA Al-Tajamaout for Touristic JOD45 million Sukuk Ijarah 24th May 2016
Third quarter of 2016 Government of Nigeria TBA Sukuk 23rd May 2016
TBA Societe Generale RM1 billion Sukuk 23rd May 2016
TBA Bank Muamalat Malaysia RM1 billion Sukuk Murabahah 23rd May 2016
TBA Bank Rakyat Malaysia RM5 billion Sukuk Murabahah 20th May 2016
TBA Government of Germany US$1 billion Sukuk 18th May 2016
TBA Aktif Bank TRY100 million Sukuk 9th May 2016
By 2017 Republic of Maldives TBA Sukuk 29th April 2016
Second half of 2016 Saudia up to SAR5 billion Sukuk 26th April 2016
By 2017 BRI Syariah TBA Sukuk 21st April 2016
TBA PRAN Foods BDT1 billion Sukuk 11th April 2016
Fourth quarter of 2016 Bank Syariah Mandiri IDR1 trillion Sukuk 5th April 2016
TBA Qatar International Islamic Bank QAR1 billion Sukuk 31st March 2016
2016-17 Sarana Multigriya Finansial IDR200 billion Sukuk 4th March 2016
TBA Ziraat Participation Bank TRY1.5 billion Sukuk 1st March 2016
TBA Hong Kong TBA Sukuk 1st March 2016
TBA Cahya Mata Sarawak RM1 billion Sukuk Ijarah 22nd February 2016
TBA Saudi Electricity Company US$2.5 billion Sukuk 16th February 2016
2016 Kuwait Finance House TBA Sukuk 1st February 2016
TBA Oman Telecommunications US$130 million Sukuk 28th January 2016
March-April 2016 Government of Qatar TBA Sukuk 26th January 2016
2017 Government of Kenya TBA Sukuk 26th January 2016

28 29th July 2016


REDmoney Asia ex. Japan 6 Months REDmoney Europe 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap
2500 1200

2090 1100

1680 1000

1270 900

860 800

450 700
Feb Mar Apr May Jun Jul Feb Mar Apr May Jun Jul

REDmoney GCC 6 Months REDmoney Global 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap
1300 2200

1130 1896

960 1592

790 1288

620 984

450 680
Feb Mar Apr May Jun Jul Feb Mar Apr May Jun Jul

REDmoney MENA 6 Months REDmoney US 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap
1150 2250

1000 1960

850 1670

700 1380

550 1090

400 800
Feb Mar Apr May Jun Jul Feb Mar Apr May Jun Jul

SAMI Halal Food Participation (All Cap) 6 months






Feb-2016 Mar-2016 Apr-2016 May-2016 Jun-2016 Jul-2016

29 27th July 2016


REDmoney Global Shariah Index Series (All Cap) 6 Months REDmoney Global Shariah Index Series (Large Cap) 6 Months
REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global
REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA
REDmoney GCC REDmoney US REDmoney GCC REDmoney US
1400 1250

1210 1080

1020 910

830 740

640 570

450 400
Feb Mar Apr May Jun Jul Feb Mar Apr May Jun Jul

REDmoney Global Shariah Index Series (Medium Cap) 6 Months REDmoney Global Shariah Index Series (Small Cap) 6 Months

REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global
REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA
REDmoney GCC REDmoney US REDmoney GCC REDmoney US
2250 2450

1900 2060

1550 1670

1200 1280

850 890

500 500
Feb Mar Apr May Jun Jul Feb Mar Apr May Jun Jul

REDmoney Global Shariah

Equities are considered eligible for inclusion Utilities Basis Materials
Telecomunication Services 2% 15%
into the REDmoney Global Shariah Index 2%
Series only if they pass a series of market Consumer Goods Services
related guidelines related to minimum market Technology
capitalization and liquidity as well as country 14%
Once the index eligible universe is determined Non-Cyclical
Consumer Goods Services
the underlying constituents are screened 7% Financials
using a set of business and financial Shariah 4%
guidelines. Industrials Healthcare
22% 11%

The REDmoney Global Shariah Index Series powered by IdealRatings consists of a rich subset of global listed equities that adhere to clearly
defined and transparent Shariah guidelines defined by Shariyah Review Bureau in Jeddah, Saudi Arabia.

The REDmoney Shariah Indexes provides Islamic investors with an accurate and Shariah-specific equity performance benchmark with optimized
compliance credibility due to the intensive research conducted to ensure that index constituents do not conflict with the defined Shariah

IdealRatings is the leading provider of Shariah investment decision support tools to investors globally, including asset managers, brokers, index
providers, and banks to empower them to develop, manage and monitor Shariah investment products and Shariah compliant funds. IdealRatings
is headquartered in San Francisco, California. For more information about IdealRatings visit:

For further information regarding REDmoney Indexes contact:

REDmoney Global Shariah Index Series
Andrew Morgan
Managing Director, REDmoney Group
RED Email:
Tel +603 2162 7800

30 27th July 2016


Eurekahedge North America Islamic Fund Index

Index Values






Top 10 Monthly Returns for Global Islamic Funds
Fund Fund Manager Performance Measure Fund Domicile
1 Deutsche Noor Precious Metals Securities - Class A DWS Noor Islamic Funds 23.29 Ireland
2 AmPrecious Metals AmInvestment Management 13.76 Malaysia
3 BLME Sharia'a Umbrella SICAV-SIF Global Bank of London and The Middle East 0.38 Luxembourg
Sukuk - Class A USD
4 Al Rajhi Global Equity Fund UBS 0.19 Saudi Arabia
5 db x-trackers DJ Islamic Market Titans 100 ETF DB Platinum Advisors 0.18 Luxembourg
6 Al Rajhi Commodity Mudarabah - USD Al Rajhi Bank 0.14 Saudi Arabia
7 BLME Umbrella Sicav - SIF - USD Income - Class B Bank of London and The Middle East 0.12 Luxembourg
8 Watani KD Money Market National Bank of Kuwait 0.05 Cayman Islands
9 Watani USD Money Market National Bank of Kuwait 0.01 Cayman Islands
10 Oasis Crescent Global Property Equity Oasis Global Management Company (Ireland) -0.10 Ireland
Eurekahedge Islamic Fund Index 1.11
Based on 81.82% of funds which have reported June 2016 returns as at the 21st July 2016
Top 10 Monthly Returns for ALL Islamic Funds
Fund Fund Manager Performance Measure Fund Domicile
1 Deutsche Noor Precious Metals Securities - Class A DWS Noor Islamic Funds 23.29 Ireland
2 AmPrecious Metals AmInvestment Management 13.76 Malaysia
3 Batavia Dana Saham Syariah Batavia Prosperindo Aset Manajemen 6.10 Indonesia
4 CIMB S&P Ethical Asia Pacific Dividend ETF CIMB-Principal Asset Management (S) 3.02 Singapore
5 Dana Ekuiti Dinamik Manulife Insurance (Malaysia) 2.79 Malaysia
6 Amana Income Saturna Capital 2.34 US
7 NBAD Islamic MENA Growth National Bank of Abu Dhabi 2.19 UAE
8 Pakistan International Element Islamic Asset Arif Habib Investment Management 2.09 Pakistan
9 Am-Namaa' Asia-Pacific Equity Growth AmInvestment Management 2.03 Malaysia
10 Public Islamic Sector Select Public Mutual 1.78 Malaysia
Eurekahedge Islamic Fund Index 0.44
Based on 54.59% of funds which have reported June 2016 returns as at the 21 July 2016

Comprehensive data from Eurekahedge will now feature the overall top 10 global and regional funds based on a specific duration (yield to date, annualized returns,
monthly returns), Sharpe ratio as well as delve into specific asset classes in the global arena equity, fixed income, money market, commodity, global investing (which
would focus on funds investing with global mandate instead of a specific country or geographical region), fund of funds, real estate as well as the Sortino ratio. Each table
covering the duration, region, asset class and ratio will be featured on a five-week rotational basis.

31 27th July 2016


Eurekahedge Islamic Fund Fixed Income Index over the last 5 years Eurekahedge Islamic Fund Fixed Income Index over the last 1 year

130 105
120 103

95 97
85 95













Top 10 Islamic Fund Fixed Income by 3 Months Returns

Fund Fund Manager Performance Measure Fund Domicile
1 MNC Dana Syariah MNC Asset Management 1.87 Indonesia
2 Public Islamic Bond Public Mutual 1.72 Malaysia
3 PB Islamic Bond Public Mutual 1.60 Malaysia
4 AmBon Islam AmInvestment Management 1.59 Malaysia
5 Public Islamic Enhanced Bond Public Mutual 1.49 Malaysia
6 Public Islamic Select Bond Public Mutual 1.20 Malaysia
7 Eastspring Investments Dana Wafi Eastspring Investments 1.18 Malaysia
8 Pacific Dana Murni Pacific Mutual Fund Bhd 1.13 Malaysia
9 BIMB Dana Al-Fakhim BIMB UNIT Trust Management (BUTM) 0.04 Malaysia
10 CIMB Islamic Enhanced Sukuk CIMB-Principal Asset Management -3.34 Malaysia
Eurekahedge Islamic Fund Index 0.71
Based on 42.31% of funds which have reported June 2016 returns as at the 21 July 2016
Top 10 Sortino Ratio for ALL Islamic Funds
Fund Fund Manager Performance Measure Fund Domicile
1 CIMB Islamic Money Market CIMB-Principal Asset Management 59.59 Malaysia
2 MNC Dana Syariah MNC Asset Management 17.37 Indonesia
3 Public Islamic Income Public Mutual 11.63 Malaysia
4 Public Islamic Select Bond Public Mutual 6.23 Malaysia
5 PB Islamic Bond Public Mutual 5.72 Malaysia
6 Public Islamic Bond Public Mutual 5.71 Malaysia
7 Oasis Crescent Balanced Stable Fund of Funds Oasis Crescent Management 3.96 South Africa
8 Public Islamic Select Enterprises Public Mutual 2.78 Malaysia
9 Pacific Dana Murni Pacific Mutual Fund 2.43 Malaysia
10 Oasis Crescent Balanced High Equity Fund of Funds Oasis Crescent Management 2.39 South Africa
Eurekahedge Islamic Fund Index 0.13
Based on 54.59% of funds which have reported June 2016 returns as at the 21st July 2016

Contact Eurekahedge
To list your fund or update your fund information:
For further details on Eurekahedge: Tel: +65 6212 0900

Copyright Eurekahedge 2016, All Rights Reserved. You, the user, may freely use the data for internal purposes and may reproduce the index data provided that
reference to Eurekahedge is provided in your dissemination and/or reproduction. The information is provided on an as is basis and you assume and will bear all
risk or associated costs in its use, and neither Islamic Finance news, Eurekahedge nor its aliates provide any express or implied warranty or representations as to
originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for any purpose.

32 27th July 2016


Most Recent Global Sukuk

Priced Issuer Nationality Instrument Market US$ (mln) Managers
29th Jun 2016 Sultanate of Oman Oman Sukuk Euro market 500 Standard Chartered Bank
public issue
2nd Jun 2016 Hazine Mustesarligi Turkey Sukuk Euro market 1,000 Standard Chartered Bank, HSBC, Emirates
Varlik Kiralama public issue NBD
Anonim Sirketi
2nd Jun 2016 Pengurusan Air SPV Malaysia Sukuk Domestic market 350 CIMB Group, AmInvestment Bank
public issue
31st May 2016 Al Hilal Bank UAE Sukuk Euro market 225 National Bank of Abu Dhabi
30th May 2016 GovCo Holdings Malaysia Sukuk Domestic market 306 HSBC, RHB Capital, CIMB Group
public issue
24th May 2016 Noor Bank UAE Sukuk Euro market 500 Standard Chartered Bank, First Gulf Bank,
public issue Dubai Islamic Bank, Sharjah Islamic Bank,
Citigroup, Emirates NBD, Noor Bank
24th May 2016 DP World UAE Sukuk Euro market 1,200 JPMorgan, Deutsche Bank, HSBC, National
public issue Bank of Abu Dhabi, First Gulf Bank,
Barclays, Dubai Islamic Bank, SG Corporate
& Investment Banking, Citigroup, Emirates
23rd May 2016 EI Sukuk UAE Sukuk Euro market 750 Standard Chartered Bank, HSBC, Arab
public issue Banking Corporation, Maybank, Dubai
Islamic Bank, Emirates NBD, Al Hilal Bank,
Noor Bank
17th May 2016 Cagamas Malaysia Sukuk Domestic market 104 CIMB Group
public issue
11th May 2016 Ezdan Holding Qatar Sukuk Euro market 500 Mashreqbank, HSBC, Abu Dhabi Islamic
Group public issue Bank, Emirates NBD, Barwa Bank
11th May 2016 UEM Sunrise Malaysia Sukuk Domestic market 123 Maybank, CIMB Group
public issue
10th May 2016 Boubyan Bank Kuwait Sukuk Euro market 250 Standard Chartered Bank, HSBC, Kuwait
public issue Finance House, National Bank of Kuwait,
Dubai Islamic Bank, Emirates NBD
28th Apr 2016 Perdana Petroleum Malaysia Sukuk Domestic market 162 UOB
public issue
26th Apr 2016 Barwa Bank Qatar Sukuk Euro market 125 National Bank of Abu Dhabi
25th Apr 2016 MEX II Malaysia Sukuk Domestic market 333 CIMB Group
public issue
21st Apr 2016 DanaInfra Nasional Malaysia Sukuk Domestic market 1,164 RHB Capital, Maybank, CIMB
public issue Group, Hong Leong Financial Group,
AmInvestment Bank
20th Apr 2016 Malaysia Sukuk Malaysia Sukuk Euro market 1,500 JPMorgan, HSBC, Maybank, CIMB Group
Global public issue
18th Apr 2016 Kuala Lumpur Malaysia Sukuk Domestic market 128 Maybank, CIMB Group
Kepong public issue
15th Apr 2016 Sarawak Energy Malaysia Sukuk Domestic market 387 RHB Capital, AmInvestment Bank
public issue
6th Apr 2016 Hilal Services Saudi Sukuk Euro market 300 Mizuho, Standard Chartered Bank, HSBC,
Arabia public issue Arab Banking, National Bank of Kuwait,
First Gulf Bank, Dubai Islamic Bank, SG
Corporate & Investment Banking, CIMB
Group, Emirates NBD, Warba Bank, Noor

Global Sukuk Volume by Month Global Sukuk Volume by Quarter

US$bn US$m US$bn Value (US$bn) Avg Size (US$m) US$m

8 1500 18 600
Value (US$bn) 16
7 1250 500
Avg Size (US$m) 14
1000 12 400
4 750 300
3 500 6 200
2 4
250 100
1 2
0 0 0 0
1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
2015 2016 2011 2012 2013 2014 2015 2016

33 27th July 2016


Top 30 Issuers of Global Sukuk 12 Months

Issuer Nationality Instrument Market US$ Iss Managers
(mln) (%)
1 Perusahaan Penerbit Indonesia Sukuk Euro market 2,500 7.5 Standard Chartered Bank, Deutsche Bank, Dubai Islamic Bank,
SBSN Indonesia III public issue CIMB Group, Citigroup
2 Jimah East Power Malaysia Sukuk Domestic market 2,100 6.3 HSBC, Maybank, CIMB Group
public issue
3 DanaInfra Nasional Malaysia Sukuk Domestic market 1,891 5.7 HSBC, RHB Capital, Maybank, CIMB Group, AmInvestment
public issue Bank, Hong Leong Financial Group
4 IDB Trust Services Saudi Sukuk Euro market 1,836 5.5 Natixis, Standard Chartered Bank, JPMorgan, National Bank of
Arabia public issue Kuwait, Gulf International Bank, Natixis, CIMB Group, Emirates
5 Malaysia Sukuk Malaysia Sukuk Euro market 1,500 4.5 JPMorgan, HSBC, Maybank, CIMB Group
Global public issue
6 DP World UAE Sukuk Euro market 1,200 3.6 JPMorgan, Deutsche Bank, HSBC, National Bank of Abu Dhabi,
public issue First Gulf Bank, Barclays, Dubai Islamic Bank, SG Corporate &
Investment Banking, Citigroup, Emirates NBD
7 Prasarana Malaysia Malaysia Sukuk Domestic market 1,192 3.6 RHB Capital, Maybank, Kenanga Investment Bank, CIMB
public issue Group, AmInvestment Bank
8 Sultanate of Oman Oman Sukuk Euro market 1,149 3.4 Bank Muscat, Standard Chartered Bank
public issue
9 Pengurusan Air SPV Malaysia Sukuk Domestic market 1,111 3.3 Maybank, Bank Islam Malaysia, CIMB Group, RHB Capital,
public issue AmInvestment Bank
10 Danga Capital Malaysia Sukuk Domestic market 1,110 3.3 RHB Capital, AmInvestment Bank, Standard Chartered Bank,
public issue DBS, CIMB Group
11 Hazine Mustesarligi Turkey Sukuk Euro market 1,000 3.0 Standard Chartered Bank, HSBC, Emirates NBD, HSBC
Varlik Kiralama public issue
Anonim Sirketi
11 Axiata SPV2 Malaysia Sukuk Euro market 1,000 3.0 Deutsche Bank, CIMB Group, HSBC, Maybank, Bank Mandiri
public issue (Persero)
13 Sarawak Energy Malaysia Sukuk Domestic market 774 2.3 RHB Capital, Kenanga Investment Bank, AmInvestment Bank
public issue
14 Qatar Islamic Bank Qatar Sukuk Euro market 750 2.3 Standard Chartered Bank, HSBC, Citigroup, QInvest, Barwa
public issue Bank, Noor Bank
14 EI Sukuk UAE Sukuk Euro market 750 2.3 Standard Chartered Bank, HSBC, Arab Banking, Maybank,
public issue Dubai Islamic Bank, Emirates NBD, Al Hilal Bank, Noor Bank
16 Rantau Abang Malaysia Sukuk Domestic market 595 1.8 CIMB Group, AmInvestment Bank, RHB Capital
Capital public issue
17 Sime Darby Malaysia Sukuk Domestic market 535 1.6 Maybank
public issue
18 Arab National Bank Saudi Sukuk Domestic market 533 1.6 JPMorgan, Deutsche Bank, HSBC, Arab National Bank
Arabia public issue
19 Noor Bank UAE Sukuk Euro market 500 1.5 Standard Chartered Bank, First Gulf Bank, Dubai Islamic Bank,
public issue Sharjah Islamic Bank, Citigroup, Emirates NBD, Noor Bank
19 Emirate of Sharjah UAE Sukuk Euro market 500 1.5 Bank of Sharjah, HSBC, Barclays, Dubai Islamic Bank, Sharjah
public issue Islamic Bank, Commerzbank Group
19 Dubai Islamic Bank UAE Sukuk Euro market 500 1.5 Standard Chartered Bank, HSBC, Arab Banking Corporation,
public issue National Bank of Abu Dhabi, Dubai Islamic Bank, Sharjah Islamic
Bank, Emirates NBD
19 Arab Petroleum Saudi Sukuk Euro market 500 1.5 Saudi National Commercial Bank, Standard Chartered Bank,
Investments Arabia public issue Goldman Sachs, First Gulf Bank, Emirates NBD, Noor Bank
23 Hilal Services Saudi Sukuk Euro market 500 1.5 Standard Chartered Bank, Mizuho, HSBC, Arab Banking
Arabia private placement Corporation, National Bank of Kuwait, First Gulf Bank, Dubai
Islamic Bank, SG Corporate & Investment Banking, CIMB
Group, Emirates NBD, Warba Bank, Noor Bank
24 Majid Al Futtaim UAE Sukuk Euro market 499 1.5 Standard Chartered Bank, HSBC, National Bank of Abu Dhabi,
Properties public issue Dubai Islamic Bank, Abu Dhabi Islamic Bank
25 Ezdan Holding Qatar Sukuk Euro market 497 1.5 Mashreqbank, HSBC, Abu Dhabi Islamic Bank, Emirates NBD,
Group public issue Barwa Bank
26 Cagamas Malaysia Sukuk Domestic market 439 1.3 CIMB Group, Maybank
public issue
27 Almarai Saudi Sukuk Domestic market 427 1.3 HSBC, Samba Capital
Arabia public issue
28 Kuala Lumpur Malaysia Sukuk Domestic market 417 1.3 Maybank, CIMB Group
Kepong public issue
29 Barwa Bank Qatar Sukuk Euro market 375 1.1 National Bank of Abu Dhabi
private placement
30 Kuveyt Turk Kuwait Sukuk Euro market 350 1.1 HSBC, Kuwait Finance House, Dubai Islamic Bank, Abu Dhabi
Katilim Bankasi public issue Islamic Bank, Emirates NBD, Kuwait Projects, QInvest, Noor
Total 33,367 100

34 27th July 2016


Top Managers of Sukuk 12 Months Sukuk Volume by Currency US$ (billion) 12 Months

Manager US$ (mln) Iss % 17.3

US dollar
1 CIMB Group 5,020 35 15.0
Malaysian ringgit 13.7
2 Maybank 4,231 32 12.7
Saudi riyal 1.0
3 RHB Capital 3,137 30 9.4
4 Standard Chartered Bank 3,099 19 9.3 Omani rial 0.6

5 HSBC 2,995 21 9.0

6 AmInvestment Bank 1,864 18 5.6 Sukuk Volume by Issuer Nation US$ (billion) 12 Months

7 Emirates NBD 1,440 14 4.3 Malaysia 17.2

8 Dubai Islamic Bank 1,195 12 3.6 UAE 4.3

Saudi Arabia 4.2
9 Deutsche Bank 1,170 5 3.5
Indonesia 2.6
10 National Bank of Abu Dhabi 956 8 2.9
Qatar 1.6
11 JPMorgan 843 4 2.5 Turkey 1.3

12 Citigroup 816 4 2.5 Oman 1.1

13 Bank Muscat 649 1 2.0

14 Natixis 551 2 1.7 Global Sukuk Volume by Sector 12 Months

15 Noor Bank 468 7 1.4

16 Kenanga Investment Bank 377 7 1.1 17%
17 Hong Leong Financial Group 343 3 1.0 6% Government
18 National Bank of Kuwait 311 3 0.9 7% Construction/Building
19 First Gulf Bank 300 4 0.9 Utility & Energy
9% Other
20 Barwa Bank 260 3 0.8
21 DBS 253 3 0.8
22 Abu Dhabi Islamic Bank 243 3 0.7
Global Sukuk Volume - US$ Analysis
23 Sharjah Islamic Bank 226 3 0.7
24 Gulf International Bank 214 1 0.6 US$bn US$m
18 600
25 Samba Capital 213 1 0.6 16 Non-US$ US$
26 QInvest 204 3 0.6 12 400
27 Barclays 203 2 0.6 300
6 200
28 Arab Banking Corporation 180 3 0.5 4
29 SG Corporate & Investment Banking 145 2 0.4 0 0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q
30 UOB 139 1 0.4
2011 2012 2013 2014 2015 2016
Total 33,367 120 100

Top Islamic Finance Related Project Finance Mandated Lead Top Islamic Finance Related Project Financing Legal Advisors
Arrangers 12 Months Ranking 12 Months
Mandated Lead Arranger US$ (million) No % Legal Advisor US$ (million) No %
1 China Development Bank 821 2 9.7 1 Allen & Overy 2,447 2 22.9
2 Al Rajhi Capital 663 2 7.8 2 Latham & Watkins 1,532 1 14.4
3 Adnan Sundra & Low 1,361 1 12.7
3 Banque Saudi Fransi 579 4 6.8
3 Zaid Ibrahim & Co 1,361 1 12.7
4 Alinma Bank 550 2 6.5
5 Norton Rose Fulbright 915 1 8.6
5 HSBC 497 3 5.9 6 Cliord Chance 758 1 7.1
5 Samba Capital & Investment 497 3 5.9 6 White & Case 758 1 7.1
Management 8 Anjarwalla Collins & Haidermota 172 2 1.6
7 National Commercial Bank 491 3 5.8 8 Haidermota & Co 172 2 1.6
8 Mitsubishi UFJ Financial Group 377 3 4.4 8 Lincolns Law Chamber 172 2 1.6
9 Aga Khan Fund for Economic 354 2 4.2 8 Linklaters 172 2 1.6
Development 8 Mohsin Tayebaly & Co 172 2 1.6
10 NATIXIS 314 2 3.7 8 Pinsent Masons 172 2 1.6

35 27th July 2016


Top Islamic Finance Related Financing Mandated Lead Arrangers

Ranking 12 Months Top Islamic Finance Related Financing Deal List 12 Months
Mandated Lead Arranger US$ (mln) No %
Credit Date Borrower Nationality US$ (mln)
1 Abu Dhabi Islamic Bank 993 9 6.6
15th Apr 2016 Yanbu Aramco Sinopec Saudi Arabia 4,700
2 Mashreqbank 711 8 4.8
3 Samba Capital 681 5 4.6
27th Jun 2016 ACWA Power International Saudi Arabia 2,686
4 SABB 640 4 4.3
9th Mar 2016 Dhuruma Electricity Saudi Arabia 1,138
4 Banque Saudi Fransi 640 4 4.3 th
15 Jun 2016 PNB Jersey Malaysia 889
6 Saudi National Commercial Bank 634 4 4.2 st
21 Dec 2015 Engro Powergen Pakistan 851
7 China Development Bank 621 1 4.2
28th Jul 2015 GEMS Education UAE 817
8 Noor Bank 600 8 4.0
16 Aug 2015 ACWA Power International Saudi Arabia 769
9 Emirates NBD 517 7 3.5
11th Dec 2015 Cititower Malaysia 751
10 Dubai Islamic Bank 474 8 3.2
29 Nov 2015 Gulf Marine Services UAE 620
11 First Gulf Bank 472 7 3.2
1st Mar 2016 National Oil & Gas Bahrain 570
12 Abu Dhabi Commercial Bank 437 6 2.9
13 Standard Chartered Bank 385 4 2.6
14 Al Rajhi Capital 366 2 2.5 Top Islamic Finance Related Financing by Country 12 Months
15 Maybank 338 1 2.3 Nationality US$ (mln) No %
15 CIMB Group 338 1 2.3 1 Saudi Arabia 4,515 4 30.2
17 Al Hilal Bank 307 3 2.1 2 UAE 4,292 15 28.7
18 HSBC 302 4 2.0 3 Pakistan 1,613 3 10.8

19 AKFED 292 2 2.0 4 Malaysia 959 2 6.4

5 Qatar 700 2 4.7
20 Bank Albilad 292 2 2.0
6 Turkey 645 3 4.3
21 Alinma Bank 260 2 1.7
7 Bahrain 570 1 3.8
22 National Bank of Abu Dhabi 251 3 1.7
8 Jordan 550 2 3.7
23 Kuwait Finance House 248 3 1.7
9 Egypt 475 3 3.2
24 Arab Banking Corporation 238 4 1.6
10 India 368 1 2.5
25 Natixis 234 3 1.6
26 Riyad Bank 229 1 1.5 Top Islamic Finance Related Financing by Sector 12 Months
27 Arab National Bank 201 2 1.3
Utility & Energy
28 European Bank for Reconstruction & 170 1 1.1
Development Oil & Gas
29 Gulf International Bank 165 2 1.1
29 Ahli United Bank 165 2 1.1
Real Estate/Property
Top Islamic Finance Related Financing Mandated Lead Arrangers Transportation
12 Months
US$ bln 0 1 2 3 4 5 6 7 8
Bookrunner US$ (mln) No %
1 Mashreqbank 1,550 4 20.2
Global Islamic Financing - Years to Maturity (YTD Comparison)
2 Abu Dhabi Islamic Bank 1,328 5 17.3
3 Noor Bank 586 4 7.6 2015
4 Maybank 338 1 4.4
4 CIMB Group 338 1 4.4 2012
6 Abu Dhabi Commercial Bank 327 1 4.3 2011
7 Arab Banking Corporation 277 4 3.6
8 Saudi National Commercial Bank 267 1 3.5 2008
8 SABB 267 1 3.5 0% 20% 40% 60% 80% 100%
0-3yrs 3-5yrs 5-7yrs 7-10yrs 10+yrs
8 Samba Capital 267 1 3.5

Are your deals listed here?

If you feel that the information within these tables is inaccurate, you may contact
the following directly: Shireen Farhana (Media Relations)
Email: Tel: +852 2804 1223

36 27th July 2016



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37 27th July 2016