Islamic Banking Monthly Bulletin

April 2010

Islamic Stock Markets GCC Region Far East Region MENA Region Rest of the World Sukuk Market Commodities Recent Developments Global Developments Developments by country UAE Bahrain Qatar Saudi Arabia Egypt, Turkey, Jordan Malaysia, Indonesia, Pakistan

2 3 4 5 6 7 8 10 14 15 17 19 20

Ιslamic Indices GCC Markets Shariah compliant indices exclude industries whose lines of businesses include forbidden goods or where debt/assets ratios exceed 33%. As a result of Islamic finance’s increasing popularity over the past few years, stock indices that abide by Shariah rules have been in-troduced in many stock markets across the world, even where the Muslim population is not significant (e.g. China, Japan etc). March has seen positive returns in most GCC stock markets. The announcement of the 2009 company results shows that the GCC economy shrank by 5% in 2009 (Source: IFIS). Corporate profitability in Saudi Arabia witnessed a 26% rise while the UAE suffered a 32% decline. A boost in liquidity was observed as banks eased credit restrictions by giving loans with portfolios of stocks accepted as collateral (Source: IFIS) Kuwait, which had the greatest return on its stock index last month, recorded positive gains of 5%; an indication of a continuing favourable economic climate. The UAE remains highly volatile (although on March the recorded returns exceeded by 17%) (last month returns of the Dubai stock exchange recorded a drop of 5%). Dubai World is very close to a successful re-negotiation of its debt which, if secured, would have a favourable consequential impact on the performance of regional stock markets. In terms of risk management, Saudi Arabia and Qatar are consistently among the safest places with Saudi Arabia having the lowest VaR of all GCC countries in March. The rise in Qatar’s stock market volatility compared to the previous month is likely to be affected by the fact that banks were allowed to resume trading of stocks (Source: IFIS)
GCC Markets (MTM % Change)

S. Arabia

Bahrain

Kuwait

Oman

Qatar

UAE

-5.0%

S. Arabia

Bahrain

Kuwait

Oman

Qatar

UAE

GCC Markets (Volatility)

0.0%

5.0%

10.0%

15.0%

20.0%

0.0%

S. Arabia

Bahrain

Kuwait

Oman

Qatar

UAE

GCC Markets (VaR 95)

0.5%

1.0%

1.5%

2.0%

2.5%

-3.5% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5%

0.0%

Figure 1: GCC Stock Markets. Bahrain: S&P Bahrain Shariah; Kuwait: S&P Kuwait Shariah; Oman: S&P Oman Shariah; Qatar: FTSE Nasdaq Dubai Qatar 10 Shariah; Saudi Arabia: S&P Saudi Arabia Shariah; UAE: FTSE Nasdaq Dubai UAE 20 Volatility is a measure of trading activity. Higher volatility is observed during periods of financial crisis. Higher volatility is also associated with speculative trading. Value at Risk (VaR) estimates what is the worst possible return that can happen tomorrow with a given confidence (here 95%). Source: Datastream

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Malaysia: FTSE Bursa Malaysia Emas.0% 0.0% Malaysia (H) Malaysia (E) Philippines Singapore Thailand Taiwan Far East Markets (Volatility) Indonesia 0. Thailand: SPGI BMI Thailand Shariah.9%). Singapore: SPGI BMI Singapore Shariah.0% 6. Philippines: SPGI BMI Philippines Shariah. The Philippines recorded further negative returns (-2.0% 0. Singapore’s returns were at the same levels as those in February indicating a good level of stability. Taiwan (2%) and Singapore (1%) performed better in March than in February in terms of risk management.2% in March compared to -3.6% and -1. positive returns in March were expected (following February returns of -2.0% Figure 2: Far East Stock Markets.5% -2.1%) to lead the country’s stock market back into high returns and profitability. For Taiwan. Last month the Indonesian stock market recorded losses of -2.5%) and VaR (-0. FTSE Bursa Malaysia Hijrah.0% -2.Islamic Banking Monthly Bulletin Far East Markets Malaysia remains the safest investment destination in the Far East due to higher levels of regulation and greater diversity of Islamic financial products. a sign of a very volatile market (VaR -1. Thailand recorded high positive returns (5%) on its stock market for March and its low VaR (-0.0% 1.2% 1.5% 0.4% and 2.0% 2. Taiwan: SPGI BMI Taiwan Shariah.1%) in this period.5% -1.0% -2. Indonesia: Jakarta SE Islamic. Of course the Islamic banking industry in this country is still in its infancy and this could affect stock market returns to a significant degree. the largest gains in this period were recorded in Indonesia (7%). Source: Datastream Page 3 . Both volatility and VaR indices remained at lower levels than those of February (VaR -0.8% 1. However. returns for March were at a modest 1.0% 4. Far East Markets (MTM % Change) Malaysia (H) Malaysia (E) Philippines Singapore Thailand Taiwan Indonesia -4.5% (much lower than other countries in the region and GCC countries). unable to recover from February. However.6% 0.6%) indicates it is a relatively safe investment option with potentially good returns.0% -1.4% Far East Markets (VaR 95) Malaysia (H) Malaysia (E) Philippines Singapore Thailand Taiwan Indonesia -3. volatility (0.0% -0. Nevertheless.0% 8.25% and volatility 0.2% 0.1%.1% in February for Taiwan and Singapore respectively).55%) indices remain consistently low.4% 0.

7%).0% Morocco Lebanon Jordan Tunisia Egypt MENA Markets (Volatility) -2. Tunisia: S&P Tunisia Shariah.5% 0. we should be cautious when interpreting these results.25%) volatility scores of February.5% 1. good investment opportunities exist within Egypt and Lebanon with recorded returns surpassed most other indices in March. The Jordanian stock market fell by -2% in March. results between two time periods are very likely to differ significantly.5% -1.0% 4.0% Morocco Lebanon Jordan -3. in March other MENA countries outperformed Egypt’s (1.2% and 4. Jordan (0.5% -2. continuing the favourable investment conditions of the previous month.0% -1. as some of these countries do not have the necessary breadth and depth in their stock markets. As a result. However. Source: Datastream Page 4 .0% Figure 3: MENA Region Stock Markets.0% 6. Lebanon: S&P Lebanon Shariah.0% -0.0% 0.Ιslamic Indices MENA Region Markets Middle East and North Africa (MENA) region markets are less developed than the GCC and some of the Far East group. Jordan: S&P Jordan Shariah.5% 2.0% Tunisia Egypt MENA Markets (VaR 95) 0.3% for Egypt and Lebanon respectively.0% 0. Egypt: MSCI Egypt Islamic. Returns were 4. However.4% despite expanding foreign demand and the easing of restrictions on bank credit to traders (Source: IFIS).0% -2. Morocco: S&P Morocco Shariah. MENA Markets (MTM % Change) Morocco Lebanon Jordan Tunisia Egypt -4.5%) and Lebanon’s (1. The Jordanian stock market failed to recover fully from last month’s -8. Tunisia and Morocco (both 0. especially in terms of risk indicators.0% 2. Risk indicators show lower volatility and lower VaR for March than February indicating that the investment climate and regulation in these countries is beginning to raise investor confidence.0% 1. However.8%) had lower volatilities for March.

Specifically.6%) and Hong Kong (1.2% South Africa Hong Kong DJ Isla mic China Korea Rest of World (VaR 95) Ja pa n India FTSE World -1.5%) and Japan (6.0% South Africa Hong Kong DJ Isla mic China Korea Rest of World (Volatility) Ja pa n India FTSE World 0. The superior performance of these indices can be attributed to their larger investment universe (which is Shariah compliant).2% -1.0% 1.4% 0.2% 0. Source: Datastream Page 5 .Islamic Banking Monthly Bulletin Rest of the World China recorded negative results in March (-1%) instead of the positive 3% recorded in February.0% 2. India (6.6% -0.0% 4.0% 0.0% -0.1%).8% -0. When compared to other groups of countries all the indices in the Rest of the World category (with the exception of the two global ones) are more volatile than the GCC and Malaysia – both of which are considered to be the most advanced Islamic financial markets.0% 6.6% 0. excluding China. Global: DJ Islamic Average. Japan: S&P Japan 500 Shariah.2%). China: FTSE Shariah China. Hong Kong: SPGI Hong Kong Shariah. Korea: SPGI BMI Republic of Korea Shariah.4% -1.9% respectively).4% -0. It is the most volatile country both in terms of volatility and VaR. FTSE Shariah All World. The least volatile country in March was Japan (0.8%). South Korea and South Africa were the most volatile (1. The two global Islamic indices recorded positive returns of 3.6% -1.0% 8. South Korea (6.1% and 0. followed by South Africa (4.5%) recorded the highest stock mar¬ket gains. In terms of riskiness. India: FTSE Shariah India.2% while sharing the lowest risk among the other countries of the sample.0% Figure 4: Rest of the World Indices.8% 1.2% 0. All the other countries recorded positive returns in March. Rest of World (MTM % Change) South Africa Korea Hong Kong DJ Isla mic Ja pa n India FTSE World China -2. South Africa: FTSE South Africa Shariah.0% 0.

28 million. The Dow Jones Citigroup Sukuk Index. Bahrain and Malaysia were in the forefront of issuing both corporate and sovereign issue in the month of March.S. Figure 5 (top): The Dow Jones Citigroup Sukuk Index (DJCSI).Sukuk Market Sukuk Market The Dow Jones Citigroup Sukuk Index was launched by Dow Jones Indexes and Citigroup Index LLC in 2006. It shares design criteria and calculation assumptions with the broader Citigroup fixed-income index family. which measures the performance of global bonds complying with Islamic investment guidelines. It measures the performance of sukuk bonds around the world. It measures the performance of global bonds that comply with Islamic investment guidelines. The index was created as a benchmark for investors seeking exposure to Shariah-compliant fixed-income investments. It should be noted that the index also has issues by Islamic banks which are based in UAE and Malaysia and thus.32. The Murabaha based Sukuk announced by the Bank of Negara. Malaysia had the highest value of US $ 301. and its screens for Shariah compliance are consistent with those of the Dow Jones Islamic Market (DJIM) Indexes. a minimum issue size of US$200 million. The bond issues included in the index must comply with both Shariah Law and the Bahrain-based Auditing & Accounting Organization of Islamic Financial Institutions (AAOIFI) standards for tradable Sukuk. decreased by 0. This behaviour is attributed to the constituents of the index. and an explicit or implicit rating of at least BBB-/Baa3 by leading rating agencies. dollar-denominated Islamic bonds—also known as Sukuk. from which GCC markets are still recuperating. Observing the Sukuk based activity around the globe. the relatively stable month-to-month change is due to the superior results posted by these banks despite Page 6 . Source: Djindexes the Dubai World debacle. The majority of the bond issues in this index are from the UAE (46%). U. The index is made up of investment-grade.15% with a closing price of 116. Bonds also must have a minimum maturity of one year.

particularly in China and India. redemptions from gold exchange-traded funds and liquidation of long positions by hedge funds were cited as factors contributing to the drop in the price of gold. The sugar market continued to weaken after sharp falls this month. Traders described sentiment as “fragile” and cautioned that the market could be vulnerable to further weak-ness as buyers waited to see if prices would fall further. Source: Datastream Page 7 . Source: Ft. Egypt’s state-owned Sugar and Integrated Industries Company cancelled a 300. However. Similarly commodities such as copper and palm oil also rallied. Business Week and IFIS 82 80 78 76 74 72 70 68 66 Natural Gas (USD/MMBTU) 6 5 4 3 2 October November December Brent Duba i Ja nua ry WTI Februa ry Ma rch 1 0 October November December Ja nua ry Februa ry Ma rch 1000 950 1050 1100 1150 1200 Gold Bullion (USD/Troy Ounce) October November December Ja nua ry Februa ry Ma rch 6000 6200 6400 6600 6800 7000 7200 7400 Copper (USD/MT) October November December Ja nua ry Februa ry Ma rch 600 650 700 750 800 850 Palm Oil (USD/MT) 35 30 25 20 15 10 5 0 Sugar (USD cents/lb) October November December Ja nua ry Februa ry Ma rch October November December Ja nua ry Februa ry Ma rch Figure 7: Price evolution of Important Commodities since October 2009. This view is affirmed by Egypt’s sugar purchasing behaviour. The value of natural gas has dropped 34% so far in 2010. The continued rise created increased confidence and profitability in GCC stock markets. according to analysts the drop in price could see natural gas displace abundant. and thus natural gas prices may rise in the second half of the year. The price of gold and sugar dropped sharply due Oil Prices (USD/barrel) to different factors. cheap coal as the fuel of choice ahead of any climate change legislation. Natural gas prices dropped to 4$/MMBTU continuing the downward trend seen since December. following reports of an improving outlook for India’s production.com. bolstered mainly by signs of strong growth in manufacturing across the world.000 tonne tender for raw sugar and said it would wait for prices to stabilize before buying for domestic consumption.Islamic Banking Monthly Bulletin Commodities The upward trend in oil prices continued during March and oil prices broke free of the US $70US $78 a barrel price range of the preceding six months by surging to the level of US $80 a barrel. trending down on lower demand and abundant supply. Unsubstantiated rumours of central bank selling.

Source: Isda. The ISDA/IIFM Tahawwut (Hedging) Master Agreement is the first financial industry framework document that is applicable across all jurisdictions where Islamic finance is practiced. IIFM Shari’ah Head. said: “The IIFM Shari’ah Advisory Panel have considered the Tahawwut Master Agreement to be a necessary step forward for promoting global standardization for Islamic financial product standards.” In addition to developing documentation for Islamic transactions. the document structure is similar to the conventional ISDA Master Agreement. Inc. closeout and netting are developed based on Islamic Shariah principles.net London to launch the first Islamic Exchange The first electronic trading platform allowing Shariah-compliant companies to raise money will be launched in London in May. The ISDA/IIFM Tahawwut Master Agreement provides the structure under which institutions can transact Islamic hedging transactions such as profit-rate and currency swaps. because the absence of a global Shariah compliant standardized agreement may lead to negative effect in the industry. Moreover. Dr Ahmad Rufai. The ISDA/IIFM Tahawwut Master Agreement will be available at IIFM’s or ISDA’s website. The published document consists of the Tahawwut Master Agreement and an Explanatory Memorandum. These countries include the UAE. ISDA (in coordination with IIFM) is in contact with various regulators in a number of Islamic jurisdictions to improve the local legal framework for hedging products and close-out netting provisioning. the key mechanisms and provisioning such as early termination events. which are estimated to represent most of today’s Islamic hedging transactions. Bahrain and Qatar and Pakistan. Parties understand that no interest shall be payable or receivable and no settlement based on valuation or Page 8 Recent Developments without tangible assets is allowed. IIFM and ISDA jointly developed the Tahawwut documentation under the guidance and approval of the IIFM Shariah Advisory Panel and in consultation with market participants. the venture capital firm behind the project announced. iifm. The Shariah Ummah Securities Information . However. both of which are part of the official Shariah Pronouncement.org. It is designed to be used between two principal counterparties as a master agreement. the counterparties to the Tahawwut Master Agreement make representations that they only enter into Shariah-compliant transactions. Although it is a completely new framework document. (ISDA) jointly issued the first Shariah-compliant master agreement for over-the-counter (OTC) derivatives entitled the ‘ISDA/ IIFM Tahawwut (Hedging) Master Agreement’.Recent Developments in the Islamic Finance Industry GLOBAL DEVELOPMENTS “ISDA/IIFM Tahawwut (Hedging) Master Agreement” launched The International Islamic Financial Market (IIFM) and the International Swaps and Derivatives Association. The development is a breakthrough in Islamic finance and risk management and marks the introduction of the first globally standardized documentation for privately negotiated Islamic hedging products.

scalable. “The collaboration reflects our commitment to building knowledge and encouraging research and discourse in Islamic finance. It would be the only MTF in Eu¬rope so far to help companies raise funds.” he explained. dialogue and study on contemporary issues and challenges faced in Islamic finance. gain industry-wide recognition. the Islamic Shariah Depository Receipt (ISDR). Islamic Development Bank. in a move to promote a more comprehensive understanding of Islamic culture and civilisation. a better understanding of Islam and the needs of Muslim societies. the OCIS welcomes the opportunity to work in partnership with the SC in this important area of study. it is embarking on the study of Islamic finance. issued by Shariah-complaint or Islamic firms. and Grameen-Jameel announced the Islamic Microfinance Challenge 2010: Innovating Sustainable. As part of this objective. Mahesh Jayanarayan. “The OCIS is dedicated to achieving by academic means. Shariah advisers and scholars from around the world. Source: IFIS The Oxford Centre for Islamic Studies (OCIS) and the Securities Commission Malaysia (SC) partner to foster the growth of Islamic finance The Securities Commission Malaysia (SC) and the Oxford Centre for Islamic Studies (OCIS) have teamed up to create an international platform for debate. which will manage the exchange said it would operate as a Multilateral Trading Facility (MTF). “UMEX has lined up 10 Islamic Enterprises and more than 100 Shariah compliant securities to be traded when it goes live. The organizers are seeking original Islamic microfinance business proposals which are profitable. Tan Sri Zarinah Anwar said. Dr Farhan Nizami said it had embarked on the study of Islamic finance.” said Jayanarayan. IS¬DRs represent ownership of a number of shares. It offers a unique opportunity to showcase innovative business ideas. OCIS Director. sustainable. and benefit from the funds and Page 9 . The contest is a joint initiative to promote the innovative design of Shariah-compliant products for Islamic microfinance clients. and Shariah-compliant. and Market-Driven Models.Islamic Banking Monthly Bulletin Exchange (UMEX) is designed to provide a platform for companies with a capital value of at least £20 million (US $31million) and looking to raise the equivalent of at least 20 % of their market value.” SC Chairman. Finalists of this competition will be awarded grants as well as needbased technical support to launch a pilot project of their proposed business idea. The inaugural collaboration with the OCIS will help further facilitate intellectual discourse among Islamic finance experts.” he added. Deutsche Bank. traded on a foreign stock exchange. chairman of Halal Industries. The OCIS is well known for its research and academic excellence.Business Proposal Competition CGAP. Scalable. MTFs are low-cost electronic trading platforms created after the Markets in Financial Instruments Directive opened up exchanges to competition. Shariah UMEX will also offer the Islamic version of American and global depository receipts. “Given Malaysia’s success in the development of Islamic capital markets. Source: Gulf Base Islamic Microfinance .

tapping into bailout funds provided by UAE Another multibillion sum to rescue the debt-hit firm Dubai World. Bolat Zhamishev said that Kazakhstan intended to begin selling Islamic bonds this year as the country seeks to establish itself as a major player on the Islamic finance market. while also pumping in $1. the Dubai World property development unit behind the manmade islands that helped put the emirate on the map. Another Dubai World property developer. The emphasis on Nakheel is significant because property development was a linchpin in Dubai’s growth. but officials said the debt would not be backed by the government of Dubai.said its plan calls on banks to restructure their debt “at commercial rates.many of whose manmade islands sit empty . Source: IFIS Kazakhstan joins the Islamic Finance bandwagon The first Islamic bank in Kazakhstan was established recently by Al-Hilal Bank of Abu Dhabi. Under its plan. new debt. As part of the deal. The Kazakh Government is a proactive supporter of Islamic finance in a ready-made market with 60% of Muslim population.” according to a statement by the company.9 billion claim in the company.” while other creditors. The plan calls for the restructuring of $23. Kazakhstan’s Finance Minister. The proposal is also heavily focused on Nakheel. Kazakhstan has also set up the Regional Financial Centre of Almaty (RFCA) which includes the first academy in the CIS to offer education and training in Islamic finance. if any.5 billion into Dubai World.2 billion loan to the company into an equity stake.2 billion owed to creditors other than the government.Recent Developments technical expertise of leading institutions in the microfinance and Islamic finance sectors.5 billion of Dubai World’s total debt. Islamic bonds. including $14. “will be offered a significant cash payment shortly and a tradable security. which will be used to fund the budget deficit. Nakheel in December paid roughly $4 billion on a maturing bond. is being offered. the government plans to recapitalize the conglomerate by offering as equity an $8. outlining a long-awaited restructuring plan aimed at rescuing its debt-saddled chief conglomerate and recapturing the Emirate’s image as a business friendly oasis in the Gulf. Nakheel . Also key in the Nakheel plan was that the company’s outstanding Islamic bonds would be paid on maturity this year and in 2011. It was not clear how much interest. is holding separate talks with creditors. The plan offers creditors full repayment on the principal of their outstanding loans over a five to eight year period by issuing Page 10 . the Dubai government would inject roughly US $8 billion in new funds and recapitalize Nakheel by converting what it described as a US $1. The company also plans to restart some development projects to reassure investors who incurred losses when the Dubai real estate bubble burst in 2008. one of the seven semi-autonomous citystates making up the United Arab Emirates. Kazakhstan has drafted legislation to allow it to sell the so-called Sukuk. The government made it clear that the newly-announced funds are the last it will offer for the conglomerate. Limitless LLC.5 billion in new funds. Dubai’s government announced it will pump up to $9.

education. President of Dow Jones Indexes said: “The Dow Jones UAE 25 Index is a strictly rules-based index that measures the performance of 25 of the largest.closing 4. according to government figures. through the swap. Source: IFIS NBAD & ADX Launch and List the First ETF in the GCC Region. It has the diversification benefits of a mutual fund and the instant liquidity of a share. the Chief Investment Officer of NBAD’s Asset Management Group said: “The NBAD OneShare Dow Jones UAE 25 ETF will give investors the opportunity to gain real time. with the benchmark index on the Dubai Financial Market . Source: Arab News UAE group keen to invest in Indian infrastructure Dubai-based Signature Group. local and international investors are offered a transparent and liquid vehicle that provides passive exposure to this attractive market.to new beginnings The National Bank of Abu Dhabi (NBAD) and Abu Dhabi Securities Exchange (ADX) announced the launch and listing of the first Exchange Traded Fund (ETF) in the Gulf region in the last week of March 2010. has identified India’s infrastructure sector as an attractive and safe investment haven. The new fund will follow the performance of the ‘Dow Jones UAE 25 Total Return Index’ and provide investors with exposure to 25 blue-chip companies from across the UAE.” He added that ETFs are fast becoming the product of choice for international investors and that ‘NBAD OneShare Dow Jones UAE 25 ETF’ as being an ideal platform for global investors to access the exciting opportunities available in local companies in the GCC region.” The constituents of the new fund will change over time in line with the Dow Jones UAE 25 Total Return Index but initially will have exposure. Michael A. The index itself is subject to strict liquidity criteria as well as international best practice restrictions on diversification. cost-effective exposure to a broad basket of UAE shares. First Gulf Bank.3% higher on the previous month. transactions in energy. healthcare. In addition to managing assets and acting as strategic advisors for major investments in infrastructure and the media sector. With these index qualities underlying the ETF by National Bank of Abu Dhabi. Listing the ETF at ADX. Emaar Properties and National Bank of Abu Dhabi amongst its top holdings.Islamic Banking Monthly Bulletin Abu Dhabi in what was seen as the first key test of Dubai World’s debt crisis. The new fund. will offer investors the opportunity to buy and sell as is the case with any other share. The country is said to be on course to achieve a $500 billion infrastructure investment five-year target by 2012. The overall plan was warmly greeted in the market. Umesh Chandra. Petronella. Source: IFIS Emirates NBD launches Emirates Islamic Money Market Fund Page 11 . NBAD OneShare Dow Jones UAE 25 ETF inaugurates the new ETF market in Abu Dhabi.the emirate’s biggest bourse . CEO of Signature group pointed out. Alan Durrant. a finance and investment company with more than $1 billion of assets under management. Signature’s particular focus on infrastructure-related investment in India is a sector which has doubled from 4 to 8 % of gross domestic product over the past five years. food and agriculture are also under process. to such heavy weights as Etisalat. which limits any stock to a maximum of 8% weighting each time the index is recomposed. most frequently traded and liquid equity securities trading in the United Arab Emirates.

. some early stages. up from 40 million Dirhams in 2008. The Fund will acquire a diversified portfolio. The Fund aims to achieve higher profit returns than comparative Shariah-compliant bank deposits. with an investment of $135 million. made available to customers throughout all of its 58 branches in the UAE. the Fund can also be used as a parking facility during periods of surplus liquidity. Islamic deposits. and plans to invest up to $20 billion in the Page 12 next few years.” Abdul Aziz Al Ghurair. Russia’s biggest carrier Aeroflot. worth up to 16 billion Dirhams. around 100 commercial aircraft. “Islamic banking is expected to contribute around 30 % of the total banking sector in the next three years in the UAE. Sukuk and international trade contracts. changed from a solely leasing company into an investment company in 2008 with four subsidiaries. Air Canada and Malaysia Airlines.UAE News Agency UAE’s Waha Capital eyes two buys in 2010 Abu Dhabi’s Waha Capital is in talks to buy controlling stakes in global aviation and maritime firms. mergers and projects. Qatar Airways. a unit of Dutch aircraft leasing firm AerCap. Waha Leasing. Its clients include Etihad Airways. the official Islamic service provider for all Mashreq Grouprelated instruments. The Fund provides diversification from traditional equity and real estate investments and can form part of an investor’s portfolio irrespective of the investment horizon. Source: Reuters Mashreq expands scope of Islamic banking services Mashreq Group announced the introduction of its Islamic banking division. maritime. whose members will continue to guide Mashreq Al Islami. its chief executive said in an interview. a daily dealing Shariah-compliant open ended fund domiciled in Jersey. predominantly from a diversified portfolio of Shariah-compliant money market instruments. land development and financial services. including but not limited to. the Islamic banking division of Mashreq bank has been advised by the respected Shariah Supervisory Board. Source: WAM . with different companies globally. financial services. The Fund will be managed by Emirates NBD Asset Management. Waha. It will also seek to benefit from the yield pick-up in USD-pegged currencies and the current cost of funding for corporate and banks. formerly known as Oasis International Leasing Co. “We are in discussions. The firm achieved a net profit of 217 million Dirhams last year. Murabaha. and expects to conclude up to two deals in 2010. Waha owns or manages. Waha is eyeing growth internationally through acquisitions.” its chief executive Salem Al-Noaimi said. Emirates airline. Further. have announced the launch of Emirates Islamic Money Market Fund. The diversified investment holding firm has interests in aircraft leasing. Mashreq Al Islami. said in a press release. leasing and maritime. The holding firm is in dis¬cussions with up to 10 companies in the aircraft leasing business and maritime. Through its subsidiary. The Fund will seek to access growing range of Islamic cash or near cash investments. CEO of Mashreq. including real estate. adding that the strategy intended to acquire controlling stakes in firms. underpinning the importance of this market segment. Waha owns a 50% stake in AerVenture.Recent Developments Emirates NBD. Initially established in 2006 as Badr Al Islami. some advanced.

with a value of $728m (equivalent to around 2. Iran.Ameinfo. but to the wider UAE and Middle East region. a professional body headquartered in the UK with more than 132. As the Islamic products and services will be marketed throughout all existing Mashreq outlets. is that the members of the think tank are predominantly practitioners rather than academics.com ICAEW (the Institute of Chartered Accountants in England and Wales) moves into in the DIFC (Dubai International Financial Centre) The world leader of the accountancy and finance profession. is distributed free in PDF format and is available from a variety of sources including Yasaar Media.7 billion Dirhams) aims to increase Abu Dhabi’s offshore gas production capacity by 1 billion cubic feet per day. Source: Gulf News Launch of an international Islamic finance journal from Dubai Islamic finance media entity Yasaar Media has launched a journal dedicated to Islamic finance. structuring finance solutions. Kuwait. ICAEW. The difference with So Far?. the UAE. called “So Far?” . a Kuwaitbased leading construction group in the Middle East and Africa. Sukuk advisory.Ameinfo. So Far?. existing Mashreq personnel are being trained and Shariah-certified. not only to firms within DIFC. Page 13 . is dedicated to a single topic of core importance to the Islamic finance industry . The ICAEW. The ICAEW Middle East office which is based at the DIFC will cover the following countries including. The DIFC presence will bring enhanced knowledge transfer and training expertise in international accounting standards and practices. Mashreq Al Islami will also provide Islamic advisory services. The project. in Abu Dhabi. Islamic investment products and Islamic treasury products.000 mem-bers in over 160 countries. has established its DIFC office as part of its campaign to set up regional offices around the world to work more closely with key stakeholders globally and to offer better support to its members and students around the world. among others. Unlike many other journals. Under the agreement. Members of the think tank are drawn from the ranks of committed Islamic finance professionals around the world from the Gulf and the Far East to the USA and Europe. is written and edited by members of an Islamic finance think tank and is modelled on traditional academic journals.and the launch issue looks at the thorny issue of the problems facing the Sukuk market. Qatar.com Dubai Islamic Bank signs Dhs790m financing deal with Kuwaiti company Kharafi National in Abu Dhabi Dubai Islamic Bank (DIB) announced a multi-purpose financing deal of 790 million Dirhams for Kharafi National. with a host of new products to be rolled out during 2010 to both retail and corporate customers. Saudi Arabia. an integrated gas development project for Gasco. strengthens its position in the Middle East region by moving into its office in the Dubai International Financial Centre (DIFC). Source: www.the Journal of Strategic Thinking in Islamic Fi-nance. The journal. Source: www. Bahrain. All staff operating in Mashreq branches will be qualified to advise on Shariahcompliant products and services. DIB will cover the banking requirements for Kharafi National’s subcontract with JGC Tecnimont Joint Venture to construct the Habshan 5 Process Plant. The move will also facilitate the institution in attracting more member firms. Egypt. Each issue of So Far?.Islamic Banking Monthly Bulletin Mashreq Al Islami will be offering a full suite of Shariah-compliant products and services. Oman.

Iraq and Jordan. Source: IFIS and businessweek. Chaired by Central Bank of Bahrain (CBB) executive director banking supervision Khalid Hamad. according to a senior executive. with a capital of 15 billion Syrian Pound (US $333 million). strategic financial institutions and its investors. “We hope to sign it in the next days. Gulf Finance House (GFH) reached an agreement with the Liquidity Management Centre (LMC) syndicate to rearrange the Wakala facility. Several of these graduates now hold fulltime employment with Islamic banks and other companies. It has also been reported that GFH. expects to sell its stake in Khaleeji Commercial Bank this year. head of the capital markets.Lebanon. and also completed their six month internships at various banks. and the rest linked to stakes in financial companies. According to the chairman. He also disclosed the bank is . to ensure a constant supply of qualified professionals for the Islamic finance industry in Bahrain. $190 million of which are related to infrastructure and real estate. sponsored by the fund. and 18 prominent Islamic and conventional banks with Islamic finance operations in Bahrain. both academically and professionally. Source: IFIS Bahrain GFH trying to stay afloat by signing the new Liquidity Management Centre’s syndicate facility. completed their diploma in Islamic finance in June last year. institutional banking and treasury unit at the Manamabased bank. he said. Once the final stage of approval has been secured from the Central Bank of Syria.” The bank has identified $420 million of assets for sale. the Page 14 Recent Developments bank will conduct an initial public offer for 30 % of its capital whilst 10% will be funded by the local partners and the remaining 60% by GFH. Source: IFIS Bahrain’s Unicorn Islamic Investment bank near Saudi asset management deal Bahrain-based Islamic investment bank Unicorn is close to signing a “big” mandate for asset management services in Saudi Arabia. He declined to identify the firm or value of the deal. The first batch of 18 Bahraini graduates. Another positive development is that GFH is in an advanced stage of establishing one of the largest Islamic banks in Syria under the name of Syria Finance House (SFH). at the right price and we are in high-level discussions to probably sell it this year. education and training is continuing with the second phase of its programme. Asset management is a focus for Unicorn in the Kingdom as well as corporate finance. GFH along with a number of prominent Syrian business partners is working to position the bank as one of the largest and most important Islamic banks in Syria. “We’re selling the whole stake. The programme aims to develop Bahraini graduates. the WAQF Fund is comprised of the CBB. the existing payment obligations of US $50 million in March 2010 and US $50 million in March 2011 have been amended such that US $20 million will be made in March 2010 with the remaining US $80 million paid over 4 instalments of US $20 million each every six months until the full amount has been paid in 2012. Esam Janahi.com Bahrain to promote the training of Islamic Banking professionals The WAQF Fund for research. Under the terms of the new arrangement.” said Ikbal Daredia.

The fund.Islamic Banking Monthly Bulletin also in talks with unspecified Saudi family firms to restructure debt. Source: IFIS Qatar Islamic Bank (QIB) and a South Korean firm sign agreement on investment vehicle Qatar Islamic Bank (QIB) has partnered with South Koreas Woori Investment and Securities to explore possibilities on investing in local. chairman and managing director of Masraf Al-Rayan. Solidarity Group Holding will cover the outstanding amount of the customer’s finance with Family Bank. Source: Arab News Bahrain’s Ithmaar Bank plans $400m capital hike Bahrain-based bank Ithmaar has announced plans to raise its capital by $400m to fund expansion. Family Bank offers finances ranging from BD 500 to BD 7. Ithmaar plans to convert itself into a retail bank by integrating with its fully owned Shamil Bank. one of the largest Takaful companies in the world. Further regional expansion on the back of its recent investment in Saudi-based Arabian Shield is also planned.5 billion and $2 billion this year. in the event of a customer’s death or permanent disability. the fund will focus on Gulf equities. as well as fixed in-come instruments. a Bahraini retail bank.” said Hussain Ali Al Abdulla. Qatar Qatar’s Masraf Al-Rayaan launches $1. Family Bank is a pioneering Islamic micro finance programme that was created earlier this year by the Social Development Ministry in co-operation with Bangladesh’s Grameen Bank. Under the agreement. Globally.25 to existing shareholders. is planning to invest up to BD 8 million (US $21. in addition to selling a mandatory convertible Islamic bond. The Memorandum of Understanding called for exploration of Shariah compliant investPage 15 . and will be managed by Al Rayan Investment. in a statement on the Qatar bourse website. though it will remain committed to its core insurance business where it is believed to hold about 20 % of the market share in Bahrain.22 million) this year in further expansion. “We believe the time is ripe to launch a fund to tap into the region’s enormous potential. Reuters has reported. The bank aims to raise up to $200m by selling shares at $0. The company is preparing to move into the Takaful Shariah-compliant market. Asian and Korean markets. Unicorn arranged for Saudi real estate developer Dar Al-Arkan a Sukuk worth $450 million in February and is also active in Asia through a separate unit. “Al Rayan GCC Fund” will comply with Islamic principles. 000 without collateral or guarantees to Bahrainis to help set up businesses. Source: Reuters Solidarity signs key bank deal Solidarity Group Holding. especially as valuations remain very attractive. The agreement was signed by Solidarity Group Holding acting chief executive Ashraf Bseisu and Social Development Minister Dr Fatima Al Balooshi. has signed an agreement to offer life cover to customers of Family Bank. worth between $1.2m in expansion Bahrain National Holding (BNH).1bn GCC fund Qatari Islamic lender Masraf Al-Rayan launched a new GCC-wide fund with a mandate to manage up to US $1.1 billion. the parent company of Bahrain National Insurance and Bahrain National Life Assurance. among them a sovereign bond in Asia. Unicorn wants to arrange Islamic bonds. or Sukuk. Source: Gulf Daily News – Local BNH Bahrain National Holding (BNH) planning to invest $21.

and QIB have signed a memorandum of understanding (MoU) to establish a joint venture financial institution that will develop and market Shariah-based retail banking products in the European country. Source: IFIS Qatar Islamic Bank joint venture with French banking group France’s second largest banking group. The joint venture (JV) will look at developing and marketing mortgage. about 4 million Muslims living in France will be able to choose alternative banking products from numerous outlets of the QIB-BPCE joint venture. JF is committed to improving its services and performance according to the highest. direct investments and Sukuk. including Qatar as a very important market. Recent Developments BPCE and QIB say they believed they could take advantage of working together in this field by pooling their respective experiences and expertise. BPCE became fully operational in August 2009 after a merger between Banque Fédérale des Banques Populaires (BFBP) and the Caisse Nationale des Caisses D’Epagne (CNCE). and is composed of a number of commercial banking and financial institutions. which is the largest financial institution in South Korea. according to the spokesman for QIB. BPCE. and serves a diverse range of customers including individuals. as well as financial transactions in equity and debt capital markets in South Korea. commercial projects and working capital for private enterprises and companies . With the adoption of the new organisational structure. It has also introduced a practical instruction manual of unified standards for performing different functions and tasks. and will strategically foster many areas of co-operation and development between Woori and QIB. and the company offers other types of financing including factory construction and equipment. scheduled open across Europe later this Page 16 year. president and CEO of Woori Investments considered the Gulf region. For the first time. an extensive network of 8. The project was developed in co-operation with the consulting house KPMG. the company has completed an advanced management development project that keeps pace with its advanced finance services. BPCE is a key player in the French banking and finance industry and accounts for 22% of total deposits held by French banks. Source: IFIS Al Jazeera Finance gets makeover Al Jazeera Finance (JF) has developed a new organisational structure and adopted a policy and procedure manual to execute different functions and tasks.ment opportunities in many areas including financing. It has approximately 37 million customers. and large corporations. This will also include possibilities of investment banking opportunities. worldclass standards. Sung-Ho Hwang. Both QIB and Woori seek to raise equity through Islamic financial instruments that are compliant with Shariah regulations. which is one of the major importers of Qatari liquefied gas. The project is consistent with the company’s vision to be a leader in Qatar’s Islamic finance. In addition to financing residential and commercial properties. vehicle and consumer goods finance and deposits and structured and investment products.200 branches throughout France and a corporate and investment banking affiliate. JF then adopted it by implementing the projects policy and procedure manual. Woori Investment and Securities is a subsidiary of Woori Financial Group. small and medium-sized enterprises. land and building materials. The move by QIB also stemmed from the strong commercial relations between Qatar and South Korea. purchase of vehicles and heavy equipment for individuals and companies. Natixis.

having already allowed indirect foreign share ownership via so-called swap agreements in 2008. “The company has already received an exemptive relief order from the Securities and Exchange Commission (SEC). But the new special fund. CEO and general manager of ICD. FALCOM Saudi Equity ETF aims to provide investors with long-term capital appreciation and growth. Khaled bin Mohammed Al-Aboodi. Falcom won approval to list a Saudi Equity ETF on the bourse at a time when the world’s top oil exporter is trying to attract more foreign money to its bourse. At a later stage. As per Tadawul’s description. The proposed fund is to be supported by incubators (premises with staff and equipment made available at low rent to new small businesses). The objective of this initiative is not limited to financing but also considers the potential for success for SMEs. will be working with Libya’s National Council for Economic Development (NCED) to implement the deal. The incubators will be responsible for creating microenterprises and helping businessmen to own viable projects that will be financed by banks. The fund would provide finance opportunities for these projects in line with the aspirations of their sponsors. “More and more investors want to invest according to Shariah in the US. the US-based Florentez Investment Management Inc. The fund passively invests in listed Saudi equities in order to achieve the results that correspond to the performance. the Indian Page 17 . said the program had been limited to financing medium and large projects. to launch the funds on the US exchanges. while encouraging them to benefit from this opportunity. the private sector arm of the Islamic Development Bank Group (IDB). ICD. the bourse said. said in an exclusive interview with Arab News.Islamic Banking Monthly Bulletin Saudi Arabia The Islamic Corporation for the Development of the Private Sector (ICD) signs agreement to promote SMEs in Libya ICD has signed a deal to develop small and medium enterprises (SMEs) in Libya. the US regulator. (ShariahShares ETF) is set to launch a family of Shariah-compliant exchange traded funds (ETFs) on the NYSE (New York Stock Exchange). Source:IFIS Saudi Arab Bourse attracting foreigners by the launch of an ETF Saudi Arabia’s Tadawul has successfully launched their first ETF (exchange traded fund) Saudi Equity ETF (Falcom 30). Source: Reuters and Arab News Saudis attracting more foreign money by listing ETFs in foreign bourses As Islamic finance is growing very rapidly in the United States. There are seven to ten mil-lion Muslims in the US. •For each stock to be eligible. president & CEO of Florentez (ShariahShares ETF). of the Saudi Tadawul benchmark index. to be created as a result of the agreement. The stocks should also be members of Tadawul public indices.” Saeid Hamedanchi. • Top 30 floating market capitalization stocks. non-trading days in the Saudi Stock Exchange (Tad¬awul) must not exceed 7 trading days during the past quarter. would operate for the benefit of SMEs. CFA. which the NCED will create and sponsor. The fund has its own index with 30 stocks that have the following criteria: • Sharia-compliant as per Falcom’s Shariah screening. He added that Amanah funds have had spectacular asset growth in the US. The majority are affluent immigrants from Southeast Asia. Saudi exchange traded funds will be allowed to include Islamic bond and commodity instruments in addition to Saudi shares. before fees and expenses.

The 35-storey. The board also approved a $1 million grant for the Syria-Turkey Inter-Regional Cooperation Program. consumer goods. he said. He added that Shariah-compliant indexes have outperformed conventional indexes in the developed markets for the past five years. For Example: Enron. focusing on delivering and managing greenfield projects in partnership with leading international groups. Dubai (Dubai . The land will be developed into a luxury hotel tower with affiliated serviced hotel apartments of a total built-up area of around 40. real estate. food and beverage. whose performance has been severely affected after the subprime crises. Yemen. and health care sectors.Subcontinent and the Arab world. The LSE will serve as a gateway to the Gulf region. The Project total cost is estimated at SR500m. The Shuaa Saudi Hospitality Fund’s acquisition marks the first private equity fund investment of its kind in Saudi Arabia. Source: Ameinfo. It boasts spectacular views of the Red Sea and offers easy access to the city centre. Similar grants were also approved for Muslim communities in non-member countries. Source:IFIS Page 18 Recent Developments Shuaa Hospitality Fund acquires land in Jeddah Shuaa Capital Saudi Arabia. Mardam-Bey said Siraj aims to be recognized as a leading regulated boutique merchant investment and finance company.000 sqm. Non-Muslims are also investing in Shariah-compliant ETFs because these ETFs have better financial ratios and Shariah indexes are financially conservative than their conventional counterparts.9 million dollars in new grants The board of executive directors of the Islamic Development Bank (IDB) approved $333. specifically in the telecom. Benin. including India. Highly indebted companies get into financial distress when their debt reaches a certain level. The company also aims to manage Islamic finance transactions for partners. technology. early stage growth capital investments. Bahrain. Shariah compliant indexes have also performed better because of their limited investment exposure to the conventional bank and financial institutions.9 million for financing new projects. Hamedanchi said after the NYSE listing they will move to the London Stock Exchange (LSE). to be managed by Rotana Hotel Management Corporation.com Opportunities abound in SMEs in Saudi Arabia Saudi Arabia is one of the world’s most exciting and emerging markets. Nepal. adding that even non-Muslims are buying these Shariah-compliant funds due to strong performance. media. they are no longer held by Shariah indexes. This causes the Shariah indexes to outperform the conventional indexes during market downturns. the leading hotel management company in the MENA region. Sierra Leone and Saudi Arabia. The Shuaa Hospitality fund has a target size of Saudi Riyal 2 billion. He foresees exciting opportunities supported by strong emerging market fundamentals. Source: Gulf News Islamic Development Bank approves 333. Jeddah. Fiji Islands. Thailand and the United States. The beneficiaries include Pakistan. 140m tower will house 250 hotel rooms in addition to 150 serviced apartments. In those circumstances. Kenya.” he said. The acquired property is situated in a prime location on the Jeddah Corniche. The company operates out of offices in Riyadh. clients and shareholders. concluded a land acquisition on behalf of the Shuaa Saudi Hospitality Fund. according to Siraj Capital’s CEO Ibrahim Mardam-Bey. Siraj Capital is a leading Saudi-based private equity group focusing on op-portunities in the Middle East-Gulf region. Worldcom and others as evidenced in the 2001-2003 recession.

the National Bank for Development (NBD) for the first time in the Egyptian banking sector. Source:IFIS Turkey IDB to lend Turkey $2 billion over 3 years Turkey and the Islamic Development Bank (IDB) have signed a memorandum of understanding to prepare a member country partnership strategy (MCPS) under which Turkey will receive a $1. education.Islamic Banking Monthly Bulletin International Financial Centre) and Beirut.000-L. Lebanon urged to create ‘Islamic market’ Turkey and Lebanon should work to create a larger Islamic market in the Middle East and eastern Mediterranean. Source:IFIS Turkey. Visiting Istanbul along with a delegation of Lebanese businessmen. energy. and in return provides the client with a life insurance scheme. Under the “Islamic Sukuk” programme. which adds a small amount to the instalment cost. Source: IFIS Dar Al-Arkan successfully redeems first Sukuk issue Dar Al-Arkan Real Estate Development Company. Egypt’s “Al-Ahram” daily reported. the landmark three-year $600 million issue marked the first Sukuk by a Saudi company in international capital markets. A joint market would increase opportunities in production and exports to all countries in the world.000. or OIC. Source: Arab News of the client’s death. First with other countries nearby and then with the countries of the Organization of the Islamic Conference.” BerPage 19 Egypt.5 billion to $2 billion loan over the next three years.25 % monthly. Turkey will be the first country among IDB member countries to have an MCPS. The “Yosr Murabha” personal finance programme will offer loans ranging between L. Siraj Capital provides Shariah-compliant and conventional debt and equity financial services to its international clients. Being a financial solutions provider. 200. Issued by DAAR International Sukuk Company. The funds will be used in various fields. “We have to create a large joint Islamic market in the region. disaster management and improvement of the private sector. launched two new products. Lebanon’s Parliament Speaker Nabih Berry said during March.E. it received an overwhelming response from financial institutions across Europe. Turkey and Jordan Egypt’s National Bank for Development (NBD) launches new Islamic retail products In fulfilment of its promises to launch new banking products conforming to Islamic Shariah regulations. for the first time in Egypt. a residential real estate developer in Saudi Arabia. South East Asia and the GCC region. The MCPS is expected to be ready in June 2010. including transportation. whereby the Shariah-compliant insurance companies that the bank deals with take on the burden of meeting instalments in the event .10. The “Yosr Murabha” is unique in possessing “Takaful Insurance”. to be repaid in equal instalments from over 12 months up till 60 months.E. Launched as a US $425 million issue. announced it has successfully redeemed its inaugural Sukuk issue of March 2007. the Bank will provide. Berry said Turkey and Lebanon should also aim to enter European markets together. namely: “Yosr Murabha” a personal finance programme and the “Islamic Sukuk” using Wakala contracts. a one-year “Suk” to both individuals and companies with a competitive interest rate. ranging between 7-7. in line with the country’s development strategy.

Italy and Germany. “We are very interested in Islamic Sukuk especially that the Islamic banks were less affected by the global financial crisis than commercial banks. Source:IFIS Central Bank of Jordan to study applying special criteria for Islamic banks The Central Bank of Jordan (CBJ) will study criteria issued by the Islamic Financial Services Board (IFSB) to apply them to Islamic Banks in Jordan. while Lebanese imports to Turkey stood at $107 million. that it applies a single regulatory framework to both conventional and Islamic banks. Under the agreement. will spend about RM 1. At present the trade balance between Turkey and Lebanon is largely in Turkey’s favour. established to help financially viable Malaysian companies tap the Sukuk or bond market for capital raising.5 billion to build 15 new hospitals in the region. Source: IFIS Recent Developments Jordan looks to speed up sukuk issuance Jordan’s finance minister.” the minister said. Saqqaf noted the challenges and difficulties faced by Jordanian Islamic banks. Auditing and Governance Standards for Islamic Financial Institutions. Vice president. the lack of lender of last resort. Source: IFIS Malaysia. bank’s top official announced. and a shortage of qualified and trained personnel to work in Islamic banks. plantation and infrastructure. Kahar Mohamed. Turkey and Lebanon signed a new visa-free travel agreement during the visit of Lebanese Prime Minister Saad Hariri to Turkey in January. property and construction. Pakistan and Indonesia Columbia Asia receives 250 million Malaysian Ringgit through Islamic facility Regional healthcare provider.4 billion guarantees for companies in various industries such as oil and gas. Columbia Asia Sdn Bhd today secured RM250 million in syndicated funding based on the Islamic principle of Ijarah Muntahiah Bitamlik from Bank Muamalat Malaysia Bhd and Bank Kerjasama Rakyat Malaysia Bhd. Turkey is currently the sixth largest importer of Lebanese goods after the United States. Discussion also related to increasing bilateral trade with a goal of US $1 billion in trade volume for 2010. Danajamin will provide an Al-Ka- Page 20 . Source:IFIS Danajamin to guarantee Kencana’s RM250 mln Sukuk Mudharabah programme Danajamin Nasional Bhd has entered into an agreement to guarantee Kencana Petroleum Bhd’s RM250 million Sukuk Mudharabah programme.ry said. Turkey exported goods worth $686 million to Lebanon. treasury services. Danajamin has approved a total of RM1. Columbia Asia Group of Companies. To date. The agreement marks a key milestone for the country’s first financial guarantee insurer. in recent years the overall trade volume has experienced a notable increase from $381 million in 2004 to $794 million in 2009. Mohammad Abu Hammour has said that his government may need to issue new legislation or find a new mechanism to speed up the issuance of Islamic Sukuk. France. said it would include three hospitals in Malaysia currently under development. However. including the absence of the secondary market for Islamic financial instruments. CBJ Deputy Governor Khulud Saqqaf gave a briefing at the Islamic Finance and Investment Forum for the Middle East 2010 about the CBJ supervisory and regulatory duties. China. The CBJ adapted the Accounting.

9 million in the previous corresponding quarter.4 million in the third quarter ended December 31 2009 from RM247. keep improving and be more competitive in the marketplace from quarter to quarter. Chairman. Source:IFIS Hong Kong to use Malaysia’s expertise to bring Islamic Finance to Mainland China Hong Kong expects to leverage on Malaysia’s strong framework and expertise to bring Islamic finance into mainland China. critical illness and permanent disability. Takaful Ikhlas offers takaful services which include more than 80 products to over 1. Petra Perdana said the money will be used to pay for the purchase of one work boat. “The awareness among the public. Some big banks in the world have already collapsed. allowing Kencana to raise funds from the sukuk market at a competitive rate. is increasing and we are always looking for an opportunity to offer takaful products that meet the Malaysian needs. Source: Business Times Malaysian Insurance firm Takaful ikhlas to offer three new schemes next year Takaful Ikhlas Sdn Bhd plans to introduce at least three new takaful schemes by next year for individual and corporate customers in line with the growing demand for takaful products. including two anchor handling tug supply vessels.” AMMB Holdings’ net profit rose to RM268. Its product portfolio consists of 76% family takaful and 24 % general takaful. for charter to the oil and gas industry. “Size is not that important because you only need a suf-ficient size to be able to compete. Funds raised would be utilised by Kencana to acquire at least three off-shore support vessels. was constantly innovating products to tap the robust 20 % annual growth of the local takaful industry. Executive vice president Wan Mohd Fadzlullah Wan Abdullah said the company.4 million certificate holders to date.88 times from 0. especially involving death.48 million Islamic loan from HSBC Amanah Malaysia Bhd.Islamic Banking Monthly Bulletin falah Guarantee for Kencana’s seven-year Sukuk Mudharabah Medium Term Note programme. Wan Mohd Fadzlullah said with the takaful industry projected to grow even more rapidly. the issue will be rated AAA. Its gearing will rise to 0. Takaful products were not just about religionbased insurance but were premised on ethical values. Page 21 . Takaful Ikhlas was in a position to tap the market as it offered a complete range of takaful products for individual and corporate customers. Hong Kong Secretary of Finance. Source: Business times Malayasia’s Petra Perdana unit secures Islamic loan Petra Perdana Bhd’s wholly owned unit Intra Oil Services Bhd has secured a US$14. said the banking group was looking to enhance growth this year and in coming years as it expects profits to keep improving with new products and its low non-performing loan ratio. “We are at a very preliminary stage in Hong Kong. “The bank will continue to focus on domestic banking and do businesses as usual. John C Tsang said Islamic finance was still new for Hong Kong. Azman said it had not approached nor had it been approached by other banks. Tan Sri Azman Hashim. Source:IFIS Malaysian AmBank on Islamic banking growth path AmBank Group plans to bolster its Islamic banking and financial services in the region as part of its expansion drive.79 upon full drawdown. especially Muslims. I am happy with the progress. a subsidiary of MNRB Holdings. In its filing to the stock exchange. With Danajamin’s guarantee. It is available for up to five years from the first drawdown.” he told reporters.” On mergers and acquisitions.

different Islamic funds. according to the country’s local daily newspaper. A number of Malaysian banks including Hong Leong and CIMB Bank have already set up Islamic windows in Hong Kong.” he said. the development of Sukuk in Hong Kong will be a natural development. TPN has also submitted applications to Capital Market and Financial Institution Supervisory Agency of Indonesia in relation to the proposed bonds. PT Titan Petrokimia Nusantara (TPN). Titan said the two proposed bonds – Obligasi Titan Petrokimia Nusantara I Tahun 2010 and Sukuk Ijarah Titan Petrokimia Nusantara I Tahun 2010 – were for amounts of 300 billion and 200 billion rupiah respectively. but we see that Hong Kong could develop into a platform for Islamic finance in the region. Source: IFIS Pakistan International Airlines Corporation (PIAC) Sukuk declared as approved security The State Bank of Pakistan has declared Sukuk Certificates issued by Pakistan International Airlines Corporation (PIAC) as an approved security. Source: IFIS Indonesia: Retail Sukuk proves a hit. Source: IFIS National University of Science & Technology (NUST). “We have actually worked with Malaysia the past two years and they have helped us a lot including sending people from the central bank” Tsang said. Source: IFIS Titan unit in Indonesia plans to issue RM¬180 million bonds including Sukuk Titan Chemicals Corp Bhd subsidiary in Indonesia. Therefore. and also a couple of bonds have been issued in Hong Kong. The potential is huge. “We have Islamic indices. bids reach US$853 million Investors snapped up Indonesia’s retail Sukuk offering in February with bids reaching Rp8.” Malaysia has a strong and well-developed infrastructure in terms of Islamic Finance. PIAC Sukuk Certificates can be used for minimum paid-up capital and reserves requirement. citing the Finance Minis- . Pakistan to receive grant from Islamic development Bank (IDB) The Islamic Development Bank will provide the National University of Science & Technology (NUST) with USD $62 million Istisna’a Facility to contribute in establishing and equipping a modern teaching hospital with a capacity of 510 beds to provide advanced health care to residents of Islamabad and Rawalpindi and adjacent areas.Section As you know we don’t have a big Muslim population in Hong Kong.03 trillion (US$853 million) . from the Islamic Council to all the different structures. Tsang added that. These certificates can also be used for maintenance of liquid assets for Islamic banks and Islamic banking branches only to the extent of 5 % of their demand and time liabilities.4mil) via a public offering. adding that they had already signed several memoranda of understanding on joint cooperation. In a filing with Bursa Malaysia. is considering issuing two bonds amounting to 500 billion rupiah (RM180. He also said that Hong Kong had a very strong financial infrastructure for conventional business and that it was currently in the process of developing a strong bond programme in Hong Kong. Fitch Ratings has assigned A+(idn) national long-term rating for TPN and also assigned expected ratings of A+(idn) to TPN’s proposed bonds.almost tripling initial targets of Rp 3 trillion. I think the potential is great particularly Hong Kong as the platform for a lot of (Islamic) products to move into the mainland of China.

Source: IFIS Bank Indonesia studies capital incentive for Shariah bank. Growth this year is supported by the existence of new Shariah commercial banks. but said the global Sukuk would be launched early in the second half of this year to cope with the budget deficit. BI projected the Shariah banking asset to grow at least 30 % every year particularly amidst better economic conditions. The first retail Sukuk issued in February last year was well-received. absorbing a total order of Rp 5. Asset target to grow 30% annually Bank Indonesia (BI) studied the incentive to allow Shariah banking so as to allow a more aggressive industry expansion. Ramzi said one of the components studied here deals with the risk-based assets (ATMR) which does not differ from the conventional banking. He did not specify when the next sale of retail Sukuk would be conducted. offering an 8.56 trillion. However.7% yield and maturing in 2013. the study is underway and the component which might lessen the cost to Shariah banking is not fixed yet. Mr Rahmat Waluyanto.77 trillion. The Finance Ministry’s Director General of Debt Management. said the government still has an option to sell Sukuk worth about Rp17 trillion to help finance the state budget. “We are considering what to cut down for Shariah banking cost without leaving prudence principles for better performance in the future. This is the second retail Sukuk issued in Indonesia.” he said last week. Source: IFIS . about three times its initial target of Rp 1. Shariah Banking director of BI Ramzi A Zuhdi claimed BI has been studying the policy components relating to Shariah banking to cut down on capitalization and operational costs.Islamic Banking Monthly Bulletin try.

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