All posts related to KL Conference on Islamic Wealth Management & Financial Planning 2016 - KLC-IWM-2017

Wednesday, 25 May 2016

DP World Raises $1.2 Billion From Sukuk to Fund Bond Buyback

DP World Ltd., the Dubai-owned company that operates ports from China to South America, raised $1.2 billion from the sale of Islamic bonds and said a tender offer to buy back securities received 48 percent more bids than the target.
The company sold a seven-year sukuk that will be priced to yield 237.5 basis points, or 2.375 percentage points, over the benchmark midswap rate, according to two people familiar with the deal, who asked not to be identified because the information is not public yet. The issue received more than $2.5 billion in bids, they said.
Money raised from the sale was meant to fund an offer to buy up to $750 million of DP World’s existing 2017 sukuk and for general corporate purposes, the company said earlier this month. The tender offer received $1.113 billion of valid certificates at its close on May 23 and DP World said it may buy all of them if it raises enough cash from the issue.
The offer for the 2017 securities was to pay $10,555 for every $10,000 of principal.
Bond sales from the six-nation Gulf Cooperation Council, which includes the two biggest Arab economies of Saudi Arabia and the United Arab Emirates, are accelerating as governments and companies seek funds following oil’s decline in the past two years. Offerings from the region have risen 28 percent to $16.7 billion, while Qatar’s government, Abu Dhabi’s Etihad Airways PJSC and its partners also plan to sell bonds this week. Dubai-based Noor Bank PJSC also raised $500 million from a perpetual sukuk today.

Citigroup Inc., Deutsche Bank AG, Dubai Islamic Bank PJSC, HSBC Holdings Plc, Barclays Plc, Emirates NBD Capital PJSC, First Gulf Bank PJSC, JPMorgan Chase & Co., National Bank of Abu Dhabi PJSC and Societe Generale SA are helping arrange DP World’s issue. Noor Bank, Samba Financial Group and Union National Bank PJSC have also been appointed co-arrangers.

(Bloomberg / 24 May 2016)
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Tuesday, 17 May 2016

Sukuk plays important infrastructure development role

Sukuk has played a significant role in promoting resilient infrastructure and sustainable economic development, and therefore should be boosted in the future, Finance Minister Bambang Brodjonegoro has said.
In his opening remarks at a seminar during the Islamic Development Bank ( IDB ) Group annual meeting at the Jakarta Convention Center ( JCC ) on Monday, Bambang said it was important for Islamic finance to contribute to the sustainable development goals ( SDGs ).
"Sukuk naturally controls the needs of financing, which are based on underlying assets. It also provides a protective mechanism and natural hedging, making the industry more sustainable," Bambang said.
He further said that sukuk had played a significant role in infrastructure financing. Aside from issuing sukuk for general financing, the government has issued sukuk to finance infrastructure projects, such as railways and toll roads.
"This kind of project financing assures the effectiveness of sukuk," he went on.
Bank Indonesia ( BI ) Governor Agus Martowardojo added that sukuk had been growing rapidly in the last few years. However, Islamic financing instruments must be developed.
Indonesia has been active in sukuk markets since it laid the groundwork for sukuk issuance in 2007. This year, Rp 110.9 trillion ( US$ 8.33 billion ) in sukuk was issued in the domestic and international markets, according to ministry data.

Sukuk made up 15 percent of total outstanding government securities as of April 29. It comprises six instruments across a wide range of tenors, sizes, coupons and investors. 
(The Jakarta Post / 16 May 2016)
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Islamic finance prepares rules for awqaf and zakat charitable funds

Islamic finance institutions will present a set of guidelines for Muslim charitable institutions later this month, as the industry looks to develop a more efficient use of their assets, an Indonesian central bank official told Reuters.
Islamic endowments (awqaf) and alms-giving (zakat) have been in existence for centuries and hold billions of dollars in assets around the globe, but they are often criticised for being poorly managed.
A set of guiding core principles for zakat has now been completed and will be unveiled at an upcoming United Nations summit in Istanbul, said Indonesian central bank deputy governor Perry Warjiyo.
Similar rules for awqaf are also in development, Warjiyo said on the sidelines of the annual meeting of the Islamic Development Bank Group being held in Jakarta.
Indonesia’s central bank is hosting some of the technical discussions for developing the core principles, as it hopes to strengthen the auditing function and professional management of such entities.
Reliable statistics are scarce, but awqaf are believed to hold large portfolios of real estate, commercial enterprises, cash, equities and other assets, with some estimates as high as $1 trillion worth of assets held globally.

In Indonesia alone, registered land from awqaf stands at 1,400 square kilometres with an estimated market value of around $60 billion, according to the country’s Ministry of Finance.
(Reuters / 16 May 2016)
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Monday, 16 May 2016

Bahrain Said to Raise $435 Million From Privately Placed Sukuk

Bahrain, whose junk rating was lowered by Moody’s Investors Service, tapped the dollar bond market for a second time in three months, according to two people familiar with the matter.
The Gulf nation appointed Noor Bank, Bank ABC and Kuwait Finance House to arrange a $435 million, privately placed Islamic offering, the people said, asking not to be identified because the information is private. The three-year debt will have a profit rate of 325 basis points over midswaps. Moody’s on Saturday reduced Bahrain’s long-term rating one notch to Ba2, two levels below investment grade.
The island state is attempting to shore up state finances pressured by low oil prices. Bahrain’s vulnerability to a decline in crude increased since 2009 when government expenditures started to rise in response to the global economic slowdown and civil unrest in the country. The sovereign last tapped the dollar bond market in February when it raised $600 million, a week after S&P Global Ratings cut the nation’s credit grade to junk.

Spokesmen for Bahrain’s central bank, Kuwait Finance House and Bank ABC didn’t immediately respond to calls or e-mails. No one at Noor Bank was immediately available for comment.

(Bloomberg / 15 May 2016)
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Gold may fuel Islamic finance

With the Islamic finance industry set to be worth US$3 trillion in the next decade, gold could be a catalyst for its growth with the setting of new regulations that will allow Islamic investors for access to gold-based products for the first time.
The market development body, the World Gold Council (WGC), which is based in London and the Islamic standard setting body, the Accounting and Auditing Organisation for Islamic Financial Institutions (Aaoifi), based in Bahrain, are working on a draft of the standard that would galvanise the $2n Islamic finance industry.
“Consumers more or less have been confined to investing in bars and coins because that’s the only area where the rules are clear," says Natalie Dempster, the WGC’s managing director of central banks and public policy.
“It [the standard] could fundamentally change the way in which Islamic countries access gold."
A final draft is expected to be published in the next few months, to be followed by a period of public consultation, says Ms Dempster. The standard could be issued in the fourth quarter, prompting its adoption and unleashing hundreds of tonnes of extra demand for gold, she adds.
“This is the most significant game-changer for the gold market since the Washington Agreement in 1999, whereby 15 central banks pledged to coordinate and limit their activities," says Matthew Keen, the founder of the Dubai consultancy Evidens. “The price of gold has quadrupled since that agreement was formed."
The Washington agreement limited the amount of gold that several major European central banks can collectively sell in any one year, helping to stabilise the gold market. The price of gold in 1999 was $290.25 an ounce. Now it is trading above $1,266 an ounce.
“I would expect billions of USD equivalent to be made available towards the global gold markets, keeping in mind that gold as an asset class has, anyway, a strong presence in a near zero interest rate environment," says Gerhard Schubert, the founder of Dubai’s Schubert Commodities Consultancy.
The fact that the Aaoifi is working on the standard will speed up its adoption worldwide because the regulations issued by the body are widely accepted, analysts say.
The divisive view of gold as a commodity or currency will also be clarified in the standard, which will take into consideration both aspects of the metal.
“Gold can only be bought and sold on spot/cash basis, there can be no deferred payment for any purchase of gold, and there are specific rules on the use of gold as a commodity or currency," says Megat Hizaini Hassan, the head of Islamic Finance Practice at Lee Hishammuddin Allen & Gledhill in Kuala Lumpur.
“Thus having a Sharia standard on gold would help contracting parties to know what specifically they can or cannot do with gold."
Gold has had a lustrous start to the year, rising by about 20 per cent year to date on the back of the low interest rate environment and flight of investments to a haven asset.
Gold’s rally this year follows three consecutive years of losses, its longest rout in more than 30 years.
Demand for gold rose in the fourth quarter of last year 4 per cent to 1,117.7 tonnes, led by central bank purchases, the WGC says. Central banks are buying the bullion to diversify their asset portfolios amid wobbly global economic growth and plunging commodity prices.
For the full year, gold demand fell 14 tonnes to 4,212.2 tonnes, a level on par with demand for 2010, the WGC adds.
Although Islamic investors have missed the gold train, the new standard will help them channel their money into products such ad gold exchange traded funds (ETFs), gold accumulation accounts and gold savings accounts, analysts and officials say.

ETFs are funds that are listed on an exchange, tracking indices and behaving like stocks.
“[The standard] makes it easier and more cost efficient for banks and financial institutions to issue gold products," says Ms Dempster.
“At the moment, if you want to invest in Sharia-compliant assets, the universe of assets that you have to choose from is actually quite small."
Currently most Islamic investors funnel their money into equities, property and sukuk or Islamic bonds.
“Although the price of gold can prove to be volatile in the short term, it’s always maintained its value over the long term," says Samina Akram, the managing director of London’s Samak Ethical Finance. “Investing in physical gold or mining stocks, I feel, will prove popular for investors in coming years. I would even argue further, values of currencies are declining as fiat money has no intrinsic value, and physical gold could be one of possible remedies to the global financial crises."
Gold could be used as an underlying asset for a number of products, including sukuk.
Islamic banks could also use gold as a high-quality liquid asset (hqlas) to comply with more stringent Basel III banking standards that are being phased in. High-quality liquid assets can be composed of cash, or assets that can be converted into cash at little or no loss of value in private markets to meet a bank’s liquidity needs.
“Since the financial crisis, banks have been required to set aside pockets of so-called high-quality liquid assets to protect them against another systemic liquidity crisis," says Ms Dempster.
“Basel gave national supervisors in Islamic jurisdictions the right to define high-quality liquid assets themselves. And I think gold will fit very well there. It is an extremely liquid market."
But the adoption of the standard could face a few bumps.
Banks should be willing to adopt the standard and dedicate time and effort to create products that investors want.
“The Islamic community will only be able to take advantage of this if the banks, both Islamic banks and regular banks, are prepared to deliver products to their clients, Islamic or otherwise," says Mr Keen.
“If the banks don’t do anything to take advantage of this, then nothing changes.
(The National Business / 15 May 2016)
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Saturday, 14 May 2016

Malaysia: Sukuk market holds potential,but devoid of retail players

KUALA LUMPUR: The sukuk market has a lot of potential as an asset class, but is currently dominated by institutional investors with little opportunities for retail players, a forum was told yesterday.
OCBC’s consumer financial services chief Lim Wyson said sukuk provides predictability of yields, which is especially looked for by investors in a volatile market.
“It is not so volatile compared to equities,” he said at a talk on Islamic wealth management at the Global Islamic Finance Forum 5.0.
Lim stressed, however, that the “depth and width” of the sukuk market need to be developed.
“If you are able to widen and deepen the sukuk issuance, you can tap into the private wealth management part of the business,” he said.
Speaking to reporters later, Lim said most of the time, institutional investors are the first to buy during a sukuk issuance. 
“Then there is left very little for the retail side. So one of the areas [to look into] is bigger development in terms of the number of issuance, liquidity so that retail investors have access to it,” he added.
Lim said the creations of more unit trusts with sukuk-investor type of funds will provide access for investors to participate in sukuk through a unit trust format.
“This is relating to investment mandates. Most of the syariah invested funds here are very concentrated in Malaysia or have a big allocation in Malaysia.
“What we are trying to find is more globally invested type of unit trust that is syariah-tied, that we will be able to give to our clients.
“That is the opportunity that we see, if we have more globally diversified mandates that are not so biased in terms of the heavyweight allocation to Malaysia. That is a demand seen in the market,” he added.
According to RAM Rating Services Bhd, global sukuk issuance totalled US$66.4 billion last year, with Malaysia being the world’s largest sukuk market.
In March 2015, Malaysia’s sukuk issuances accounted for 58% of the global US$308 billion outstanding sukuk.
Another speaker, Employees Provident Fund chief executive officer Datuk Shahril Ridza Ridzuan, said there has been limited growth in the global issuance of sukuk to certain issuing markets and issuers.

“Hopefully, if we can move away from this preoccupation with syariah financing purely on faith-based systems towards sustainability, then I think that’s the right way forward to improve growth of this market.
(The Edge Markets / 13 May 2016)
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Zakat Foundation’s Super 17 shine at civils

Aligarh: It was a day of fireworks at New Delhi's Mukherjee Nagar-based Zakat Foundation - an organization devoted to increasing the number of civil servants in India, whose 17 candidates made to the final list of civil services examination on Tuesday. The organization, which selects candidates for coaching after an exam conducted at centres situated in areas of concentration of Muslim population, had coached a total of 35 candidates. Significantly, 16 of its students had also cleared the prestigious exam even last year.

The candidates who cleared the exam this year include Farha Husain from Rajasthan, Mohd Arshad from Jharkhand, Ansar Ahmad Shaikh from Maharashtra, Minhajuddin Nizami, Ashar Ahmad, Arish Bilal from Uttar Pradesh, Anna Sosa Thomas, Benson Samuel, Dr Ibson Shah and Ashif Anakarth from Kerala, Asim Anwer from Karnataka, Syed Junaid Adil, Dr Bashit Qayoom, Dr Bilalwal Shafeeq Chowdhury, Shakil Ahmad Ghani, and Deeba Farhat from Jammu and Kashmir and Hussain Mehedi Rahman from West Bengal.



The organistaion's founder, Zafar Mahmood, who was in Aligarh to encourage and inspire AMU students to prepare for civil services exam, told TOI, "Political representation of Muslims is very low because constituencies of Muslim majority areas are mostly reserved for SC/ST candidates. The Sachar Committee had asked for referring this anomaly to the Delimitation Commission. Similarly, sufficient number of Muslims are not appearing for civil services exam after a well-directed training. . The effort needs to be made by sincere community leaders and well-wishers."


Explaining the way the foundation picks up talent and nurtures them for the country's top exam, Mahmood, himself a civil servant who took voluntary retirement in 2009, said, "The candidates are taken only after they clear the foundation's in-house exam. The exams are conducted in Kerala, Jammu and Kashmir and in Kolkata keeping the concentration of Muslim population in mind and also the fact that the potential of people in these regions is very good. Then a test is held in Delhi for the Muslim aspirants from the rest of India. After the results are out, good performers are taken in and are provided with residential as well as coaching facilities in New Delhi's Mukherjee Nagar. A monthly report card of each candidate is maintained to track his or her performance."



Since Independence, there have been just four Muslim toppers of civil services exam and one of them, Shah Faesal from Kashmir who topped the exam in 2009, was coached by this foundation.





According to Mahmood, a lack of information and confidence in the system has led to disinterest of Indian Muslims in the civil services exam. "Ever since I joined the services in 1977, I made it a point to visit AMU, Jamia Milia Islamia and other minority institutes to encourage Muslim students for taking the exam. I met students and encouraged them to become part of the policymaking system and governance," he said.


(The Times Of India City / 10 May 2016)
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Indonesia: BI urges Islamic finance industry to enhance human capital

Bank Indonesia ( BI ) has urged Islamic financial institutions to enhance their human capital in order to improve competitiveness and sustain the industry’s rapid growth.
"If we want to see the Islamic financial sector on par with its conventional counterpart, it is relevant to improve the human capital," BI deputy governor Hendar told a seminar on human capital development held at BI’s offices in Jakarta on Friday.
Hendar added that Islamic financial institutions had achieved significant growth, surpassing the growth of conventional financial institutions even during the global economic crisis.
Despite this achievement, the industry was still facing a low quality of human capital, resulting in relatively low operational efficiency and poor product knowledge, he said.
"We should pay more attention to the low quality of human resources. This unfortunate phenomenon has affected many countries, including Indonesia," he said.
To enhance human capital, industry players needed to address crucial factors. Universities needed to provide teaching materials that combined Islamic and regular education with technology-based development and needed to build strong cooperation with global institutions.
Meanwhile, Ali Ghufron Mukti, director general for science, technology and higher education at the Research and Technology and Higher Education Ministry, added that to achieve global competitiveness, industry players needed to improve technological readiness, innovation and higher education.
"In the era of ASEAN Economic Community, human resources, undoubtedly, play an important role to enhance the competitiveness of the country. Hence, the ministry encourages individuals and organizations to conceptualize and make strategies to enhance human capital," he said, adding that vocational education was necessary beside academic education.

He said priority sectors to focus on were energy and renewable energy, health care, transportation, defense and maritime industries.
(The Jakarta Post / 13 May 2016)
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Wednesday, 11 May 2016

Boubyan Bank’s sukuk issuance oversubscribed, reaches $1.3bn

Mr. Adel Abdul Wahab Al-Majed, Boubyan Bank’s Vice Chairman and CEO, stated: “Thanks to God, the Bank succeeded locally and internationally in covering the subscription in its capital enhancement sukuk which was oversubscribed by more than 5 times the targeted amount, reaching US$ 1.3 billion. This was achieved during a marketing period that did not exceed two weeks from the date of obtaining the regulatory approvals from the Capital Markets Authority and the Central Bank of Kuwait. The marketing campaign was launched by the Bank in Kuwait as well as the international financial capitals and Boubyan Bank issued US$ 250 million sukuk, priced at 100%, which will bear profit at a rate of 6.75%.”
“Succeeding in covering the sukuk issuance which aims at enhancing the capital base via Tier 1 capital instruments reflects the trust of local and international investors in the future of Boubyan Bank in light of the Bank’s achievements during the past years and its successes which encouraged such investors.”, Al-Majed added.
Al-Majed went on to add: “We take pride in our achievement not only because this represents a success for Boubyan Bank, but also because this success is similarly attributed to the Islamic financial industry, and as it highlights the investment environment in the state of Kuwait, in general, being one of the countries that enjoy the necessary elements to attract global investors in light of the availability of new opportunities such as Boubyan Bank’s sukuk.”
Al-Majed did not forget to praise the role played by Boubyan Capital, Boubyan Bank’s investment arm, whose efforts were crowned by success in managing the sukuk issuance which represented the company’s first and most important test on the international arena where the company succeeded in arranging, managing and marketing Boubyan Bank’s sukuk within record time for this important issuance and in a very professional manner.
On the other hand, Mr. Saleh Al Ateeqi, Chief Executive Officer of Boubyan Capital, stated: “Boubyan Capital believed that the first sukuk issuance to be managed by the company should be the one of Boubyan Bank because this is a very unique event, being the first issuance of sukuk in the world for the enhancement of Tier 1 Capital in compliance with the requirements of Basel III. The importance of this sukuk issuance emanates from the fact that it is the first one in Kuwait since 2007 in addition to being the first sukuk issued by a Kuwaiti Bank to enhance Tier 1 Capital.”

“Despite the circumstances surrounding the international economy and the concerns of investors which drive them away from entering into investment opportunities, the company managed, thanks to God, with its young national cadres and expertise, to market the sukuk within a record time and succeeded in managing the issuance.”, he added.

(Kuwait Times / 11 May 2016)
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Australian budget opens door to Islamic finance

May 9 The Australian government has proposed removing tax barriers to asset-backed financing arrangements as part of its federal budget, a move likely aimed at facilitating interest-free transactions used in Islamic finance.
Islamic finance is gradually catching on in Australia, with National Australia Bank Ltd helping fund a A$160 million ($114 million) Brisbane property purchase in February, after its maiden Islamic finance deal in August.
Under its 2016/17 spending plan, the government would seek to ensure the tax treatment of asset backed financing is similar to other arrangements which are based on interest bearing loans.
The measure would become effective only in 2018 and apply to transactions supported by assets, including deferred payment arrangements and hire purchase arrangements.
The two most common Islamic finance contracts are murabaha, where a client buys a commodity on a deferred-payment basis, and ijara, an installment-based leasing arrangement.
Islamic finance follows religious principles such as bans on interest and gambling but the asset-based nature of such contracts means they can incur double or triple tax charges because they require multiple transfers of titles of underlying assets.

The proposal comes almost five years after the Australian Tax Office first presented a paper on Islamic finance to the government for its review. 

(Reuters / 09 May 2016)
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Saturday, 7 May 2016

Islamic Development Bank to return to ringgit sukuk market

SARAJEVO May 5 The Islamic Development Bank (IDB) plans to sell local currency Islamic bonds (sukuk) in the Malaysian market this year after a three-year hiatus, the head of the Jeddah-based multilateral lender told Reuters.

The deal would be the fourth ringgit-denominated sukuk from the AAA-rated IDB, one of the largest issuers of sukuk alongside the governments of Malaysia, Indonesia and Qatar.

"It could be both, private and public placement," IDB president Ahmad Mohamed Ali said on the sidelines of an industry conference in Sarajevo, adding that specific size and timing of the deal would depend on market conditions.
"We have a very active cooperation and relationship with Malaysia and sometimes we need to have ringgit and we will act according to the needs and issue sukuk in ringgit."

The IDB board has approved the issuance of up to 400 million ringgit ($99.9 million) in sukuk this year, from a 1 billion ringgit programme listed on Bursa Malaysia in 2008.

It has raised a total of 700 million ringgit via three sukuk transactions since then, the latter a 5-year 300 million ringgit sukuk in July of 2013.

Last year, the IDB increased the ceiling of its flagship London-listed sukuk programme to $25 billion from $10 billion, aiming to expand its financing activities.


The bank, which operates to promote economic development in Muslim countries and communities, has 56 member countries and counts Saudi Arabia, Libya and Iran as its largest shareholders.

(Reuters / 04 May 2016)
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Use Zakat for human devt

Governor Abiola Ajimobi of Oyo State has urged Muslims to use the institution of Zakat to promote equitable redistribution of wealth and foster a sense of solidarity among Muslims.

 Ajimobi gave the advice recently during the annual distribution of Zakat by the Elders Consultative Forum of Supreme Council for Shariah in Nigeria, Oyo state chapter in Ibadan. 

The governor, who was represented at the event by Mr AbdulJelil Busari, PermanentSecretary, Oyo state Teaching Service Commission, said Zakat was considered by Muslims as an act of piety through which one expresses concern for the well-being of fellow Muslims.

 Ajimobi called on the Muslims and groups to address the effective, efficient collection and management of Zakat fund. 

He urged the forum to ensure that indigent Muslims have access to Zakat fund and other items and are managed in a sustainable way in order to get adequate reward from Allah. In his contribution, the Minister of Communication, Mr. Adebayo Shittu, said that poverty was too rampant among the Muslims because the rich among them were not paying Zakat. 


Shittu said that he was planning a poverty alleviation programme which was not politically motivated but aimed at assisting the less-privileged and would be done purposely for the sake of Allah.


(Vanguard / 06 May 2016)
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Thursday, 5 May 2016

Malaysia: MAA sells takaful biz for RM394mil, declares special dividend of 35 sen


KUALA LUMPUR: MAA Group Bhd (MAAG) and Solidarity Group Holding BSC (Closed) are selling their combined 100% interest in MAA Takaful Bhd for RM525mil in cash to Zurich Insurance Co Ltd.

The financial services group told Bursa Malaysia that they had on Wednesday signed a conditional share purchase agreement with the Swiss insurance company.

MAAG, which owns 75% equity interest in MAA Takaful, will receive RM393.75mil for its stake.

MAAG and Solidarity had last week received the approval of the Finance Minister, vide a Bank Negara Malaysia letter dated April 27, for the proposed disposal.

Subsequent to the completion of the proposed disposal, the MAAG board proposes to declare an interim special dividend of 35 sen per MAAG share on an entitlement date to be determined and announced later.

The total amount under the proposed special dividend will be payable out of the disposal consideration.

The proposed special dividend will amount to about RM100.8mil computed based on the current issued and paid-up share capital of MAAG.


MAAG shares closed unchanged on Wednesday at RM1.06, with 1.127 million shares traded.



(The Star Online / 04 May 2016)
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Pakistan's Summit Bank eyes Burj Bank for Islamic banking entry

May 3 Summit Bank has received approval from Pakistan's central bank to conduct due diligence on Burj Bank, it said in a stock exchange filing, in the latest bid for the unlisted lender, which is seeking to boost capital through a stake sale.
The acquisition of a majority shareholding in Burj Bank would fit the long term strategy of Summit Bank, which is planning to convert its operations to conform to Islamic principles that include bans on interest and gambling.
Burj Bank, one of the country's five full-fledged Islamic banks, held 4.4 billion rupees ($42 million) in paid up capital as of December, compared with the regulatory minimum of 10 billion rupees.
Last month, Burj Bank said it had shortlisted three financial institutions to conduct due diligence on a non-exclusive basis. It also received an extension from the central bank to meet the mimimum capital requirement until June 30.
The Islamic lender has previously attracted interest from state-owned National Bank of Pakistan and MCB Bank Ltd , both conducting their own due diligence in 2014, but a sale has not materialised.

The largest shareholders of Burj Bank are Bahrain's Bank Alkhair with a 37.9 percent stake and the Jeddah-based Islamic Corporation for the Development of the Private Sector, which holds a 33.9 percent stake. 

(Reuters / 03 May 2016)
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Wednesday, 4 May 2016

3rd African Islamic Finance Summit" - Tanzania

Mr. Muhammad Zubair Mughal, Chief Executive Officer, AlHuda CIBE, while talking to the media said that increasing trend of Islamic finance events in Africa is evidence, that Africa is moving forward in this industry. This is quite a wrong conception that Islamic finance is only taking its roots in North African countries e.g. Tunisia, Morocco, and Algeria, etc., rather its potential exists in the whole of African continent. Islamic banking and finance is growing rapidly in Nigeria, Libya, South Africa, Kenya, and Morocco, while Egypt, Sudan, Tunisia have already taken good initiatives in the mentioned field. He said that there is also a rising trend of Islamic banking and finance in Senegal, Mauritania, Uganda, Tanzania, Ghana and Ethiopia.
Analyzing Islamic financial industry of Africa, he added that, according to estimates the total volume of Islamic finance in Africa is 78 Billion USD, which is less than 5% share of global Islamic finance industry. Out of that, Islamic Banking has 81% share, Islamic Fund 7 %, Sukuk 5 %, Takaful 6%, and Islamic microfinance has only 1% share in the African Islamic Finance Industry. While more than 96 Islamic banks, 29 Islamic Funds, 31 Islamic Microfinance Institutions and more than 41 Takaful companies are working over there.
He also emphasized that the increasing trend of poverty in Africa can be reduced by utilizing Islamic Microfinance methodology and the multilateral organizations e.g. African Development Bank, Islamic Development Bank, GIZ, IFAD and World Bank. These can play a pivotal role in this direction to achieve the goal of poverty alleviation and social development. Current economic conditions have further highlighted the need for Islamic banking and finance and African region would definitely take advantage of it.

It is to be noted that AlHuda Centre of Islamic Banking and Economics (CIBE) is an international organization, working for the promotion of Islamic banking and finance. It is working for education, training, advisory and consultancy with having footprints in UAE, South Africa, Uganda, Pakistan, Tanzania, Somali land, and Nigeria.
(Zawya / 03 May 2016)
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Back to News Zurich Insurance to acquire MAA’s takaful unit

Swiss insurer Zurich Insurance Group AG (Zurich Insurance) is set to wholly take over MAA (Malaysian Assurance Alliance) Takaful, after the deal received regulatory approval from Bank Negara Malaysia (BNM) – Malaysia’s central bank – Reuters reported on April 27.
The disposal of the 75% stake on the part of MAA Group Berhad (MAA Group) is subject to regulations under the Islamic Financial Services Act 2013 (IFSA), which stipulates that the transaction has to secure the prior approval of the Finance Minister, with the recommendation of BNM.
MAA Takaful is one of Malaysia’s 11 Islamic insurers. It was founded in February 2006 as a joint venture between MAA Group and Solidarity Company BSC(c) of Bahrain (Solidarity), both of which hold a 75% and 25% stake, respectively.
The deal to acquire MAA Takaful was first proposed in June last year, although the value of the transaction is undisclosed. On November 30, 2015, MAA Group, Solidarity and Zurich Insurance jointly submitted an application to enter into an agreement for the proposed disposals.  
This venture into Islamic insurance is said to allow for greater penetration into Zurich Insurance’s core markets in the Gulf and Southeast Asia, in addition to strengthening its presence in Bahrain, Qatar and the United Arab Emirates. It also marks the entry of Europe’s fifth-biggest insurer into the world’s second-largest Islamic insurance market.
An alternative to conventional insurance, takaful is based on the concept of mutuality, whereby members contribute money into a pooling system to guarantee each other against losses or damages.
Takaful-branded insurance is based on shariah principles, which prohibits elements of gambling, alcohol, interest and pure monetary speculation, all of which are outlawed under Islamic principles.
As of June 2015, MAA Takaful held 1.2 billion ringgit (US$306.1 million) in AUM, a 5% increase from a year earlier. Its parent company, MAA Group – which is listed on Malaysian bourse Bursa Malaysia – has been plagued with funding issues despite claiming to be relatively cash-rich, according to a report by local daily The Star.
MAA Group has been classified by Bursa Malaysia as a Practice Note 17/2005 (PN17) company since 2011, when it first disposed of its conventional insurance arm. Companies classified as PN17 are companies that are deemed to be under financial distress.
MAA Group had told The Star recently that its activities have been restricted by provisions under the IFSA due to its involvement in the takaful business, but a turnaround is expected soon with the disposal of its takaful unit.

Under its takaful business, the general takaful division recorded a 3.2% decrease in total gross earned contributions to reach 277.6 million ringgit for 2015, whereas the family takaful division registered a 31.8% decrease in total gross earned contributions amounting to 250.7 million ringgit.
(Asia Aset Management / 04 May 2016)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com

Tuesday, 3 May 2016

CMA Oman's sukuk regulation aims to provide transparency

KUALA LUMPUR: Capital Market Authority of Oman (CMA Oman) recently issued new sukuk regulations that aim to provide clarity and transparency to market players, while providing protection to investors in sukuk transactions. 


At the forefront of the historical initiative is Kemal Rizadi Arbi, a Malaysian who is an adviser at CMA Oman as well as a member of the Oman government’s sukuk committee.

“It is to be noted that not all jurisdictions have specific and separate sukuk regulations, particularly in the Gulf Cooperation Council (GCC) countries, with many just having a conventional bond regulatory framework with some additions made on the syariah requirements. 


“In addition, it has been drafted to provide flexibilities and spur innovation in the market, among others introducing a new trust regulation and structure and allowing the issuance of a sukuk programme,” said Kemal in an email to Business Times recently. 


He said the issuance of the new sukuk regulation formed an integral part of the overall strategy of the Oman CMA to enable the capital market to play a vital role as a fund-raising platform for companies in the economic development of Oman, particularly in the fixed income market, where sukuk forms an important element to further develop Oman’s Islamic capital market.

“This new sukuk regulation will form a key milestone in the evolution of the sukuk market in Oman and hopefully boost sukuk issuances, particularly from private sector players in order to meet their development and funding needs, while diversifying the financing base and risk away from the traditional banking sector,” he said.



 Kemal said sukuk issuances would also provide an essential liquidity management instrument and investment avenue for both Islamic and conventional financial institutions, investment funds and takaful/insurance operators in Oman.


“Hence, it will not only provide a wider investor base for both conventional and syariah-compliant investors, but also attract the required foreign investments into the country via foreign investors. 

“We are confident that this new regulation will have a positive impact on Oman’s capital market and the economy,”


 he said. Kemal said within three years since the issuance of the Islamic Banking Regulatory Framework in December 2012 and the establishment of two Islamic banks and six Islamic windows, the Islamic financial market in Oman has seen the launch of the new Muscat Securities Market (MSM) Syariah Index with 30 syariah-compliant listed companies.


esides that, Oman has also seen the launch of three syariah-compliant investment funds, the first Oman sovereign sukuk and also the first corporate sukuk, and the establishment of two takaful operators, including the issuance of the new takaful law. 


“This is another important milestone and will lay the foundation to boost the development of the sukuk market and Islamic finance in Oman,”


he said. According to recent media reports, several Omani companies — including financial institutions, property developers and oil firms, are exploring the feasibility of floating sukuk issues, with the new regulation on syariah compliant bond instrument in place.

The Times of Oman said this was in line with global trends where GCC states, along with Malaysia, Indonesia, Turkey, Singapore, and Pakistan,


have issued US$11.1 billion (RM43 billion) worth of sukuk in the first three months of this year. 

“These countries are choosing to issue more of their debt as sukuk rather than conventional bonds. “These countries issued 39.3 percent of their debt as sukuk — the highest ratio of sukuk to conventional debt in eight years, based on data from Fitch Ratings,” it said.





(News Strait Times Online / 03 May 2016)
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Alfalah Consulting - Kuala Lumpur: www.alfalahconsulting.com
Islamic Investment Malaysia: www.islamic-invest-malaysia.com