From Arabnews.com: Islamic banks are the least affected by the current global financial crisis triggered by subprime tsunami in the United States, the CEO & general manager of Islamic Corporation for the Development of the Private Sector (ICD) said.

Khaled Al-Aboodi said, “Islamic banks are Shariah-compliant and Shariah does not allow them to invest in subprime products as compared to conventional banks.” …. Full Article: Source

From Business24-7.ae: Islamic securitisation through the issue of public sukuk could be the answer to the liquidity constraints faced by home financing institutions, says a Dubai-based Shariah consultancy firm.

“Traditionally Islamic institutions have sought funding from institutional investors and banks but have not created any relationship with small investors or the common man,” said Sohail Zubairi, CEO of Dar Al Sharia, a subsidiary of Dubai Islamic Bank….. Full Article: Source

From Business24-7.ae: The long-term picture for UAE banks looks positive given the inherent strength of the economy and the growing consciousness of loan-book quality, new research has said.

Analysts at ING have ruled out the possibility of a crash in UAE banking stocks that are trading at historic lows. …. Full Article: Source

Benedicte Gravrand, Opalesque London, reports for Opalesque’s free daily Islamic Finance Briefing (subscribe here). See yesterday’s part 1 of the article here.

Some experts on Islamic finance gave their views on the current developments: Dr. Mushtaq Shah, CEO of Ratings Intelligence (www.ratingsintelligence.com), a London firm which provides services for investors who wish to invest in stocks in accordance with Islamic principles, and Farmida Bi and Neil D Miller, partners at the law firm Norton Rose’s Banking team in London (www.nortonrose.com) and specialists in Islamic Finance contributed. Norton Rose now has three offices in the region in Bahrain, Dubai and Abu Dhabi as well as an associated office in Riyadh with the Law Office of Abdul-Aziz Al Assaf.

New products in Islamic finance: note issuance platforms, structured products, alternatives, ETFS
According to Dr. Shah, we continue to see a wide range of products being developed along the risk/reward spectrum. The return on cash equivalent Islamic products is quite low so investors are looking for new products. In addition, global property (which used to be very popular with Islamic investors) is not looking very attractive and the illiquidity is an issue. On the Sukuk side, there are now almost exclusively Ijara type structures after the AAOIFI ruling, but at least the market is active again. Money continues to flow into equity mutual funds, albeit with capital protection. And there are more alternatives in the Shariah space (both hedge funds and private equity), though demand so far is limited.

Norton Rose believes that in the current market environment, it is difficult to talk definitively about what investors are willing to buy. In the past there has been demand for a wide variety of investment classes, although real estate has been a consistent favourite. The growing range of Shariah compliant indices such as the Dow Jones Islamic and the FTSE Islamic have also made equities more readily accessible and over the past year we have seen a wide range of structured notes trading or linked to equities.

In previous years, investment funds have provided convenient vehicles for investors and these remain a popular method. However, in the past 18 moths or so Norton Rose has advised on several note issuance platforms and structured investment products, including one of the first Shariah compliant hedge funds that has delivered a scholar approved arrangement that achieves the economics of short selling. Several Islamic ETFs have also been launched, although Norton Rose believes the Barclays Global iShares product they helped the banks to launch on the London Stock Exchange in December 2007 was probably the first of its type.

Investors-base becoming more institutionalised, most demand comes from Muslim majority countries
A recent Terrapinn survey, which was conducted amongst more than 820 institutional investors and fund managers from around the world and the Middle East, showed that more than half of international institutional investors, or 53%, were looking to allocate to Middle East-based hedge funds.

Investors “are looking for liquid assets that can provide a better return than compliant cash alternatives, but not with too much risk,” Shah says. And at the moment, most of the demand is coming from the private sector. In the Mid East, this amounts to private banking clients and in the Far East retail.

“However, there are signs that institutions (SWF’s, pension funds) in the Far East are starting to look at Islamic investments” he continues. “The ME institutions are a little behind, but we expect a SWF or pension fund to start making Islamic investments in the next 18 months. Once one has done it, they will all be forced to. This will really change the market and make it more institutionalised. We will see big flows into the area.”

Norton Rose observed that Islamic investors traditionally look for strong returns but may relinquish some of the return for a good periodic cash flow. It is difficult to predict whether sectoral and risk appetites will change in the new year. There are some arguments to suggest that investor portfolios do need to broaden when and where they can in equities not least because of the lack of fixed income and/or cash investments that are available.

The demand for Islamic products comes from Muslim majority countries, according to Norton Rose, with demand led out of the Gulf States and Malaysia. The pressures driving these demands are various. In some cases, Government and quasi Government sponsors will often require Shariah compliant financing solutions for major infrastructure developments etc. There is also demand from an increasingly sophisticated regional investor community which varies from high net worth individuals at one end of the spectrum to retail consumers at the other. The demand for sukuk however was driven largely by conventional investors looking for debt-like returns but wanting to invest in the region.

Sell-side and buy-side relationships
With regards to the sell-side and buy-side relationships, Shah says that on the sell-side (investment banks), the structured products/derivative desks are providing all sorts of products that can be “white labelled”, such as index tracking products with capital protection, passive product with volatility targets… On the client servicing side (prime brokerage for example), banks are gearing themselves to provide compliant solutions. This should [give] the cost of the product to the end client and improve efficiency. On the buy-side (fund managers) a number of big name Western managers are either looking to do Shariah compliant products or in the process of launching them.

Norton Rose believes that at present, investors are divesting real estate assets in particular, in order to meet cash flow obligations elsewhere. On the buy side, certain investors are looking for, and investing in, assets and regions where they see good valuations at present- and potential for growth e.g.: green technologies and emerging markets such as North Africa, China and India.

Fund flows come from individuals and from governments
Norton Rose argues that what external observers fail to realise is that the (vast) majority of funds generated in the Muslim world (much of which stems from oil revenues) has been managed either conventionally or not at all. The money that then starts to be managed Islamically generally represents amounts that belong to individuals who have then chosen (for religious reasons) to manage their financial affairs in a way that reflects their faith (i.e. in accordance with the Shariah) and/or it may be pools of cash that Governments, quasi Government entities and/or large corporations that have similarly decided (for religious reasons), should be managed in this way.

So far as the Islamic windows of conventional banks are concerned, Norton Rose adds, when they were providing credit to Islamically financed projects, it was on the basis of the demand for such financing coming from regional sponsors, so it made sense to respond to that demand and inject funding in a structured way that responds to these requirements. In this respect, the flow into Islamic finance has been in two directions but for completely different reasons.

According to Dr. Shah, counting the money coming into Islamic finance is hard to figure out, but taking the number of banks that are either converting to 100% Islamic or opening up Islamic arms, the growth in assets seems to be 20% + per annum.

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From BTimes: Malaysia launched the world’s first syariah interbank money market and popularised interest-free bonds to establish itself as a leading centre for Islamic finance, but its legal system is struggling to keep up.

Malaysia is not alone. Rival Middle East centres in the US$1 trillion sector are also finding that their legal systems are ill equipped to deal with Islamic finance cases as the market grows at a furious pace….. Full Article: Source

From Sukuk: The Brunei Darussalam government must start issuing longer term sukuk or Islamic bonds to take the next step in developing its Islamic capital market, bankers and investment managers said yesterday.

In a market regarded as still in its infancy stage, the government plays a key role in encouraging private business to issue sukuk as a way of raising capital….. Full Article: Source

From BTimes: Islamic banking is gaining ground with non-Muslims worldwide due to its strict lending principles, Singapore’s third-largest lender OCBC said today, reflecting industry efforts to transcend religious beliefs to gain market share.

Syariah finance is a blend of Islamic economics and modern lending principles and its products can be sold to Muslims and non-Muslims….. Full Article: Source

From Zawya: Gulf Co-operation Council (GCC) countries will soon have a comprehensive Islamic private banking system to address a variety of requirements in the region, according to banking experts.

In the backdrop of investors and depositors across the world turning their focus on Islamic banking as safe and reliable bet, private non-Islamic bankers and wealth funds should get rid of commercial banking mentality and be committed to customers’ wealth care, they said….. Full Article: Source

From Forexpros: Malaysia launched the world’s first sharia interbank money market and popularised interest-free bonds to establish itself as a leading centre for Islamic finance, but its legal system is struggling to keep up.

Malaysia is not alone. Rival Middle East centres in the $1 trillion sector are also finding that their legal systems are ill equipped to deal with Islamic finance cases as the market grows at a furious pace….. Full Article: Source

From CBN: U.S. dependence on oil has led to an unprecedented transfer of wealth to the Muslim nations of the Middle East. And now it seems they are using that money to advance an Islamic agenda.

It’s called Sharia compliant finance. Sharia is best known in the West for the punishments it requires, including stoning for adultery, amputation for theft and death to those who leave Islam. Sharia finance claims to not allow profit from interest or risk, or from prohibited items such as pork or alcohol….. Full Article: Source

From CPI Financial: UAE Central Bank grants Deutsche Bank a wholesale banking licence allowing the German group to expand its product offerings.

Deutsche Bank has received authorization from the Central Bank of the United Arab Emirates to conduct wholesale banking through an on-shore branch, which will enable it to take institutional deposits, and offer loans and advances to corporate entities, government and semi-government institutions….. Full Article: Source

From Zawya: International rating agencies such as Standard & Poor’s, Moody’s and Fitch have revised their outlook on the ratings of Dubai-based Government-Related Entities (GREs) and a number of regional banks to negative.

S&P has assigned a negative outlook to six Dubai government entities such as DIFC Investments LLC, DP World Ltd, Dubai Holding Commercial Operations Group LLC, Dubai Multi Commodities Centre Authority, Jebel Ali Free Zone (FZE)and JAFZ Sukuk Ltd. All ratings on these entities were affirmed….. Full Article: Source

From Zawya: Al Hilal Bank, one of the UAE’s newest Islamic banks has launched an instant car financing scheme. The new financing product was launched at the five-day Abu Dhabi Motor Show, which opened at Abu Dhabi National Exhibition Centre yesterday.

“Our aim is to give the best customer experience to our clients. Al Hilal offers financing up to 100 per cent with repayment schedules that are flexible,” said Mohammed Zaqout, Head of Personal Banking….. Full Article: Source

From Reuters: Pakistan’s central bank said on Tuesday it had set a target of 10 billion rupees ($123 million) for its 3-year Islamic bond.

The tender will be opened on Dec. 20 at 11:30 a.m. and the result will be communicated the same day, the State Bank of Pakistan said. Settlement will be on Dec. 29….. Full Article: Source

From Zawya: Before even opening its doors to its first customer, Ajman Bank - the latest entrant into the United Arab Emirates’ crowded banking sector - sent out a press release stating it was reviewing its strategy in the light of the global financial crisis.

In hindsight, it was perhaps not the best time to launch a new lender in the UAE. Though the Dh561m ($153m) initial public offering in February was 85-times subscribed and the stock trebled in value on the first day of trading on June 22, the shares have since tumbled to near their subscription price, and the bank has yet to open its doors….. Full Article: Source

Benedicte Gravrand, Opalesque London, reports for Opalesque’s free daily Islamic Finance Briefing (subscribe here).

Quite a few firms are looking at creating Shariah-compliant products to attract the cash-rich Islamic investor’s community, as well as non-Islamic investors looking for less-risky alternatives. And despite the few challenges that it is facing, the Islamic finance industry is continuing on the road to self-development.

Islamic finance comprises any investment that is compliant with the Islamic Shariah law. According to ACCA’s Aziz Tayyebi, the current growth in Islamic finance is increasingly being seen outside the traditional markets of the Gulf Cooperation Council (GCC) countries and Malaysia which has meant that global market participants and policy makers are increasingly paying attention to its potential. The UK Government has also played a major role in trying to make the City of London the global centre of Islamic finance by extending support wherever possible, including the abolition of double stamp duty on Islamic mortgages, and the recently announced plans to test the feasibility of issuing Shari’ah-compliant sukuk bonds (aka Islamic bonds).

Among the most recent new ventures, Barclay Capital last month was in the process of launching a Shariah-compliant hedge fund platform along with Sharia Capital (Gulf-daily-news). HSBC Amanah opened three new Shariah branches in the cities of Bandung, Surabaya and Medan to coincide with its 10th year of operation in Indonesia (coverage). And the DFSA licensed Macquarie Capital Advisers (Dubai) Ltd as an authorised firm.

Singapore’s third-largest lender OCBC is one of the many institutions that have set up Islamic banking businesses to tap opportunities in the $1 trillion industry. OCBC told Reuters earlier this month that Islamic banking was gaining ground with non-Muslims worldwide, reflecting industry efforts to transcend religious beliefs to gain market share. Islamic finance has become popular in recent years among cash-rich Gulf Muslim investors, rising demand for ethical investing, and now for less risky alternatives.

Human resources
This rise in demand for Shariah-compliant investments has also given rise to a demand for Islamic finance experts, who are in short supply. That is why the Bangor Business School is one of the schools that have launched specialist courses on the subject.

Another problem in human resources comes from the lack of standardisation: there is no central authority for increasingly complex Shariah compliance demands, and Shariah experts in different jurisdictions do not always agree (CNBC video).

Challenges
Islamic finance does not allow debt with interests and does not invest in financials, so it has been generally sheltered from the general financial turmoil. However it does heavily invests in commodities and energy. And as those prices are tumbling down, one would expect such investments to suffer – and some have. However an analyst from SEI, a U.S. asset manager, is optimistic: “Should commodities, materials and energy pick up over the next quarter and beyond, we would expect to see sharia indexes recover from the Q3 slow down.” (coverage).

According to a recent Moody’s report, Islamic financial institutions, even if they displayed strong resilience in the financial turmoil, have been facing three series of cyclical challenges, which again reflect their current structural strengths and weaknesses:

- Managing short-term liquidity has been made more difficult;
- Investment portfolios, concentrated on illiquid and cyclical asset classes, have been impaired;
- Access to long-term funding has been postponed, forcing banks to reduce the maturity profile of their assets.

However, despite such constraints, which are expected to be temporary, Islamic banks have had the capacity to resist, thanks to a few buffers:

- Their credit portfolios have been essentially domestic, with limited pressure on asset quality so far;
- Their entrenchment in the retail banking arena, with high customer loyalty and deposit stability, limits the probability of massive bank runs;
- High capitalisation and ample core liquidity often provide a relatively higher amount of confidence to counterparts.

Not always a shelter from the crisis
However, the Middle-East is not altogether a shelter from the global financial crisis; oil prices are dropping and so oil-dependent economies are suffering and investing less; Dubai’s economy has suffered some setbacks in its real estate sector; and Kuwait lost heavily on some bank investments.

Dubai, whose economy is more reliant on real estate than on oil, has felt the effect of the falling oil prices as investors and lenders retracted from its real estate sector, forcing the country to put projects on hold, and its stock market to lose almost 70% of its value since the summer.

Kuwait’s Gulf Bank had to be rescued by a government in the fallout from the global credit crisis, after suffering currency derivatives losses worth 375 million dinars, Reuters recently reported. And Kuwait’s Finance Minister Mustafa Al-Shamali was asked to confirm whether Kuwait’s sovereign wealth fund had lost 80% of its $5bln investments in Merrill Lynch and Citigroup ( Kuwaittimes.net).

After losing 22% in October, the broad MENA equity market index lost a further 14% in November taking the 2008 loss in MENA equity markets to close to 55% (coverage). The Dow Jones Islamic Market (DJIMSM) Index was up 5.3% on 5 December. And the Eurekahedge Islamic Fund Index was down 2% (est.) in November, -28.06% YTD.

Tomorrow: Experts give their views on the developments within the Islamic finance arena.

Recent exclusive articles about the Islamic Financial market on Opalesque’s Alternative Market Briefing:
- 300 institutions, $650bln assets at 15% yearly growth rate - Report says Islamic banking attractive as it is highly profitable: Source
- The 4th GCC Oil Boom (2002 - ????) Part 3: Understanding Islam: Source
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From Cpifinancial.net: The last few months have been good for those watching Islamic finance activities in India. It is a well-known fact that owing to its religious sensibilities India has been cautious in allowing Islamic financial activities.

Despite having one of the largest Muslim populations in the world and a strong demand for Shari’ah-compliant products from the community as well as the business sector, India has not yet permitted Islamic finance at official levels, though some kind of Islamic financial activities or Shari’ah-compliant products have been on offer for some time now….. Full Article: Source

From Gulfweeklyworldwide.com: The current crisis provides Islamic finance with a rare opportunity to reinvent itself and to appeal not just to the 1.5 billion Muslims in the world but the rest of humanity too, which is suffering as a whole from the collapse of free market capitalism and for whom the pain is likely to intensify next year, as the effects of the financial crisis are fully felt in the real economy in the form of higher costs and fewer jobs.

Islamic finance needs to focus less on complying with each rule and more on reflecting the principles which underlie those rules so that transactions are no longer Sharia-compliant but are Sharia-based….. Full Article: Source

From Theedgedaily.com: Maybank Islamic Bhd is targeting a 10% to 15% growth to its overall financial portfolio in its next financial year following the introduction of an Islamic term financing facility for corporate and business customers.

Maybank Islamic acting chief executive officer Ibrahim Hassain said the new facility, Musharakah Mutanaqisah Term Financing-i (MMTF-i), was a syariah-compliant financing facility for asset acquisitions and for refinancing landed properties, plant and machinery, vessels and commercial vehicles….. Full Article: Source

From Cpifinancial.net: Following a rebranding in 2006, Mashreq Group has introduced the second phase of its long-term strategy to become the most convenient bank in the UAE.

Osool, which operates in the self employed segment, will now become the specialised Factoring, Leasing and Commercial Auto Financing subsidiary of the Mashreq Group. …. Full Article: Source

Leading Islamic Solution to Drive Innovation in Banking Misys, the global application software and services company, announced today that Egyptian Saudi Finance Bank (ESFB) has chosen Misys Equation 3.9 for its 11 branches across Egypt. The solution is the latest version of the widely-used retail banking solution from Misys and will help ESFB to provide better and more innovative Islamic services to its customers.

ESFB is one of the leading banks in Egypt and has a long tradition of providing its customers with the best and most up-to-date products and services. Misys Equation 3.9 with advanced Islamic Banking capabilities was selected pre-integrated with the trade finance solution, Misys Trade Innovation. …. Full Press Release: Source

From Zawya.com: Banque Albaraka D’Algerie, a subsidiary banking unit of Albaraka Banking Group, announced that it had achieved a big increase in net profits in the first nine months of 2008 which rose by 80%. In the meantime, total assets increased by 39%, finance by 53%, deposits by 32% and shareholders equity by 68%.

The financial results of the Bank for the first nine months of the year revealed that the Bank’s operating income amounted to US$59.38 million compared to US$39.78 million for the same period of last year. …. Full Article: Source

From Arabtimesonline.com: The global financial crisis will be at the top of the agenda at the next GCC summit meeting, to be held in Muscat in two weeks’time, said Deputy Prime Minister and Foreign Minister Sheikh Mohammad Al-Sabah on Tuesday.

GCC states are currently striving to create a unified stance vis-a-vis the global financial crisis, that would curb its impact on them and would be part of the groundwork to be discussed at the Arab Economic Summit, convening in Kuwait in January, he said in a speech he delivered at a Kuwait University conference on the changing face of the world economy….. Full Article: Source

From Business24-7.ae: Arab banks should take urgent measures to ensure stronger co-ordination so they can play an active role in the development of a new world economic order spawned by the current financial crisis, the top Arab banker has said.

Adnan Ahmed Yousuf, Chairman of the Union of the Arab Banks (UAB) said all countries are expected to contribute to the evolution of the new global system, adding the recent trips by British Prime Minister Gordon Brown and other officials to the Gulf illustrated the important part it can play in this field….. Full Article: Source

From Ameinfo.com: Daman Investments PSC, the leading Dubai-based investment management company, has announced the performance results of its highly subscribed funds, the Daman Speculator Fund, the Daman Second Emirates Fund, and the Daman Islamic Fund, for the month of November 2008.

The newest Daman offering, the Daman Speculator Fund launched in July 1, 2008, has presented a noteworthy performance in comparison with today’s volatile markets, posting a positive monthly gain….. Full Article: Source

From Dailystaregypt.com: In Egypt, where the colloquial term for any credit card is “visa,” it is easy to forget that a host of financial service companies are here, vying for a slice of the market presented by Egypt’s recent push toward banking.

MasterCard is one of these firms. From a regional office in Dubai, the financial company oversees 16 countries in the Middle East and Levant, in a swath sweeping from Pakistan to Egypt. …. Full Article: Source

Dow Jones Indexes, a leading global index provider, today announced the results of the regular quarterly review of the Dow Jones Islamic Market Indexes. All changes will be effective at the start of trading on Monday, December 22, 2008.

In the Dow Jones Islamic Market World Index, 481 components will be added while 226 components will be deleted. That brings the number of components in the index to 2,558. …. Full Article: Source

From Wired.com: Pakistan is about to become a failed state, and Iran and Turkey will be close behind. The West at present is unable to cope with a failed state like Somalia, with less than a tenth as many military age men as Pakistan, but which nonetheless constitutes a threat to world shipping and a likely source of funding for terrorism.

As state finances crumble, states will become less important, and freebooters will seize the stage. Think of the Mumbai terrorists as a political cognate of the Somali pirates, and the character of a Middle East made up of failed states comes into focus….. Full Article: Source

From Nasdaq.com: Malaysia’s national water assets management company Pungurusan Aset Air Berhad said Wednesday it may raise funds via Islamic bond issuance to partially finance its acquisition of the country’s water assets and to improve services.

“The bonds are likely to be Islamic,” PAAB Chief Executive Suhaimi Kamaralzaman told reporters at a news conference. He didn’t disclose details of the bonds or the timing of the issue….. Full Article: Source

From Creepingsharia: If “cash is king,” then Middle East coffers are irresistibly enticing. During a recent tour of Saudi Arabia and the Gulf states, Deputy Treasury Secretary Robert Kimmitt applauded the “growing role” of Arab banks in the U.S. economy.

Treasury is seeking buyers for its newly acquired bailout assets because more than $1 trillion in cash is urgently needed to rescue the largest U.S. banks….. Full Article: Source

From Theasianbanker.com: Some are claiming that greater use of Islamic finance could have averted, or at least minimised, the global financial crisis. However, the sector has potential problems of its own, which may become apparent in 2009 as the real economy in most countries starts to suffer.

The musharakah contract, in which a bank acts as a partner in a business interest, could potentially expose institutions to legal action. The bank is likely to be involved in management decisions, and it could be vulnerable if business is conducted improperly….. Full Article: Source

From Zawya.com: Bank of Tokyo-Mitsubishi UF, a unit of Japan’s biggest bank by assets, will offer a broad range of Islamic financial services in the Middle East and Asia, with the business set to kick off with its local unit in Malaysia.

Bank of Tokyo-Mitsubishi UFJ (Malaysia) Bhd has already obtained a licence as an international currency business unit from Bank Negara Malaysia, the central bank of this country, according to the Nikkei Shimbun. The license allows the unit to offer Islamic finance in foreign currencies such as the yen and the dollar….. Full Article: Source

From Thepost.com.pk: State Bank of Pakistan on Tuesday invited tenders for sale of 3-Year Government of Pakistan Ijara Sukuk (GIS).

The target for this auction is Rs 10 billion. The tenders have been invited in accordance with the provisions of SBP, FSCD circular No.13 dated Sept. 06, 2008, says SBP statement….. Full Article: Source

From Mortgagesolutions-online.com: Islamic Bank of Britain (IBB) has announced the launch of a new website, www.ibbintermediaries.com, targeted at mortgage intermediaries and IFAs.

The bank said the site provides agents with a dedicated resource enabling them to re-sell IBB’s competitive Sharia’a compliant Home Purchase Plans and Commercial Property Finance products. …. Full Article: Source

From Reuters: Singapore-listed Hong Kong commodities firm Noble Group said on Tuesday it will borrow $80 million via an Islamic loan facility to refinance existing debt and for general working capital.

HSBC is the sole arranger and book runner for the two-year committed syndicated commodity Murabahah….. Full Article: Source

From Middle-east-online.com: Despite recently announced lay-offs at some banks, Dubai remains an attractive financial hub for top executives. “A closer look clarifies that lay-offs at banks are only minor job cuts and they happen mostly in investment banking”, says Thomas W. Hofer, Managing Partner at Taylor Hofer Partners UAE Ltd.

“Even those financial institutions which are mentioned in the press, continue to hire”, Hofer adds. …. Full Article: Source

From Bernama.com: Maybank Islamic expects its overall financing portfolio to grow between 10 percent and 15 percent for the financial year ending June 2009 with the launch of its new Islamic term Financing Facility, Musharakah Mutanaqisah Term Financing-i (MMTF-i), specifically suited for corporate and business customers.

To date, the bank has more than RM8.2 billion in outstanding financing to the business sector….. Full Article: Source

From Zawya.com: The mortgage lending sector will face the challenge of balancing the opposing interests of ensuring adequate access to capital for the new entity - formed with the four-way merger between Amlak Finance and Tamweel and federal entities Emirates Industrial Bank and Real Estate Bank.

It is trying to avoid having it crowd out the private sector banks entirely through its ability to finance more cheaply than a non-guaranteed entity, said a report. Should the merged entities have access to low cost funding, this will allow it to continue to compete in the mortgage market, said the UAE yearbook research report by EFG-Hermes….. Full Article: Source

From Insurancejournal.com: A Michigan–based Christian rights group has filed suit against the federal government claiming the government’s loan to insurance giant American International Group (AIG) is illegal because AIG has financial products that the group claims promote Islam and are anti-Christian.

The federal lawsuit was filed against U.S. Treasury Secretary Henry M. Paulson, Jr. and the Federal Reserve Board and calls for a halt to all bailout monies going to AIG. AIG is not being sued….. Full Article: Source

From Istockanalyst.com: Abu Dhabi Commercial Bank has launched ADCB BusinessEdge, four new transaction banking packages targeted at the small and medium enterprises.

ADCB BusinessEdge is claimed to comprise many service packages including ADCB BusinessEdge Elite, ADCB BusinessEdge Preferred, ADCB BusinessEdge Premium and ADCB BusinessEdge Priority. …. Full Article: Source

From Khaleejtimes.com: The Dubai government may seek sovereign credit rating from three major rating agencies instead of one, said a senior banker.

Sovereign rating would certainly add to Dubai’s already established image of being a tax-free, safe and secure haven for investors from around the world, said Sohail Zubairi,Chief Executive Officer, Dar Al Sharia — a subsidiary of Dubai Islamic Bank….. Full Article: Source

From Zawya.com: The Macquarie Group (Macquarie) and Abu Dhabi Commercial Bank (ADCB) announced today the launch of a fund that is expected to raise up to US$1 billion to invest in infrastructure opportunities in the Gulf Cooperation Council (GCC) as well as the broader Middle East and North Africa (MENA) region.

An initial cornerstone investment of US$500m has been made by Al Hail Holding, a prominent UAE-based investor and developer, and the fund - ADCB Macquarie Infrastructure Fund (AMIF) - is now welcoming other regional investors. …. Full Article: Source

From Businessmirror.com.ph: Qatar National Bank, one of the largest in the Middle East, is interested to buy 40 percent of Al-Amanah Islamic Investment Bank of the Philippines, Finance Secretary Margarito Teves said on Tuesday.

Teves said Qatar National would send a team to do due diligence on Al-Amanah. The bank also expects representation when Emir Sheik Hamad bin Khalifa al-Thani of Qatar goes on a state visit to the Philippines in the next quarter….. Full Article: Source

From Reuters: Hamas has approved for the first time the establishment of a new bank in the Gaza Strip under its authority, a move that could open a door to bypass a financial blockade imposed by Israel and its Western allies.

Islamic National Bank chairman Ala al-Rafati said the new financial institution had received a license from the government run by the Islamist group which controls the Palestinian coastal enclave and planned to open for business early in the new year….. Full Article: Source

From Birminghampost.net: The West will see fundamental changes to its banking systems as it looks to claw its way out of the recession, but how will the recent global events affect the Muslim world?

By the time President Obama arrives at the White House, the United States will be a different country in a different world. There will be no going back and no return to business as usual….. Full Article: Source

From Aawsat.com: It is expected that many Muslim countries, which had fast-growing economies, will suffer [from the global financial crisis] and experience a decrease in growth, which will have a negative effect on their development projects.

There is no doubt that the consequences of this crisis and the subsequent impacts on the Islamic countries mean that those rejoicing at the crisis should reconsider their position, and use a more rational and realistic discourse, especially that we have not witnessed the collapse of the capitalist countries or the disintegration of the capitalist system. …. Full Article: Source

From Europenews.dk: The Government has launched a consultation on the legal implications of regulating Islamic finance in the UK. The joint Treasury – Financial Services Authority (FAS) consultation will set out the proposed legislative framework for regulation of an alternative financial instrument commonly known as an Islamic bond, or sukuk, which is interest-free and asset-backed.

Ian Pearson MP, Economic Secretary to the Treasury, launched the consultation as part of the government’s work to support the growth of Islamic finance in the UK….. Full Article: Source

The Islamic finance industry, which refers to the banking activity conducted in accordance with the principles of Sharia (Islamic law), gained the limelight over the past two months during the global financial turmoil as one of the relatively safe havens for investments.

Executives of Islamic banks and financial institutions have been arguing from the very beginning of the crisis that their businesses were relatively immune to the repercussions of the world financial turmoil because Islamic financial products were different from those inherent in the conventional banking system….. Full Press Release: Source

From Thenews.com.pk: Kuwait Finance House (KFH) has been awarded the Best Islamic Retail Brand of the year by MTI Consulting at the 15th World Islamic Banking Conference (WIBC) held in Bahrain.

This is the first occasion such a prestigious and strategic award has been introduced at the WIBC since its inception. It recognises the growing dominance and importance of Islamic finance, in particular the need to harness and develop the retail Islamic finance market, which will provide the foundation for sustainable growth of the Islamic finance….. Full Article: Source

From Wnd.com: A lawsuit has been filed against the Federal Reserve Board and U.S. Treasury Secretary Henry M. Paulson Jr. over Wall Street bailout money going to American International Group, which is funding Shariah-compliant insurance and products.

WND reported a week ago that AIG has benefited from two major bailout agreements with the U.S. government giving $152.5 billion in taxpayer dollars to the company. Then it confirmed it is stepping up its dealings with Islamic finance offering homeowners insurance that complies with Islam’s religious Shariah laws. …. Full Article: Source