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Islamic Finance Briefing - Archive | June, 2009

Sukuk under scrutiny after Kuwaiti firm’s failure to meet payments

Posted on 30 June 2009 by Laxman  |  Email|Print

From Efinancialnews.com: Lawyers are calling for greater due diligence and disclosure in the Islamic bond market as the first default in the Gulf region highlights uncertainties for investors.…….Full Article (Subscription Required) : Source

Sharia and sustainability

Posted on 30 June 2009 by Laxman  |  Email|Print

From Efinancialnews.com: Investment in sharia funds has grown by 20% a year since 2003, according to asset manager State Street, which estimates Islamic financial institutions now manage more than $500bn. Despite this rapid growth, institutional Islamic investors have been slow to commit to western “sustainable investment” models.…….Full Article(Subscription Required): Source

DIB mortgage offer likely to add more risk

Posted on 30 June 2009 by Laxman  |  Email|Print

From Business24-7.ae: Dubai Islamic Bank’s (DIB) decision to offer property mortgages of up to 90 per cent of value may add more risk to its real estate portfolio, analysts said.

DIB this month announced 90 per cent loan-to-value (LTV) financing for properties across the UAE……..Full Article: Source

New funds put bank on target

Posted on 30 June 2009 by Laxman  |  Email|Print

From Thenational.ae: Emirates NBD is close to securing a Dh3.5 billion ($US953 million) government cash injection that will allow the UAE’s largest lender to meet new capital adequacy targets set by the Central Bank late last year.

Most of the cash is expected to come from the Government of Dubai, which owns 56.6 per cent of Emirates NBD through the Investment Corporation of Dubai (ICD), its investment arm……..Full Article: Source

NBK has ‘no exposure to Saad, Gosaibi’

Posted on 30 June 2009 by Laxman  |  Email|Print

From Tradearabia.com: National Bank of Kuwait, the country’s biggest bank by assets, does not have any exposure to Saudi Arabia’s troubled groups Saad and Al Gosaibi, two newspapers said on Monday.

An official at NBK denied having a relation with both Saad and Al Gosaibi groups, local daily Awan said without identifying the official……..Full Article: Source

UAE to guarantee bank bond sales to boost liquidity, Al Suwaidi says

Posted on 30 June 2009 by Laxman  |  Email|Print

From Gulfnews.com: The UAE plans to guarantee bank bond sales, intensifying efforts to shore up the financial system after pledging Dh120 billion ($33 billion) to boost liquidity in the Arab world’s second biggest economy.

The proposed law, which would allow the government to guarantee bonds, medium-term notes, syndicated loans and commercial paper, is expected to be discussed this week and will “give banks an extra arm to extend credit,” central bank Governor Sultan Bin Nasser Al Suwaidi said in an interview in Basel, Switzerland, yesterday……..Full Article: Source

UAE to boost banks with gilt edged guarantee

Posted on 30 June 2009 by Laxman  |  Email|Print

From Maktoob.com: The UAE has announced plans to tackle rising liquidity issues by adding a gilt edged guarantee from the government, thereby making bank bonds, medium-term notes, syndicated loans and commercial paper more attractive to international and local investors.

The UAE financial sector faces a shortage of funds and underlying conditions are expected to worsen with the number of non-performing loans continue to rise into 2010……..Full Article: Source

Saudi loan restructuring to hit Gulf borrowing

Posted on 30 June 2009 by Laxman  |  Email|Print

From Tradearabia.com: The debt restructurings of privately-owned Saudi groups Saad and Algosaibi could curtail international lending to Saudi Arabia and the Middle East, banking sources said.

The Saudi problems come after similar issues in Kuwait, and companies in the Gulf region may now face problems refinancing syndicated or bilateral loans, bankers say, as fears spread they are facing structural debt problems……..Full Article: Source

Pakistan Islamic banks join hands

Posted on 30 June 2009 by Laxman  |  Email|Print

From Islamonline.net: Pakistan’s six Islamic banks are going to set up an Islamic inter-bank price market in order to stop relying on interest-based conventional banks in meeting their short-term funds requirements.

“Things are almost finalized and an official announcement in this regard will soon be made,” Ahmed Ali Siddiqui, head of Product Development Shari`ah Compliance at Meezan Islamic Bank, Pakistan’s first full-fledged Islamic bank, told IslamOnline.net on Monday, June 29……..Full Article: Source

Sharia finance advances to quench investor thirst

Posted on 30 June 2009 by Laxman  |  Email|Print

From Efinancialnews.com: The Islamic finance market is witnessing a wave of innovation as lawyers and financial institutions develop products in the face of growing investor demand.…….Full Article(Subscription Required): Source

CBB Sukuk Al-Salam securities fully subscribed

Posted on 30 June 2009 by Laxman  |  Email|Print

From Bna.bh: The Central Bank of Bahrain (CBB) announces that the monthly issue of the Sukuk Al Salam Islamic securities has been fully subscribed.
Subscriptions worth BD6 million were received for the BD6 million issue, which carries a maturity of 91 days……..Full Article: Source

UAE banks have ’significant’ exposure to Saad

Posted on 30 June 2009 by Laxman  |  Email|Print

From Tradearabia.com: Banks in the United Arab Emirates have “significant” exposure to Saudi Arabia’s troubled Saad Group and Algosaibi conglomerates, the UAE central bank governor told Reuters on Monday.

Speaking in the Swiss city of Basel, Sultan Bin Nasser al-Suweidi said the Saudi central bank could not keep its freeze on accounts linked to the two firms forever and that Gulf countries must find a common and transparent solution to this issue as they are all affected……..Full Article: Source

Private investors sell 49% stake in EIB to government

Posted on 30 June 2009 by Laxman  |  Email|Print

From Business24-7.ae: Private sector investors yesterday agreed to sell their 49 per cent stake in the Emirates Industrial Bank (EIB) to the Federal Government.

The Ministry of Finance previously owned 51 per cent of the bank and the government now becomes the sole owner. A number of investors held 49 per cent of the stake, who agreed unanimously to the sale……..Full Article: Source

Riyad Bank eyes $373 mln financing in property plan

Posted on 30 June 2009 by Laxman  |  Email|Print

From Aawsat.com: Saudi lender Riyad Bank 1010.SE said on Monday it would provide up to 1.4 billion riyals ($373 million) in financing for buyers into a property project partly led by Egypt’s Talaat Moustafa Group.

The bank signed an agreement on Sunday with Saudi-based property developer Thabat under which the lender will design Islamic-compliant packages for buyers into a project worth 6 billion riyals in the capital Riyadh……..Full Article: Source

Saudi economy to fall 1.2% in 2009

Posted on 30 June 2009 by Laxman  |  Email|Print

From Saudigazette.com.sa: The Saudi economy is forecast to shrink by 1.2 percent in 2009, despite a stronger market for oil and expanded government investment, Riyadh-based Samba Bank said on Monday.
The recovery of oil prices to above $60 a barrel and a forecast 24-percent hike in government spending is not enough to offset a sharp slowdown in private sector activity, the bank said in its mid-year report on the economy of the world’s leading oil exporter……..Full Article: Source

Russell and Jadwa to launch sharia index series

Posted on 30 June 2009 by Laxman  |  Email|Print

From Asianinvestor.net: Russell Investments and Jadwa Investment have signed an agreement to launch a sharia-compliant Russell-Jadwa Shariah Index series, which will become live within the next few weeks.

The Russell-Jadwa Index series will be screened from the 10,000-stock Russell Global Index universe. It will contain more than 2,700 stocks from more than 60 countries……..Full Article (Subscription Required): Source

Top honours for Islamic finance unit

Posted on 30 June 2009 by Laxman  |  Email|Print

From Gulf-daily-news.com: Standard Chartered Bank’s Islamic finance arm Saadiq took the lead with the most awards at The Asset Triple A Islamic Finance Awards 2009.
The bank was among the top winners, winning nine awards to reinforce its position as the leading bank for Islamic finance at the awards in Malaysia hosted by The Asset magazine……..Full Article: Source

Korean banks turn to Malaysia to raise funds

Posted on 30 June 2009 by Laxman  |  Email|Print

From Chosun.com: A growing number of Korean banks have been raising funds in Malaysia since early last year when the U.S. subprime mortgage crisis began to shake the world.
The Korean government-backed Hana Bank issued US$284 million worth of bonds in Malaysia on June 22, and in February the Export-Import Bank of Korea (KEXIM) issued $60 million worth of three-year maturity bonds in the Southeast Asian nation……..Full Article: Source

A caliphate of toxic assets

Posted on 30 June 2009 by Laxman  |  Email|Print

From Analyst-network.com: How Shari’a-compliant finance is preparing the next wave of Enrons. When a pro-terrorist organization announces its intention to launch a financial jihad against the West, it is well worth learning their methods.
More significant than the promotion of a religious pseudo-financial scheme is the possibility their largely unregulated practices could release a new wave of toxic assets into the wider economy and trigger a series of small-scale Enrons……..Full Article: Source

Islamic finance maintains growth despite global crisis

Posted on 29 June 2009 by Laxman  |  Email|Print

From Business24-7.ae: Despite the economic slowdown last year, Islamic finance resumed its rapid growth, exceeding 10 per cent annual growth in the last decade, said a top official in an Islamic bank in the UAE.

And that is not all. The outlook for the industry is promising in 2009 with interest from various quarters……..Full Article: Source

SECO Sukuk orders exceed $1.87 bln

Posted on 29 June 2009 by Laxman  |  Email|Print

From Bloomberg: Saudi Electricity Co., the state- controlled power producer, received more than 7 billion riyals ($1.87 billion) in orders for this year’s largest Islamic bond sale, a banker familiar with the transaction said.

The five-year Islamic bonds, known as sukuk, may be priced to yield 160 basis points over the Saudi interbank rate, said the banker, who declined to be identified before the sale is completed……..Full Article: Source

Emaar, Dubai Holding merger to create real estate giant worth $ 52.8 bln

Posted on 29 June 2009 by Laxman  |  Email|Print

From Khaleejtimes.com: Emaar Properties PJSC, the Middle East’s largest real estate developer, on Sunday said its merger with three Dubai companies would create a giant real estate group with an asset base of AED 194 billion (US$ 52.8 billion) and a debt of AED 13.4 billion, or roughly 7 % of the total assets.

In a letter posted Sunday on the Dubai Financial Market’s Web site, Chairman of Emaar Mohammed Al Abbar said its proposed merger with Dubai Holding subsidiaries Dubai Properties LLC, Samar Dubai LLC and Tatweer LLC would take up to four months……..Full Article: Source

MENA’s first Islamic REIT could list by Sept

Posted on 29 June 2009 by Laxman  |  Email|Print

From Arabianbusiness.com: Bahraini asset manager Inovest could list the first Islamic REIT in the MENA region as early as September, the company’s CEO has said.

Inovest is currently raising funds to buy at least $79.5m (BD30m) of property……..Full Article: Source

Global plans $133 mln Saudi real estate fund

Posted on 29 June 2009 by Laxman  |  Email|Print

From Maktoob.com: Kuwait’s Global Investment House plans to launch next year a 500 million Saudi riyal ($133.32 million) fund to invest in the Kingdom’s real estate sector, Al-Rai daily reported on Sunday.

Ziad Awad, head of Asset Management for Global in Saudi Arabia, told the paper that the new fund will be launched in 2010 with a tenor of three to five years……..Full Article: Source

New asset classes for Islamic investments

Posted on 29 June 2009 by Laxman  |  Email|Print

From Arabnews.com: The water industry and agriculture are emerging as major new asset classes for Islamic financial institutions, especially in the field of sustainable investments.
This is despite the fact that the Islamic finance industry in general has hitherto not followed carbon neutral or carbon-friendly investment strategies……..Full Article: Source

Islamic deals are still attractive

Posted on 29 June 2009 by Laxman  |  Email|Print

From Business24-7.ae: Outlook for structured Islamic investment deals has not diminished despite the global economic downturn, Bahrain-based Seera Investment Bank chief executive officer said.

Abdulla Janahi said: “Our business approach which comprises working on an equity syndication model has played a pivotal role. We are confident that with our strategy of tapping niche investment opportunities and through the business model we follow, the medium- and long-term potential for structured Islamic investment deals is actually quite good.”…….Full Article: Source

Pharos launches first equity fund

Posted on 29 June 2009 by Laxman  |  Email|Print

From Tradearabia.com: Pharos Asset Management, the youngest of Pharos Holding for Financial Investments’ subsidiaries, has launched its first Egypt-centric, equity fund; Pharos Fund I.

This comes following recent changes in Capital Market Authority (CMA) regulations which have allowed financial services firms to create independent fund management companies; a privilege previously granted only to banks and insurance companies……..Full Article: Source

Arab Monetary Fund questions dollar peg

Posted on 29 June 2009 by Laxman  |  Email|Print

From Maktoob.com: The United States’ huge debt and moves by Russia and China to start considering another reserve currency could drag on the U.S. dollar, the head of the Arab Monetary Fund told news agency Reuters on Sunday.

Jassem al-Mannai, director general of the Abu Dhabi-based AMF, also said there was no threat of contagion from troubled Saudi family conglomerates Saad Group and Ahmad Hamad Al-Gosaibi and Brothers Co (AHAB), which are restructuring debt……..Full Article: Source

Crisis shows importance of Islamic finance

Posted on 29 June 2009 by Laxman  |  Email|Print

From Business24-7.ae: The current economic climate has seen a growing interest in Islamic finance, an ethical approach to economic activity, worldwide.

Anouar Hassoune, Vice-President, Senior Credit Officer, Moody’s Investors Service, France, says Islamic finance has been resilient to the crisis, even though it is not risk-immune per se……..Full Article: Source

Islamic banking gains momentum

Posted on 29 June 2009 by Laxman  |  Email|Print

From Albawaba.com: Conventional banks trying to extend their line of service by Islamic Banking. And Islamic banks are expanding their network globally.
Islamic Banking is on the rise! But despite that impressive growth standards have to be set in order to not dilute the quality of Islamic Banking……..Full Article: Source

Emaar merger signals Dubai Inc. consolidation,M&A wave

Posted on 29 June 2009 by Laxman  |  Email|Print

From Zawya Dow Jones: The merger of Dubai’s Emaar Properties PJSC (EMAAR.DFM) and three state-controlled property firms could prompt a wave of consolidation in the struggling emirate, analysts say.

“We believe M&A will pickup over the next 18 months in addition to questions around the standalone survivability of several developers,” said UBS AG analyst Saud Masud……..Full Article (Subscription Required) : Source

Qatar economy may get more support, Al-Thani says

Posted on 29 June 2009 by Laxman  |  Email|Print

From Bloomberg: Qatar, which has said it will buy bank real estate portfolios, may introduce new measures to support its financial markets, central bank Governor Abdullah Bin Saud Al-Thani said.

“I think there is more in our plan to stabilize and to make the financial market and industry more stable and sound,” al-Thani said in an interview today at a central bank governors meeting in Basel, Switzerland……..Full Article: Source

Bahrain ‘a model for economic freedom’

Posted on 29 June 2009 by Laxman  |  Email|Print

From Tradearabia.com: Bahrain is a beacon of economic freedom, built on policies geared for growth, says Prime Minister Shaikh Khalifa bin Salman Al Khalifa.

Its success is reflected in its ranking as one of the freest economies in the world, he said in an interview with Al Masaref Al Arabiya magazine, issued by the Union of Arab Banks……..Full Article: Source

Kenya’s Islamic investment banker

Posted on 29 June 2009 by Laxman  |  Email|Print

From Nation.co.ke: The Capital Markets Authority has licensed FCB Capital Investment Bank as Kenya’s first Islamic investment bank.

A fully-owned subsidiary of First Community Bank, FCB Capital will be the first of its kind in Kenya and the region to offer Sharia compliant investment banking……..Full Article: Source

Saudi mortgage market primed for action

Posted on 29 June 2009 by Laxman  |  Email|Print

From Thenational.ae: It is the world’s largest oil exporter and the biggest economy in the Gulf, but only one in five of its citizens owns a home.

That is soon to change as Saudi Arabia prepares to introduce its first mortgage law, which is expected to attract lenders from across the region seeking to join the Gulf’s largest new housing market……..Full Article: Source

Saudi credit, foreign assets decline

Posted on 29 June 2009 by Laxman  |  Email|Print

From Gulf-times.com: Saudi banks’ lending to the private sector fell for a third straight month in May, official data showed, amid growing concerns over the solvency of some family-owned firms and the local lenders’ exposure to bad debts.
Bank claims on the private sector, a key indicator of lenders’ confidence, stood at 724.87bn riyals ($193.3bn) in May, their lowest level since August, showed the data published on the Saudi Arabian Monetary Agency’s (Sama) website……..Full Article: Source

Salam Bounian signs a finance deal with Qatar Islamic Bank

Posted on 29 June 2009 by Laxman  |  Email|Print

From Ameinfo.com: Salam Bounian is pleased to announce that a (Musharaka) finance agreement has been signed with QIB for the amount of QR206m as part of a funding plan for Jumana Tower which is one of Salam Bounian’s projects at The Pearl Qatar.
The finance agreement is of high importance due to the fact that it is the first real estate finance agreement to be signed and realized in Qatar since the beginning of the financial crisis at the third quarter of last year. …….Full Article: Source

Emirates Islamic approves $300mln rights issue

Posted on 29 June 2009 by Laxman  |  Email|Print

From Tradearabia.com: Emirates Islamic Bank said on Sunday its shareholders had approved a rights issue for 1.1 billion shares valued at a total Dh1.1 billion ($299.6 million).

Shareholders also cancelled a previously proposed issue of 565.6 million shares, the bank said in a statement on the bourse website……..Full Article: Source

Algosaibi a test for Gulf unity - UAE

Posted on 29 June 2009 by Laxman  |  Email|Print

From Gulfnews.com: The way Gulf states manage the fallout from the Algosaibi group, which owes 34.6 billion Saudi riyals (Dh33.71 billion) to banks, is a test for the cooperation needed to build a unified currency, the UAE Central Bank governor said.

“If we have a common market, we should know how to deal with such cases,” Sultan Bin Nasser Al Suwaidi said in an interview in Basel, Switzerland, on Sunday. “We should meet as regulators and we should discuss the issue and discuss a solution. All these things have not happened.” …….Full Article: Source

Saudi investor accepts watchdog’s verdict

Posted on 29 June 2009 by Laxman  |  Email|Print

From Arabnews.com: A top Saudi retail investor denied yesterday that he engaged in insider trading but said he accepted a verdict earlier this week by the bourse’s watchdog which fined him for the alleged practice.

The Capital Market Authority (CMA) said it had fined Mohammed bin Ibrahim bin Mohammed Al-Issa SR100,000 ($26,667) after an appellate body affirmed a ruling that he conducted “insider trading in shares of Saudi Hotels Co. based on his membership of the company’s board”. …….Full Article: Source

Islamic finance ex-chief sentenced

Posted on 29 June 2009 by Laxman  |  Email|Print

From Business24-7.ae: Abu Dhabi Court of First Instance has sentenced former chairman of the Islamic Finance Company Ali Hamel Al Gaith Al Qubessi to three years, former chairman Abdullah Saeed Al Qubessi to two years, and board members Al Waleed bin Hamad Al Mubarak, Essa Shamlan Al Shamlan and Gaith Hamel Al Gaith to one year for betraying the trust and valuating shares in bad intention and in violation of the Commercial Companies Law.…….Full Article: Source

The difference between Sukuk and bonds

Posted on 29 June 2009 by Laxman  |  Email|Print

From Aawsat.com: The launch of a secondary market for Sukuk bonds by the Saudi Arabian Capital Market Authority [CMA] has led to Ulama and religious scholars issuing a number of fatwas and statements prohibiting this.
The majority of these fatwas and statements were unwritten [i.e. issued verbally] and so were missing many details……..Full Article: Source

Europe banks eye IPO brief for $10 bln Islamic bank

Posted on 26 June 2009 by Laxman  |  Email|Print

From Guardian: European banks are showing interest in investing in and providing initial public offering advice to a planned $10 billion Islamic bank, the chairman of the Union of Arab Banks told Reuters on Thursday.
Adnan Ahmed Yousif said the bank, which would be the first Islamic bank of its size and which is to be launched by year-end, is attracting foreign investors……..Full Article: Source

Nakheel likely to offer buyback of $3.5bln Sukuk

Posted on 26 June 2009 by Laxman  |  Email|Print

From Khaleejtimes.com: Real estate developer Nakheel PJSC may offer to buy back its $3.52 billion Islamic bonds before they come due in December, Barclays Capital said.

“A tender could be launched in the next few weeks, offering immediate cash payment at a discount,” Alia Moubayed, London-based senior economist for the Middle East and North Africa at Barclays Capital, said in a June 19 report, e-mailed on Thursday……..Full Article: Source

UAE lenders get approval to establish unified bank

Posted on 26 June 2009 by Laxman  |  Email|Print

From Thenational.ae: The Cabinet has approved the formation of a new Dh10 billion (US$2.72bn) development bank, as the UAE banking sector takes its first big step towards consolidation amid the continuing credit squeeze.

The Government will inject half of the capital to establish the Emirates Development Bank, which will combine Emirates Real Estate Bank with the Emirates Industrial Bank (EIB), the state news agency WAM said yesterday……..Full Article: Source

Syria eyes $30 bln foreign investments-FinMin

Posted on 26 June 2009 by Laxman  |  Email|Print

From Reuters: Syria expects to attract $30 billion of foreign private investment in the next five years, as it encourages Islamic banking development and opens up its economy, the finance minister said on Thursday.

The government is “serious” about supporting the development of Islamic finance in the country which has partially opened to private enterprise after decades of nationalisation and state control, Mohammad Al-Hussein told Reuters……..Full Article: Source

UAE millionaires’ fortunes slashed 13 pct

Posted on 26 June 2009 by Laxman  |  Email|Print

From Maktoob.com: The number of millionaires in the Middle East fell 6 percent in 2008, with the number in the UAE dropping 13 percent, as the rich around the world saw as billions of dollars was wiped off their fortunes due to the global financial crisis, Merrill Lynch said on Wednesday.

The U.S. bank said in its annual World Wealth Report that the world’s population of high net worth individuals (HNWIs) slumped 14.9 percent last year, compared to 2007, while the number of ultra-HNWIs tumbled 24.6 percent……..Full Article: Source

Islamic banking gains momentum

Posted on 26 June 2009 by Laxman  |  Email|Print

From Zawya.com: Governments trying to set framework for establishing Islamic Banking. Conventional banks trying to extend their line of service by Islamic Banking.
And Islamic banks are expanding their network globally. Islamic Banking is on the rise! But despite that impressive growth standards have to be set in order to not dilute the quality of Islamic Banking……..Full Article: Source

Indonesia agency to issue bond, sukuk prices

Posted on 26 June 2009 by Laxman  |  Email|Print

From Alibaba.com: Indonesia’s exchange-backed bond pricing agency said it will start publishing daily reference prices for corporate bonds and sukuk, improving transparency to make Indonesian debt more attractive to investors.

In Indonesia, bond deals are mostly done over the counter and based on negotiations between the buyers, sellers and intermediaries. So two identical bonds traded at the same time may be priced very differently depending on the parties involved……..Full Article: Source

Shuaa hands 48% to Dubai ruler’s firm in bond dispute

Posted on 26 June 2009 by Laxman  |  Email|Print

From Bloomberg: Shuaa Capital PSC, the biggest investment bank in the United Arab Emirates, agreed to hand a 48.4 percent stake to the investment firm owned by Dubai’s ruler to settle a dispute over bonds convertible into stock.
Shuaa shares surged the most in six months……..Full Article: Source

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