Despite the existence of Shariah advisory councils, Islamic banks and financial institutions in Malaysia may be failing to carry out their duties. An article in this month’s JSSH investigates transactions on purchasing houses specifically on transactions involving houses pending completion using the current practice of ’sale by deferred payment’ also known as Bay’ Bithaman al-Ajil (BBA).

Islamic banking gained foothold in Malaysia, with the establishment of Bank Islam Malaysia Berhad in 1983 and facilities have since expanded……………………………………..Full Article: Source

Goldman Sachs Group Inc. is aiming to follow HSBC Holdings Plc and General Electric Co. to the Islamic bond market as the investment bank seeks to diversify sources of funding.

Global sales of sukuk, or Islamic bonds, have jumped 48 percent so far this year to $18.8 billion from $12.7 billion in the year-earlier period, data compiled by Bloomberg show. Goldman Sachs’ $2 billion Islamic bond program was approved for listing on the Irish Stock Exchange by the Central Bank of Ireland last week………………………………………Full Article: Source

The ongoing unrest in North Africa and the Middle East have directed many investors from Gulf countries to Turkey. The newcomers include many Islamic bankers, says to top executive of Dubai-based Noor.
Turkey has attracted significant investments from Gulf countries as well as Islamic bankers due to the Arab Spring in the Middle East and North Africa, according to the top executive of the Dubai-based Noor Islamic Bank………………………………………Full Article: Source

Islamic finance is continuing to go from strength to strength and in the near future the industry is likely to see a period of consolidation, said a top banking expert.

‘Mergers within the industry will make it more efficient through economies of scale but it will also allow the industry to finance the kind of mega projects sometimes outside its scale at present,’ remarked Dr Mohammed Nedal Alchaar, the secretary-general of Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI)………………………………………Full Article: Source

Regional governments need to issue more sukuk in order to provide short-term liquidity instruments that Islamic finance needs. That was the claim by Kuwait Finance House-Bahrain (KFH-Bahrain) managing director and chief executive officer Abdulhakeem Alkhayyat on the sidelines of the AAOFI conference.

The Islamic finance industry desperately needs more short-term liquidity but we cannot look to the private sector to provide this in the region,” he said………………………………………Full Article: Source

The issue of the Islamic bond (sukuk) market and its role in providing short-term liquidity to the Islamic finance industry dominated the first day of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) conference.

The event at the Crowne Plaza is being held in partnership with the World Bank and under the auspices of Central Bank of Bahrain (CBB). “The principle of risk sharing is at the core of the Islamic financial industry,” said CBB Governor Rasheed Al Maraj………………………………………Full Article: Source

Dubai’s Majid Al-Futtaim may issue a planned sukuk program as early as next month and is pushing ahead with growth plans in Egypt despite operations being severely hit by months of unrest, its chief executive said on Monday.

The mall developer, which is the sole franchisee for hypermarket chain Carrefour in the Gulf, was forced to shut down its malls and hypermarkets in Egypt due to riots following an uprising against former President Hosni Mubarak. The company is now racing ahead with plans to grow in Egypt as it seeks financing for a new mall………………………………………Full Article: Source

Finance Minister Ibrahim Al-Assaf has said that the Kingdom will not need to tap into its reserves this year to finance additional budget spending. However, he said Saudi Arabia is considering whether to issue Islamic or conventional bonds to help fund specific projects.

He pointed out that robust oil prices had helped to fill state coffers. “We have higher expenditure than projected, but we have higher revenues than projected,” Reuters quoted Al-Assaf as saying in Abu Dhabi………………………………………Full Article: Source

Saudi Arabia will not need to tap into its reserves this year to finance additional budget spending but it is considering whether to issue Islamic or conventional bonds to help fund specific projects, the country’s Finance Minister Ibrahim Alassaf told Reuters.

Responding to a wave of social unrest across the region, the world’s top oil exporter pledged early this year to spend an estimated $130 billion, or nearly 30 percent of its economic output, on housing and other social measures for its citizens over an unspecified period………………………………………Full Article: Source

Hong Leong Islamic Bank Bhd has been granted by the High Court a Vesting Order transferring the entire business including all assets and liabilities of EONCAP Islamic Bank Bhd to the former with effect from Nov 1, 2011.

Following the vesting, EONCAP Islamic Bank Bhd will become a dormant company. “With the granting of the Vesting Order by the High Court, we are now one step closer towards celebrating Malaysia’s first vesting of an Islamic Bank,” said Hong Leong Bank group managing director Yvonne Chia in a statement here Monday………………………………………Full Article: Source

Dubai Islamic Bank Pakistan Limited (DIBPL) will open 25 new branches in various cities of Pakistan by next year.

President and CEO DIBPL Junaid Ahmed told APP, that since starting operation in Pakistan in 2006, the bank has 72 branches and were planning to open 25 more branches within a period of one year………………………………………Full Article: Source

Halim Alamsyah, a Bank Indonesia deputy governor, told a seminar on Sunday that the country’s Shariah banking industry grew by an average of 36.3 percent from 2000 to 2010, from Rp 100 trillion ($11.3 billion) to Rp 1.79 trillion.

Halim was speaking in Dubai, where the Indonesian Consulate General brought together more than 130 participants, including banking officials from both countries, to discuss Shariah finance………………………………………Full Article: Source

Saudi Arabia is the largest economy and banking market in the Arab world, with almost 40 per cent of all deposits in interest free Shariah-compliant savings products and an embryonic, high growth mortgage, takaful (Islamic insurance), consumer credit and leasing industries.

Despite the $24 billion Al Gosaibi-Saad Group debt debacle, Saudi banking is the least leveraged in the GCC, with loans/deposit ratios rarely in excess of 80 per cent and a conservative, best in regional breed regulator in SAMA………………………………………Full Article: Source

The first Oman Islamic Economic Forum 2011 (OIEF) will be held at the Al Bustan Ritz Carlton Muscat Hotel on December 17 and 18. Organised by Amjaad Development, the event will be the first international conference of its kind in the Sultanate.

The OIEF will bring together leading practitioners, prominent heads of state and opinion-making academicians and introduce best practices in Islamic finance to Omani authorities and other relevant players, while discussing key issues in Islamic finance. The conclave will also provide an opportunity for interested foreign stakeholders to network with key Omani players and establish long lasting relationships………………………………………Full Article: Source

The Chartered Institute of Management Accountants (CIMA) announced the launch of its Advanced Diploma in Islamic Finance for finance and banking professionals in the UAE.

The CIMA Advanced Diploma in Islamic Finance (CADIF) is the first qualification of its kind to be offered by an international professional accountancy body, and marks a major step forward for the Islamic finance industry, which has its roots in the Middle East………………………………………Full Article: Source

The development of mortgage finance is key to the growth of the housing sector in the Gulf Cooperation Council (GCC) countries where demand for affordable housing is set to increase significantly because of the demography of the region where some 65 per cent of the population is under 30 years old.

“Islamic mortgage finance is set to grow at varying levels in the GCC markets as compared to previous years,” explains R. Lakshmanan, chief executive officer of Bahrain-based Sakana Holistic Housing Solutions, one of the pioneers of Islamic mortgage finance in the GCC………………………………………Full Article: Source

Emerging and Islamic markets are expected to lead a growth in global trade volumes over the next fifteen years as non-traditional markets in Asia and Latin America drive demand, said a senior executive at HSBC’s Islamic arm.

Global trade volumes are expected to jump 73 percent to $49 trillion with Malaysia, Indonesia and the UAE emerging as major trade players, according to HSBC Amanah’s recent trade forecast, said Romy Buchari, senior manager of global commercial banking………………………………………Full Article: Source

Noor Islamic Bank (Noor) has been mandated to arrange and lead manage more than US $1.4 billion Islamic finance capital market deals in Turkey in the last 18 months, making it the most active UAE bank in the republic.

Noor released details of its financial dealings in Turkey on the eve of the Islamic Investment and Finance Forum, scheduled to take place in the Turkish capital Istanbul, from October 24-27. Noor is the Sukuk partner for the event………………………………………Full Article: Source

Islamic finance could provide some of the multi-billion-dollar loans needed by Asia to pay for $US8 trillion in infrastructure costs over the next decade, says ratings agency Standard and Poor’s (S&P).

Islamic financing is a growing source of loans worldwide and is now a better way to fund huge Asian infrastructure deals than banks, S&P says in a new report. “Although banks have dominated the financing landscape for Asian infrastructure projects over the past decade, we believe that Islamic finance may be a better match for the region’s infrastructure funding needs.”……………………………………..Full Article: Source

The Royal Decree issued by His Majesty Sultan Qaboos authorising use of Shari’a compliant means of finance has provided a unique opportunity to the financial services sector and people of Oman at large. Islamic Finance is practiced in many jurisdictions and a closer look at country experiences reveals that countries with a robust Islamic ecosystem (an appropriate framework to provide a level playing field to Islamic finance from a legal, regulatory, prudential supervision, accounting and tax perspective) have been more successful in this space.
While Oman is new to Islamic finance, it can benefit from experiences of other jurisdictions………………………………………Full Article: Source

Qatar’s banking sector saw flat net profit growth during the first nine months of this year. The credit portfolio was about 58% of the total assets, while impairment losses/provisions presented a mixed picture.
Cumulative net profits of the eight listed banks registered a 22% growth during the January-September period this year against a 21% jump in the corresponding period of the previous year, according to the data collected from the Qatar Exchange………………………………………Full Article: Source

The need to educate more staff on Islamic banking products and services is apparent as Malaysia moves towards becoming a hub for Islamic finance, said Islamic Banking and Finance Institute Malaysia (IBFIM) senior consultant in training and professional development Zanariah Zahari.

She said while the country retained a dual-banking system to cater to conventional and Islamic banking needs, employees with Islamic banking knowledge were not many as compared to conventional banking staff……………………………………..Full Article: Source

Kenya’s financial markets regulator, the Capital Markets Authority (CMA) has identified challenges and made recommendations, which if adopted, will help deepen Islamic Finance in the capital markets in Kenya, CMA said.
CMA Chief Executive Stella Kilonzo said one of the key recommendations is the setting up of a National Shariah Advisory Board to provide guidance on product authenticity within the entire Islamic Finance Industry in Kenya and also ensure consistent interpretation of the Shariah law………………………………………Full Article: Source

The Central Bank of Bahrain’s (CBB’s) governor Rasheed Al-Mi’raj called on Islamic financial institutions to learn from the experience of conventional banking institutions from the international financial crunch, increase understanding, monitor and even control, risks of liquidity, and cautioned them against the repercussions of succumbing to the same conventional financial mismanagement of short-term financial markets instrument

Mr. Al-Mi’raj said in his speech as he patronized today the sessions of the 3rd Islamic Finance and Banking Conference for the Accountancy and Auditing Authority for Islamic Financial Institutions (AAOIFI) in cooperation with the World Bank and the Central Bank of Bahrain that chiming of the bell after the shortage in liquidity and inability to offset losses incurred in the conventional financial industry has come too late and that the Islamic financial industry should beware of the need for good liquidity and risks management………………………………………Full Article: Source

International financial institutions and experts are gathering in Oman to deliberate upon various issues of Islamic banking, which is poised to offer several opportunities in financial services sector as also to the common man. The deliberations will be part of the Oman Islamic Economic Forum (OIEF) to be held at the Al Bustan Ritz Carlton Muscat Hotel on December 17 and 18. The event is to be organised under the joint auspices of Bank Nizwa and Amjaad Development.
A major highlight of the OIEF will be the annual Global Islamic Finance Awards (GIFA), which is aimed at recognising the best financial institution for adopting the best business practices. “GIFA is different from other awards it is based on the methodology developed by Edbiz Consulting,” said the organisers………………………………………Full Article: Source

Islamic mortgage provider Tamweel said on Sunday its third-quarter profit soared 114 per cent as income earned from Islamic financing and investing assets grew while impairment provisions dropped.

Net income for the period surged to Dh15.7 million from Dh7.3 million a year earlier, the mortgage company said in a statement. Impairment provisions narrowed to Dh13.5 million from Dh46.6 million, while income from Islamic financing rose to Dh136.6 million from Dh128.9 million………………………………………Full Article: Source

The impending roll-out of compulsory insurance in many countries in the Middle East and North Africa region, regulatory improvements, and the scope for growth due to low insurance penetration, are attracting more global firms to the region, according to Bin Shabib Associates, or BSA, a leading regional law firm that offers tailored advice for insurance and reinsurance firms seeking to enter the region.

“With profits in developed markets under pressure amidst the current economic crisis and the centre of gravity of growth shifting to emerging markets, the Middle East is high on the growth agenda of global re-insurance firms,” said Irshied Tayeb, Regional Head of Insurance and Re-Insurance Services for BSA………………………………………Full Article: Source

National Transitional Council leader Mustafa Abdel Jalil and key NTC officials on Sunday insisted Islamic sharia law will prevail in liberated Libya. He also announced the introduction of Islamic banking in Libya in keeping with sharia which prohibits the earning of interest, or riba in Arabic, because it is considered a type of usury.

“There are good intentions to regulate all banking laws. We especially seek to establish Islamic banks that don’t deal with interest and abolish all banking interests in the future according to Islamic tradition,” he said………………………………………Full Article: Source

Kuveyt Turk, the Turkish arm of Kuwait Finance House , has priced its $350m five-year sukuk, lead managers said in a document on Thursday. The paper priced at par with a spread of 447.5 basis points over midswaps and carried a profit rate of 5.875 percent.

HSBC Bank , Liquidity Management House and Standard Chartered were bookrunners on the transaction, with Abu Dhabi Islamic Bank and Commerzbank joining the trade in a lead manager capacity……………………………………….Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

Goldman Sachs Group Inc.’s filing of prospectus for a $2 billion Islamic bond program for listing on the Irish Stock Exchange has been approved by the Central Bank of Ireland.

New York-based bank’s Goldman Sachs International unit set up Global Sukuk Company Limited, which is incorporated in the Cayman Islands, as trustee and seller of so-called murabaha trust certificates, according to the prospectus, published on the Dublin-based central bank’s website………………………………………..Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

Ireland’s burgeoning Islamic finance industry got a boost yesterday when financial behemoth Goldman Sachs was approved by the Central Bank to list a $2 billion “sukuk” bond on the Irish Stock Exchange, the Global Sukuk Company.
The bond, incorporated in the Cayman Islands, is compliant with Sharia, Islamic religious law, and will act as a trustee and seller of “murabaha” trust certificates. Murabaha is a contract whereby the seller must disclose its profit to the buyer……………………………………….Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

Standard & Poor’s Ratings Services said today that its rating on Tenaga Nasional Bhd. (BBB+/Stable/–, axA+/axA-1) is unaffected by a proposed Malaysian ringgit (MYR) 5 billion sukuk issue. Our rating already factors in the likelihood that Tenaga will incur higher debt to fund a planned 1,000 megawatt supercritical coal-fired power plant.
We will further assess the impact of increased debt after the company releases its audited accounts for the full year ended Aug. 31, 2011. The results are expected in November 2011……………………………………….Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

Demonstrating its Islamic finance expertise, Linklaters recently advised on the issuance of 3.749 billion riyals (about $1 billion) worth of sukuk, or Islamic bond certificates, by Arabian Aramco Total Services Company (AATSC) in a transaction that represents the first-ever Sharia-compliant greenfield project sukuk.
Acting as international legal counsel, Linklaters advised Deutsche Securities Saudi Arabia, Samba Capital & Investment Management Co and Saudi Fransi Capital as joint lead managers and joint bookrunners on the issuance of the sukuk certificates, which are part of the wider financing for a $14 billion, 400,000-barrel-per-day refinery and petrochemical project at the Jubail Industrial City in Saudi Arabia……………………………………….Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

Recent regulatory changes in Kuwait and Qatar, retail client preferences for Shariah-compliant banking products, and stronger balance sheets and funding positions, offer better growth prospects for Islamic banks compared with conventional peers, HSBC said as it initiated coverage on four Islamic banks.

The brokerage initiated Saudi Arabia’s Alinma Bank and Qatar Islamic Bank with “overweight”. In an October note, the brokerage said it expects Alinma, which has no legacy credit risk in its loan portfolio, to double its market share in the medium term, helped mainly by corporate lending………………………………………..Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

Now that Islamic banking and finance is a trillion dollar industry (US$ 1.14 trillion according to the Global Islamic Finance Report 2011), the ability of Islamic banks to influence government policy is much greater than it was fifteen years ago.
However, there are some state-owned institutions and corporates in different parts of the world, which are resisting change by proclaiming that they are already shari’a compliant and that their shari’a compliancy is sufficient to ignore further external requirements………………………………………..Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

Nearly 200 Toronto-area Muslim homeowners face an uncertain future after the company holding their mortgages was ordered into receivership.

Since 2005, UM Financial has offered loans and mortgages to people who want to adhere strictly to Islamic law (Shariah), under which no interest can be charged on a loan……………………………………….Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

Intel Corp is working with Pakistan Islamic bank Meezan to offer the nation’s consumers their first large-scale hire-purchase scheme for personal computers as the technology company seeks to increase its market share in the country, according to a Financial Times report.
Intel, whose scheme will be compliant with sharia, or Islamic law, is also considering expanding the scheme to other emerging markets, the report said……………………………………….Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

Europe can learn and gain from Islamic finance, given that financial institutions under it, have remained stable against the backdrop of the eurozone debt crisis. This observation was made by Luxembourg’s Minister of Finance, Luc Frieden.
Frieden said despite the credit crunch that had impacted Europe’s banks, Islamic financial institutions had weathered the global crisis and emerged to be the most well managed……………………………………….Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

The Securities Commission Malaysia (SC) will host the 5th International Islamic Capital Market Forum (IICMF) on 10 November 2011. The 5th IICMF will gather local and international experts to discuss and deliberate on the current state of Islamic finance.
The forum provides a platform for these international experts to discuss the current model of Islamic finance. The discussions will focus on how a risk sharing system can address some of the issues arising from the risk transfer system practised by the conventional financial industry……………………………………….Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

In the 20th century, getting more success and establishing a strong position of Islamic finance against conventional banking was just a dream but in today’s Muslim world that dream has, at least partly come true.

Questions were raised if it was possible to develop an Islamic financial system different from the conventional one? Now it has been proved that even without conventional banking system, Islamic finance has been able to make a strong platform………………………………………..Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

CIMB Group Holdings Bhd (CIMB) launched its Islamic securities services at the sidelines of the IFN 2011 Investors and Issu­ers Asia Forum recently aiming to reinforce its position as a fully-integrated service provider.
CIMB said, “We offer syariah-compliant securities services on a single platform to institutions and individuals, both domestic and abroad……………………………………….Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

The use of Islamic finance has not been deep enough in equity markets worldwide and major stock exchanges should emulate the accessibility in Malaysia’s stock exchange to syariah-compliant stocks, says an industry practitioner.
“In terms of Islamic finance, the reach out to equity market is not very deep yet globally, especially the public equities traded around the world……………………………………….Full Article: Source

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

Tharwa Investment Company announced that Tharwa Islamic Fund has been rated as the best performing Kuwaiti Islamic Fund according to the quarterly report that has recently been released by Zawya.com; a report that rates all the investment funds throughout the region on a quarterly basis and is considered to be a first-of-its-kind in the Middle East.

Commenting on this performance, Abdullatif Al-Muzaini, Tharwa Investment Company’s Assistant Vice President for Local & Arab Countries, said: “We are proud of the excellent results that have been achieved by Tharwa Islamic Fund since the beginning of 2011, having outperformed all the market indices to become the best performing Islamic Fund in Kuwait.(Press Release)

Play - Download this article

|

Play - Download Full Briefing

|

Subscribe to the Podcast Feed

Goldman Sachs has registered a $2 billion Islamic bond programme, providing further evidence of conventional borrowers looking to sharia-complaint funding sources as market volatility makes raising debt finance more difficult.
The investment bank has set up the Cayman Islands-registered Global Sukuk Company Limited special purpose vehicle to issue murabaha-structured sukuk, according to a base prospectus filed with the Irish Stock Exchange……………………………………….Full Article: Source

Goldman Sachs Group Inc.’s filing of prospectus for a $2 billion Islamic bond program for listing on the Irish Stock Exchange has been approved by the Central Bank of Ireland.
New York-based bank’s Goldman Sachs International unit set up Global Sukuk Company Limited, which is incorporated in the Cayman Islands, as trustee and seller of so-called murabaha trust certificates, according to the prospectus, published on the Dublin-based central bank’s website……………………………………….Full Article: Source

Fitch Ratings has assigned an ‘A+/F1+’ rating to the trust certificate program created by The Goldman Sachs Group, Inc. (Goldman) and placed the rating on Rating Watch Negative. The issuing entity under the program is Global Sukuk Company Limited (GSCL). This program was created for the issuance of murabaha trust certificates.
The ratings assigned do not imply any confirmation that the Sukuk are Shari’ah-compliant. These ratings are based entirely on the rating of parent guarantor Goldman. Goldman guarantees the obligations of Goldman Sachs International (GSI), its wholly owned subsidiary. The guaranty is unconditional and irrevocable regarding the prompt payment of GSI’s payment obligations under the Master Murabaha Agreement. GSI is the purchaser of the commodities being sold by GSCL under a deferred payment arrangement. (Press Rlease)

Malaysia, which estimates outstanding sukuk to grow to RM1.3 trillion while registering a compound annual growth rate (CAGR) of 16.3 per cent by 2020, encourages domestic Islamic financial institutions to internationalise the business further.
Second Finance Minster Datuk Seri Ahmad Husni Mohamad Hanadzlah said the local sukuk market was already the world’s largest Islamic bond market, being the domicile for 60 per cent of the US$165 billion total global sukuk outstanding……………………………………….Full Article: Source

Kuwait Finance House’s Turkish unit Kuveyt Turk’s $350 million sukuk issue initial profit rate is around the 6 percent area, bankers told Reuters on Wednesday.
Last year, the Capital Markets Board of Turkey (SPK), the regulatory and supervisory authority in charge of the securities markets, published a statement setting the legal ground for sukuk issues by Turkish companies……………………………………….Full Article: Source

The Employees Provident Fund (EPF) expects to increase its global sukuk mandate to US$1.75 billion. Its general manager for treasury, Wan Kamaruzaman Wan Ahmad said the global sukuk fund, coming from Malaysia and Middle East countries, started with a fund size of US$650 million at its launch in October last year.
On the US$1.75-billion global sukuk fund, he said, US$1.38 billion was outsourced to fund managers with the balance being managed internally……………………………………….Full Article: Source

Europe can learn and gain from Islamic finance, given that financial institutions under it, have remained stable against the backdrop of the eurozone debt crisis.
This observation was made by Luxembourg’s Minister of Finance, Luc Frieden, in a keynote address at the IFN 2011 Issuers & Investors Asia Forum here today. Frieden said despite the credit crunch that has impacted Europe’s banks, Islamic financial institutions had weathered the global crisis and emerged to be the most well managed……………………………………….Full Article: Source