Islamic banks say their small scale and a lack of risk-management products makes it harder for them to compete, after Ernst & Young LLP warned lower profitability threatens to slow expansion of the $1.8 trillion industry.
The average return on equity at Shariah-compliant lenders was 11.6 percent in 2011, compared with 15.3 percent at their non-Islamic counterparts, according to a December report by Ernst & Young that covered 12 countries. The use of hedging and treasury solutions is lagging behind, Haszeri Hussin, head of Islamic global markets at Hong Leong Islamic Bank Bhd. (HLBK), a unit of Malaysia’s fourth-biggest lender, said………………………………………..Full Article: Source

Sukuk is becoming more important in the Gulf Cooperation Council’s fixed-income market, including Qatar, representing almost half of the regional banks’ issuance in 2011 and 2012. Market analysts see an upward trend in issuance from banks in Qatar on the back of strong domestic credit growth, which they anticipate will continue.
There was a sharp rebound in the Gulf banks’ activity in debt capital markets in 2012 as they took the opportunity to issue long-term debt at healthy prices under favorable market conditions. The sukuk segment is becoming more active as conventional banks are increasingly tapping into sharia-compliant products to diversify their funding bases, a research note issued by Standard & Poor’s (S&P) said………………………………………..Full Article: Source

Dubai Islamic Bank (DIB) has hired banks to prepare a sukuk sale that asset managers say reflects an increasing appetite for risk among global investors. The world’s first Sharia-compliant commercial lender said it had hired Emirates NBD Capital, HSBC, National Bank of Abu Dhabi and Standard Chartered for investor roadshows beginning next week.
A benchmark dollar perpetual Tier 1 sukuk may follow, “subject to market conditions”, the bank said in a statement to the Dubai Financial Market. This Islamic bond is a particularly complex instrument and “right at the riskier end of what we’ve seen to date out of the GCC”, said Doug Bitcon, the head of fixed income and portfolios at Rasmala Investment Bank………………………………………..Full Article: Source

The sukuk market will see another promising year with escalating interest in both the US dollar- and ringgit-denominated Islamic bonds, said Standard Chartered Saadiq Malaysia chief executive officer Wasim Saifi.
He expects it to be as good or even better than the close to RM100 billion sukuk issuances which Malaysia enjoyed last year. “We see a lot of cross border movements on the sukuk side and definitely interest in the Malaysian market and issuers,” he said………………………………………..Full Article: Source

Falcon Private Bank, a Swiss private bank owned by Abu Dhabi’s Aabar Investments, is planning to launch a fund early next month that will invest in global Islamic bonds, or sukuk. The fund will be offered to the bank’s clients and could grow to $500 million, Zafar Khan, Falcon’s Mena chief executive, said on Tuesday.
“We already have substantial demand from our clients” for global sukuk investments, Khan said, adding that debt that complies with Islam’s prohibition on charging or paying interest was set to take off………………………………………..Full Article: Source

Indonesia’s finance ministry raised 760 billion rupiah ($78.30 million) at its March 5 sukuk auction, well below the target of 1.5 trillion rupiah, the Finance Ministry’s debt office said in a statement on Tuesday.
The ministry sold 6-month, 9- and 14-year sukuk to help finance its budget deficit. Incoming bids were 3.4 trillion rupiah. The G20 economy plans to raise 57.5 trillion rupiah in the first quarter of the year………………………………………..Full Article: Source

Last year, banks in the Gulf Cooperation Council (GCC) were able to capitalize on investors’ global search for higher yields, and their issuance volumes were substantially higher than in 2011. In an article published Monday titled “Low Interest Rates Should Keep Gulf Banks’ Debt Issuance Levels Strong In 2013,” Standard & Poor’s Ratings Services gives reasons why it expects Gulf banks’ issuance levels to remain high this year.
“We noted a sharp rebound in Gulf banks’ activity in debt capital markets in 2012 as they took the opportunity to issue long-term debt at healthy prices under the favorable market conditions,” said Standard & Poor’s credit analyst Timucin Engin………………………………………..Full Article: Source

Banks in Qatar, along with those in the UAE, will provide the impetus for debt issue this year in view of high macroeconomic and credit growth as well as low interest rates, according to global credit rating agency Standard and Poor’s (S&P). “We expect most of the impetus to come from banks in the UAE, the largest issuers in 2012, and Qatar, where issuance has been steadily increasing,” S&P said in its latest report.
Finding that banks in Qatar raised $4.5bn in bonds and sukuk last year, of which QNB issued $2bn, followed by Qatar Islamic Bank ($750mn) and International Islamic ($700mn), Commercialbank and Doha Bank $500mn each in five-year notes; it said the country continues to display very strong domestic growth that is fostering the increase in issuances………………………………………..Full Article: Source

Dubai Islamic Bank (DIB) announced that the assembly has approved its 100 per cent acquisition of Tamweel , the Islamic home finance provider, following the conclusion of its Extraordinary General Assembly Meeting (EGM). DIB is the majority shareholder in Tamweel with 58.2 per cent of the issued equity.
The assembly voted in favour of DIB ’s formal offer to acquire the remaining 41.8 per cent of the issued shares in Tamweel it does not currently own. This bid, which was announced on January 3, 2013, is based on the offer of 10 new DIB shares for 18 existing Tamweel shares held. The fair value of each share for DIB and Tamweel underlying the intended swap is set at Dh2.25 and Dh1.25, respectively………………………………………..Full Article: Source

After the successful launch of five branches of Al Hilal Islamic Banking Services from Ahlibank, the leading Islamic Banking services provider in the Sultanate, recently announced the launch of its Sharia Compliant term deposit account.
Abdullah Al Jabry, Head of Al Hilal Islamic Banking Services, highlighted the characteristics of the product “The Term Deposit Account makes both long term and short term investment opportunities available to our clients. By Investing funds with Al Hilal Term Deposit account our customers can benefit from attractive Sharia permissible returns.”……………………………………….Full Article: Source

Majid Bader Hashem Al-Refai, the former Chief Executive Officer of Unicorn Investment Bank, was found guilty of money laundering and sentenced to an additional five years imprisonment and fined BHD 100,000.
The High Criminal Court of the Kingdom of Bahrain issued its ruling on Monday 4 March 2013, on a money laundering case against Al-Refai. The High Criminal Court issued the ruling in absentia as Al-Refai failed to attend any of the court hearings in relation to this case to date………………………………………..Full Article: Source

QInvest, Qatar’s leading investment bank, as part of efforts to strengthen its team, has announced the appointment of Nasser Abdullah Al Mahmoud as Director with the Investment Banking arm, a press statement said. On his appointment, Tamim Hamad Al Kawari, QInvest’s CEO, said: “We would like to take this opportunity to welcome Nasser to our investment banking team. His experience and knowledge will strengthen our capabilities in the investment banking capacity.”
Al Kawari added: “We are very excited about the continuing growth of financial services in the region and abroad; and we look forward to continually work alongside our clients and be their advisor and financier of choice.”……………………………………….Full Article: Source

Hong Kong’s Legislative Council is considering a bill that will ease taxes on transfers of underlying assets of Islamic finance products, giving them equal treatment to conventional instruments;But Hong Kong lacks cultural connections and a large shariah-compliant investor base.
Investors might instead be looking to invest in China;The bill only covers assets located in Hong Kong. To include assets in China, China would need to amend its relevant laws for equal tax treatment of shariah-compliant products……………………………………….Full Article: Source

Renewed focus on interest-free finance sees one of the world’s banking giants hire Ethica to deliver Islamic finance e-learning to thousands of its bankers. At a time in history when people are beginning to question the viability of interest-based banking - banks having triggered the entire financial mess - there is renewed focus on interest-free banking. Enter Islamic finance.
In a hotly contested bid to deliver Islamic finance e-learning at one of the world’s largest global banks, Dubai-based Ethica won the final mandate to train thousands of the bank’s employees. The name of the banking giant remained under wraps but sources close to the deal said that bankers from 8 countries were slated to receive Ethica’s training. (Press Release)

Ernst & Young signed a working agreement with Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) to assist in Sharia certification of Core Banking Systems (CBS) used by Islamic banks. On the back of this mandate, Ernst & Young is launching its new Advisory Solution, CBS Sharia Assessment, to assist international and regional technology firms.
The agreement was signed by AAOIFI’s Secretary-General Dr Khaled al Fakih and Essa al Jowder, Office Managing Partner, Ernst & Young Bahrain. The certification programme will assess CBS services to ensure that they conform to the approved global Sharia and accounting standards………………………………………..Full Article: Source

Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) has been given the award for Most Outstanding Standard Setting Body by Islamic Finance News, an industry publication. The award was presented to AAOIFI at a ceremony in Dubai, United Arab Emirates, recently and accepted by Dr. Khaled R. Al Fakih, Secretary General and CEO of AAOIFI .
Dr. Al Fakih said that “In receiving the award, we are honouring the exceptional work of members of our Shari’a Board as well as Accounting and Auditing Standards Board and their committees in developing and reviewing AAOIFI standards. The award also reflects the tireless effort of the Chairman and members of our Board of Trustees in providing strategic oversight and guidance for AAOIFI operations.” (Press Release)

The Islamic Financial Services Board (IFSB) has announced that it will be organising the 4th Islamic Financial Services Forum: The European Challenge on 9 April 2013 in Rome, Italy.
Banca D’Italia is hosting the Forum, which has received strong support, especially in terms of attendance and the participation of a number of central banks’ governors, key regulators, market players and opinion leaders of the European financial community. (Press Release)