Global Islamic Finance 118 - Gilani Foundation Islamic Finance 118.pdf · Weekly Report on Global...

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1 BPM Report # 118 BUSINESS AND POLITICS IN THE MUSLIM WORLD Weekly Report on Global Islamic Finance and Business in the Muslim World Period: May 01 – 08, 2010 Submitted By: Muhammad Ibrahim Presentation: May 12, 2010 Report Outline GLOBAL FINANCE & GLOBAL ISLAMIC FINANCE 04 o Australia mulls moves to attract Islamic finance o India looks to start Shariah-compliant financial products o Abu Dhabi Securities Exchange (ADX) may be open to Shariah compliance o Dundee first university in UK to offer Islamic course in financing o Malaysia-Gulf countries to join hands o Malaysia calls for Kingdom help to foster Islamic finance o Lack of liquidity among risks facing Islamic financing o Islamic finance needs effective system-wide crisis management framework o Britain to continue Islamic finance initiative o Absa launches Islamic Banking in Tanzania o KFH-Group Platinum Sponsor of the 7th IFSB Annual Summit in Bahrain o African Islamic finance faces image problem: banker o Islamic Finance Also Draws Interest from Non-Muslims, Says Zeti o Islamic Banks Must Play Role in Industrialization of Muslim Nations, Dr. Mahathir Mohamad o Tanzania: Shariah Banking Services Launched o Saudi Islamic bank to set up coaching centre in Delhi o Islamic finance could be an answer to global economic problems o Winner sells Islamic Banking course in Shanghai o Shariah Banks Are the Future, Kenya drives Islamic financing in East Africa

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Transcript of Global Islamic Finance 118 - Gilani Foundation Islamic Finance 118.pdf · Weekly Report on Global...

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    Weekly Report on Global Islamic Finance and Business in the Muslim World Period: May 01 08, 2010

    Submitted By: Muhammad Ibrahim Presentation: May 12, 2010

    Report Outline

    GLOBAL FINANCE & GLOBAL ISLAMIC FINANCE 04 o Australia mulls moves to attract Islamic finance

    o India looks to start Shariah-compliant financial products

    o Abu Dhabi Securities Exchange (ADX) may be open to Shariah compliance

    o Dundee first university in UK to offer Islamic course in financing

    o Malaysia-Gulf countries to join hands

    o Malaysia calls for Kingdom help to foster Islamic finance

    o Lack of liquidity among risks facing Islamic financing

    o Islamic finance needs effective system-wide crisis management framework

    o Britain to continue Islamic finance initiative

    o Absa launches Islamic Banking in Tanzania

    o KFH-Group Platinum Sponsor of the 7th IFSB Annual Summit in Bahrain

    o African Islamic finance faces image problem: banker

    o Islamic Finance Also Draws Interest from Non-Muslims, Says Zeti

    o Islamic Banks Must Play Role in Industrialization of Muslim Nations, Dr.

    Mahathir Mohamad

    o Tanzania: Shariah Banking Services Launched

    o Saudi Islamic bank to set up coaching centre in Delhi

    o Islamic finance could be an answer to global economic problems

    o Winner sells Islamic Banking course in Shanghai

    o Shariah Banks Are the Future, Kenya drives Islamic financing in East Africa

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    o ADIB heads to Iraq as trail-blazer for Emirates

    o Qatar International Islamic Bank (QIIB) launches unique finance scheme

    o Kuwait Finance House posts lower Q1 profit

    o Dubai Islamic Bank Named Best Islamic Bank In UAE by Global Finance


    o Sharjah Islamic Bank appoints new Head for Corporate Banking Group

    o Dubai Islamic Bank celebrates 35th anniversary

    o Bahrain bank eyes Muamalat

    o Dubai Group may not sell Bank Islam stake - Report

    o Dubai Islamic Bank Q1 net plunges 46 per cent


    o RPT-Malaysia's Kencana plans 250 million Rgt Sukuk

    o Nakheel May Pay Bonds May 13 without Formal Debt Agreement

    o Al Rajhi turns to untapped Sukuk

    o International Financial Centre (DIFC) to set template for Sukuk issuance

    o Central Bank Kenya targets Gulf cash with Shariah compliant bonds

    o Cagamas and Al-Rajhi to develop, issue Sukuk for Mideast market

    o Sukuk still a niche despite huge potential

    o ADB mulls multi-billion dollar Sukuk


    o Britains only Takaful insurer closes

    o Pak-Qatar to invest Rs500m in Family Takaful

    o Bringing Family Takaful into the 2nd Decade of the 21st Century


    o Market for Shariah-compliant products, mutual funds tepid

    o Islamic Investors' Risk Tolerance Will Determine Demand for Shariah Fund

    Ratings, Report Says

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    o S&P rates Shariah fund to raise transparency



    o Islamic Banking, capable of protecting economy from unprecedented meltdown,

    Aligarh Muslim University (AMU) holds conference on Islamic Finance: An

    Alternative Financial System

    o Luxembourg to Hold Country Showcase at the 7th IFSB Annual Summit in


    o Major Islamic finance challenges in spotlight in 7th IFSB Annual Summit

    o 2nd Annual World Islamic Retail Banking Conference to be held in Dubai

    o Islamic Bankers from More Than 10 APAC to Gather in Kuala Lumpur This July


    o A more positive image for Islamic nations

    o Rev. Franklin: The USA is the most Shariah Compliant Country in the world

    o Debt or equity? Shariah allows both


    o The Stability of Islamic Finance: Creating a Resilient Financial Environment for a

    Secure Future

    o Summary of Book Review The European Economy since 1945: Coordinated Capitalism and Beyond, Written by: BARRY EICHENGREEN, as it appeared in Foreign Affairs; Jan/Feb2007, Vol. 86 Issue 1, p158-158, 1/2p, Reviewed by: Cooper, Richard N.

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    GLOBAL FINANCE & GLOBAL ISLAMIC FINANCE Australia mulls moves to attract Islamic finance Tuesday, April 27, 2010 Australias Board of Taxation will be undertaking a comprehensive review of laws that need to be changed to encourage the expansion of Islamic finance, banking and insurance products in Australia, Australian Assistant Treasurer Senator Nick Sherry has said. He is set to meet Qatar government officials today to discuss these changes and the resultant opportunities for Qatar investment in Australia. Sherry will meet Prime Minister HE Sheikh Hamad bin Jassim bin Jabor al-Thani and Finance Minister HE Yousef Hussein Kamal, as well as officials from the Qatar Investment Authority and Qatar Islamic Bank tomorrow, with whom he will discuss how best to develop Islamic finance in Australia, as well as opportunities for sovereign wealth funds and other investments. He explained that his trip to Qatar and the region is aimed at learning more about Islamic finance, as the Australian government has identified the development of Shariah-compliant financial vehicles as essential to the countrys economic development. Sherry confirmed the review yesterday at a meeting of the Australia and New Zealand Business Group in Doha, where he said that details of any reviews will be made in the near future. He also stated that the introduction of Qatar-based Islamic banks in Australia is something that would be welcomed by the Australian government.I would like to be clear: this is not about special treatment or concessions for Islamic finance or its providers, but about ensuring that our system doesnt unfairly disadvantage or preclude such instruments and, in doing so, deprive Australia of capital, jobs and growth, he said. Islamic finance is a rapidly growing part of the global financial system and Australia is in an excellent position to capitalize on that growth, but we have to ensure our tax system doesnt unnecessarily prevent that from happening, the assistant treasurer said. A report by the Australian Financial Centre Forum earlier this year suggested that such a review should be taken in order to ensure that Islamic finance products have parity with conventional products, having regards to their economic substance. Sherry explained that the growth of global Islamic financial investments has been a major factor in the decision to amend laws, as well as the fact that Australia already has a Muslim population of between 300,000 and 400,000. He also pointed out that the Australian economy is one of very few which made it through the recent global recession unscathed, claiming that a major government stimulus plan as well as record low interest rates led to this achievement. Describing the present as a very good time for investment in Australia, Sherry said that

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    the unparalleled capacity of the country to produce such a selection of export goods means that Shariah-compliant investment which requires a tangible base for investment could work perfectly. He pointed to agricultural and infrastructure opportunities, arguing that agricultural investment is particularly beneficial to Qatar as it will also help to ensure food security for the future. Australia has made major inroads into integrating an economic substance approach into our tax laws, particularly with the latest Taxation of Financial Arrangements (TOFA) legislative reforms progressed by the Rudd government, he said. The Board of Taxation review will take this work to the next level by examining the Australian tax laws to make sure the wholesale market for Islamic instruments is not being hampered, Sherry added. India looks to start Shariah-compliant financial products Tuesday, April 27, 2010 New Delhi: India needs to actively consider allowing introduction of Shariah-compliant Islamic finance products to channelize savings of the Muslim community, K Reh-man Khan, deputy chairman of Rajya Sabha, said on Tuesday. Speaking at the India Shariah Finance Summit in the capital, Khan said the mutual fund industry is the best vehicle for popularizing Shariah-compliant products. He pointed out that mutual funds are largely compliant with Islamic finance principles since they do not pay interest. The concept of charging or paying interest is prohibited under Islamic law. We should start adopting the mutual fund route in a bigger way for Islamic banking. Shariah-compliant mutual fund schemes will help to channelize savings of the huge Islamic population in India, Khan said. Khan said Indian Muslims should have the option to invest in Shariah-compliant products. Muslims have every right to seek an avenue for investment that complies with their religious faith, he said. Speaking on the occasion, Abizer Diwanji, executive director and head of financial services, KPMG, said the mutual fund sector could be opened up for Shariah-compliant products. The present laws are amenable to mutual fund instruments that are compliant with Islamic finance. However, innovation in the industry is lacking and hence such products are not hitting the market, he said.

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    Diwanji said bringing out Islamic finance products would be a step towards greater financial inclusion. Muslims are an under banked community in India. Islamic finance could be a very big component for financial inclusion that the government is pushing for, he said. Muslims account for around 13.4 per cent of the population or around 175 million people in absolute terms. Diwanji said the Reserve Bank of India could also consider offering specialized licenses for Islamic banks, while doling out fresh bank licenses as promised in the Union budget. Sashi Krishnan, chief investment officer, Bajaj Allianz Life Insurance, which offers Pure Stock Pension Fund a Shariah-certified scheme, said Islamic financial products have seen growing acceptance in India over the past few years. The government is already working on a project to analyze the future of interest-free banking in India, while the mutual fund and insurance industry are also developing Shariah-compliant products, he added. Krishnan said the challenges to the popularity of Islamic finance in India are distributors who are not equipped to sell Shariah-compliant products, besides a lack of certifying agencies and standardization of Shariah-based products. Financial Chronicle, (Indias first global business networking platform) Abu Dhabi Securities Exchange (ADX) may be open to Shariah compliance Wednesday, April 28, 2010 The Acting Chief Executive and Director of Operations, Rashed Al Baloushi, yesterday said that there is no current policy for the ADX to operate in compliance with Shariah, but this may happen in future. Al Baloushi was speaking to Emirates Business on the sidelines of the signing of a memorandum of co-operation with Istanbul Stock Exchange (ISE).

    He said no steps have been taken as yet to classify listed companies as Islamic and non-Islamic. But since the ADX has a strategy that focuses on the diversification of financial derivatives and services, the signing of the memo aims to benefit from the major expertise of Istanbul Exchange in the fields of exchange and Islamic derivative products, he said.

    "We will benefit from them if we decide to classify listed companies as Islamic and non-Islamic, or when we launch Islamic products in Abu Dhabi market, which is probable in the future."

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    Asked whether the listing of Turkish companies in the ADX is expected, Al Baloushi said there is no plan at the moment for such listing, but "we found a strong Turkish desire for co-operation with exchanges of Arab and Gulf countries, and we are happy for that and (hope to) integrate with it".

    There is no policy to set up a link between the financial markets of the UAE and Turkey, said Al Baloushi. The link between the ADX and the DFM is the best in the Middle East, he said, adding that the experiment succeeded because of a strong will.

    Al Baloushi declined to comment on the merger between the two markets and the impact it would have on the country's financial markets. However, a Reuters report yesterday quoted a source saying a merger of the bourses is imminent. "The merger is being discussed at the highest level and the outcome is awaited imminently," an ADX official told the news agency, declining to be identified. "It would be good for both markets, instead of them competing against each other. This is a sign of consolidation in the UAE."

    The ADX recently launched the country's first exchange-traded fund, and Al Baloushi said: "We have received several listing requests, but we will not disclose them at the moment until the process is complete."

    He described as "very good" the demand for the National Bank of Abu Dhabi ETF, the first to be listed at the ADX last month. Preparations are under way for the launch of a second fund, a partnership between an international company and the NBAD. It will be a health service fund. Several other funds are expected soon, said Al Baloushi.

    ADX yesterday hosted the third meeting of the 57 exchanges of the Organization of Islamic Conference, which discussed the challenges facing Islamic banking and financial work.

    Shariah scholar Hussein Hamed Hassan said markets in Arab and Islamic countries badly need Islamic financial and investment derivatives and tools. The past few years saw new products, mainly Sukuk and Ijarah, he said.

    The volume of Islamic Sukuk currently stands at $1.7 trillion (Dh6.24trn) and Sukuk issued in the UAE over the past three years totaled $33bn, the scholar pointed out.

    Meanwhile, ISE Chairman and CEO Huseyin Erkan said the co-operation agreement signed with the ADX will strengthen relations between Abu Dhabi and Turkey. The memorandum comes within other agreements to be signed with other Arab exchanges, mainly Dubai, Egypt, Qatar and Oman.

    Emirates Business 24-7

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    Dundee first university in UK to offer Islamic course in financing Thursday, April 29, 2010 SCOTTISH university is to offer the UK's first postgraduate course in Islamic finance. Dundee University will unveil its MSc in Islamic accounting and finance at a conference on ethical finance in Edinburgh today. The course has been created to meet increased demand from the banking sector. Dr Rania Kamla, a lecturer in the accountancy and finance department at Dundee who will lead the new course, said high street banks were increasingly catering for Muslims and needed knowledgeable staff. She said Islamic banking should not invest in areas in conflict with the religion's teachings such as pork products, alcohol, the arms trade, or pornography. "But it is also about the deeper impact, so it would also encourage investment in communities and try to reach out to disadvantaged groups, she added. There is only one dedicated bank that adheres to the teachings of Shariah law, the Islamic Bank of Britain. Dr Kamla said: "It was originally based in London and Birmingham, but has now expanded to Scotland. Up to 20 financial institutions in the UK now provide Islamic products, including HSBC. It is not allowed in Islam to charge interest; therefore they promote interest-free banking. "Instead, they depend on profit and loss sharing, so you both share in the risk." The MSc course, which begins in September, is expected to take a handful of students in the first year while the university gauges demand. Omar Shaikh of the Islamic Finance Council said: "This is a wonderful opportunity for Scottish students to study Islamic finance, in Scotland. "Education is extremely important if we are to realize the ambition to make Scotland and UK a global gateway for Islamic finance." Legal firm Tods Murray, which created the first Islamic mortgage in Scotland, organized today's conference. Partner Graham Burnside said: "The role of Islamic finance and ethical-based financial systems in today's economy has not been fully explored, and the launch of Dundee University's course is an important step to ensure that Scotland does not miss out on the potential it offers." The Islamic and Ethical Finance Conference, takes place at the Tods Murray headquarters in Edinburgh Quay, and will explore the various faces of ethical finance and Scotland's heritage in faith-based finance.

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    Speakers include specialists from the Islamic finance industry and representatives from the Church of Scotland, the Co-Op Bank and the Scottish Widows Investment Partnership. Professor Christine Helliar, dean of the school of accounting and finance at Dundee University, said of the new course: "Graduates will be able to bridge the gap between accounting and financial knowledge and how it relates to Islamic law. The programme will include an introductory element to the main issues, coverage of the most popular products and how they relate to Shariah law, and how conventional banks compare with the practices of Islamic banks." DIVINE PROFITS UNDER Islamic teaching usury is not allowed therefore borrowing money must be done under special arrangements. For example if you wanted a mortgage to buy a property, the bank would buy the house and then sell it back to you but charge you profit. In other words the deal would be based on profit sharing by both parties rather than interest payments. This is because profit is allowed under Shariah law while charging interest on debt is considered immoral. Islam also precludes banking which invests in businesses which go against the teachings of the religion. So for example, it would be un-Islamic to invest in the arms trade or pornography. But it would also not be seen as ethical to gain profit out of firms that are involved with pork products or alcohol which are also barred by the religion.

    Malaysia-Gulf countries to join hands

    Saturday May 01, 2010

    ABU DHABI: Malaysia and the Gulf countries can join hands in creating more opportunities to boost trading in the secondary Sukuk market.

    Enhanced trading activities in the secondary Sukuk market could help develop the Malaysian Sukuk market to a higher level, said Labuan Financial Services Authority (Labuan FSA) deputy director-general Danial Mah Abdullah.

    We want to create a more vibrant secondary market in Malaysia.

    Then, you can at least say, the Malaysian Sukuk market will be more competitive, as you have a primary as well as secondary market, he told Bernama after a roundtable with the Gulf Board Sukuk Association (GBSA) here recently. He said currently the secondary market was not very active as most institutions bought and kept the Sukuk in their books.

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    According to Danial, through the GBSA, a partnership can be forged to develop the Sukuk market in Malaysia and the Gulf countries.

    It can be a starting block to create more cross-border transactions and create some trading in the secondary market.

    We can explore creating a framework that can benefit the Sukuk market, he said.

    According to a news report, the Gulf Cooperation Council is poised to play a key role in driving the global Islamic bond market to a two-fold growth of about US$200bil in 2010.

    It was reported that a strong demand from Muslim countries and outside the circle, for Syariah-principled bonds, would boost the potential for the Sukuk market despite the global credit crisis.

    Meanwhile, there were concerns expressed by some panelists on the need to address issues on the misconception over Sukuk defaults, which has slightly affected the Sukuk issuance globally.

    The session was organized as part of the Malaysia International Islamic Financial Centre road-show to the United Arab Emirates and Saudi Arabia.

    The road-show, which completed the first leg in Abu Dhabi on Wednesday, concluded in Makkah and Jeddah yesterday and is headed for the final leg in Riyadh. Malaysia calls for Kingdom help to foster Islamic finance Sunday, May 02, 2010 RIYADH - Saudi Arabia can be a strategy partner of Malaysia to promote international Islamic finance industry, said a high-ranking official of Malaysia bank currently visiting the Kingdom. Mohamed Razif Abd Kadir, deputy governor, Bank Negara Malaysia said at a press conference Saturday that the dynamic nature of economic ties and historical relations between the two countries, Saudi Arabia could be a strategic partner for Malaysia in shaping the global Islamic finance industry. A 50-member delegation led by Raja Dr. Nazrin Shah, financial ambassador of Malaysia International Islamic Financial Center (MIFC) is currently visiting Saudi Arabia. MIFC is an initiative to promote Malaysia as an Islamic financial hub by global integration of economic linkages among organizations related with Islamic finance.

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    The MIFC delegation is comprised of representatives from Malaysias regulatory authorities, national investment agencies, Islamic banks, Islamic fund managers, Takaful operators and professions services firms and Shariah research institute. The delegation is organizing road shows in Riyadh, Jeddah and Makkah seeking to establish contacts with Saudi businessmen and investors. Kadir said about 60 percent of Sukuk in the worlds financial market originate from Malaysia. In fact, Malaysia has a 60 percent of the Sukuk worlds market share, he said. Sukuk, a legal instrument, deed, check is the Arabic name for a financial certificate, but commonly refers to the Islamic equivalent of bond. Kadir said during the visit MIFC members will hold talks with officials of Capital Market Authority (CMA) and Saudi Arabian Monetary Agency (SAMA). We will explore possibilities of establishing close links that can shape the global Islamic finance industry, he said. He said the countries in ASEAN Free Trade Area (AFTA) alone comprised of a population of 500 million people that offers huge potential for Islamic finance. The awareness among the people in ASEAN -member countries namely Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Laos and Myanmar is increasing remarkably, he said. Saudis can join hands with Malaysia and other players in the region to tap this huge potential for Islamic finance, he said. Nik Mohamed Din Nik Musa of MIFC Promotions Unit said the level of interest for Islamic finance is rising among Saudis. He said more number of Saudi businessmen and investors started looking for Shariah compliant projects. During our current visit we want to establish contacts with more number of Saudi businessmen before entering into transaction dealings, he said. Dr. Nazrin Shah, MIFC Finance Ambassador said there has been a 30 percent growth in the corporate Sukuk that rose to SR32 billion in 2009 from SR24 billion in 2008. The annual compound rate of growth in Sukuk issues is 21 percent since 2001, she said. Saudi Gazette

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    Lack of liquidity among risks facing Islamic financing Sunday, May 02, 2010 Lack of liquidity, questionable Shariah-compliance by some Sukuk and replenishment of capital remain risks to Islamic financing, according to Qatar First Investment Bank (QFIB). A tipping point has been reached in the finance across the GCC markets which could lead to accelerated growth. All the main economies in the GCC have a positive outlook and it is important that Islamic Finance links into this growth, QFIB CEO Mike de Graffenried said ahead of his keynote address on Future of Islamic Investment Banking Industry at the Arab Investment Summit, which will begin today in Abu Dhabi. Finding risks to this growth, he said many Islamic banks have been hit by the lack of liquidity with the less conservative having large real estate and private equity exposures and have had to adapt their business focus to emphasize liquidity. The Shariah-compliant basis of some Sukuk was being questioned as there was no direct link to assets and therefore they were being seen as straight debt issuance, according to Graffenried. Banks now need to replenish capital to substantially higher levels than before, and this needs to be tangible money not debt disguised as equity, he said. He said private wealth in the GCC remained strong and the intergenerational transfer of wealth would spur the need for corporate advisory work. Much family wealth is tied up in the form of illiquid business assets, the passage of these assets from generation to generation would be facilitated and familial disputes reduced through the incorporation and provision of liquidity of family shareholdings, he said, adding this would release investment capital and may well be vital for the continued development and strengthening of Islamic finance in the region. Islamic finance needs effective system-wide crisis management framework Monday April 03, 2010 RIYADH: Islamic finance needs to establish an effective system-wide crisis management and harmonized regulatory framework, in order to keep up with new challenges in the industry. In making the call, the Raja Muda Perak Raja Dr Nazrin Shah said Islamic finance, had very unique characteristics and risks that also required unique risk management solutions.

    "To optimize its potential, there is a need to address current gaps and challenges in the Islamic financial system. In particular, Islamic finance requires the expansion of enabling infrastructures to support its efficient functioning," he said, in his keynote address on

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    Saturday in conjunction with the Malaysia International Islamic Financial Centre (MIFC) road show here.

    Raja Nazrin, who is the MIFC Financial Ambassador, said the infrastructure needed would entail a robust regulatory and supervisory framework, adequate financial safety nets and effective punitive and problem-resolution mechanisms.

    He said devising such solutions is complex and therefore, must be pursued collectively by Islamic finance experts and regulators.

    "Regulators and market practitioners should work hand in hand to develop a deeper understanding of the behaviour of the market, the likely interactions between the Islamic and conventional systems and the effect of changes in macroeconomic policy on the two systems," he explained.

    Raja Nazrin said as competition in Islamic finance intensifies, there would be increased pressure for market participants to innovate, potentially testing the boundaries of Shariah-compliance.

    He added that while continuing to offer new opportunities and portfolio diversification to investors, it would be good to have a clear and universally-agreed set of Shariah parameters, as a common reference for participants.

    According to Raja Nazrin, these parameters should emphasize good risk management, strong governance practices, ethics and transparency as underpinning factors.

    "This will ensure Islamic finance continues to offer genuine benefits to the global financial market instead of merely mimicking conventional finance," he said, to some 80 businessmen from Saudi Arabia and Malaysia, who attended the luncheon talk organized by MIFC.

    Addressing the emergence of ethical funds, Raja Nazrin said this move was a positive step in transforming the current financial system into one that is more accountable, and which makes investors more aware of their responsibilities in economic decision-making.

    Citing the recent launch of a Christian index in Europe, he said this trend, however, should not be viewed as a new point of contention from a religious perspective as that will only serve to divide the world further.

    Instead, he highlighted, it should be viewed as contributing to the betterment of the global financial system.

    Meanwhile, on Malaysia and Saudi Arabia, he said both countries must continue to pursue the priorities crucial to making Islamic finance play a leading role in the economic development of both.

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    "By doing that, the two countries could capitalize on their potential by exploring new business ventures and tapping into each other's strengths while at the same time, becoming the bridge between East and West Asia," he added.

    Raja Nazrin was leading the MIFC delegation to the United Arab Emirates (UAE) and Saudi Arabia with the objective of among others, strengthen relationships and woo investors to Malaysia.

    The more than 50-member delegation included, the Deputy Governor of Bank Negara Datuk Mohd Razif Abd Kadir, the Securities Commission Malaysia Chairman Tan Sri Zarinah Anwar and Bursa Malaysia Bhd Chief Executive Officer, Datuk Yusli Mohamed Yusoff as well as several local and foreign fund managers.

    The roadshow, which ended here on Sunday, saw the delegation visit the Tadawul Stock Exchange, the Saudi Arabia General Investment Authority (SAGIA), the Public Investment Fund (PIF) and the General Organization for Social Insurance (GOSI). (By Nor Baizura Basri/ Bernama)

    Britain to continue Islamic finance initiative

    Monday April 03, 2010 Whichever party wins the British general election next Thursday, the UK government's policy on Islamic finance will be "business as usual" and all of the three main parties - Labour, Conservatives and the Liberal Democrats - have confirmed cross-party support to continue the Labour government's Islamic finance initiative.

    A few days ago, the City-based international law firm, Norton Rose, published a fascinating report - "The Election Briefing: Implications for Business" - which is effectively a roadmap of the positions of the above three parties on a cornucopia of issues including Islamic finance.

    Norton Rose, which has a sizeable Islamic finance legal business and one of the top firms with a specialized Islamic finance expertise, concludes that "Islamic finance is an area with clear potential for development. The UK government and the City of London are both promoting its growth, in both the retail and wholesale markets. London's emerging role as a center of excellence for Islamic finance seems likely to continue to develop irrespective of which party wins the election."

    At the core of the Brown government's policy is the stated ambition of developing the City of London into a major international center for Islamic finance, which already generates millions of pounds of revenues every year for UK law firms, fund managers, investment banks, auditing and advisory companies, and academic and professional training organizations.

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    "Islamic finance is an increasingly important part of British business," declares Norton Rose. "UK government policy has in recent years recognized this, and measures have been taken to promote and facilitate Britain as a center for Islamic finance."

    But how will the general election affect the above assertion? Although issues relating to Islamic finance are not at the center of the national political debate, it is clear, according to Norton Rose, from government policy where the Labour Party stands. With regards to the Conservative Party, private and public statements indicate that they are broadly supportive. The Liberal Democrats also have privately stated cross-party support for the Brown government's Islamic finance initiative.

    As such, whatever the outcome of the election, Islamic bankers in London maintain that there is most likely to be considerable continuity with current UK government policy.

    Under Labour, the party in power since 1997, the briefing stressed that there have been significant symbolic and legislative changes relating to Islamic finance under both the Blair and Brown Government's "financial inclusion" policy.

    All the enabling legislation do not specifically mention the word "Islamic" but defines certain types of transactions and instruments as alternative and cater for them under relevant changes by specifying tax neutrality treatment for them.

    In fact, the UK model for Islamic finance is being replicated in other jurisdictions such as France, Luxembourg and elsewhere. Indeed government-led initiatives started in 2001 involving Treasury, RC (Revenue and Customs), the Bank of England and the Financial Services Authority (FSA). The Treasury has introduced a spate of enabling laws dealing with the abolishing of double stamp duty for equivalent Islamic financial products such as the Diminishing Musharaka and Ijara mortgages; exemption from stamp duty land tax (SDLT) in real estate-backed Sukuk; equal risk weighting for conventional and Islamic mortgages; and the facilitation of Sukuk or alternative financial investment bonds.

    Although the Conservatives have not published any formal policy on Islamic finance, informal understandings of Conservative and Liberal Democrat positions, added the Briefing, is that they will further the development of Islamic finance on the same basis as the Labour government.

    Earlier this year at a Norton Rose seminar on Islamic finance, Mark Hoban MP, Conservative shadow financial secretary to the treasury, confirmed that his party has supported the steps taken by the government to create a level playing field for Islamic finance and that it would continue the same approach. He recognized the concerns raised by the audience in respect of a need for clearer criteria to enable the industry to address any government concerns in relation to a UK government Sukuk.

    Should the Conservatives win, then Hoban is most likely to become the financial secretary to the treasury and lead the new government's Islamic finance initiative.

    This cross-party support (including by the Opposition Liberal Democrat Party) for UK government's Islamic finance initiative has been welcomed by the industry. Farmida Bi,

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    London banking partner at Norton Rose, emphasized, "It is extremely good news for the City of London that there is cross party support for the promotion of Islamic finance and that the helpful legislative changes that have been made will be continued irrespective of which party is in power."

    One interesting area is that of a UK sovereign Sukuk issuance, which the Labour government ruled out in December 2008 because such an issuance would not "offer value-for-money" at the time because of market conditions. Market players have queried this rationale and would like any future UK government to explain the criteria that need to be fulfilled in order for a sterling Sukuk issuance to be viable.

    The briefing adds that there has been considerable interest in the possibility of the UK government issuing a 2012 London Olympic Sukuk since the decision not to proceed with the UK Treasury Sukuk was taken. "Our discussion with market participants has shown that there is a huge amount of interest in the Islamic finance investor market for a UK government Sukuk issue, for largely strategic reasons," confirmed Norton Rose.

    Some City observers stress that a Conservative government under David Cameron may revise the Labour government decision on the issuing of a sovereign Sukuk in the wholesale sterling market, because it would be an efficient and cost-effective way of raising funds off the national balance sheet to finance projects such Crossrail and other planned infrastructure developments.

    Absa launches Islamic Banking in Tanzania Monday April 03, 2010 Tanzania: The National Bank of Commerce (NBC), a subsidiary of Absa, has placed itself ahead of competitors in the Banking Industry by launching Islamic Banking to the public. This move is in line with Absa strategy of expanding its offering in Africa.NBC Managing Director Mr. Christo De Vries said this new service is part of NBCs business banking strategy, to provide innovative products to meet the needs of the market. The introduction of Islamic Banking in the Tanzanian market is aimed at ensuring that we offer products that appeal to all Tanzanians regardless of their faith or background.

    The concept of NBC Islamic Banking - which offers the options of the Cheque Account and Saving Account with an embedded Funeral Plan - is built around the Shariah Laws which govern the way in which Muslims live their lives and conduct their daily business including their financial affairs. The service will be managed in line with clear guidelines Shariah lays down for the management of money, one of these guidelines being the absence of interest on current and savings accounts. The Shariah Law forbids the earning of interest. Funds deposited in the accounts will be invested in businesses that are approved under Shariah Law.

    Islamic Banking will be a new and innovative solution to modern day banking in Tanzania. Though this service will mostly appeal to our Muslim clientele, it is

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    completely open to everyone regardless of their faith. Islamic Banking services will be available to all who choose an alternative to conventional banking, Muslims and non-Muslims globally are choosing to make use of Islamic Banking. It is a service that gives them the assurance that their money will be invested well. All investments made under Islamic Banking are never associated with any of the traditional sin industries, such as alcohol, tobacco, gambling or pornography; as a result the product stands on an individuals faith, ensuring not only financial security but also moral and mental satisfaction, said NBC Islamic Banking Board Chairman Dr. Mussa Assad

    In terms of account opening, Islamic Banking will be conducted in exactly the same manner as opening a conventional account, however, the product features will differ based on the Shariah principles. The costs associated with opening Islamic Banking accounts will also remain the same as for conventional accounts.

    NBC will be the largest bank in Tanzania with the broadest branch and ATM footprint offering Islamic Banking services. This will combine the best of traditional Islamic values with the technology and innovation that characterize the best of modern banking.

    Here at home, Absa Islamic Banking (AIB) has scooped yet another Global Finance Award for 2010. AIB has all the convenience of a national branch and ATM footprint as well as the 24hour access of cellphone and internet banking.

    Supermarket.Co.Za (The Online Home of Supermarket & Retailer and Wholesale Magazines) KFH-Group Platinum Sponsor of the 7th IFSB Annual Summit in Bahrain Tuesday, May 04, 2010 Kuwait Finance House-Group (KFH) is supporting the 7th Islamic Financial Services Board (IFSB) as Platinum Sponsor, which is currently being held at the Ritz Carlton Hotel and Resort Bahrain, during the period 3-5 May 2010. The Central Bank of Bahrain is hosting the Summit and this year's theme is "Global Finance Architecture: Challenges for Islamic Finance".

    The IFSB, is a transnational organization that sets mandates for prudential and supervisory standards for the global Islamic finance sector.

    Among the participants are high profile delegates, including central banks governors, chairmen, executive managers from Islamic banks and a number of highly respected experts within the Islamic banking industry.

    As a group, KFH-Kuwait, Kuveyt Trk and KFH-Bahrain are jointly co-sponsoring the event. Commenting on the occasion, Mr. Abdulhakeem Alkhayyat, Managing Director and CEO of KFH-Bahrain, emphasized the importance of the IFSB as an umbrella that

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    supports Islamic banks, especially in terms of consolidating relations between central banks, regulatory bodies and Islamic banks.

    During the summit a number of pressing topics and issues are being addressed that have a direct impact and relevance to the unprecedented challenges faced by the Islamic finance industry as a result of the global financial crisis. It will examine the extent of change brought forth by the crisis on the economic growth trends and stimulate strategies that identify the best means to develop new regulatory paradigms for the financial and banking markets.

    This year Summit theme "Global Financial Architecture: Challenges for Islamic Finance" provides an alternative platform to devise new methods of pre-empting the very issues that caused a near collapse of the global financial system.

    The main issues of this year's Summit are also being reflected in the five session topics which cover; the Changing Landscape of Financial Regulation: Implications for Islamic Finance; Macro-Prudential Surveillance Issues for Islamic Finance; New Architecture for Liquidity Management for Islamic Financial Instruments; Balanced growth of Islamic finance - the Sectoral Composition of the Islamic Financial Services Industry as a Contributor to Growth with Stability; and New Islamic Financial Architecture: Challenges Ahead.

    About Kuwait Finance House, Bahrain

    Kuwait Finance House-Bahrain is a leading provider of Islamic commercial and investment banking services. Established in 2002 as a wholly owned subsidiary of Kuwait Finance House (Kuwait) -- an industry leader for more than 30 years -- KFH-Bahrain specializes in developing and bringing to market the highest quality Islamic compliant banking and investment products, all of which are delivered by a staff of experienced and dedicated professionals with a deep understanding of the market and the clients we serve.

    African Islamic finance faces image problem: banker Tuesday, May 04, 2010 NAIROBI: Africa Islamic finance industry needs to overcome negative perceptions among non-Muslims to successfully expand into predominantly Christian sub-Saharan Africa, an industry leader said on Tuesday.

    Northern Africa is largely Muslim and countries such as Egypt and Sudan have offered Islamic banking for decades. Now some lenders are looking to expand into sub-Saharan nations, such as Uganda which is 80 percent Christian.

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    Islamic finance caters for customers who want to avoid earning interest, which is viewed as usury under Islamic law.

    Islamic banking operates on a small scale in a few sub-Saharan countries, such as Kenya, South Africa, Botswana and Nigeria. Industry participants say Tanzania, Malawi, Uganda and Zambia would be next. Each has minority Muslim populations.

    "The biggest challenge we face is the perception that this is a bank only for Muslims, which is not correct," said Suleiman Shahbal, chairman of Gulf African Bank, which was launched in 2008 and is one of Kenya's two Islamic banks.

    "This is a business and frankly we are indifferent to whether you are Muslim, Christian, Hindu, a non-believer or whatever," Shahbal said, who added that Islamic banking institutions were still accused of hiding political agendas.

    "Some people are extremely hostile and they see a political agenda in Islamic banking. It is not political at all, we have no political agenda ... some even think we support al Qaeda, which is of course complete nonsense," Shahbal said.

    The Islamic finance industry is eager to grow outside its main centers in the Gulf Arab region and South East Asia.

    Ebrahim Ahmed Patel, chief of South Africa FNB and WesBank Islamic Finance, told a Nairobi conference the Islamic finance market in Africa is potentially worth $235 billion.

    Experts say national regulatory bodies need to be open to facilitating an alternative system of banking. Kenya has made adjustments to its banking laws which allowed the emergence of Islamic finance in the east Africa.

    Reuters Africa

    Islamic Finance Also Draws Interest from Non-Muslims, Says Zeti

    Tuesday, May 04, 2010 MANAMA: The sustained and largely uninterrupted expansion of the global growth in Islamic finance has drawn significant international interest, not only from Muslim countries but also from non-Muslim communities, Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz. She said Islamic finance continued to demonstrate its resilience against the background of the current challenging international financial environment. "Financial centers such as London, France, Hong Kong and Singapore are increasing their efforts to enhance the development of Islamic finance in their financial centers," she

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    said in a speech read out by Deputy Governor Datuk Mohd Razif Abd Kadir at the Malaysia Showcase Dinner in this Bahrain capital Monday. The showcase was held in conjunction with the Seventh Islamic Financial Services Board (IFSB) Summit which starts tomorrow. Zeti said the internationalization of Islamic finance had also observed the strengthening of ties between Asia and the Middle East in trade and investments in the recent years. "The emergence of new financial centers in Asia and the Middle East and their increased integration has strengthened the foundations for a New Silk Road," she said. Furthermore, it had also opened up and extended this potential to developed economies to forge stronger financial linkages with the growth regions of Asia and the Middle East, said the central bank governor. She said, while Islamic finance had demonstrated its resilience during the challenging period, continuous efforts were being taken to further strengthen its resilience and facilitate effective liquidity management across the border. The Islamic Development Bank, for example, has collaborated with IFSB and formed two task forces -- the Task Force on Islamic Finance and Global Financial Stability and the High Level Task Force on Liquidity Management. Through the task force on financial stability, it has established an Islamic Financial Stability Forum which is held twice a year, a strategic platform for productive dialogue to promote financial stability. Zeti said an important dimension of Islamic finance was not only its potential role and relevance in contributing to global financial stability but also its potential to support overall global economic growth. More importantly, it also represented an important channel for greater connectivity among emerging economies to not only enhance trade and investment flows but also international financial flows between nations. She said these combined efforts would contribute to the stability of the international financial system and global economic prosperity. BERNAMA

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    Islamic Banks Must Play Role in Industrialization of Muslim Nations, Dr. Mahathir Mohamad

    Tuesday, May 04, 2010 MANAMA (Bahrain: Islamic banks and financial institutions must play a role in the industrialization of Muslim countries to be able to withstand future challenges in the global financial system.

    In making the call, Former Prime Minister Tun Dr Mahathir Mohamad said banks role in the industrialization of developed countries in Europe and East Asia cannot be understated. "There is no reason why Muslim banks and financial institutions cannot play the same role. In fact, considering the lack of knowledge and initiatives in this area among Muslims generally and Muslim investors specifically, the Islamic banks must play an even bigger and more aggressive role than conventional banks," he said in his special address at a Malaysia Showcase dinner in this capital city of Bahrain Monday.

    Dr Mahathir said currently there was not a single Muslim country that was fully industrialized, with some of these countries having no natural resources to support industrialization. However, they make up by having the most valuable resources of all -- they have people who are intelligent, knowledgeable and skilled in the development of industries.


    Tanzania: Shariah Banking Services Launched

    Wednesday, May 05, 2010

    Dar Es Salaam: SHARIAH banking products were officially launched in Dar es Salaam on last night, with the government challenging bankers to strive for more education to the masses on the sector.

    Minister for Planning and Economic Affairs, Mr Mustafa Mkullo, while launching the services in Dar es Salaam, said that banks should also take their services to rural areas where the majority of Tanzanians dwell.

    "People in rural areas have to be educated on banking because due to habits it would be hard for them to believe in banking their money if there is no proper sensitization and education," he said.

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    He also challenged Stanbic Bank, a member of the Standard Bank Group, the leading emerging markets bank with the largest presence in Africa, to also educate both Muslims and non-Muslims about Shariah banking which, he said, is not familiar to many.

    The Minister maintained that the government was happy to having Shariah banking in the country and that there are several requests for operating similar services tendered by other banks.

    The Managing Director of Stanbic, Mr Bashir Aawale, explained that Shariah banking is a system of banking that is consistent with the principles of Islamic law.

    "In practice, it prohibits the payment or acceptance of interest fees for the lending and acceptance of money", said Mr. Bashir, adding that It also prohibits Muslims from investing in businesses that provide goods or services that are considered contrary to the Islamic principles.

    In practice, Islam prohibits the taking and giving of interest, there should be no gambling (speculation) and no investments in prohibited industries.

    He said the first products that will be offered under this proposition will be a transactional product 'TransactPlus' and current account, which is 100% Shariah compliant and provides the same convenient features of conventional accounts, including internet banking, Visa electron or Maestro debit card and prepaid airtime services.

    Mr Awale said Tanzania is an important market for Standard Bank as the gateway to East Africa and we are proud to be the first bank in Africa to offer our first Shariah banking product in this market, where about 50% of the population is Muslim.

    "There is a substantial untapped market among Muslims who make up a large portion of the population in Africa and Standard Bank is mindful of the fact that to be truly an African bank, it needs to ensure that there are products in the market that cater for them," says Terry Moodley, Chief Executive, Personal and Business Banking, Standard Bank Africa.

    As the leading bank in Africa, Standard Bank is constantly looking for ways to provide banking products and services that allow all customers in Africa to save and transact. It also aims to demonstrate its confidence in the future of Africa and other emerging markets by making the right connections with its customers and stakeholders across the continent.

    "Standard Bank plans to roll out its Shariah banking value proposition to all other markets in the coming months," concluded Moodley.

    Standard Bank trading as Stanbic Bank is part of one of Africa's leading financial services groups, the Standard Bank Group Limited, which is based in South Africa and listed on the Johannesburg Securities Exchange.

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    The group trades under the name Stanbic Bank in Botswana, Ghana, Kenya, Nigeria, Tanzania, Uganda, Zambia and Zimbabwe and is known as Standard Bank in Angola, the DRC, Malawi, Namibia, Swaziland, South Africa, Lesotho, Mauritius and Mozambique.

    The group has the largest presence in Africa with the Group total assets of approximately 182 billion USD as at December 2009 and employing about 35,000 people worldwide.

    Tanzania Daily News (Dar es Salaam) Saudi Islamic bank to set up coaching centre in Delhi Wednesday, May 05, 2010 Dubai: In a major expansion plan in India, which will benefit mostly Muslim educational institutions, Saudi Arabia-based Islamic Development Bank (IDB) has approved several new projects for its financial grants. Initial investments, totaling 600,000 dollars, would be to start among others an extension centre in New Delhi of a premier civil services coaching institute presently run by Hamdard Education Society. Three more such world-class coaching institutes would be opened in the country. ''The IDB has pledged to support the educational projects within the framework of the regulatory provisions of the Indian government,'' Kamal Faruqui, an IDB representative in India, who made a presentation in Riyadh on Sunday, said. Mr Faruqui, who is also Delhi Minorities Commission Chairman and Central Bank of India Director, is currently visiting the Kingdom at the invitation of the IDB. He, a member of the board of Aligarh Muslim University, urged Saudi aid organizations and Indian expatriates to ''support minority projects and set up viable educational projects along commercial lines.'' He pointed out that a major educational project had been launched in Hapur city of Uttar Pradesh, which would primarily cater to the needs of Muslims. In his speech, he also gave an overview of the problems faced by Indian Muslims. He said the relationship between education and development was strong. ''Education is a key instrument of socio-economic development,'' Mr Faruqui said, adding the areas with better education have a higher GDP growth. Nafees Ahmed, an IDB employee, said the vision of the IDB was to promote education

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    and training in India. He said the basic objective of the IDB special assistance programme was to ensure development of Muslims in non-member countries. Since its beginning, the number of projects supported under the programme worldwide exceeds 1,500 in which millions of dollars of IDB grants have been invested. Islamic finance could be an answer to global economic problems Thursday, May 06, 2010 Adopting Islamic finance practices could lead to a more equitable global economic system, an Islamic finance expert told an AUB audience. Sheikh Zaher Nsouli, chief of Shariah audits at the Lebanese Islamic Bank, added that methods applied in Islamic institutions could help prevent future economic meltdowns. Nsouli, in the talk Islamic Finance in the Midst of the Meltdown Crisis, held at AUB Suliman S. Olayan School of Business, praised the Islamic Zakat system where a 2.5 percent of all revenue is continually redistributed to the poor. No economy is capable of doing or reaching such results except with Islamic finance, which is divine. As GDP increases, the Zakat increases and goes towards poverty alleviation, he said. Anwar Soubra, Shariah compliance officer at Elaf Bank, Bahrain, praised the Islamic finance system due to its refusal to allow speculation. According to Soubra, 97 percent of all transactions done on the New York Stock Exchange were based on speculation. Nobody goes for real delivery and this is not acceptable in Islamic finance, he said. Speculation is an action that does not guarantee the safety or return of initial investment. It typically involves lending money or purchasing assets, equity or debt in an imprecise manner and is deemed to have a significant risk of the loss. The end result, according to Soubra, is a worrying disparity in the value of the real economy and that created by speculation. We produce what is worth $60 trillion in the market but we buy and sell what is worth $2000 trillion, he said. It is a very big bubble and when it burst it hurts everybody. Nsouli rounded on the greed of world finance, suggesting it was malign neglect which brought about the recent financial meltdown. According to (ratings agency) Fitch, $1.4 trillion of sub-prime mortgages originated from 2005 to 2007. The heart of the sub-prime meltdown rests with the default of these loans. This is inadequate and it is something that I refer to as a malign neglect, he said.

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    A sub-prime mortgage is a loan granted to individuals with poor credit histories, who would not be able to qualify for conventional mortgages. Since sub-prime borrowers present a higher risk for lenders, sub-prime mortgages charge interest rates above the prime lending rate, something which Nsouli disapproved of. We actually have a crisis in the system, Nsouli added. He said that Adjustable Rate Mortgages which charge repayment rates, linked to financial indexes comprised 80 percent of US mortgages and accused derivatives markets of helping bring down some of the worlds biggest banks. Derivates are estimated by the Bank of International Settlements to be $600 trillion, 10 times greater than the size of the world economy, he said. A derivative is a security whose price is dependent upon or derived from one or more underlying assets, he explained. Its value is determined by fluctuations in the underlying asset, Nsouli said. Derivatives are referred to by the American philanthropist Warren Buffett as being financial weapons of mass destruction. Nsouli said that the current world economic system led to the 2007 world food crisis. Food prices increased by 40 percent in 2007 and 50 percent in 2008, he said. He added that 850 million people went to bed hungry in 2008 but the number today reached 1 billion. To prevent the death of 50 million children it is estimated that $2.5 billion a year is needed, which is the same amount that a cigarette company spends on advertisements, Nsouli said. He added that the problem lay not in scarcity of food, but in reallocation of wealth. The GDP of 41 poor countries is less than the wealth of the richest seven persons combined, he said. Al Bawaba Winner sells Islamic Banking course in Shanghai Thursday, May 06, 2010 AMONG the many booths located in the Brunei Pavilion in Expo 2010 Shanghai, one booth stands out due to its promotion of a field that is very much unknown in China, Islamic banking. Hjh Salma Latiff, the Managing Director of Crescent Sdn Bhd, third prize winner of the ThinkBig Business Plan Competition 2009/10, is at the expo to promote her companys Islamic Banking course to the rest of the world.

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    Speaking to The Brunei Times, Hjh Salma revealed her bold plans to link up with universities from various parts of the world to provide either a Masters degree or an Advanced Diploma to students who joins the course conducted by her school. Were currently in talks with several universities, and they are very keen in such a collaboration, where our students will complete the course online, and then receive their diploma or degree, said Hjh Salma. There will be 10 modules in the course, including Syariah Law of Contracts in Banking and Finance, Islamic Economics and Islamic Risk Investment. Our discussion with Singapore University is in an advanced stage, and I believe we can conclude a deal by the end of the year, and students of Crescent can choose to receive an Advanced Diploma in Islamic Banking and Finance issued by them. Were also hoping that we can collaborate with universities from China, and I hope we can start something early next year, she said. Besides Singapore and China, Crescent is also looking at expanding into the markets of USA, Canada, Korea, Japan and the Middle East. The pricing for the course will vary according to the country of origin of the degree requested by students, and the certification offered in Singapore will cost about US$12,000. The Brunei Times

    Shariah Banks Are the Future, Kenya drives Islamic financing in East Africa

    Friday, May 07, 2010

    NAIROBI (Xinhua): Kenya is angling herself to reap from the growing appetite for Islamic banking products by countries in East Africa as investors from the Gulf region show a renewed interest in the region.

    Central Bank of Kenya (CBK) Governor Prof. Njuguna Ndungu said the renewed interest in Shariah compliant banking in the neighbouring countries could greatly benefit the country as it seeks to transform herself into a regional Islamic finance hub in tandem with her ambitious growth plan dubbed the Vision 2030.

    Under this vision, one of the key aspirations for the financial sector is positioning of Nairobi as a regional financial hub by 2030, Njuguna told a major Islamic banking conference in Nairobi.

    The two day conference, dubbed, Second Gulf African Bank Annual East and Central Africa Conference themed Islamic Finance: The African Experience, seeks to explore the African Perspective on Islamic finance and finance products and the challenges faced in the African market as well as applicable solutions.

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    The conference also explored the global scenario, Islamic infrastructure bonds (Sukuk), Risk in Islamic finance, Islamic Insurance (Takaful), Technology, and the role of the Shariah board.

    There is a move by countries in the region to permit their institutions to offer Islamic products and the CBK is sharing its experience in Shariah compliant banking with other Central Banks in the East African Community, Ndungu said.

    Kenya has made great strides in Islamic banking since the licensing of the first two fully fledged Shariah compliant banks in 2008.

    The two, Gulf Africa Bank (GAB) and First Community Bank currently boast of 1,570 loan accounts and 58,548 deposit accounts and control 0.8 per cent of the banking sectors net assets after being in operation for less than two years.

    These developments have enabled the formerly unbanked Kenyans and specifically the Muslim community in the marginal areas to have access to financial services adding to the wealth creation in the economy.

    This is a solid testimony of the vast potential of Islamic finance in Kenya, which should be tapped, and opportunities explored in the insurance and capital market segments using Shariah compliant vehicles, Ndungu said.

    Islamic Finance is so far the fastest growing segment in the global financial industry.

    Despite the global financial crisis, Islamic finance has demonstrated strong growth with new areas of business such as mutual funds and Takaful industry attracting a lot of attention. We need to understand this business model that will support our comparative ad-vantage in the E.A.C. region.

    The world is now looking at Islamic Finance as an alternative to the conventional finance system after the global financial turmoil, GAB chairman Suleiman Shahbal said.

    Kenya pioneered Islamic Banking in East and Central Africa with the licensing of the first two banks to exclusively offer Shariah compliant products, with many other conventional banks establishing a window specifically for Shariah compliant products.

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    ADIB heads to Iraq as trail-blazer for Emirates

    Thursday, April 29, 2010 Abu Dhabi Islamic Bank (ADIB) will become the first Emirati bank with a presence in Iraq when it opens a branch in Baghdad next month. The company plans to open other branches across Iraq. Well have a branch in every major business city, said Hussain Qaragholi, a senior vice president at ADIB and the companys head of Iraq business.

    Construction of the first Baghdad branch is under way, and the Central Bank of Iraq has given ADIB a preliminary license. The next branches were looking for is Basra, Erbil, Najaf, Karbala, and eventually Mosul, Mr Qaragholi said yesterday at an Iraqi Business Council conference in Abu Dhabi. Iraqs banking sector continues to be dominated by public entities such as Rafidain Bank and Rashid Bank, as they control 85 per cent of the transactions in the country, while private banks account for 15 per cent. There are 36 local banks in the country, according to the Central Bank website.

    Several foreign banks including Capital Bank of Jordan, HSBC, National Bank of Kuwait and Ahli United Bank of Bahrain have already set up in Iraq, but they have entered through partnerships with local banks. In the past, foreign banks shied away from opening branches under their own names because of security concerns. ADIB is only the second foreign bank to enter the market by starting a branch from scratch rather than through a partnership.

    The first foreign bank to open a branch in Iraq was Byblos Bank of Lebanon, said Wassim Jazrawy, the head of Al Karmal Stock Exchange, a brokerage company in Baghdad. ADIB entry into the market was a good and timely decision, Mr Jazrawy said. The financial sector accounts for 80 per cent of shares traded on the Iraq Stock Exchange. Iraq banking sector suffered from years of isolation during the rule of Saddam Hussein and still lacks strong links with the outside world.

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    Mr Qaragholi, an Iraqi-American, said bankers in Baghdad thought they could run the sector alone after the US invasion in 2003, but now realized the benefits of opening to foreign participation. ADIB planned to invest in power generation and oil services, he said. The property and manufacturing sectors are potentially attractive to investors, but accurate and detailed feasibility studies would be required, Mr Qaragholi added.

    Foreign banks are hoping to capitalize on economic growth driven by rising oil production in Iraq. ADIB shares rose 3.2 per cent to Dh2.84 yesterday on the Abu Dhabi Securities Exchange. The financial sector in Iraq is one that has remained in the shadows against the global financial crisis, Mr Qaragholi said.

    THE NATIONAL Qatar International Islamic Bank (QIIB) launches unique finance scheme Sunday, May 02, 2010 DOHA: Qatar International Islamic Bank (QIIB) has launched a new unique product providing the banks customers and non-customers to pay their financial obligations owed to other banks at competitive profit rates which are considered the lowest in the country.

    International Islamic Assistant General Manager, Banking Services, Massoun Mohammed Al Asfar (pictured) said that anyone with a salary of QR5, 000 can be among the beneficiaries of this unique product provided the salary is transferred to International Islamic. He said that as per the provisions of the new offer 4.66 percent annual profit rates on financial obligations with a 5-year financing period will be applied. Besides, the profit rates for a financing period ranging from 6 to 10 years will amount to 5.23 percent.

    Massoun added that the launch of the new product is in line with QIIB efforts to implement its philosophy in practice which is based on financial pressures and obligations that a large section of customers of banks may be facing.

    He also said that customers of banks are now being provided an opportunity to benefit from the new offer by transferring their salary to International Islamic and thus pay their financial obligations to these banks at competitive profit rates.

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    Many customers of other banks have been interested for a long time to deal with Islamic banking specifications which provide an opportunity to benefit from fixed terms and values contracts, fixed monthly installments and unchanged and non-cumulative total values for credits, said Massoun in a news release yesterday.

    International Islamic customers and non-customers can take advantage of the new offer by approaching any of the QIIB branches.

    QIIB is rapidly growing as one of the prominent Islamic banks in the Middle East region and beyond. The bank is one of the founders of Islamic Bank of Britain and of Syria International Islamic Bank.

    The Peninsula (Qatars Leading English Daily)

    Kuwait Finance House posts lower Q1 profit

    Monday, May 03, 2010

    KUWAIT: Kuwait Finance House (KFH), the country's biggest Islamic lender, yesterday reported a 21.4 per cent fall in first-quarter net profit, missing analysts' expectations. Net profit for the quarter was 30.9 million Dinars, or US$107 million (US$1 = RM3.19), down from 39.3 million Dinars in the same period a year earlier, KFH said in a statement on the bourse.

    Earnings per share stood at 12.6 Fils, down from 15.9 Fils in the first quarter of last year. There are 1,000 Fils to the Dinar.

    Two analysts had forecast net profit of 46 million and 65 million Dinars for the lender, according to a Reuters survey.

    Chairman and managing director Bader al-Mukhaizeem said the bank would maintain its conservative policy and continue to add provisions to face the consequences of the global financial crisis. KFH said its assets on March 31 increased 11 per cent to US$40.5 billion, from US$37 billion a year ago. Deposits rose 7 per cent to US$25 billion at the end of the first quarter, while shareholders' equity inched 2 per cent higher to reach US$4.17 billion. Bader said in a statement the lender continued to book "sufficient provisions to face any consequences of the crisis". He did not provide any figures.

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    Naser al-Nafisi, general manager of Al Joman Center for Economic Consultancy, said the drop in profit was due to the bank's investments in troubled Kuwaiti companies and reported trouble at its Malaysian unit. "Kuwait Finance House invests in many Islamic investment companies that are in financial trouble ... and at the same time it gives them loans," the analyst said. He said it was not clear if the problems in Malaysia were related to the lender's investments there or to its clients. However, Naser said the first-quarter figure was "very good" compared with earlier rumours about possible losses from the lender. The stock had fallen nearly 12 per cent over the past five weeks as investors fretted over its likely results. Business Times Dubai Islamic Bank Named Best Islamic Bank In UAE by Global Finance Magazine DIB recognized for third consecutive year by international jury of editors, banker and analysts Monday, May 03, 2010 Dubai Islamic Bank (DIB) announced today that it has been named the Best Islamic Bank in the UAE for 2010 by Global Finance magazine. Marking the third consecutive year that DIB has received this international award, this latest accolade underscores DIB leadership position in the UAE growing Islamic finance sector.

    This award caps a string of industry accolades for DIB so far in 2010, following the 34 awards won by the bank in 2008 and 24 accolades in 2009.

    Global Finance magazines annual award winners are selected by a jury of the magazines editors, following extensive consultations with bankers, corporate finance executives and analysts across the world. Additional criteria include growth in assets, profitability and product innovation, as well as opinions of equity analysts, banking consultants and other industry participants.

    We are delighted to have been named Best Islamic Bank in the UAE for the third consecutive year by Global Finance, said Abdulla Al Hamli, Chief Executive Officer, Dubai Islamic Bank. Backed by a 35-year track record of success and committed to product innovation and service excellence, Dubai Islamic Bank continues to set new benchmarks in the UAE and the world at large.

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    Al Hamli continued: At a time when the global economy is entering a period of recovery, we will maintain our focus on meeting the needs of our more than 900,000 customers across the UAE. We are grateful to Global Finance for recognizing our sustained efforts in that regard.

    DIB continues to be recognized by its peers for the excellence of its operations and innovative nature of its Shariah-compliant products and services. Most recently, the bank was named Best Islamic Bank in the UAE by Asiamoney, Best Islamic Bank in the UAE for the fifth consecutive year by Islamic Finance News, as well as Best Investment Bank by emeafinance.

    Global Finance is a monthly magazine with a mission to help corporate leaders, bankers and investors chart the course of global business and finance. Headquartered in New York, the magazine offers analysis, articles and awards that are the heritage of 22 years of experience in international financial markets and provides a valuable source of data on 192 countries. Sharjah Islamic Bank appoints new Head for Corporate Banking Group Tuesday, May 04, 2010 Sharjah: Sharjah Islamic Bank (SIB) has announced the appointment of Mr Rahma Mohammed Al Shamsi as Head of the bank's Corporate Banking Group. In his new position, Al Shamsi will oversee all the corporate banking services and products, and develop these services in compliance with Shariah principles, and the standards adopted by the bank.

    The new appointment comes in line with SIB drive for Emiratisation as strategy outlined by the Board of Directors. SIB also contributes to community development by providing training to UAE nationals, enabling them to obtain the necessary qualifications and skills for the industry, and to become leaders, in line with the community partnership principle, and with SIB belief that the private sector has a significant role to play in developing a specialized national workforce and enabling them to compete in the job market.

    Speaking on the occasion, Mr Al Shamsi, said, "The responsibility of the Corporate Banking Group is to take the initiative in rendering innovative corporate banking products and services to a broader base of corporate clients, and introducing Shariah-compliant innovative business solutions that are tailor-made to fit particular company requirements".

    Mr Al Shamsi brings with him a wealth of financial and banking experience that make him suitable for this senior position and for managing SIB Corporate Banking Group.

    Since joining SIB in 2004, Mr Al Shamsi held various senior positions throughout the bank, in the Strategic Planning Division, and the Investment and Banking Relations

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    Division, before being promoted to the position of Deputy Head of the Credit Group, the position he held prior to his appointment to SIB Corporate Banking Group.

    About Sharjah Islamic Bank Sharjah Islamic Bank, formerly known as National Bank of Sharjah, was founded by an Amiri decree issued by H.H. Dr. Sultan Bin Mohammed Al Qassimi, Member of the Supreme Council, and Ruler of Sharjah, to provide commercial banking services to firms and individuals. Originally a conventional bank, Sharjah Islamic Bank became the first in the world to convert successfully to Islamic banking in 2002. Since then, all operating systems and procedures have been modified to facilitate this conversion and all employees trained in Islamic banking. Dubai Islamic Bank celebrates 35th anniversary 1,300 bank staff attend one-day event led by H.E. Mohammed Ibrahim Al Shaibani, Chairman of DIB, and DIB CEO Abdulla Al Hamli Performance Excellence Awards presented to outstanding employees and business departments Tuesday, May 04, 2010 Dubai: The world first Islamic bank and the largest Shariah-compliant financial institution in the UAE, Dubai Islamic Bank (DIB) recently celebrated the 35th anniversary of its establishment at a special one-day event, which was attended by more than 1,300 bank staff from across the country.

    The event, which was held in Dubai, was led by His Excellency Mohammed Ibrahim Al Shaibani, Director-General of His Highness the Ruler's Court of Dubai and Chairman of Dubai Islamic Bank, and Abdulla Al Hamli, the Bank Chief Executive Officer. The highlight of the evening was the awarding of Performance Excellence Awards to outstanding employees and departments of the bank.

    Introducing the awards, His Excellency Mr. Al Shaibani told the audience of DIB staff: "It is a joy to be here among my colleagues and friends. Our gathering reflects the strong relationship our employees have with this great organization, as well as our shared determination to reach new heights."

    "Our sustained success, despite challenging global conditions that have impacted the performance of financial services firms worldwide, is testament to the focus and dedication of DIB employees in providing innovative products and services that meet the needs of our more than 900,000 customers here in the UAE and many more across the world," Mr. Al Hamli added.

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    "Three and a half decades after the bank was founded," he said, "we remain uniquely positioned to thrive, and to continue to contribute to the economic growth and diversification of the UAE and all the markets that we serve."

    The Dubai Islamic Bank Performance Excellence Awards was launched in 2002, creating a platform for internal development among DIB staff in order to provide the highest standards of service and customer satisfaction. The award focuses on rewarding outstanding achievements of employees and departments which encourage them to improve their performance in order to contribute to the success and growth of the bank.

    About Dubai Islamic Bank

    Dubai Islamic Bank (DIB), established in 1975, is the first Islamic bank to have incorporated the principles of Islam in all its practices and is the largest Islamic bank in the UAE. DIB is a public joint stock company, and its shares are listed on the Dubai Financial Market. The bank enjoys a reputation as a leader and innovator in maintaining the quality, flexibility and accessibility of its products and services. The bank currently operates 63 branches in the UAE.

    DIB has been proactive in creating partnerships and alliances at both the local and international level. The bank has established DIB Pakistan Limited, a wholly owned subsidiary which has a network of 37 branches across 15 major cities in Pakistan. DIB also has a representative office in Turkey to enhance its access to that market. DIB has also received a preliminary banking license by the Central Bank of Jordan to operate as an Islamic financial institution through a new entity - Jordan Dubai Islamic Bank.

    DIB has won the respect of its peers around the world for many years, and its leading position has been reaffirmed by the 34 awards that it won in 2008 and 24 accolades in 2009, across diversified areas, including retail, corporate and investment banking. The bank was recently named "Best Islamic Bank" for the fourth consecutive year by Banker Middle East magazine. DIB has also received many awards from international organizations, such as the prestigious "Bank of the Year" award from The Banker (Financial Times), along with prestigious accolades from UK-based Euromoney and NY-based Global Finance magazines.

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    Bahrain bank eyes Muamalat

    Wednesday, May 05, 2010

    MANAMA: Bahraini Islamic lender Al Baraka expects to buy a stake in Bank Muamalat Malaysia Bhd by the year-end, its chief executive said yesterday, as it seeks growth outside of its home market.

    "There is a correspondence between us and them. We have stated our intention," Adnan Yousif said on the sidelines of a conference here, adding that he expected a deal to close this year.

    Conglomerate DRB-HICOM Bhd holds a 70 per cent stake in Bank Muamalat, while state investment agency Khazanah Nasional Bhd owns the rest.

    Al Baraka interest in the Malaysian lender comes as Gulf Islamic banks seek new growth areas to diversify earnings as their domestic markets mature.

    Al Baraka has already said that it is planning to spend US$30 million to US$50 million (RM96 million to RM160 million) to buy a bank in Indonesia. Yousif also said that Al Baraka planned to grow its assets to about US$21 billion (RM67 billion) from about US$14 billion (RM45 billion) currently over the next three years. The bank also plans to open a representative office in Libya this year, having obtained initial approval from that country's central bank, he said. Business Times Dubai Group may not sell Bank Islam stake - Report

    Wednesday, May 05, 2010

    KUALA LUMPUR: Dubai Group may not be keen to sell its stake in Malaysia No. 2 Shariah lender Bank Islam, the Business Times reported on Wednesday, citing a source. "They may not sell after all because they see value in the bank," the source was quoted as saying in a Business Times report.

    Dubai Group, an investment vehicle owned by the ruler of Dubai, said last month that its plan to sell Bank Islam was unlikely to be completed by June. The sale was to help the Middle Eastern investor shift its focus closer to home and settle its debt burden.

    Dubai Financial Group, a unit of Dubai Group, holds a 40 percent stake in the Malaysian lender, according to Bank Islam's website.

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    Both Dubai Group and Bank Islam were not immediately available for comment.

    The Business Times report said Dubai Group had initially hired investment bankers Rothschild to find potential buyers.

    Bahrain's Unicorn Investment Bank has said it was mulling buying Dubai Group's stake in Bank Islam.

    Several Islamic bankers have said the Islamic subsidiary of Malaysia's largest lender Maybank (MBBM.KL) was also keen to take up a stake in Bank Islam. Malaysian Islamic banking group BIMB Holdings Bhd (BIMB.KL) owns 51 percent of Bank Islam, with Lembaga Tabung Haji, or the Malaysian Pilgrims fund, holding the remaining 9 percent.

    Reuters Dubai Islamic Bank Q1 net plunges 46 per cent Wednesday, May 05, 2010 Dubai: Dubai Islamic Bank (DIB), a leading Islamic bank in the region, said its net profit for the first quarter plunged 46 per cent to Dh200 million ($54.4 million) when compared to Dh370.3 million last year. Announcing the results on Wednesday, DIB said its total assets as on March 31, 2010, stood at Dh85 billion compared to Dh84.3 billion at the end of 2009. The customer deposits stood at Dh64.7 billion compared to Dh64.2 billion as of December 31, 2009. The bank reported a healthy financing-to-deposit ratio of 79 per cent, providing a clear indication of the banks healthy liquidity position. The bank also reported a robust Basel II capital adequacy ratio of 17.9 per cent, as of the same date. Commenting on the results, Mohammed Ibrahim Al Shaibani, director-general of The Rulers Court of Dubai and chairman of DIB, said the financial performance during the first three months was impacted by the banks ongoing policy of prudent provisioning, as well as lower contribution levels from group companies during the period. Thirty-five years after the bank was founded, DIB continues to provide innovative products and customized services that help sustain public and private-sector organizations, and facilitate personal growth opportunities for its more than 900,000 customers in the UAE alone, he remarked.

    In line with its long-term domestic retail expansion strategy, Dubai Islamic Bank continues to focus on the opening of strategically located branches and express banking centers, while also increasing its total customer base, he added.

    Trade Arabia News Service

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    SUKUK (ISLAMIC BONDS) RPT-Malaysia's Kencana plans 250 million Rgt Sukuk Friday, April 30, 2010 Malaysia's Kencana Petroleum says to sell up to 250 million Rgt Sukuk

    The Sukuk will be guaranteed by Danajamin Nasional Berhad, Kencana said in a stock exchange filing.

    AmInvestment Bank Berhad has been appointed as the principal adviser and lead arranger for the proposed Sukuk.

    The purpose of the Sukuk is to mainly finance/refinance the Kencana Petroleum Groups acquisition of offshore support vessels. The Sukuk issuance is still subject to relevant documentations and approval by the Securities Commission, it said.

    Reuters India Nakheel May Pay Bonds May 13 without Formal Debt Agreement Sunday, May 02, 201 Nakheel PJSC may pay about 3.6 billion Dirhams ($980 million) of Islamic bonds due May 13 even if its parent Dubai World doesnt reach a formal debt-restructuring agreement, a government spokeswoman said.

    A formal agreement with creditors isnt needed to repay the bonds, said the spokeswoman for Dubais Department of Finance yesterday. Dubai World in March said Nakheel local-currency and dollar-denominated Sukuk will be paid on time assuming sufficient support for the restructuring plan from banks.

    Repayment of the Nakheel 2010 Sukuk would be an important step towards restoring investor confidence in Gulf credit, said Chavan Bhogaita, head of credit research at National Bank of Abu Dhabi PJSC, the United Arab Emirates second-biggest bank by assets. Despite the fact that theres still some way to go in terms of the broader Dubai World restructuring, the market is expecting the Nakheel 10s to be repaid.

    Nakheel floating-rate Sukuk closed at 97.33 Fils to the Dirham on April 30, according to data compiled by Bloomberg. They have climbed 47 percent since Dubai World on March 25 proposed to renegotiate terms of its debt.

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    Dubai World, one of the Emirates three main state-owned holding companies, and Nakheel are seeking to renegotiate about $24.8 billion of liabilities after the global credit crisis hurt Dubais property market and left the emirates companies unable to get loans. Nakheel has a total $1.73 billion of Islamic bonds maturing this month and in January 2011.

    Interest Rates

    Dubai World asked its almost 100 creditors on March 25 to roll over liabilities into two new loans of five and eight years maturities. The company offered to pay creditors an additional 1 percent interest upon the maturity of rolled-over loans that are part of a $14.2 billion debt restructuring, a banker familiar with the plan said last week.

    Dubai Worlds creditors will be paid interest below the market rate in cash, although that will be supplemented by so- called payment-in-kind interest, a person close to the Dubai government said March 29. Nakheel, which owes $10.5 billion to suppliers, contractors and banks, plans to pay market-linked interest rates, according to the restructuring proposal.

    Banks are asking for different rates on dirham and dollar loans rather than the uniform 1 percent, the banker said last week. The 1 percent rate would be on top of the 1 percent offered over the life of the loan.

    The spokeswoman for Dubais Department of Finance declined to be identified, citing government policy. Bloomberg Al Rajhi turns to untapped Sukuk Monday, May 03, 2010 After a fivefold increase during a run from 2000 to 2006, the Saudi stock market lost two-thirds of its value in downturns in 2006 and 2008. It is little surprise, then, that falling trading volumes ha