In this issue Europe the next hotbed for Islamic ﬁ nance?Sept... · New Islamic index PAKISTAN:...

Vol. 5, Issue 35 5th September 2008

T h e W o r l d ’ s G l o b a l I s l a m i c F i n a n c e N e w s P r o v i d e r

The international advance of Islamic fi nance must include Europe, but unlike the UK, the authorities on the Continent have largely left it to the private sector to set the pace. However, the double digit growth rates of Islamic fi nance elsewhere in the world — to which several western banks are already contributing — have prompted several European governments to move towards creating a climate that is more amenable to this alternative fi nancial model.

It has reached a stage where, while recognizing London’s ambition to be a global leader in Islamic fi nance, other capitals such as Paris and Rome don’t wish to be too far behind. An added spur is the huge liquidity overhang in the Gulf due to the high petroleum prices for which Shariah compliant investments are the channel of choice. This situation has led to European states promoting their acceptance of Islamic fi nance.

Europe’s acceptance of Islamic fi nance is a natural follow-through to the emergence of a sizeable Muslim middle and upper classes, but the players are eyeing the overall population as a cycle of fi nancial and credit crises pushes consumers to seek ethical fi nancial services. Ironically, a French legislative panel found that stronger commitment was needed from professionals for the development of Islamic fi nance to become more than just a “nice to have” option.

Not to be left out, Italy touts itself as a viable market for a wide array of Islamic fi nance products, with detailed market studies becoming available to industry players. Questions have been raised on the compatibility of Islamic activities with the

current Italian banking regulatory system but it is felt that this can be largely abated through approvals by the EU. The country is banking on its close trade links with many southern Mediterranean countries as well as the GCC to draw Islamic funds.

Much activity is taking place to promote Islamic fi nance in Italy. Our country reports this week are on France and Italy. One noted that Italy, “with its century-old network of cooperative banks, small territorial fi nancial institutions and the strongest movement of ethical fi nance in the whole EU,” is a natural candidate for Islamic fi nance in Europe.

This week’s sector report analyzes the im-pact of the credit crunch on Islamic secu-ritization, a particularly relevant topic as some concerns have been raised over pos-sible spillover effects from the conventional fi nance system.

An interesting IFN Report is on Bank Islam Malaysia seeking strategic partners to buy into it and help it expand beyond the national border. It is portraying itself as a viable vehicle for those wishing to enter the Southeast Asian market, having posted a 30.3% increase in gross profi t in its just-ended fi nancial year and with group gross profi t swelling by almost 50%. It also boasts of strong branding, leading market position and the increasing popularity of Islamic banking in the region.

Another IFN Report relates how Munich Re Retakaful is counting on innovation in developing Shariah compliant products to stay ahead of the competition. It is also seeking to work with other industry players for facultative business.

Europe the next hotbed for Islamic fi nance?

In this issue

Islamic Finance News ................................ 1

Takaful News ............................................11

Ratings News ...........................................12

IFN Reports ...............................................13

Islamic Finance Services In Italy — an Update ........................................................15

More Than Just a Hope for France ......... 17

Frequently Asked Questions: Notable Trends in Islamic Finance in France ......19

The Impact of the Credit Crunch on Islamic Securitization ..............................21

Munich Re Retakaful Focuses onInnovation ..................................................23

Islamic Finance Forum ............................24

Meet the Head ..........................................25Mohamad Salihuddin Ahmad, CEO, Prudential BSN Takaful (PruBSN)

Termsheet ..................................................26Emirates Islamic Bank’s Global Logistix RIA Fund

Moves .........................................................27

Deal Tracker ..............................................28

Islamic Funds Tables ................................29

S&P Shariah Indexes ...............................30

Dow Jones Shariah Indexes ....................31

Islamic League Tables .............................32

Events Diary...............................................35

Country Index ............................................36

Company Index .........................................36

Subscriptions Form ..................................36

www.islamicfi nancenews.comNEWS

© 5th September 2008

AFRICAThe next hub of Shariah compliant banking?KENYA: It has been reported that the Kenyan Islamic community is planning to turn the country into the hub of Islamic banking in the region once a legislative framework is put in place.

The community has already begun talks with the Central Bank of Kenya and other stakeholders on the basics of Islamic fi nance and its implementation in the African nation, said the report. The discussions aim to establish a Shariah supervisory and audit board to oversee the growth of Islamic banking in the country, the report added.

ASIARHB’s moves to become a top threeMALAYSIA: The RHB banking group, which has an Islamic bank, aims to be among the top three fi nancial institutions in Asean by 2020, said managing director Michael Joseph Barrett. One of its moves in this direction has been to upgrade its technology infrastructure with the IBM System z10.

The group is upgrading its data center to centralize the banking business system in the region to a one-stop center in Malaysia, he added, with the z10 having a key role in this. It will also support the critical processing capacity for RHB clients in Malaysia, Singapore, Brunei and Thailand.

RHB is paying RM50 million (US$15 million) for the system, Barrett said, and it is currently in the testing stage. IBM Malaysia managing director Ou Shian Waei said RHB is the fi rst local bank to use the system.

Sitara Peroxide’s Sukuk closes successfullyPAKISTAN: The diminishing Sukuk Musharakah issuance worth PKR1.4 billion (US$18.4 million) by Sitara Peroxide has been closed successfully. It received overwhelming response from banks and fi nancial institutions and was oversubscribed. United Bank, Bank Alfalah and AMZ Securities were the mandated lead advisors and arrangers for the issuance.

Sitara Peroxide is the only producer of hydrogen peroxide in Pakistan and is a unit under Sitara Group of Industries, a well-known company in the country’s chemical and textile industry.

Still the largest Sukukmarket globallyMALAYSIA: There was a 13.8% increase in gross funds raised in the capital markets in the fi rst half of 2008, to RM64.8 billion (US$19 billion), while net funds went up to RM40.2 billion (US$12 billion), according

to the fi nance ministry. The issuance of government securities grew by 4.3% to RM26.8 billion (US$8 billion), with most of the funds raised used to fi nance development projects. The private sector raised RM33.7 billion (US$10 billion) from the private debt securities (PDS) market.Islamic bond issuance remained healthy, with Islamic medium-term notes and bonds comprising 34% of total PDS issued. Malaysia remains the largest Sukuk market globally, with RM223.08 billion (US$65 billion) or 62.6% of outstanding Sukuk issuance worldwide as at end of June.

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ASIA (continued)

BIBD launches redesigned credit cardBRUNEI: Bank Islam Brunei Darussalam (BIBD) launched its redesigned BIBD MasterCard Gold and Classic Card. Besides sporting a new look, the Shariah compliant card offers benefi ts such as special privileges, discounts from merchants, 24-hour customer service and reward points.

Malaysian IFIs need toventure outMALAYSIA: Malaysian Islamic fi nancial institutions (IFIs) have been strongly advised to set up offi ces internationally, especially in the Gulf Cooperation Council (GCC) countries. The executive director of Islamic fi nance at the Dubai International Financial Center (DIFC), Nik Norishky Thani, told them of the US$600 million worth of infrastructure projects fi nancing expected in the region over the next few years.

He noted that Malaysia is always mentioned as the country with cutting-edge approach towards Islamic fi nance; hence Malaysian talent is much sought after. In urging that the brain drain be reversed, he suggested that the Malaysia International Islamic Financial Center (MIFC) is the perfect platform to compete internationally.

However, Nik Norishky felt that Malaysian IFIs need to have a strong presence and branding in order to venture into the GCC, which is why they need to think outside the box as to compete with big institutions such as Barclays, HSBC, JPMorgan and UBS.

Bank Islam looks for M&AMALAYSIA: Bank Islam posted a 30.3% higher pre-tax and zakat profi t of RM308.3 million (US$90 million) for the fi nancial year ended the 30th June 2008 from RM236.7 million (US$69 million) the year before. Managing director Zukri Samat said this was achieved due to a 14% increase in income to RM1.15 billion (US$335 million) from RM1.01 billion (US$294 million) previously. Its net fi nancing went up by 7% to RM9.06 billion (US$2.6 billion) from RM8.47 billion (US$2.5 billion), while customer deposits grew by 18% to RM20.76 billion (US$6 billion) from RM17.61 billion (US$5 billion).

The bank is looking into merger and acquisition (M&A) opportunities domestically

as well as in Indonesia, said Zukri. He added that Bank Islam is looking for the right partner, and has held talks with several parties but there are no concrete results yet.

On a regional level, the bank is interested in setting foot in Indonesia, with Zukri saying Bank Islam could either take a strategic stake in or buy an Islamic lender in Indonesia. He described the country as an obvious choice as Malaysia is familiar with Indonesia, and the majority of its population is Muslim. Opportunities in Thailand and Singapore will be explored later, he noted.

(Also see IFN Report on Page 14)

OCBC targets 20% growthMALAYSIA: OCBC Malaysia aims to grow its Islamic banking business by 20% a year as it moves to introduce more Shariah compliant products, and as more Malaysians switch from conventional banking, said CEO Jeffrey Chew. He estimated that 60% to 70% of its Islamic banking clients are non-Muslims.

OCBC is targeting to open its fi rst Islamic banking branch by December. Currently, it offers Shariah compliant services through separate windows at its bank branches.

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ASIA (continued)

Moody’s: Asian market to remain cautiousHONG KONG: Moody’s Investors Service is cautious on the prospects for the structured fi nance markets in Asia ex-Japan in the second half of 2008, with moderate growth having been recorded in the fi rst half of 2008. In its 2008 First Half Review and Second Half Outlook, Moody’s said the market for Asian structured fi nance is likely to remain cautious in the second part of the year, as originators continue to wait for better market conditions.

“Most activity will likely take place in Korea and India, and in addition to the traditional residential mortgage-backed security (RMBS), auto loan and credit card receivables backed transactions, new asset classes may emerge in Korea, while interest in covered bonds has also been growing,” said Dominique Gribot-Carroz, Moody’s business development executive.

“If market conditions improve in the sec-ond half of 2008, we may see small- and medium-sized enterprise loan securitizations in China, a RMBS transaction in Indonesia, as well as the resumption of real estate

securitizations in Singapore. In the regional derivatives market, we expect new balance sheet transactions with signifi cant Asian exposure,” the report said.

New Islamic indexPAKISTAN: The Karachi Stock Exchange (KSE) and Al Meezan Investment Management (AMIM) have launched the nation’s fi rst co-branded Islamic index, KSE-Meezan Index (KMI). AMIM provides its Shariah expertise, guidelines skills and stocks screening while KSE provides maintenance and dissemination support.

The KMI comprises 30 companies which meet the KMI Shariah screening criteria and are weighted by fl oat adjusted market capitalization, subject to a 12% cap on weights of individual securities. There will be periodic balancing and adjustments to ensure Shariah compliance and benchmark stability. The index will also provide investors with a suitable benchmark for comparing the returns on their Shariah compliant equity investments.

(Also see IFN Reports on page 13)

Call for Islamic banking INDIA: A delegation of bankers has called on the country’s fi nance minister, P Chidambaram to look into the Islamic banking system. The country is in need of over US$400 billion to fi nance infrastructure projects and Islamic banking is the best option as its fi nancial products are without interest payment, said K Rahman Khan, deputy chairman of Rajya Sabha, the upper house of the Parliament of India.

The government has been looking at using pension funds and foreign exchange re-serves, among others, to fi nance infrastruc-ture projects. Islamic banking is participatory banking, Rahman said, clarifying that it is not meant only for Muslims.

Pointing to the UK as an example, he said that although the Muslim population there is not huge, Islamic banking sees billions of dollars worth of transactions. Rahman added that the interest-free model would also pro-vide fi nancial alternatives to Indian Muslims, 70% to 75% of whom do not deposit money in banks because of religious beliefs.

India’s Muslim population of more than 150 million makes it the world’s second largest, after Indonesia.

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ASIA (continued)

Non-ringgit Sukuk nowtax-exemptMALAYSIA: Earnings from non-ringgit Sukuk deals outside the country will be exempted from taxes for three years from this year, the fi nance ministry said. This is applicable to fees and profi ts on arranging, underwriting, distributing and trading the Islamic bonds.

Bursa Malaysia CEO Yusli Mohamed Yusoff saw the move as taking the Malaysian Sukuk market into international space and reinforcing the country’s position as the world’s largest Sukuk issuance center. Kuwait Finance House Malaysia managing director Salman Younis called the tax exemption a boost to the local Sukuk market.

OCBC Bank described this as being in line with the Malaysian Islamic fi nance sector’s next phase of growth focusing on developing the non-ringgit Sukuk market. The bank, how-ever, felt that other critical measures for this development also need to be taken, such as

developing a regional clearing and settle-ment system, a vibrant secondary market by virtue of price transparency and promoting regional credit rating agencies.

Islamic fi nancing for agri-culture sectorPAKISTAN: The State Bank of Pakistan (SBP) has prepared draft guidelines on Islamic fi -nance for the agriculture industry.

This is to facilitate involvement in agriculture fi nancing by Islamic banks as well as conventional banks with Islamic banking licenses. The central bank said they can develop specialized Islamic fi nancing products to meet the needs of the farming community.

The guidelines broadly cover Islamic modes of fi nancing such as Murabahah, Ijarah, Salam, Musharakah and Mudarabah that can be used to fi nance farm and non-farm sector activities including livestock, fi sheries, poultry and orchards. The bank said the guidelines also cover Islamic fi nancing

for production purposes such as working capital and term fi nance for purchase. The guidelines will be fi nalized following stakeholders’ review and feedback, SBP noted.

Increased demand prompts bigger fundMALAYSIA: CIMB-Principal Asset Management has increased the size of its Islamic DALI Equity Theme Fund for the third time to two billion units due to overwhelming demand, said CEO Noripah Kamso. She said that the fund optimizes the country’s resilience in the uncertain global markets.

The fund is suitable for those willing to accept above-average to high-risk in their investments, Noripah added.

CIMB-Principal has also increased the fund size of its Money Market Fund to 150 million units. The fund is for those who wish to in-vest money temporarily while waiting for the next investment opportunity, Noripah said.

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ASIA (continued)

Banks arrange Amreli Steel’s SukukPAKISTAN: Faysal Bank and Meezan Bank have arranged an Islamic bond for Amreli Steel for PKR1 billion (US$13 million). Also participating in the consortium are Saudi Pak Leasing, Pakistan Kuwait Investment, Bank Alfalah, UBL Ameen, Habib Metropolitan Bank, Soneri Bank, Dawood Islamic, Askari Bank and CresBank.

The seven-year facility Sukuk is the fi rst for the steel sector in Pakistan and will provide innovative and diverse funding to support Amreli’s signifi cant growth plans.

Profi t increase forIslamic fi rmMALAYSIA: The net profi t of BIMB Holdings grew by 4.5 times to RM82.11 million (US$24 million) in its fourth quarter from the previous corresponding period. The company attributed the growth to lower provisions and improving income from its Islamic bank and Takaful businesses.

The parent company of Bank Islam and Takaful Malaysia said its full year net profi t amounted to RM231.45 million (US$67.4 million) on revenue of RM1.41 billion (US$411 million). Total assets went up by 22.9% to RM27.76 billion (US$8.1 billion), with return on assets at 1.57% and return on equity at 35.1%.

Using Sukuk Ijarah to bridge defi citPAKISTAN: The sovereign Sukuk planned by Pakistan will be Ijarah-structured, according to a statement by the State Bank of Pakistan (SBP). It will be used to help bridge a budget defi cit that has widened to a 10-year high.

The Islamic bond is scheduled to be issued by this week. The central bank did not provide any details on the sale.

Last month, the special secretary at Pakistan’s fi nance ministry, Ashfaque Hassan Khan, said that the Sukuk is expected to be less than the PKR20 billion (US$260 million) initially projected by several bankers. The transaction was to be handled by Standard Chartered Bank and Dubai Islamic Bank, he added.

Penetration into newmarkets abroadMALAYSIA: AmIslamic Bank is planning to tap into Indonesia’s Islamic retail market as well as expand into Australia, the Philippines and Vietnam. CEO Ahmad Zaini Othman felt that it is easier to go into markets outside the GCC and educate the markets where Islamic banking has yet to take root.

According to him, several Australian energy and resource companies are interested in selling Sukuk but he declined to elaborate.

In the Philippines, AmIslamic is looking at the Islamic retail and commercial business while in Vietnam, the focus is on the Shariah compliant property market.

AmIslamic, Malaysia’s third largest Islamic lender, is part of AMMB Holdings. Twenty percent of AMMB’s stake is held by the Australia and New Zealand Banking Group.

EUROPENo obstacles to conduct Islamic banking but…SWEDEN: There are no legal obstacles to conduct Islamic banking operations in Sweden, said the Swedish Financial Supervisory Authority, or Finansinspektionen (FI). However, each application for authorization to conduct banking operations

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LEADERSHIP



will be reviewed individually along with the products and services that the bank intends to offer, said FI.

The regulator added certain sections of other Swedish regulations but excluded banking and fi nancial legislation as it may lead to complications. FI gave the example of real estate fi nancing where an Islamic bank purchases a piece of property, only to sell it off later. This is not possible in Sweden as banks are not allowed to own real estate other than for their own use, FI added.

Amiri launches fi rst Islamic fundUK: Shariah compliant alternative investment management group Amiri Capital has launched the Amiri Equity Alternative Strategies (AEAS) fund, and is targeting US$1 billion in assets within the next three years from Middle Eastern and Asian investors.

Trading of the fund began on Wednesday, the 3rd September. It is the fi rst from Amiri, and is also the fi rst Islamic alternative investment product to offer a fund of fund managers long/short equity strategy.

The AEAS fund will be overseen by Coronation, a London-based multi-manager, which will employ 10 underlying managers by year-end to provide full diversifi cation across investment geographies and currencies. It has been certifi ed as Islamic by a fi ve-member Shariah supervisory committee chaired by Sheikh Hussain Hassan. Lehman Brothers is the fund’s principal prime brokers.

The fund is ideal for investors who believe that the equity markets are currently fairly priced but want protection from the volatility they are exhibiting.

MIDDLE EASTIslamic banks top the listGCC: According to research by SHUAA Capital, banks and fi nancial companies accounted for 42%, or 63 of the 150 listed companies in the GCC region.

It estimated the combined market capitalization of the banks and fi nancial companies at US$369 billion, or more than 40% of the total US$916 billion reported by the top 150. This year’s listing ranked the top 150 companies based on their market cap as at the 5th August.

Shariah compliant Al Rajhi Bank led the sectoral listing with more than US$32 billion, placing third in the overall ranking. The next highest was another Islamic fi nancial institution, Kuwait Finance House, with US$21.68 billion. Its overall ranking was No. 7.

Other banks rounding off the top 10 in this category were the National Bank of Kuwait (US$18.7 billion), SAMBA Financial Group (US$16.26 billion), Emirates NBD (US$16.23 billion), SABB (US$14.22 billion), Qatar National Bank (US$13.96 billion), Riyadh Bank (US$13.1 billion), Saudi French Bank (US$11.66 billion) and the National Bank of Abu Dhabi (US$10.72 billion).

Have you got the drive fora BMW?QATAR: In conjunction with Ramadan, Alfardan Automobiles, the exclusive importer for BMW, MINI and Rolls-Royce, has teamed up with Commercialbank on a special Islamic fi nancing program. Under the scheme available through the bank’s Al Safa Islamic banking division, customers who buy selected BMW models from Alfardan Automobiles will enjoy a 1.99% profi t rate, among other benefi ts.

This enables customers to purchase BMW vehicles and, at the same time, provides extra value and convenience through affordable repayments, longer repayment periods and fi nancing on insurance, said Naim Majdalani, Alfardan’s director of sales and marketing. It comes with a three-year unlimited mile-age warranty and a cost-free extended BMW service inclusive package valid for a minimum period of three years, or 60,000 km.

CBB’s Islamic securities proves successfulBAHRAIN: The monthly issue of the Central Bank of Bahrain’s (CBB) Sukuk Al Salam has been oversubscribed by 116.7%. A total subscription of BHD7 million (US$19 million) was received for the BHD6 million (US$16 million) issue of Islamic securities, the bank said.

The Sukuk carried a 91-day maturity, which will end on the 3rd December. It has an ex-pected return of 2.3%.

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MIDDLE EAST(continued)

DIB eyeing majority stake in Jordanian bank JORDAN: Dubai Islamic Bank (DIB) plans to acquire a majority 52% stake in the Industrial Development Bank of Jordan and convert it into a Shariah compliant institution. Should the deal be fi nalized, the bank will be renamed Jordan Dubai Islamic Bank.

The acquisition will take place through a joint venture with Dubai International Capital (DIC). The value of the deal, however, has not been revealed.

DIC has already joined forces with Amlak Finance to set up an Islamic mortgage fi rm in Jordan to penetrate the country’s mortgage industry, which is still in its infancy.

Clyde goes on Gulfrecruitment driveQATAR/UAE: Clyde & Co has launched a recruitment drive to attract local lawyers to its Abu Dhabi, Dubai and Doha offi ces. The law fi rm has started a two-year English-law training program for Arabic-speaking lawyers, and has recruited trainees from Lebanon, Saudi Arabia and the UAE.

The venture is part of a Gulf recruitment drive that has seen Clyde bring in 138 fee-earners, mostly from the Commonwealth countries, but the fi rm believes that it needs to set its sights closer to the region.

JV for Deloitte’s fi rmsUAE: Professional services group Deloitte announced that its UK and Middle East fi rms have formed a joint corporate fi nance venture, Deloitte Corporate Finance. The company will be registered and authorized by the Dubai Financial Services Authority (DFSA).

For a start, it will focus on Islamic fi nance advice, merger and acquisition (M&A) advisory and support services, valuation, business modeling, initial public offering advisory, and forensic and dispute services.

The joint venture will create the scale and breadth of fi nancial skills needed to provide a full range of M&A services to clients from within and outside the region, said John Connolly, the global chairman for Deloitte.

DFSA approves license for Jasper’s subsidiaryUAE: Jasper Capital’s fully-owned subsidiary, Jasper Corporate Finance, has been licensed by the Dubai Financial Services Authority (DFSA) to operate in the Dubai International Financial Center (DIFC).

The subsidiary will offer a full range of fi nan-cial and corporate fi nance advisory services from its new branch, focusing on regional transactions including debt and equity rais-ing, mergers and acquisitions, project fi -nance, underwriting and corporate strategy.

The DIFC branch will serve Jasper’s existing and new clients within the GCC, and will also act as a gateway for its international client base to access the Middle East markets. The new DFSA license will allow Jasper Corporate Finance to expand its presence in the region by building on its current relationships, strategic partnerships and long history in the region, and gives the company a strategic base and a globally-benchmarked regulatory framework to provide its clients with world-class services.

Jasper Corporate Finance will be headed by CEO Jason Peers, who has more than 20 years’ experience in investment banking, project fi nance and corporate advisory in the region.

ADIC plans international sale in fi ve yearsUAE: Abu Dhabi Investment Company (ADIC) plans to offer its shares to international investors within the next fi ve years with the aim of becoming a global fi rm and compete with banks such as Deutsche Bank and Citigroup. An initial public offering is expected to be completed by 2013, and ADIC hopes to see its shares listed on a foreign stock exchange.

An international listing will give ADIC a check mark for corporate transparency, said CEO Nazem Al Kudsi. This in turn will give the company more liquidity and make it easier to acquire stakes in foreign companies.

Amr Abol-Enein, a regional banking analyst at ING Bank in Dubai, said that an international listing will give ADIC more exposure to inter-national clients and the models they use, adding that this will force the investment arm to raise its sophistication level and quality of services.

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Refresher Day: Principles of IslamicFinance & Investment9 November, MANAMA

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QIB branches outQATAR: Qatar Islamic Bank (QIB) has opened a branch in Ras Laffan Industrial City. This latest addition marks the fi rst branch to be opened by a full-fl edged Islamic bank in the area.

QIB considers Ras Laffan’s industrial growth to be a key component in Qatar’s economic boom, which has resulted in growing demand for Islamic banking products and services. The bank continually seeks new locations for its branches so as to better serve clients and expand the market.

Ajman Bank to startoperations soonUAE: According to a recent report, Ajman Bank will start operations in the last quarter of this year. The Islamic lender plans to expand in Dubai, Abu Dhabi and Sharjah by the beginning of next year, the report quoted CEO Yousef Khalaf as saying.

The bank is the fi rst Islamic bank to be incor-porated in the emirate of Ajman.

al khaliji on track to begin UAE operationsQATAR: al khaliji has acquired the UAE-based assets of France’s BLC Bank in a move to expand operations outside its domestic market.

The acquisition would enable al khaliji to expand to Abu Dhabi, Dubai, Sharjah and Ras Al Khaimah, where BLC has a branch in each of those emirates. The transaction is expected to be completed by December, said Robin McCall, managing executive of al khaliji.

Although Qatar’s newest bank declined to reveal the price of the acquisition, market sources said it paid more than US$300 million. McCall said that the UAE operations will be conducted under the al khaliji name. He added that al khaliji plans to further develop its portfolio, and is considering more opportunities.

The bank is also growing domestically by opening six new branches in Qatar and a service center at its West Bay head offi ce. It plans to launch an Islamic fi nancing arm this year.

Dubai Bank sets up fi nancing programUAE: Dubai Bank plans to become a major global Islamic lender within the next fi ve years and has set up a US$5 billion fi nancing program for its expansion plans, said CEO Ahmed El Shall. The group is looking to expand in Asia and Africa through acquisition and organic growth, he added, and is currently in joint venture talks with certain countries. However, he declined to elaborate.

Commenting on the fi nancing program, Ahmed said that Dubai Bank is waiting for the right moment to tap into the debt markets, and is looking into Sukuk and syndicated loans as its options.

Dubai Banking Group, a unit of Dubai Hold-ing, has a 40% stake in Malaysia’s Bank Islam and a 40% stake in ACR ReTakaful Holdings. Dubai Bank was set up in 2002 and was converted into an Islamic bank at the beginning of 2007.

BLOM Bank Egypt toincrease capitalEGYPT: BLOM Bank Egypt has received preliminary approval from the country’s Capital Market Authority (CMA) to raise its capital from EGP500 million (US$93 million) to EGP750 million (US$139 million), revealed the stock exchange. It added that the bank would offer 25 million new shares to existing shareholders at a par value of EGP10 (US$1.86) each. The bank currently has 50 million shares.

BLOM Bank Egypt is a subsidiary of Lebanon’s BLOM Bank. The parent company owns 99.36% of the Egyptian subsidiary, following the acquisition and renaming of Misr Romanian Bank.

ADCB launches Islamic banking divisionUAE: Abu Dhabi Commercial Bank (ADCB) has launched ADCB Meethaq, an Islamic banking division offering Shariah compliant products and services. Eirvin Knox, CEO of ADCB, said a comprehensive range of products has been developed to meet the needs of all types of customers.

Deputy CEO Ala’a Eraiqat explained that the bank’s proposition rests on three principles: Shariah compliance, fl exibility of choice and maximum convenience. Customers

can select the combination of products that works for them and access those services from any ADCB branch or via the Internet, SMS or contact center.

DIB hires NorkomUAE: Dubai Islamic Bank (DIB) has chosen Norkom Technologies’ integrated anti-money laundering and compliance solution for its operations in the UAE and Pakistan. The software will allow DIB to monitor and analyze transactions and customer interactions across its entire customer base in order to identify and investigate suspicious and criminal behavior.

Norkom, the fi nancial crime and compliance solutions provider, was chosen based on its proven technological and international capability, excellent insight and approach to cultivating close customer relationships, said DIB’s head of group compliance, Waheed Rathore.

GIH launches education fi nancing programKUWAIT: Global Investment House (GIH) has launched the fi rst education fi nancing program in Kuwait as well as the GCC in collaboration with Al Ahli Bank, for Al Rayan Holding.

Al Rayan is a Shariah compliant education-specifi c holding company that focuses on acquiring educational institutions.

The aim of the educational fi nancing program is to help parents cover their children’s tuition fees in convenient installments, giving them the opportunity to enrol their children in Kuwait’s leading schools, said Shailesh Dash, GIH’s senior vice president.

NRE Sukuk in the offi ngKUWAIT: National Real Estate (NRE) plans to issue Sukuk to fi nance its expansion plans during the fourth quarter of this year or the fi rst quarter of 2009, said CEO Khaleel Al-Abdullah.

NRE also hopes to expand into Syria, Djibouti, Algeria and South Africa within the next four years, he said, adding that in Kuwait, big investment opportunities do not exist. It currently invests in real estate projects in the UAE, Egypt, Libya, Jordan, Lebanon, Iraq and Pakistan.

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DIFC enacts arbitration lawUAE: Dubai enacted an arbitration law on Monday, which seeks to enable the recently established Dubai International Financial Center-London Court of International Arbitration (DIFC-LCIA) Center to provide neutral, effi cient and reliable dispute resolution services to companies throughout the world, and to position DIFC as a world-class center for arbitration.

The law was drafted by an industry focus group, led by the DIFC Authority, followed by a period of consultation during which the public were invited to give their comments on the legislation.

It covers all stages of the arbitral process, from the arbitration agreement to the recognition and enforcement, and is universally applicable and compatible with both civil and common law systems. The law offers a comprehensive and modern set of rules enabling effective settlement of arbitration cases.

Omar Sulaiman, governor of DIFC, said that by offering arbitration, the DIFC is affi rming its commitment to creating a legal and regulatory environment of the highest standard that is above the requirements of leading fi nancial institutions.

Sukuk market slumps after AAOIFI decreeUAE: HSBC Holdings index data shows that sales of Shariah compliant debt fell 50% this year and prices dropped an average 1.51%. The Sukuk market, which has doubled each year since 2004 and grown to over US$90 billion, has declined since the Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI) decree in February this year that most of the bonds do not comply with Shariah rules.

Bahrain-based AAOIFI’s Islamic scholars had ruled then that bonds do not meet religious requirements if they have not transferred ownership of collateral to holders. The board estimated that 85% of Sukuk failed this test.

Under the new rules, a Sukuk issuer passes ownership of an underlying asset, such as a building, to the investor for the bond’s dura-tion. Should the asset price rise or fall, the change will be refl ected in the bond’s value.

“The Sukuk market is clouded by considerable uncertainty and nervousness,” said Chavan Bhogaita, head of credit research at HSBC’s Middle East unit. “Spreads have been widening, Sukuk have been underperforming conventional bonds and investors have been shying away.”

ABG’s income surges by 81% in fi rst halfBAHRAIN: Albaraka Banking Group’s (ABG) net operating income in the fi rst half of 2008 increased by 81% to US$175 million, compared to US$96.6 million for the previous corresponding period.

The surge is the result of signifi cant increases in the income from Islamic fi nance and investment operations. Customer deposits, other accounts and unrestricted investment accounts registered a noticeable increase of 32% to reach US$9.1 billion in total as at end-June 2008. As a result of this improvement, net income increased by 62% to US$108 million in the fi rst half of 2008, vis-à-vis US$67 million for the previous corresponding period.

Dar Al Arkan considers issuing SukukSAUDI ARABIA: The board of Dar Al Arkan Real Estate Development has proposed asking shareholders to approve a plan to issue local or international Sukuk, but gave no fi nancial details. The Saudi Arabian developer sold US$1 billion worth of fi ve-year Islamic bonds last year.

The board also proposed to issue one-for-three bonus shares to existing stockholders. The issue of 180 million shares worth SAR1.8 billion (US$480 million) would raise Dar Al Arkan’s capital by 33.3% to SAR7.2 billion (US$2 billion), the company said.

BBK to launch Islamic bankBAHRAIN: BBK, formerly known as Bank of Bahrain and Kuwait, is in the process of launching its own Islamic bank. CEO Abdul Karim Ahmad Bucheery said the formation of Al Khaleej Islamic Bank is part of its major growth strategy that also includes expanding overseas and moving into equity investment.

The bank already set up a branch in Kuwait and an offi ce in Dubai, in addition to offi ces in Mumbai and Hyderabad in India. It is looking into strengthening its footing in that

country and start operation in Chennai, Pune and Kochi, said Abdulkarim.

According to him, BBK has set up Naseej Holding as part of its move to actively participate in direct equity investment, and will take equity stakes in companies, especially in real estate. BBK is also working with the social affairs ministry to set up Al Osra, a family bank that will provide funding for very small companies.

Thirty-two percent of BBK is owned by the Social Insurance Organization, with the remaining stakes held by Ithmaar Bank (26%), Global Investment House (19%), Bahraini individuals (17%) and Kuwaiti interests (6%).

www.islamicfi nancenews.com


ASIATakaful assets see a growth of 25%MALAYSIA: The fi nance ministry said Takaful assets grew by 25.1% to RM9.6 billion (US$2.8 billion) as at the 30th June and accounted for 6.9% of the total assets of the insurance industry. The industry grew by 23% in the fi rst half of this year in terms of combined Takaful contribution income, to RM1.4 billion (US$408 million) against RM1.1 billion (US$320 million) in the same period of last year.

New business contributions in the family Takaful sector increased by 98.1% to RM1 billion (US$292 million) due to new product launches earlier this year and high growth in endowment products recorded by new Takaful operators. The general Takaful contribution, however, fell by 6.7% on account of the 34.2% decline in fi re insurance to RM97.6 million (US$28.5 million) and 46% drop in marine, aviation and transport insurance to RM13.8 million (US$4 million).

The ministry said total assets of Islamic banking expanded by 12.6% to RM177 billion (US$52 billion) as at the 30th June, compared with RM157.2 billion (US$46 billion) reported at the end of 2007. Deposits increased 17% to RM142.7 billion (US$42 billion) while fi nancing went up by 8.5% to RM97.5 billion (US$28.5 billion). Lending concentrated on the household sector, which amounted to RM58.5 billion (US$17 billion) or 60% of the total outstanding loans.

Maybank calls off planson Panin tie-upMALAYSIA: In a statement to Bursa Malay-sia on the 3rd September, Malayan Bank-ing (Maybank) said it had canceled plans to collaborate with Indonesia’s Panin Life to venture into the Takaful and insurance market in the republic. The approval from the Indonesian ministry of fi nance for the partnership lapsed on the 4th August.

Earlier, Maybank had entered into a memo-randum of understanding with Panin to acquire a 60% stake in Anugrah Life Insur-ance.

In the statement, the bank said that both parties were unable to formalize the proposed partnership due to unavoidable circumstances. Maybank also said Panin and Anugrah had since been notifi ed that all arrangements relating to the acquisition were to be terminated.

Maybank has marked Indonesia as a key market in its expansion plans, but is facing tough challenges in its efforts to build up a presence there. Plans to acquire Bank Internasional Indonesia also stalled following Bank Negara Malaysia’s decision to revoke its approval.

MAS launches online travel insuranceMALAYSIA: Takaful operator Etiqa Insurance and Mondial Assistance, a global leader in travel assistance, have teamed up with Malaysia Airlines (MAS) to offer online travel insurance, MHinsure. The product is expected to rake in RM20 million (US$5.8 million) in gross premium for the fi nancial year ending June 2009, said Etiqa CEO Hugo Van Vledder.

The product covers medical expenses, cancellations, baggage losses, delays and other travel disruptions, said MAS executive director and CEO Tengku Azmil Zahruddin Raja Abdul Aziz.

MHinsure offers affordable premiums with the basic plan rate — RM20 (US$5.90) for Malaysian domestic travel, RM29 (US$8.50) for travel from Malaysia to Asian countries, RM40 (US$11.70) for travel to international destinations beyond Asia and RM50 (US$14.60) for international travel including to North America.

The travel insurance can be purchased through MAS’ website together with the fl ight tickets.

MIDDLE EASTFinding Solidarity in EgyptBAHRAIN: Solidarity Group is set to launch Solidarity Family Takaful Egypt, which has a subscribed capital of EGP60 million (US$11 million). The subsidiary will operate from Cairo and offer innovative family Takaful products and services in tandem with the country’s growing population and thriving economy. Operations should commence in the fourth quarter.

Sameer Al Wazzan, CEO of Solidarity Group, said the move into Egypt, and its recent announcement to penetrate the Saudi Arabian market, marked an important milestone in its expansion strategy. The group is also planning to enter the UAE market soon, and is working toward entering Pakistan and Indonesia, said deputy CEO Ashraf Bseisu.

Last week, Solidarity Group received preliminary approval from the Saudi Arabia Monetary Agency to set up its subsidiary in the kingdom, Solidarity Saudi Takaful.

StanChart, Alico in ban-cassurance partnershipBAHRAIN: Standard Chartered Bank (StanChart) and American Life Insurance (Alico) in Bahrain have entered into an arrangement to launch bancassurance products from the latter that will be available at StanChart branches.

The products to be issued relate to retirement plans, child education, wealth creation and savings that include investment options designed to assist customers in planning for specifi c lifetime events. The plans offer various options with both regular and single premium payment modes.

StanChart will soon offer a wider range of insurance and saving solutions, including variable universal life products, medical and personal accident products, group life, pensions and annuities.

Winner of Best Takaful Law Firm at the International Takaful Summit 2008



ASIAStable outlook for Sunway City’s ratingsMALAYSIA: The ratings on Sunway City’s RM500 million (US$146 million) Murabahah commercial papers/medium-term notes (CP/MTN) program and its RM250 million (US$73 million) CP/MTN program have been affi rmed at ‘A2/P2’ by RAM Ratings, carrying a stable outlook.

Sunway City is one of the few established property developers in Malaysia. Aided by its strong branding and commendable track record, the group has been able to position itself in the upper-middle to higher end of the property market. Besides property development, it is also involved in property investment, leisure and hospitality, as well as healthcare.

RAM reaffi rms KLK’sSukuk IjarahMALAYSIA: RAM Ratings has reaffi rmed the long-term and short-term ratings of Kuala Lumpur Kepong’s (KLK) RM500 million (US$146 million) Sukuk Ijarah commercial paper/medium-term notes program at ‘AA2’ and ‘P1’ respectively. The outlook on the long-term rating is stable.

The ratings are supported by its sturdy balance sheet, strong cash fl ow generating ability and solid liquidity profi le, said the agency. It added that, moving ahead, the fi rm’s performance will be supported by healthy demand for crude palm oil (CPO) from developing economies and structural changes within the industry.

However, RAM said the ratings are moderated by an increased risk appetite as refl ected in its increasing debt load to fi nance capital expenditure for its oleochemical manufacturing businesses, as well as by the inherent cyclicality of the palm oil plantation sector, as CPO is a tradable commodity.

KLK is one of the larger and more established plantation players in Malaysia, and boasts of a competitive cost structure compared to other RAM Ratings-rated plantation companies.

MIDDLE EASTAhli Bank upgraded,outlook is stableQATAR: Ahli Bank’s long-term issuer default rating (IDR) has been upgraded to ‘A-’ from ‘BBB+’ by Fitch Ratings, with a stable outlook. The agency has also upgraded the Qatari bank’s support rating to ‘1’ from’2’, and the support rating fl oor to ‘A-’ from ‘BBB+’. The bank’s short-term IDR and individual rating were affi rmed at ‘F2’ and ‘C’ respectively.

The upgrades are refl ective of the high probability of support Ahli Bank would receive from the Qatari authorities, should the bank need any.

The affi rmation of its individual rating, on the other hand, is based on the bank’s strengthened franchise, performance and risk management processes following the acquisition of a 40% stake in Ahli Bank by the Bahrain-based Ahli United Bank in

2004. It also recognized Ahli Bank’s rapid loan growth, declining but adequate capital ratios, concentrations in loans and deposits, and reliance on a small and undiversifi ed economy.

Ahli Bank was established in 1983 and operates through 14 local branches, including two Islamic ones, as well as 31 ATMs. It had around 5.3% share of Qatari banking system assets at the end of 2007.

Fitch views QNB’sacquisition favorablyQATAR: Fitch Ratings has commented positively on Qatar National Bank’s (QNB) acquisition of a 23.8% stake in UAE-based Commercial Bank International (CBI). Mahin Dissanayake, associate director in Fitch’s fi nancial institutions team, said the agency viewed the acquisition favorably as it is in line with QNB’s strategy of building a franchise covering the MENA region.

The price QNB paid for the stake is 2.7 times higher than book value, at US$302 million, and is fi nanced entirely from internal resources. Fitch feels that this will not affect the Qatari bank’s credit profi le.

QNB is the largest bank in Qatar and is active in retail, corporate and investment banking, treasury, wealth management, and Islamic banking. It is 50% owned by the Qatar Investment Authority. Its current long-term and short-term issuer default ratings stand at ‘A+’ and ‘F1’ respectively, while its individual rating is at ‘B/C’, support rating at ‘1’, and support rating fl oor at ‘A+’.

CBI is a mid-sized retail and corporate bank, with 12 branches across the UAE.

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PAKISTANTimely launch of KSE-Meezan IndexThe launch of Pakistan’s fi rst co-branded Islamic Index, KSE-Meezan Index (KMI), is timely as the move could increase the investor base needed for the growth of the country’s capital markets, fi nancial analysts said. The Karachi Stock Exchange (KSE) and Al-Meezan Investment Management launched the Index this week.

“In the scenario of the emerging Islamic fi nancial markets, the launch of KMI is a very good step; in fact, it should have been done earlier,” Aisha Khalid, fi nancial analyst at the Pakistan Credit Rating Agency, told Islamic Finance news. The new Islamic index comprises stocks that meet Islamic funds’ investment criteria. The tests for screening a company as an investment avenue include the business of the investee company, which should be in accordance with the principles of Islam.

Besides that, the total debt of the company should not exceed 40% of the total assets while total illiquid assets, such as plant, equipment and land, should be at least 20% of the total assets of the company.

Other criteria include excluding investments in activities and income from investments that are not Shariah compliant. An eligible company should not have more than 33% of its total assets in business that is non-Shariah compliant and the income from such a business should not exceed 5% of the gross revenue (total of net sales and other income) of the company. Apart from that, the company’s net liquid assets per share should be less than the market price of the share. Oil and gas exploration and fertilizer stocks dominate the index, with about 55% weight in the index.

According to the agreement signed by KSE and Al Meezan Investments, the latter provides its Shariah expertise, guidelines skills and stock screening towards the activities with regard to launching and continuation process of the Index, while KSE provides maintenance and dissemination support for the index.

The KMI comprises 30 companies which are weighted by fl oat adjusted market capitalization subject to a 12% capitalization on weights of individual securities.

The KMI measures the performance of these companies on the KSE with periodic balancing and adjustments to ensure the utmost Sha-riah compliance and benchmark stability. The co-branded Islamic Index also provides a suitable benchmark for investors when com-paring the returns on their Shariah compliant equity investments.

KSE was said to have been looking to associate with an organization that has strength and expertise to create a Shariah compliant product during a time when Islamic products are developing very fast globally. According to reports, Al Meezan is the only Shariah compliant asset management company in Pakistan, adhering to Shariah guidelines set by the Shariah supervisory board of Meezan Bank. The Shariah Board is chaired by an eminent Shariah scholar, retired Justice Mufti Muhammad Taqi Usmani.

By Dalila Abu Bakar

BAHRAINOne of a kind ‘Health Island’ projectIthmaar Banking group is no stranger to creating a name in the GCC. Just last week, it formed a strategic alliance with two other GCC fi nance houses to boost the infrastructure, agriculture and hospitality sectors in the Middle East, North Africa and Asia.

On the 1st September, its development arm, Ithmaar Development Company (IDC), launched the marketing campaign for Dilmunia — a US$1.6 billion ‘Health Island’ project.

Dilmunia entails the creation of international standard health and wellness facilities in a resort-style environment.

It will be constructed on a 125-hectare man-made island off the north-east coast of Bahrain. It is learnt that work will begin with the reclamation of area and the entire project is scheduled to be completed in 2011.

Ithmaar Bank co-CEO Mohamed A R Hussain (pic) told Islamic Finance news: “We want to make this a brand. Dilmunia is taken from Dilmun, the ancient name of Bahrain 4,000 years ago. We have used the ancient name and we will replicate Dilmun.”

Dilmunia will also include state-of-the-art diagnostic centers and facilities catering to nutrition and diabetes, plastic surgery and aesthetic medicine, women’s and children’s health, alternative medicine and sports medicine.

The development will also include three fi ve-star boutique hotels with French, Chinese and Thai-inspired themes, as well as a four-star luxury hotel with a Middle East design that will also be equipped to take care of patients still undergoing treatment at the island’s medical and wellness facilities.

Residential units will consist of villas, condominium and residential units, quayside residences and several serviced apartments.

A representative of the Ithmaar banking group told Islamic Finance news that unlike like the Dubai Healthcare City which focuses on clinical services for disease treatment and prevention, Dilmunia will be a place for the prevention and diagnosis of diseases. “When completed, it will be the largest healthcare, leisure and real estate project of its kind in the Middle East,” he asserted.

IDC CEO & board member as well as chairman of the Health Island company, Mohammed Khalil Alsayed, sees Dilmunia turning Bahrain into a center of wellness and specialist treatments which will then allow investors to tap into the growing international demand for health tourism.

By Raphael Wong

www.islamicfi nancenews.comIFN REPORTS


Bank Islam Malaysia is looking at merger and acquisition opportunities in neighbouring Indonesia and even within Malaysia to increase its market share in the region. According to managing director Zukri Samat, the bank has held talks with some fi nancial institutions but these are still in the early stages. The bank sees Indonesia as its prime target for immediate expansion and will then explore growth opportunities in Thailand and Singapore.

“We are very familiar with the country (Indonesia). It is also a country with a 250 million population with Muslims in the majority,” he said. Zukri said Bank Islam could either acquire a strategic stake in or buy an Indonesian Islamic bank to tap opportunities in consumer fi nancing in Southeast Asia’s largest economy.

“Bank Islam is prepared to merge with the right partner. We are looking for partners. Anyone who has a proposal, who wants to talk to Bank Islam, we are open to that,” he said. Bank Islam, Malaysia’s oldest Shariah compliant lender which began business in 1983, is a subsidiary of fi nancial group BIMB Holdings and is the second biggest Islamic bank in Malaysia in terms of assets.

The Shariah banks in Indonesia are reported to have less than 5% of domestic banks’ total assets. The Indonesian central bank targets the Shariah banking industry to have a 10%-15% share of national banking assets by 2015. Indonesia issued its fi rst Sukuk last month to provide a vital funding source for the government’s burgeoning budget defi cit and this should also spur other borrowers to tap the Islamic market there more aggressively.

Islamic banking accounts for about 13% of total banking assets in Malaysia and are expected to be one of the leading growth drivers for the country’s economy as the government drives efforts to make Malaysia a global Islamic fi nance hub. Zukri however described Malaysia’s Islamic banking industry as being overcrowded with 14 full-fl edged Islamic banks and some banks having Islamic windows or limited operations, although he conceded that there is still ample space to grow.

“Islamic banking is growing at a much faster rate than conventional banking, at close to 20% a year. In certain areas there is still a lot of potential that has not been tapped,” he said, pointing to wealth and fund management as well as venture capital as some of the growth areas in the Islamic banking sector.

Bank Islam posted a 30.3% increase in profi t before zakat and tax (PBZT) to RM308.3 million (US$90 million) for the fi nancial year ended the 30th June 2008 on the back of a 14% increase in income to RM1.15 billion (US$335 million). At the group level, PBZT was boosted by a signifi cant contribution of RM20.4 million (US$6 million) from its wholly-owned BIMB Foreign Currency Clearing Agency (BIFCCA), pushing Group PBZT 49.5% higher to RM316.9 million (US$92 million).

Zukri attributed the sound performance to the strategy of leveraging to the bank’s strong branding, leading market position and the increasing popularity of Islamic banking to grow its business. “This was achieved through the aggressive marketing and promotion of our highly popular core products and the introduction of several

innovative Shariah compliant fi nancing, deposit and investment products for the consumer and the corporations,” he added.

During the year, Bank Islam launched new consumer products such as the Payment Holiday and No-Payment during Construction schemes for housing loans. In addition, through strategic partnerships with pilgrims fund management board Tabung Haji and property developers, Bank Islam expanded its customer base and broadened its product range. Zukri said the bank also created history when its corporate investment banking division completed a corporate advisory deal, the fi rst to be undertaken by a commercial bank.

He reported that all business divisions performed well, with the consumer banking division remaining the largest contributor at 62% of the total gross fi nancing assets. Non-fund based income rose from RM75.9 million (US$22 million) to RM93.8 million (US$27 million) to account for 8.1% of the total income of the bank.

Bank Islam’s return on equity improved to 26.5% compared with 23.3% previously. The return on assets was 1.5% for the bank and the group. With the improved performance, the Bank’s risk weighted capital ratio improved further to 12.9% from 12% in the fi nancial year 2007. Bank Islam’s other fi nancial indicators improved in tandem, with total assets growing 23.4% or RM4.5 billion (US$1.3 billion) to RM23.6 billion (US$7 billion) while total customer deposit rose RM3.1 billion (US$904 million) or 17.9% to RM20.8 billion (US$6 billion).

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As mentioned in our article on Islamic fi nancial services in Italy published in the Islamic Finance news 2008 Guide at the beginning of the year, the ‘Bel Paese’ (‘Beautiful Country’) was home in 2007 to around 1.4 million Muslims. They represented 32% of the 3.7 million foreigners residing in Italy or 2.3% of Italy’s population and evenly distributed, with 55% living in the north, 25% in the central region and 20% in the southern part of the country.

It is safe to say that these fi gures have since increased by a few percentage points. Though economic statistics focusing specifi cally on Muslim workers were not available to the author of this article, it has been offi cially reported that around 6% or EUR87 billion (US$126 billion) of the Italian Gross National Product (GNP) is produced by immigrants, that one out of every two has a bank account and one out of six owns a house.

With a growing number of GCC investors showing interest in branching out to serve Muslims living overseas in the west and with the UK Islamic fi nance success story widely trumpeted in the media, Italy is attracting attention as a viable market for Islamic consumer fi nancing, home fi nancing, insurance, retirement plans and investment products.

Detailed market studies that analyze regions, cities, trends, fl ows and the purchasing power of different groups and nationalities of immigrants are beginning to be available. This untapped market represents an opportunity for a standalone retail bank that wishes to offer Islamic fi nancial services or for the rolling out of the UK’s Islamic fi nance experience through the establishment of branches and operations in Italy.

Although the debate is still open on the compatibility of Islamic activities with the current Italian banking regulatory system and whether it is necessary to identify other norms that actually permit the legal regulation of the Islamic model, the use of the so called ‘EU passporting’ — where an institution authorized in a EU country may offer products throughout the EU without the need to have separate authorization — offers a viable way for such an institution to start operations in Italy.

The second EU directive on banking (646/1989) with its two fundamental principles of mutual recognition and prudential vigilance also facilitate, at least in principle, the opening of such a bank.

On the capital market and investment banking side as well, the market remains totally untapped in spite of Italy being home to two of the

largest European banks. With global banking players such as JP Morgan, Credit Suisse, HSBC, Barclays Capital, Deutsche Bank and BNP Paribas throwing their weight fully behind the Islamic fi nance industry, there is an extraordinary business opportunity to fi ll the Islamic investment banking gap in Italy.

Italy is the fi rst trading partner with many southern Mediterranean countries and has a multi-billion dollar trade balance with the GCC. It has also played a key role in the last decades in the Euro-Arab dialogue, is geopolitically and politically at the center of the soon-to-come Mediterranean free trade zone and is unquestionably the G7 (Group of Seven industrialized nations) country psychologically and emotionally closer to the Arab world.

It should therefore come as no surprise that since the beginning of the year the debate on Islamic fi nance has picked up with the unfolding of a series of events on a topic that is becoming at the same time popular and controversial. These events, sponsored by different organizations, have taken place across the peninsula and have helped the national business community and the media to come to term with the value proposition represented by Islamic fi nance: a fi nance that is naturally averse to products involving alcohol, gambling and pornography and that abhors interest and speculation while encouraging the productive use of assets and funds for the greater benefi t of society as a whole.

In March and April two seminars organized by national law fi rms in Milan were attended by prominent bankers from the Gulf. They focused on the structure of the products offered and on the regulatory and legal hurdles faced by Islamic fi nance in a modern western country. They have been followed by a workshop on Islam and the business world organized by ISTUD, an independent business school founded by Assolombarda (the Entrepreneurial Association of Lombardy) and some major Italian multinational companies. The event gathered a wide array of representatives of the entrepreneurial and banking world of northern Italy.

At the end of October, ABI (the Italian Banking Association), together with Confi ndustria (the Italian Entrepreneurial Association) and ICE (the Italian Institute for Foreign Trade), will host in Rome a two-day forum on the integration between the Italian and the GCC banking industries. A full day workshop will deal with Islamic fi nance whereas the closing session will discuss the role that the sovereign funds of the GCC can possibly play in Italy.

Also in October, Welcomebank will host its sixth annual meeting in Milan focusing on banking and second generation migrants. The year will close with the First European Forum on Islamic Finance in Milan in December. This two-day event will kick off a series scheduled in the principal European cities aimed at the creation of a European platform for Islamic fi nance.

On the news side, the fi nancial press, including a quarterly on Islamic banking and fi nance, regularly publishes articles on various aspect of Islamic fi nance. The number of university theses and PhD dissertations on different aspects of Islamic fi nance ranging from retail banking to Sukuk is on the rise. ABI, the Union of Arab Banks and University of

Islamic Finance Services In Italy — an UpdateBy Alberto Brugnoni

continued...

“On the capital market and investment banking side as well, the market remains totally untapped in spite of Italy being home to two of the largest European banks”

www.islamicfinancenews.comCOUNTRY REPORT


Islamic Finance Services In Italy — an Update (continued)

Rome La Sapienza have introduced a masters degree in Mediterranean Finance and Banking.

This aims to integrate Islamic finance within the international finance community and create a new professional profile with the skills necessary to contribute to the integration of the MENA (Middle East and Northern Africa) and EU economies. The number of university departments working on “migrant marketing,” which focuses on the ethnicity of the migrant population and their specific requirements, is also increasing.

So with all this positive momentum, what are the main challenges for Islamic institutions wishing to set up in Italy? The main one revolves, without any doubt, around the fact that the Italian banking system is, for the first time in its modern history, confronted with the emergence of models of credit brokerage based on principles that are religious in nature.

The financial products and concepts behind Islamic finance are basically unfamiliar to the regulators and the business community and the lack of precedents raises very practical issues in accounting, fiscal and regulatory matters. These issues in turn are hampering the development of Islamic finance in Italy.

Although Islamic financial products have equivalents in conventional banks, the theory behind them raises complex accounting issues on how to treat them, such as, whether products should appear on the balance sheet; whether a product should be classified as a financing product or a leasing product; and whether an investment should be classified as an equity investment or a loan.

One of the biggest issues is the tax treatment of Islamic customer deposits and whether the expense paid out on these deposits should be tax deductible. The double stamp duty or registration tax is an issue shared with all continental Europe whereas with regard to indirect taxation that must conform with EU legislation, progress on the extra VAT (value added tax) for Murabahah transactions is still to be made.

On the regulatory side, the issue of whether customer deposits under the Mudarabah model should be on or off the balance sheet — which, in other words, is the issue of the difference in the level of risk that the depositor assumes in the Islamic verses the conventional system — has clear implications for the deposit protection scheme.

Also, the necessity to have a Shariah Supervisory Board as a sole authoritative body to advise the central bank on Islamic banking and Takaful matters is still to be addressed. This body should exert a priori control on the Shariah advisory boards of Islamic institutions and a posteriori control to coordinate their activities.

It shall be referred to by a court or an arbitrator in disputes involving Shariah issues in Islamic banking and finance. (A priori knowledge is gained independently of experience, and a posteriori knowledge is based on experience.)

Italy with its century-old network of cooperative banks, small territorial financial institutions and the strongest movement of ethical finance in the whole EU is a natural candidate for Islamic finance in Europe. Once the issues mentioned are resolved it shall play a pivotal role in south-ern Europe and could easily see the acquisition and conversion of a small domestic bank by a Middle East Islamic financial institution.

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Challenges to Islamic Finance

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Islamic-ComplianceSupervision: Shariah

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Basic understandingof Islamic contracts

Alberto BrugnoniPresident of ASSAIF, a think tank on Islamic financial engineering based in Milan.Via Montebello 14, I 20121 Milan.Tel: +3902653964Fax: +39026597544E-Mail: [email protected] site: www.assaif.org

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Islamic fi nance began in the 1970s and aimed to develop banking services based on the Shariah. Historically based in the Middle East and Southeast Asia, it now benefi ts from increasing interest at the international level. Being the European pioneer, London seeks to attain the worldwide leading position and Paris intends to follow close behind.

The Islamic fi nance market size is estimated at over US$700 billion and there are more than 400 Islamic fi nancial institutions worldwide with an annual growth of 15% over the last decade. A number of western banks are active in Islamic fi nance in the Middle East and Southeast Asia.

Leading European banks have been attracted by the overfl ow of liquidity in the Gulf due to the rise in oil prices. They are therefore present in those countries, next to the local Islamic banks, and are major players in the fi eld of corporate and investment banking.

As for the retail business, conventional banks have opened Islamic windows next to their traditional business and sometimes even dedicated subsidiaries. French banks such as BNP Paribas, Société Générale as well as Calyon have invested heavily in the region.

Islamic funds have been used for years in the European real estate sector. In France, the fi rst was a EUR70 million (US$102 million) deal concluded by GFH with Unibail, the largest owners of commercial property, for the landmark Alstom Transport HQ building in the Saint-Ouen district of Paris.

This deal was quickly followed by the EUR80 million (US$116 million) acquisition from Velizy Developpement of a fi ve-building 25,000 sq m offi ce development in the Velizy area southwest of Paris, leased to Peugeot Citroen Automobiles.

The two acquisitions by GFH were the fi rst in France to utilize an Islamically compliant structure and constituted GFH’s entry into the French market with its EUR400 million (US$580 million) GAF property fund. EuroHypo AG provided the funding of the Islamically structured fi nancing of the deal for the Alstom Transport HQ in Saint-Ouen, while Société Générale provided the funding for the acquisition in Velizy.

Today’s European market represents signifi cant potential, thanks to its emerging Muslim middle and upper classes. About 15 million Muslims are eager to buy homes. London seeks to be the global leader in Islamic fi nance. Its goal is to attract investments from the Middle East and to provide banking services compliant with the ethics of the local Muslim community.

This is one of the most important strategic moves of British banks in recent years. In 2004, the Financial Services Authority approved the fi rst Islamic retail bank in the UK, the Islamic Bank of Britain. Since then four investment banks have been established while conventional banks have opened “Islamic windows” and legal and fi scal arrangements have been made in the UK in order to boost this industry.

France would like to catch upCompared to the UK, France seems rather restrained. According to fi nancial magazine Revue Banque, 5% to 10% of investments made in the real estate come from Middle Eastern funds, even though all are not necessarily Shariah funds. However, there is no sign yet of an Islamic bank materializing, although France has the most Muslim residents in Europe (fi ve million people versus two million in the UK).

This is due to the different origins of the British and the French Muslim populations. The British Muslims come mainly from the Middle East and Asia, where Islamic fi nance is well established. French Muslims however come from North Africa, where Islamic fi nance has just been launched. However, real and increasing interest in Islamic fi nance in France is becoming more apparent.

In July 2007, France’s Financial Markets Authority (FMA) issued a note authorizing the creation of collective investment schemes that declare themselves to be Shariah compliant, as well as authorizing criteria specifi c to Islamic funds.

Among others, it provides for securities selection criteria adopted by both the index supplier and the fund which ensure compliance with Islamic law. They pertain to sectors of activity and apply to certain fi nancial ratios.

For example, companies which rely on the alcohol and tobacco industries or pork-related products, for example, for their business and income are excluded. Other exclusions, still by way of example, concern companies with total balance sheet debt that exceeds 33% of their average market capitalization over the previous 12 months.

The note also allows for up to 10% of a fund’s income, corresponding to the percentage of the dividends considered as “impure” under Shariah, to be paid to a pre-designated French charity. This donation attracts tax relief for investors resident in France.

BNP launched the fi rst Islamic fund under French law in 2007 — EasyETF DJ Islamic Market Titans 100 — capitalized at US$20 million as at the beginning of July 2008. In early 2008, SGAM Al followed with a Murabahah fund created in collaboration with Banque Française Commerciale de l’Océan Indien for the Réunion — SGAM Al Shariahh Liquitité, capitalized at US$15 million as at the end of June 2008.

The Senate’s Finance Commission meanwhile organized a conference on the 14th May 2008 to discuss the further development of Islamic fi nance in France and possible fi scal and legal adjustments. It emerged that stronger commitment from dedicated professionals was needed so that the development of Islamic fi nance becomes more than just a “nice to have” option.

More Than Just a Hope for FranceBy Zoubeir Ben Terdeyet

continued...

“Today’s European market represents signifi cant potential, thanks to its emerging Muslim middle and upper classes”



More Than Just a Hope for France (continued)

French banking authorities are not opposed to a Shariah compliant fi nancial institution. During the Paris Europlace forum on the 2nd and 3rd July 2008, French economy minister Christine Lagarde highlighted the initiatives inspired by Paris Europlace committees, particularly those concerning the development of Islamic fi nance services in the Paris fi nancial marketplace. French law already offers the best fl exibility and adaptability to welcome Islamic fi nance operations.

Nevertheless, new measures are in the pipeline, including setting up a new framework for Shariah compatible asset management instruments by FMA. Some measures including tax incentives are on track, aimed at facilitating Islamic banking and Takaful products as well as Sukuk issuance, which will make Paris an attractive center for Islamic fi nance.

Shariah compliant products are naturally destined for Muslim consumers, but may also become a new alternative and be of interest to the community at large. The principles of Islamic fi nance aspire to the same goals as “universal” ethics and, above all, French law. It has been contended that the French legal framework is very compatible with the needs of Islamic fi nance — the basic rules of the Shariah can be found in the Civil Code under which gambling and usury has been prohibited since 1804.

The very philosophy of the Islamic fi nance system could be attractive to all those disappointed with traditional fi nance. Take a closer look and you will see the most appropriate system for the real economy and an alternative for those who disagree with an economy based on a system that has no link with reality.

Setting up a retail offerIn Europe, Islamic fi nance targets the wealthy Gulf investors and their cash overfl ow. Although the conventional fi nancial system is meant for the real economy, it is hard for consumers and small- and medium-sized enterprises to fi nd banking services complying with their religious principles. This is therefore a real business opportunity. The European Islamic fi nance retail demand is beginning to make itself known:

• The emergence of a new middle/upper class of Muslims made up of senior executives in the banking, IT and legal fi elds as well as professionals.

• More Muslims in France and Europe apply Islamic principles in their daily life and business practices.

• The French Muslim community has become very keen on Islamic fi nance, especially since the Islamic Bank of Britain began its business in the UK.

• Buying a home is the main concern for consumers. Many are waiting for an alternative to traditional mortgage. There is a real need for Ijarah and Murabahah.

• Adapted savings products will be attractive due to their valuable and innovative offers.

• Shariah compliant insurance and reinsurance could also have big stakes.

• The French nationals of Northern African origin outnumber other ethnic groups in starting new businesses in France.

• The halal food industry in France amounts to EUR8 billion (US$12 billion).

• The Hajj is a big industry amounting to EUR150 million (US$218 million).

The May conference was told that providing Islamic fi nance services can also become a signifi cant integration factor for the Muslim community in France. France’s fi nancial community needs to be prepared for the snowball effect that can result when Islamic fi nance takes root.

Zoubeir Ben TerdeyetFounder & Executive ManagerIsla Invest ConsultintTél : 00 33 (0) 6 19 56 35 3618 rue Salvador Allende9200 Nanterre, France

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continued...

The issue of Islamic banking and fi nance becoming more international, if not global, is important. In particular, Moody’s recently commented on the industry’s strong prospects in France, where the French minister of economy and fi nance has just announced support for Islamic fi nance.

Is this the emergence of Islamic fi nance in this country?Defi nitely. The fact that the French political and governmental authorities have at last endorsed the value of the Islamic fi nancial concept à la française (in the French style) constitutes by itself a necessary condition for this Shariah compliant fi nancial industry to deploy itself more comprehensively on the French territory.

The French minister has been supported by the conclusions of the work carried out by the commission put in place by Paris Europlace, a French fi nancial think tank. This commission has conducted an in-depth study on the necessary technical adjustments in the French regulatory and legal arsenal capable of reducing the tax, legal and regulatory impediments which are currently constraining the emergence of Islamic fi nancial solutions in France.

That said, both the recommendations of the Paris Europlace’s commission and the words spoken by the Minister appear partial: indeed, only wholesale Islamic fi nance has been mentioned, studied and commented upon so far, where the emphasis has only been on the fi nancial activities conducted by investment and corporate bankers, including incentives to French entities for issuing Sukuk. By this, one should understand that at this stage, priority is only given to corporate issuers, that is private sector companies.

In almost all the countries where Islamic fi nance has successfully become part of mainstream business, the State has always provided clear and manifest support to that industry, not only by creating the optimal infrastructural conditions but also by taking visible economic and symbolic initiatives, for instance by itself issuing sovereign Sukuk.

France could be the second issuer of ‘Aaa’-rated Sukuk, after the Islamic Development Bank, and the fi rst sovereign issuer of ‘Aaa’ Sukuk, an asset class that does not exist at this point in time. Ultimately, although government support — in word or fact — is an absolute necessity, it is not suffi cient per se to allow the emergence of a French-style Islamic fi nancial industry of material size and reach.

How long will it take, and with what amount of effort, for Paris to catch up with London’s achievements so far in Islamic fi nance?We are still wondering whether this is truly France’s ambition, and if this is really the case, whether such a plan makes sense. Paris indeed aims at competing with London as a European hub for Islamic fi nance, and through this making Paris is more attractive to international fi nance, including its more alternative, if not exotic, compartments, like Islamic fi nance.

This is part of a broader scheme to modernize the French economy, bringing more capacity for innovation and more fl exibility, and simultaneously reducing talent haemorrhage, especially in the fi nancial

industry. Consequently, the French strategy is not to naively imitate the UK, which has obviously made some advance in developing an Islamic fi nancial market on its own territory.

The task is actually harder for France as a new and late comer to the ballgame because this means France needs to invent its own way of providing Shariah compliant fi nancial services to its Muslim (and non-Muslim) population, as well as beyond its borders.

Reducing legal and tax constraints will need a fi nance law, followed by signifi cant efforts in terms of communication with those Islamic countries France intends to economically and fi nancially seduce through its specifi c offering, that is essentially the Gulf petro-monarchies and large economies of Muslim Asia. Then, heavy work is expected before at least one onshore Islamic bank is launched in France, which could contribute to serve the six million French Muslims while making it attractive to the rest of the community.

Islam and Shariah are words that do not immediately have positive connotations in France today; when the word “fi nance” is added to “Islamic”, in the midst of one of the most damaging fi nancial crises of the past three decades, one can easily understand why many French citizens may rightfully question its overall concept, credibility, and viability. This is why a large amount of patient pedagogy is needed in a country where “communitarism” is not considered a realistic option, and where the principle of secularity is sacred. Therefore, Islamic fi nanciers attracted by France will have to prove that Islamic fi nance is not a community thing and will not endanger the dogma of the strictest religious neutrality.

Islamic fi nance will need to be perceived as an ethical alternative to modern conventional fi nance. The year 2010 appears as a credible horizon for Sukuk to be issued out of France, as well as for the inauguration of the fi rst French Islamic fi nancial institution. French demand for Islamic banking and fi nance is being quantifi ed as we speak, and the fi rst results of such studies are expected to be made public, at least partially, probably by the end of 2008. The speed with which Islamic fi nance in France will move from a latent phenomenon to a visible market will largely depend on the conclusions of such reports, which have been ordered by Middle Eastern institutional investors.

How do Islamic investors and fi nanciers perceive the French market?Investors and fi nanciers have manners that are much in contrast. On the one hand, the Islamic fi nancial industry — although still very young — has of late begun a rapid internationalization process from its two

Frequently Asked Questions: Notable Trendsin Islamic Finance in France

By Moody’s Investors Service

“Islam and Shariah are words that do not immediately have positive connotations in France today”



Frequently Asked Questions: Notable Trends in Islamic Finance in France (continued)

historical platforms of Malaysia and the Persian Gulf. Such a process is incremental from one geographical location to another through an interesting phenomenon of “capillarization”, which appears as spontaneous and natural: the Muslim populations living in the countries neighboring the areas where Islamic fi nance is already well entrenched tend to get more interested in the products, then taste them, and fi nally tend to easily adopt them, when this is allowed by local regulators. This is exactly what happened in the Gulf countries, with the noticeable exception of Oman, still reluctant to see its fi nancial institutions offer Shariah compliant fi nancial services.

North and then Sub-Saharan Africa, Turkey, Muslim Caucasian countries and the Islamic periphery of Malaysia constituted the fi rst circle in which Islamic fi nance started to shine beyond the borders of its core markets. Next comes the second ring, that of the so called “mature” or “developed” countries: Islamic bankers and investors now naturally eye those places in the Western hemisphere where Muslim communities are important and visible, including obviously France. The French economy is well diversifi ed and home to industrial and services sectors considered lawful by the Islamic ethics.

For instance, French companies are well established in clean and renewable energies, a sector that is very attractive to Islamic investors. Furthermore, 10% of the French population belongs to the Muslim faith, which by itself makes France the largest potential market for Islamic fi nance in the West, capable of durably entrenching the Shariah compliant value proposition in a more stable, predictable and mature environment.

Finally, France shares a long, shared history with the Muslim and Arab world, in most cases full of friendship and common interests despite a few gloomy episodes. Consequently, there are large common grounds between France and its Islamic economic partners, which are far from being limited to the oil trade. France still conveys a very positive image in the Muslim universe.

However, on the other hand are many of France’s existing or potential partners across the world’s Muslim community who hardly understand why French Muslims, fi ve times more numerous than in the UK, do not yet have access to fi nancial solutions in line with their religious principles. In addition, France’s excessive emphasis on its sacred principle of secularity, supposed to be prevailing only in the public domain and not in private transactions, is still subject to a large amount of misunderstanding and confusion in the world of Islam, which also fi nds it diffi cult to conceive why Islam and Muslims form a subject that is so passionately debated in France.

A consequence of this is that a relationship of mutual trust can hardly be built: one side fears new forms of disguised proselytism whereas the other is tempted to consider that Islamic fi nance would be instrumental in recycling part of the oil wealth in France at a time when western economies face a serious liquidity issue. If the dialogue is set in such terms in France, then France would face the bitter evidence of the gap that puts it apart from Britain.

On the contrary, if useless prejudgments are left aside, France may be in a position to welcome an alternative fi nancial model capable of providing renewed fresh dynamics to a profession that has been through some turbulence over the past year or so.

What is the outlook for retail and wholesale Islamic banking in France in the short term?In the next 12 months, a number of initiatives are expected in Islamic banking and fi nance in France. After a subsidiary of Societe Generale launched a Shariah compliant investment fund in the Reunion Island a few months ago, it is probable that capturing French Muslims’ savings in a Shariah compliant manner will constitute a more visible niche market, through specifi cally designed lawful investment and placement vehicles.

Furthermore, an increasing number of French companies are looking for alternative funding sources at more attractive rates than those applicable on their traditional, conventional fi nancing mechanisms: one of the impacts of the subprime crises was an obvious liquidity drought in debt capital markets, and consequently a widening of spreads, or funding costs. One of the very few places where liquidity is still widely available today is in the group of oil-exporting countries, where a large number of Islamic investors are located.

It appears that all the conditions and incentives are there for more active issuance of Sukuk by French companies. Several such Sukuk were indeed issued in the past, but in small numbers and amounts, and in the form of local issuances, which is not out of France itself. Today, it is increasingly possible to see Euro Sukuk emerging out of France. Once the legal and tax impediments are neutralized, probably by the end of next year, it will become less penalizing to invest in France in a Shariah compliant manner, especially in real estate. As prices prevailing in such an asset class seem to plateau, we could witness the increasing interest of Islamic investors in French properties.

In retail banking, the process by which an Islamic bank could see the light of day in France is expected to be slow. At the Second French Forum of Islamic Finance, which is expected to occur in late November 2008 in Paris, some conclusions of the fi rst market studies on the potential for Islamic retail banking in the country are expected to be made public, providing very valuable information about the size and attractiveness of French demand.

At this stage, should an Islamic bank be launched in France, it would probably take the form of a joint venture between an established French player providing the network and its knowledge of the market, and a Middle Eastern partner bringing the technical expertise and the religious legitimacy. However, it is unlikely that such an initiative will be carried out in the next 12 months or so.

The academic world is also investing time and effort to contribute to inform students and professionals in particular, as well as the public at large. Publications and books written in French are now more numerous, and many others are to be released in the next few months. Education programs and courses are being designed and will be made more widely available in French universities and professional circles in the very near future. This will further contribute to enlighten the debate of accepting Islamic fi nance in France as an ethical alternative and a bridge between worlds that would undoubtedly and mutually benefi t from more active economic and intellectual interaction.

These are excerpts taken from a nine-page “Special Comment” by Moody’s Global Banking published in August.

www.islamicfi nancenews.comSECTOR REPORT


Perhaps the biggest innovation in the capital markets in recent years has been the growth of Islamic fi nance through the issue of Sukuk and, more recently, Shariah compliant securitizations, mainly from issuers based in the Gulf and Malaysia. It is estimated that over US$100 billion Sukuk are currently outstanding.

Sukuk are usually described as asset-backed securities and take the form of notes or certifi cates that represent ownership of an underlying pool of assets. This suggests that Sukuk investors should be entitled to the ongoing cash fl ows and proceeds of sales from those assets but in reality, in the event of an insolvency or a default, a purchase undertaking is usually triggered and the assets are transferred to the provider of the purchase undertaking, leaving the Sukuk holders with an unsecured claim against the provider of the purchase undertaking.

As a result, when these issues have received ratings in the past, it has typically been the same as the corporate rating of the provider of the purchase undertaking. A Shariah compliant securitization which refl ects the economic structure of a conventional securitization would allow investors to participate in the profi ts and losses generated by the assets placed in the securitization pool rather than the creditworthiness of the originator and would therefore mitigate some of the concerns expressed by some Shariah scholars about the balance of risk and rewards enjoyed by Sukuk investors.

There has been some discussion about whether the capital markets in the Middle East, supported by petrodollars, are robust enough to withstand the effects of the credit crunch which have affected the global markets generally. This seems an odd argument since a large proportion of Shariah compliant deals are placed with conventional investors outside the region, who have found them a useful way of gaining exposure to the high growth markets of the Gulf which are otherwise diffi cult for international investors to access.

This is borne out by the fact that, as at the 31st August 2008, the number of Sukuk coming to the market are substantially less than last year (US$10 billion to date compared to issuances of US$16 billion for 2007) and the returns being paid on the Sukuk which are issued are signifi cantly higher than 12 months ago, with investment bankers reporting that an issuer is now required to pay at least 1% above what it would have paid last year for a similar transaction.

The effect of the credit crunch has also been exacerbated by the decline in the value of the US dollar, resulting in increasing issuances in local currencies which may be less attractive to investors outside the Gulf region.

In addition, the debate triggered by Sheikh Taqi Usmani’s comments in November 2007 and the Accounting and Auditing Organization for Islamic Financial Institutions’ (AAOIFI) statement issued in February 2008 — that Musharakah and Mudarabah-based Sukuk should not use purchase undertakings with predetermined exercise prices in order to guarantee the return at the commencement of the transaction — affected a large number of Sukuk and has resulted in the need for issuers to either fi nd assets which can be used in Ijarah-based structures or, where such assets are not easily available, to consider alternative structures, resulting in a slowdown in the growth of the industry.

Caravan IThe fi rst Islamic securitization deal is generally believed to be the issue by Caravan 1 which was launched in March 2004. Caravan 1 was a US$27 million Sukuk, securitizing a Saudi Arabian car fl eet inventory. The structure involved a special purpose vehicle (SPV) in Saudi Arabia funding the acquisition of a pool of vehicles and vehicle lease arrangements from Hanco Rent-A-Car, a large Saudi car leasing and rental company, via a separate Jersey-registered SPV.

The dual-SPV structure was required because a local SPV would not have been bankruptcy remote while, under Saudi commercial law, an offshore SPV is barred from buying or leasing vehicles directly. The deal was structured so that, in the event of default, investors have recourse to the underlying assets and can force the sale of the cash fl ow-generating assets. Caravan 1, however, failed to secure an offi cial rating and had only a single class of notes.

EnsecCaravan I was followed in 2005 by the Emirates National Securitization Corporation (Ensec), a Dubai-based specialist securitization fi rm set up in 2004 to facilitate securitization in the region, issuing a rated securitization of mortgage assets originated by Tamweel and called Ensec Home Finance Pool 1.

The US$350 million issue was rated ‘AAA’ by Standard & Poor’s and ‘Aaa’ by Moody’s, with credit support apparently provided by mortgages and cash collateral. However, in reality, the deal was 104% cash collateralized with over US$350 million in cash placed offshore as security, meaning it was really a securitization of cash rather than of tangible assets.

TamweelIn July 2007, Tamweel, a provider of real estate fi nance in the UAE, issued the fi rst internationally rated, tranched Islamic securitization issue with all of the characteristics of a conventional securitization: it has four classes of note holders, a bankruptcy remote SPV incorporated in the Cayman Islands acting as the issuer of the notes, and a right of participation in assets and losses that is based on the pledged assets of the structure rather than on the credit risk of the borrower or originator. The US$220 million deal was lead managed by Ensec. Morgan Stanley and Standard Chartered Bank acted as joint book runners on the deal.

The most innovative feature in the structure was the achievement of tranching in a Shariah compliant manner through each note holder, as a result of its acquisition and holding of a note, being deemed to agree that its right to receive payments under the notes is reserved and amounts that would otherwise be payable to such note holder on a pari passu basis could be used to make payments to another (more senior) class of note holder in priority to it. This mechanism ensured

The Impact of the Credit Crunch on Islamic SecuritizationBy Farmida Bi

continued...

“It is estimated that over US$100 billion Sukuk are currently outstanding”

www.islamicfi nancenews.comSECTOR REPORT


The Impact of the Credit Crunch on Islamic Securitization (continued)

that both losses and profi ts could be shared (by mutual agreement) between the different investor classes in a way that is consistent with a conventional securitization.

The underlying portfolio comprises 829 Islamic mortgages on apartments and villas in Dubai’s various free zones, the areas in which non-UAE residents are allowed to buy freehold property. The transaction is rated by Fitch and Moody’s and consists of four classes of notes — under Moody’s classifi cation, ‘Aa2’, ‘Baa1’ and ‘Ba3’ tranches, plus a non-rated equity tranche. It is the fi rst global Islamic residential mortgage-backed securities (RMBS) deal to be rated investment grade. Fitch gave the senior notes an ‘AA’ rating.

The transaction uses a dual SPV structure, whereby Tamweel passes the legal title and assigns the lease rentals and all the associated rights and receivables on the properties to an SPV incorporated in the Dubai International Financial Center. The rights and lease rental receivables are then assigned to a separate, Cayman Islands-registered, SPV. This means that the contractual terms of the structure are not affected by local laws, while overcoming any legal risk associated with the recognition of true-sale under Islamic law.

Sorouh Real EstateTamweel came to the market just before the credit crunch really took hold last summer. It was expected that it would herald the arrival of many further Shariah compliant, multi-tranche RMBS and commercial mortgage-backed securitization (CMBS) deals.

In fact, thanks to global concerns about the securitization market since the closing of Tamweel, the only Shariah compliant securitization deal that has entered the market from the Gulf region is the Sorouh Real Estate AED4 billion (US$1.1 billion) issue, using a Mudarabah structure and achieving tranching through a Musawwamah agreement. The three tranches issued by the Jersey based SPV, Sun Finance, are rated by Moody’s (Aa3, A3 and Baa3) and by Standard & Poor’s (A, BBB+, BBB-).

The transaction uses a Mudarabah structure where the issuer is the investor (Raab ul Maal) and the PropCo (as defi ned below) is the asset manager (Mudarib). Capital is invested in accordance with a Restricted Mudarabah agreement (investment plan) to purchase the assets (as defi ned below).

The Raab ul Maal has a security interest over all the assets of the Mudarib in the case of an event of default. Income from the assets is distributed as profi t to the Raab ul Maal (and then onto the investors) with separate amounts being used to pay the monthly profi t due and to repurchase a share of the Raab ul Maal’s interest in the assets in order to achieve amortization of the principal.

The transaction is an Islamic securitization of the land and associated rights to payment (Assets) from a pool of GCC obligors. The 62 obligors are primarily GCC real estate developers who pay in scheduled installments to purchase undeveloped land concentrated within two real estate developments — Shams and Saraya (Developments) in Abu Dhabi (rated Aa2). The purchase contracts were originated by Sorouh Real Estate (Sorouh), one of the three key real estate developers in Abu Dhabi which have been granted land on preferential terms by the government.

The transaction involves a dual SPV structure whereby Sorouh will transfer the land and assign the plot sale and purchase agreements (PSPAs) installments and all the associated rights under the contracts to Sorouh Abu Dhabi Real Estate (PropCo), a company incorporated in Abu Dhabi, so as to isolate the assets from Sorouh. The issuer will extend an inter-company loan to PropCo, which will then create security interests over all of its assets in favor of the local Security Trustee acting on behalf of the issuer.

There will be a transfer of the land to PropCo and registration of the title. This registered transfer, as well as the assignment of the PSPA rights, is governed by local Abu Dhabi law, while the remaining security documents are governed by English law.

The futureThe future of Islamic securitizations cannot be separated from developments in the securitization market generally, despite the demand for funding for infrastructure projects in the Gulf and the impressive increases in property prices in the region.

It is hoped that the market will recover by the middle of next year and a number of potential issuers are currently warehousing their assets in the expectation that they will be able to securitize in 2009.

There is certainly huge potential for both conventional and Shariah compliant RMBS and CMBS deals in the region. Similarly, the Gulf should also be a natural home for future fl ow transactions and there will certainly be demand to securitize the assets emerging from the growing retail credit market. All we need now are the investors.

Farmida BiPartnerTel: +44 (0)20 7444 5842Email: [email protected]

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• Can Shari’ah ScholarsAchieve Consensus?

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• Structuring Shari'ahCompliant Funds

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www.islamicfi nancenews.comTAKAFUL REPORT


Munich Re’s reTakaful operation continues to focus on innovation in developing Shariah compliant products to stay ahead of the competition, relying on its combination of (non-Shariah related) technical expertise and in-depth study of Takaful issues. CEO Dr Ludwig Stiftl (pic) describes these as the key that sets it apart from the competition.

Stressing that having a sound approach towards Shariah grounds for developing new and innovative products is one of the company’s competitive edges in a challenging market, he said Munich Re Retakaful offers its expertise in developing new or tailor-made products which are consistent with the Shariah, the demand of Muslims and the requirements of their economies and societies.

“We compete using our worldwide expertise and combining it with Shariah

knowledge. This is our competitive edge,” he told Islamic Finance news in an interview. Stiftl said Munich Re Retakaful had secured general and family treaty business in Malaysia and all main regions of the Muslim world in its fi rst seven months of operations.

Regarding facultative business, he explained: “We would like to fi nd a pooling solution for facultative business together with the industry. Although we have already written some facultative risks outside the region, we think the best solution would be on a pooling basis among the reTakaful industry and we would like to support this via the industry’s association”.

Munich Re Retakaful, which started its operations in Malaysia in 2007, is the fi rst foreign reinsurer to be awarded a license to conduct reTakaful business in Malaysia. Stiftl sees stiff competition in the reTakaful business in Malaysia but said the company will use certain approaches to handle it.

“The competition is stronger than we expected because we came in a wave of reTakaful operators. The competition has been tough in conventional insurance for quite a while and it is the same with reTakaful. We deal with this competition as we deal with it on the conventional side. We offer exceptional services and add value to our clients in a tailor-made approach,” he added.

According to Stiftl, apart from Malaysia, the company has customers in Pakistan and the Middle East and is working on penetrating other markets as well. The group sees Takaful as a longstanding part of the worldwide industry. “We are convinced that Takaful will, like Islamic banking 20 years earlier, establish itself on a long-term basis parallel to the conventional insurance industry. Its special advantage is the ability to enlarge the still underdeveloped penetration among the broad population in Muslim countries.”

According to Malaysia’s central bank, the Takaful industry has been growing at 25% a year over the past fi ve years and the industry’s assets in the country amounted to RM6.5 billion (US$2 billion). It said the

establishment of the reTakaful companies will also promote Malaysia as the center for international currency reTakaful business, which is one of the measures taken to promote Malaysia as an international Islamic fi nancial center.

Stiftl said the group decided to set up its reTakaful operation in Kuala Lumpur and make the city its global hub because of its infrastructure, regulatory environment and position as an international Islamic fi nan-cial center. “At the moment, it appears that the Middle East is more dy-namic but our approach was to go to Kuala Lumpur because Malaysia stands out with its long experience and its regulatory efforts.”

He believes that conventional reinsurance still has the larger market share than reTakaful as Muslims, not only in Malaysia but elsewhere too, predominantly buy conventional products. In addition, many Mus-lims do not have cover at all. However, he said, Takaful may become the main arena in creating a broader customer base, higher penetra-tion and capital accumulation to strengthen the industry as a whole.

According to Stiftl, Munich Re Retakaful is monitoring the development and has no immediate plans to open branches in other markets. “We expect to contribute to the Munich Re Group. We want to strengthen our appearance in this region and outside, and help the industry increase penetration and insurance awareness. We are service-orientated and we provide tailor-made products.”

Munich Re Retakaful, he stressed, aims to be a major player in Malaysia. “We aim to have a presence in all markets of the region, coming out of Malaysia. But in such a young and developing market a few new clients from one country can quickly change our portfolio.”

Regarding Malaysia’s future weight, Stiftl noted that the Government is targeting to increase Malaysia’s Takaful market share to 20% by 2012 from the current 6.1%. He described as reasonable the often-quoted expected fi gures for the global market value of Islamic insurance to reach US$7.4 billion by 2015 with a double digit growth rate over the next 10 years.

He added that Munich Re Retakaful has completed its set up for the moment, but with increasing business, the company will also increase its manpower in Malaysia from the current fi ve staff. The Retakaful team is supported by other experts within the Munich Re Group which has almost 43,000 employees worldwide.

It was reported that Munich Re, one of the world’s biggest reinsurers, plans to control as much as 20% of the global market for Islamic reinsurance within fi ve years by tapping the economic growth in the Middle East and Asian Muslim nations.

Munich Re Retakaful Focuses on InnovationBy Dalila Abu Bakar

“We are convinced that Takaful will, like Islamic banking 20 years earlier, establish itself on a long-term basis parallel to the conventional insurance industry”



I think the premise is wrong. The main objective of Sukuk is to have a tool or instrument which is fl exible and tradable. It was badly needed in Islamic fi nance and was the topic of innovation in Islamic banking in any conference.

However, nowadays the emphasis could be to chase petrodollars because it is a window of opportunity but by all means we should not, I repeat, we should not deviate from AAOIFI standards. Otherwise, why then should we have AAOIFI? Are they not meant to standardize the industry and meet international and Shariah requirements to ensure streamlining?

Are they not (the standards) developed by Shariah scholars and professionals in accounting and transparency? Why should we defy a concept that we all worked very hard to realize?

JAMIL A K EL JAROUDI: CEO, Elaf Bank, Bahrain

Whether or not the purpose of Sukuk issuers is to capture petrodollars or create an alternate funding source that may be cheaper than conventional fi nance, issuers should follow AAOIFI standards. The AAOIFI guidelines on Sukuk are the most widely respected and their incorporation provides a level of consistency across Sukuk issues.

Were Sukuk issuers to ignore AAOIFI standards, there would be confusion about whether a given Sukuk confi rms to the minimum agreed standard for Shariah compliance. The use of AAOIFI standards provides some measure of international standardization in some areas of Islamic fi nance like Sukuk issuance and promotes greater development of the industry as a whole.

If Sukuk issuers begin to issue Sukuk outside of or without following the AAOIFI standards, it would lead to a reversal of the moves toward standardization within the industry. This would be an unfortunate reversal of the development and globalization of Islamic fi nance.

BLAKE GOUD: Principal, SharingRisk.Org, US

In order to enhance the transparency in the industry, and to refute any claims of favoritism or “smoke and mirrors”, all Sukuk — regardless of where the issuer is — should follow the same standards. The AAOIFI Shariah standards for Sukuk are widely accepted in the industry and are followed for every Sukuk issued. Although it could be tempting to loosen the requirements to attract a larger amount of potential issuers, it defeats the

purpose of growing the industry and enhancing transparency.

DR NATALIE SCHOON: Head of product management, Bank of London and the Middle East, UK

AAOIFI is the closest thing that the industry has to a semi-regulatory organization. The leading 20 Shariah scholars are on the AAOIFI Shariah board who meet twice a year and create working teams with practitioners to look at issues and challenges facing the industry. AAOIFI recently created a contract certifi cation program that can further strengthen the Sukuk industry. UM Financial as a member of AAOIFI endorses its standards and encourages the industry to grow around its pioneer leadership.

OMAR KALAIR: President and CEO, UM Financial, Canada

The main purpose of Sukuk issuers is to capture the petrodollars in the Middle East. Do you think they should follow AAOIFI standards and why?

Next Forum Question

The takeover by Commerzbank of Dresdner Bank from Allianz SE closes the book on yet another failed attempt at bancassurance in the conventional markets. Should this raise alarm bells for those entering bancaTakaful, or

can the Shariah version buck the trend and be a best seller?

If you would like to air your views on the next Islamic Finance Forum Question, please email your response of between 50 and 300words to Christina Morgan, Forum Editor, at: [email protected] before Wednesday, 17th September 2008.

www.islamicfi nancenews.comMEET THE HEAD


Islamic Finance news talks to leading players in the industry

Could you provide a brief journey of how you arrived where you are today?

I began my career in the insurance industry in 1988 and having been involved in general insurance during the fi rst eight years, I then ventured into Life insurance in 1996. About two years ago, I was hired to set up PruBSN, which was launched on the 8th August 2006.

What does your role involve?My role involves leading our young team in establishing our presence in the Malaysian Takaful landscape.

What is your greatest achievement to date?My greatest achievement to date is leading and establishing Prudential BSN Takaful as the number one Takaful company (in terms of new business regular contribution) in Malaysia in less than two years after its launch.

Which of your products/services deliver the best results?

Our main contributor is Takafulink, our regular contribution investment-linked plan. We were the fi rst Takaful company in Malaysia to offer a Shariah compliant medical card and it has been well received by Malaysians.

What are the strengths of your business?Our strengths are:

1. Our shareholders, Prudential and Bank Simpanan Nasional (BSN). Their brand presence, awareness and infrastructure availability made our road to the top an easier route. We are able to leverage on the product familiarity and back end infrastructure to get our business going from the word ‘go’.

2. Our agency force — we are able to tap into the best agency force in Malaysia (Prudential Malaysia) and get them excited in promoting our Takaful products. More than 90% of our sales are generated through our agents. Currently, we have more than 9,800 agents nationwide.

3. Our dedicated and committed staff — we have a young but dynamic staff. From a humble beginning of only 20 people in

August 2006, we have now a strong, innovative and vibrant team of 188 staff. We would not be where we are today without their whole-hearted commitment and for that, I am thankful.

What are the factors contributing to the success of your company?

Two key factors contribute to our success. The fi rst is our decision to promote ‘Takaful for All’ from Day One. We believe that Takaful is for everyone, be it a distributor or a consumer. More than 70% of our agents are non-Muslims and 35% of our certifi cate holders are non-Muslims. Islamic insurance system is a beautiful system and we shall continue to promote it to everyone regardless of faith, race or color.

Secondly, our values — TRUST — an acronym for Trustworthy, Respect, Understanding, Smile and Teamwork. Through these, we inculcate, nurture and embed in our people (staff and agents) the importance of our values from Day One and they (the values) have become our pillar of strength in running our company and also in selecting people to join us. We strongly believe that if we have people with the right values, the journey to success will be more satisfying and meaningful.

What are the obstacles faced in running your business today?

The key obstacle is the mindset of people. Malaysians still do not treat Takaful/insurance as an important part of their fi nancial management. And the authorities could assist the industry by giving attractive incentives (standalone tax incentives) for people to take up the Takaful/insurance policies. Another obstacle is the perception of Takaful itself. Generally, Takaful is perceived as uncompetitive, slow to respond to market needs and that it is only for the Muslims.

Where do you see the Islamic fi nance industry in, say, the next fi ve years?

Personally, I see the Islamic fi nance industry rising to be at par with or even better than its conventional rivals in the next fi ve years. More and more discerning customers are looking at ethical fi nancial instruments to manage their wealth and being an ethical system, Islamic fi nance should be at the forefront of attracting this new breed of consumers. However, we need to position ourselves differently than how we are doing today. We must embrace a new approach in order to attract non-Muslim customers and investors to appreciate and invest in the Islamic fi nancial system.

Name one thing you would like to see change in the world of Islamic fi nance.

I might stir a hornet’s nest here… but one thing that I would like to see in the world of Islamic fi nance is dropping of the word ‘Islamic’. We place too much emphasis on the word ‘Islamic’ that it loses the real appeal to the non-Muslims to learn, understand and appreciate our Shariah compliant system.

The Shariah compliant system and framework is a beautiful system and should be shared with everyone regardless of faith or race, but if we put too much emphasis or religious connotation to it, it will scare “followers of other faiths” from learning the beauty of this system.

Name:

Position:

Company:

Based:

Age:

Nationality:

Mohamad Salihuddin Ahmad

CEO

Prudential BSN Takaful (PruBSN)

Kuala Lumpur

45

Malaysian

www.islamicfi nancenews.comTERMSHEET


STRUCTURE Restricted Mudarabah Investment Account (RIA)

CURRENCY Emirate Dirhams (AED)

COMMENCEMENT OF RIA

15th August 2008

MUDAREB (FUND MANAGER)

Emirates Islamic Bank

OFFERING AMOUNTA maximum size of AED624.41 million (US$170 million). Applicants are advised that the bank is also co-investing its own proprietary monies of AED110.19 million (US$30 million) in the company.

MINIMUM INVESTMENTMultiples of AED500,000 (US$136,000) and any additional amounts in multiples of AED100,000 (US$27,000).

UNDERLYING INVESTMENT

Acquisition of 85% equity interest in Global Logistix RIA Company, Cayman Islands, set up to indirectly acquire about 400 acres to develop an integrated logistics park in Navi Mumbai. The profi t will be generated through the sale of undeveloped land parcels as well as developed housing units within the project over the course of the investment term.

EXPECTED INVESTMENT TERM

36 months from the commencement date (with an option to extend by an additional 12 months).

PROFIT SHARING RATIO

Applicant — 75%, Bank — 25%

EXPECTED GROSS PROFIT ON THE UNDERLYING INVESTMENT

80.16%

EXPECTED APPLICANT PROFIT

60% (Calculation of this return does not take into account front-end subscription fees as detailed below).

PERFORMANCE FEE 25% of any excess return over the expected gross profi t (80%)

SUBSCRIPTION FEES3% of the deposit amount, payable in addition to the actual amount deposited and thus payable at the time of RIA commencement.

EXPECTED DISTRIBUTION TIMING

Bullet repayment of Deposit plus Expected Applicant Profi t (as calculated in accordance with the Terms and Conditions) at the end of the expected investment term.

EARLY WITHDRAWAL Not permitted under the Terms & Conditions of the RIA

Emirates Islamic Bank’s Global Logistix RIA Fund

For more termsheets, visit www.islamicfinancenews.com

www.islamicfi nancenews.comMOVES


CREDIT SUISSEUK: The bank has appointed Garrett Curran as its managing director and co-head of securities sale for Europe, effective from the 1st September and based in London. Curran joins the bank from Dresdner Kleinwort where he was a member of the Dresdner Kleinwort executive committee. He has eight years experience in capital markets distribution and has worked in a variety of roles.

DLA PIPERUK/US: Jeffrey Steiner and seven partners from Thelen Reid Brown Raysman & Steiner have moved to DLA Piper.

Steiner will become co-chairman of DLA Piper’s US fi nance group and will be based in New York. He was Thelen Reid’s chairman of real estate practice and co-chairman of its business and fi nance practice.

Joining Steiner in New York are Jason Goldstein, R Kenneth MacCallum, Rand Peppas, Robert Unger and Scott Weinberg. Another two of Thelen Reid’s partners, Marc Friedman and Robert Mower, will be practicing in DLA’s London offi ce.

ING PRIVATE BANKINGCHINA: Mark Chan has been appointed as the bank’s managing director and head of marketing for China.

He has three decades of experience, and was most recently the managing director of private wealth management for China in Deutsche Bank. He had held the post for six years.

LINKLATERSUAE: The law fi rm will move two of its partners from London to its Dubai offi ce. Capital markets partner Richard O’Callaghan and banking partner James Martin will be joining Dubai managing partner Sarosh Mewawalla, Jonathan Inman and Luma Saqqaf, increasing the fi rm’s Middle East fi nance practice to fi ve partners.

Martin specializes in bank fi nance and particularly leverage and acquisition fi nance while O’Callaghan specializes in debt and equity capital markets work on high profi le transactions.

ADIC-UBSINFRASTRUCTUREUAE: Vincent Giles is the new chief investment offi cer for ADIC-UBS Infrastructure, a new joint venture between Abu Dhabi Investment Company (ADIC) and UBS Asset Management that focuses on infrastructure investments within the MENA region and Turkey.

Giles has been with UBS for 10 years and was most recently UBS Infrastructure Asset Management’s (IAM) head of the European and Middle East practice. Prior to joining IAM in 2007, he headed the UBS Equity Research European Infrastructure and Utilities team from 2001. He also worked for JPMorgan and Société Générale.

BARCLAYSHONG KONG: The wealth management unit of Barclays has appointed Nitin Birla as head of South Asia and Hong Kong as part of its latest strategy to tap the potential of the high net worth community in the region.

Birla was previously attached to RBS Coutts for seven years. His most recent position before leaving was as its executive vice president in Hong Kong.

NATIONAL BONDSUAE: The Shariah compliant national savings scheme for the emirates has announced the appointment of Jacques Bernard as its chief investment offi cer. He will be responsible for overseeing the company’s investment policy as well as managing and diversifying its current portfolio of investments.

He has 23 years experience and was previ-ously the head of investment funds at Ku-wait’s Global Investment House. He had also served as chief investment offi cer at Banque Ferrier Lullin & Cie Geneva, managing direc-tor at Prudential Financial and head of Citi-bank Asset Management Group.

RBIINDIA: Finance secretary Duvvuri Subbarao will be appointed as the governor of the Reserve Bank of India (RBI), the country’s central bank, replacing Yaga Venugopal Reddy whose term ends on the 5th September. Subbarao will hold the position for three years.

DMEUAE: Thomas Leaver has been promoted to the role of CEO of the Dubai Mercantile Exchange (DME), effective from the 1st September. He was previously DME’s chief operating offi cer, a role he had held since the 1st May 2006.

Leaver is an energy industry veteran and has more than 30 years experience. He will be replacing Gary King, who has completed a phased handover of his responsibilities to Leaver.

LATHAM & WATKINSUAE: The law fi rm said Tim Ross has joined its Dubai offi ce as partner in the fi nance de-partment from the 1st September. He joined from Linklaters where he was the head of the fi rm’s Middle East banking practice.

Ross is a recognized leader in fi nancing transactions involving entities in the Middle East and is a highly regarded banking and fi nance specialist.

PRUDENTIAL ASSURANCEMALAYSIA: Abishek Bhatia is the new chief offi cer for general insurance and partnerships distribution at Prudential Assurance Malaysia. He will report to the CEO and will be responsible for developing and implementing strategies of the company’s general insurance and partnerships distribution businesses. Partnership distribution includes bancassurance, worksite marketing, group life, mortgage reducing term assurance and direct/telemarketing.

UBSUS: UBS Investment Bank announced that Jon Jodka will join the fi rm as managing director and head of US prime brokerage sales within its equities division. He will be based in New York.

He was most recently the president and founding partner of Copper Arch Capital, a New York-based hedge fund which successfully grew its assets, client base and product array prior to voluntarily returning capital to its investors earlier this year. Prior to that, he was attached to Morgan Stanley for 13 years and had held several senior positions including head of US sales from 2000 to 2002.

www.islamicfi nancenews.comDEAL TRACKER


Islamic Finance newsAdvisory Board:

Mr Daud Abdullah (David Vicary)Chief Operating Offi cer

Asian Finance Bank

Dr Mohd Daud BakarChief Executive Offi cer

International Institute of Islamic Finance

Prof Dr Mohd Masum BillahGroup Executive ChairmanMiddle Eastern Business

World Group of Companies

Dr Humayon DarChief Executive Offi cer

BMB Islamic

Mr Badlisyah Abdul GhaniChief Executive Offi cer

CIMB Islamic

Ms Baljeet Kaur GrewalGroup Chief EconomistHead, Global ResearchKFH Research Limited

Mr Sohail JafferPartner

International Business Development FWU International

Dr Monzer Kahf Consultant/Trainer/Lecturer

Private Practice

Mr Mohamed Ridza AbdullahManaging Partner

Mohamed Ridza & Co

Prof Bala ShanmugamDirector of Banking & Finance Monash University Malaysia

Mr Muhammad Nejatullah SiddiqiAuthor, Scholar, Speaker, Trainer

Mr Rushdi SiddiquiGlobal Director

Dow Jones Islamic Indexes

Mr Dawood TaylorHead of Takaful Taawuni Division

Bank Aljazira

Mr Abdulkader ThomasPresident & CEO

SHAPE – Financial Corp

Mr Paul WoutersPartnerBener

Prof Rodney WilsonDirector of Postgraduate Studies

Durham University

Mr Sohail ZubairiVice President & Head Shariah

Coordination Dubai Islamic Bank

Another Islamic Finance news exclusive

ISSUER SIZE (million) INSTRUMENT

Pakistan Up to US$261.78 Sukuk

City Development US$708.32 Sukuk

Malaysian Debt Ventures Up to US$449.07 Sukuk

Bumiputra-Commerce Holdings

US$1.84 billion Islamic and conventional CP/MTN program

Islamic Bank of Thailand US$178.77 Ijarah

ETA Star Property Developers

Up to US$150 Sukuk

Abu Dhabi Commercial Bank US$1.07 billion Islamic MTN

Dewa Minimum US$500 Sukuk

Philippines Up to US$1 billion Sukuk

BTA Bank Up to US$150 Sukuk

Bahrain Central Bank US$500 Sukuk

Qatar Islamic Bank US$300 Sukuk

Barwa Real Estate US$800 Sukuk

Doha Bank US$1 billion Sukuk Ijarah

Tabreed Up to US$500 Sukuk

Dubai International Financial Center

US$200 Sukuk

Amlak Finance US$260 Sukuk

Al-Rajhi Cement Investment US$595 Sukuk

Muhibbah Engineering US$125.41 Mudarabah

Indonesia up to US$2 billion Ijarah

Orient Technology Indonesia US$120 Islamic and conventional

Glomac US$18.83 Murabahah MTN

Prolintas US$187US$93.5 million senior Ijarah, US$93.5 million junior Musharakah

Monetary Authority of Singapore

TBA Sukuk

Islamic Development Bank US$122.75 Ijarah

For more details and the full list of deals visit


Deal trackerKeeping you abreast of the world’s upcoming Shariah compliant deals

www.islamicfi nancenews.comISLAMIC FUNDS TABLES


Monthly returns for Emerging Markets funds (as of the 3rd September 2008)

FUND FUND MANAGER PERFORMANCE MEASURE FUND DOMICILE

1 KASB Islamic Income Fund KASB Funds 12.06 Pakistan

2 Jadwa Saudi Equity Fund Jadwa Investment 8.54 Saudi Arabia

3 Tijari Islamic Money Market Fund Commercial Bank of Kuwait 6.17 Kuwait

4 Al Rajhi Local Shares Fund Al Rajhi Bank 6.06 Saudi Arabia

5 Jadwa GCC Equity Fund Jadwa Investment 5.38 Saudi Arabia

6 Jadwa Arab Markets Equity Fund Jadwa Investment 4.70 Saudi Arabia

7 HSBC Amanah Saudi Equity Segregated Portfolio HSBC Investments 4.51 Cayman Islands

8 Al-Beit Al-Mali Fund Qatar National Bank 3.89 Qatar

9 Riyad Equity Fund 2 Riyad Bank 3.67 Saudi Arabia

10 Al-Durra Islamic Fund Global Investment House 3.63 Kuwait

Eurekahedge Emerging Markets Islamic Funds Index* -1.98

DisclaimerCopyright Eurekahedge 2007, All Rights Reserved. You, the user, may freely use the data for internal purposes and may reproduce the index data provided that reference to Eurekahedge is provided in your dissemination and/or reproduction. The information is provided on an “as is” basis and you assume and will bear all risk or associated costs in its use, and neither Islamic Finance news, Eurekahedge nor its affi liates provide any express or implied warranty or representations as to originality, accuracy, completeness, timeliness, non-infringement, merchantability and fi tness for any purpose.

Contact EurekahedgeTo list your fund or update your fund information: [email protected]

For further details on Eurekahedge: [email protected] Tel: +65 6212 0900

Eurekahedge Asia Pacifi c Islamic Fund Index

Monthly returns for Developed Markets funds (as of the 3rd September 2008)FUND FUND MANAGER PERFORMANCE MEASURE FUND DOMICILE

1Islamic Al Yusr Certifi cate on the ABN Amro US Opportunities Fund A

ABN Amro Bank 5.50 Not disclosed

2 Solidarity European Real Estate Fund Solidarity Funds Company 0.47 Bahrain

3Islamic Certifi cate on European Real Estate Altiplano

ABN Amro Bank -0.17 Not disclosed

4 AlAhli Islamic US Equitybuilder Certifi cates The National Commercial Bank -1.18 Germany

5 AlAhli Europe Trading Equity Fund The National Commercial Bank -4.55 Saudi Arabia

6 The Iman Fund Allied Asset Advisors -4.85 United States

7 HSBC Amanah Pan-European Equity Fund HSBC -4.87 Ireland

8 AlAhli US Trading Equity Fund The National Commercial Bank -4.91 Saudi Arabia

9 iShares MSCI USA Islamic Barclays Global Investors -5.05 Ireland

10 Alfanar Europe TT International -5.29British Virgin Islands

Eurekahedge Developed Markets Islamic Fund Index* -4.94

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SHARIAH INDEXES


Index Code Index Name 03/09/08 August-08 July-08 June-08 May-08 April-08 Mar-08

SPSHX S&P 500 Shariah 1087.695 1105.698 1088.084 1117.006 1191.671 1159.136 1101.027

SPSHEU S&P Europe 350 Shariah 1299.336 1360.152 1422.505 1484.523 1561.127 1527.614 1447.319

SPSHJU S&P Japan 500 Shariah 1093.657 1118.087 1147.273 1215.950 1298.106 1256.791 1183.592

S&P Shariah Indices Price Index Levels


SPSHAS S&P Pan Asia Shariah 899.833 940.242 1018.429 1043.774 1181.396 1213.284 1128.294

SPSHG S&P GCC Composite Shariah 1150.304 1150.304 1212.987 1267.310 1275.791 1300.940 1217.620

SPSHPA S&P Pan Arab Shariah 1132.450 1192.275 1262.353 1315.524 1326.664 1346.319 1265.530

SPSHBR S&P BRIC Shariah 1157.719 1221.728 1341.591 1491.666 1618.083 1490.222 1339.677


SPSHGU S&P Global Property Shariah 683.924 696.868 726.645 714.774 846.205 897.914 832.467

SPSHIF S&P Global Infrastructure Shariah 94.151 97.923 102.631 107.070 113.133 111.336 108.755

The S&P Shariah Indices. Creating opportunity for Islamic investors.To learn more, contact [email protected].

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03/09/08 July-08 June-08 May-08 April-08 Mar-08August-08

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03/09/08 July-08 June-08 May-08 April-08 Mar-08August-08

www.islamicfi nancenews.comSHARIAH INDEXES


DESCRIPTIVE STATISTICS Market Capitalization (US$ billions) Component Weight (%)

IndexComponent

numberFull

Float adjusted

Mean Median Largest Smallest Large Small

DJIM World 2393 16724.92 13668.87 5.71 1.12 419.90 0.01 3.07 0.00

DJIM Asia/Pacifi c 1081 3011.41 2000.15 1.85 0.4 105.95 0.02 5.30 0.00

DJIM Europe 335 4210.10 3184.23 9.51 2.17 169.28 0.22 5.32 0.01

DJIM US 634 7954.17 7465.18 11.77 3.06 419.90 0.13 5.62 0.00

DJIM Titans 100 100 7813.60 6946.83 69.47 49.40 408.80 11.95 5.88 0.17

DJIM Asia/Pacifi c Titans 25 25 1073.65 690.68 27.63 21.29 63.02 11.95 9.12 1.73

Mean, median, largest, smallest and component weights are based on fl oat adjusted market capitalization, not full market capitalization.

Anthony YeungRegional Director

[email protected]: +852 2831 2580

Learn more about the Dow Jones Islamic Market Indexes

Data as of the 3rd September 2008

INDEX PRICE RETURN (%)

1 Week 2 Week 3 Week 1 Month 3 Month 6 Month 1 Year YTD

DJIM World -3.45 -2.74 -3.44 -4.52 -11.21 -4.12 -10.40 -14.50

DJIM Asia/Pacifi c -4.05 -4.46 -5.83 -7.55 -19.54 -13.40 -21.69 -23.26

DJIM Europe -3.64 -2.36 -3.11 -7.49 -13.41 -7.71 -13.04 -18.85

DJIM US -2.60 -2.10 -2.79 -1.88 -5.95 1.46 -6.37 -9.61

PERFORMANCE OF DJ INDEXES

INDEX PRICE RETURN (%)


DJIM Titans 100 -3.02 -2.41 -3.46 -4.21 -8.53 -3.99 -11.00 -15.44

DJIM Asia/Pacifi c Titans 25 -4.59 -4.52 -6.62 -8.04 -18.15 -9.03 -16.01 -17.27

PERFORMANCE OF DJ TITANS INDEXES

PRIC

E R

ETU

RN

(%)


DJIM World DJIM Asia/Pacif ic DJIM Europe DJIM US

PRIC

E R

ETU

RN

(%)


DJIM Titans 100 DJIM Asia/Pacif ic Titans 25

-25

-20

-15

-10

-5

0

5

-20

-18

-16

-14

-12

-10

-8

-6

-4

-2

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www.islamicfi nancenews.comISLAMIC LEAGUE TABLES


For all enquires regarding the above information, please contact: Catherine Chu Email: [email protected] Phone: +852 2804 1223; Fax: +852 2529 4377

TOP ISSUERS OF ISLAMIC BONDS SEPTEMBER 2007 – SEPTEMBER 2008

Issuer or Group Nationality Instrument Amt US$ m Iss. % Manager

1 Binariang GSM Malaysia Sukuk Musharakah 4,524 9 17.7CIMB, RHB, Aseambankers, Royal Bank of Scotland, AmInvestment, OCBC Bank (Malaysia)

2 Malaysia Malaysia Sukuk 3,757 4 14.7 Malaysia Government bond

3 JAFZ Sukuk UAE Sukuk Musharakah 2,043 1 8.0Barclays Capital, Deutsche Bank (London), Dubai Islamic Bank, Lehman Brothers International (Europe)

4 Saudi Basic Industries Saudi Arabia Sukuk Istithmar 1,333 1 5.2 Calyon, HSBC Saudi Arabia

5Projek Lebuhraya Utara Selatan

Malaysia Sukuk Musharakah 1,160 11 4.5 CIMB

6 Sun Finance UAEMudarabah Sukuk Asset backed Securities

1,093 3 4.3Citigtoup Global Markets, Abu Dhabi Commercial Bank, National Bank of Abu Dhabi, First Gulf Bank, Noor Islamic Bank

7 Sukuk Funding (No.2) UAE Sukuk Ijarah 1,021 1 4.0

Abu Dhabi Commercial Bank, Barclays Capital, Credit Suisse Securities (Europe), Dubai Islamic Bank, First Gulf Bank, Lehman Brothers International (Europe), National Bank of Abu Dhabi, Noor Islamic Bank

8 Nakheel Development 3 UAE Sukuk Ijarah 980 1 3.8Dubai Islamic Bank, NBD Investment Bank, JPMorgan

9 Cagamas Malaysia Sukuk Murabahah 929 12 3.6 HSBC, CIMB, Aseambankers

10 DEWA Funding UAE Sukuk Ijarah 749 1 2.9Barclays Capital, Citigroup Global Markets, Dubai Islamic Bank, Emirates Bank International

11 Syarikat Prasarana Negara Malaysia Sukuk Ijarah 620 3 2.4 CIMB, AmInvestment

12Perusahaan Penerbit SBSN Indonesia

Indonesia Sukuk Ijarah 512 2 2.0Mandiri Sekuritas, Danareksa Sekuritas, Trimegah Securities

13 Lingkaran Trans Kota Holdings Malaysia Sukuk Musharakah 456 13 1.8 Aseambankers

14 Royal Bank of Scotland Malaysia Sukuk Musharakah 453 2 1.8 CIMB, AmInvestment

15 Central Bank of Bahrain Bahrain Sukuk Ijarah 350 1 1.4 Calyon

16 Rakia Sukuk UAE Sukuk Wakalah 325 1 1.3Credit Suisse Securities (Europe), HSBC, National Bank of Dubai

17 MRCB Southern Link Malaysia Sukuk Istisna 320 20 1.3 HSBC, CIMB, RHB

18 Menara ABS MalaysiaSukuk Ijarah Asset backed Securities

307 8 1.2 Citibank

19 Tamweel Sukuk UAE Sukuk 299 1 1.2Standard Chartered, Dubai Islamic Bank, Badr Al Islami

20 RAK Capital UAE Sukuk Ijarah 272 1 1.1Mashreqbank, Standard Chartered, Arab Bank, Ahli United Bank, Emirates NBD

Total 25,606 279 100.0



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TOP ISSUERS OF ISLAMIC BONDS JUNE 2008 – SEPTEMBER 2008

Issuer or Group Nationality Instrument Amt US$ m Iss. % Manager

1 Malaysia Malaysia Islamic Sukuk 2,127 2 30.6 Malaysia Government bond

2 Sun Finance UAEMudarabah Sukuk Asset backed Securities

1,093 3 15.7

Citigroup Global Markets, Abu Dhabi Commercial Bank, National Bank of Abu Dhabi, First Gulf Bank, Noor Islamic Bank

3 Sukuk Funding (No 2) UAE Sukuk Ijarah 1,021 1 14.7

Abu Dhabi Commercial Bank, Barclays Capital, Credit Suisse Securities (Europe), Dubai Islamic Bank, First Gulf Bank, Lehman Brothers International (Europe), National Bank of Abu Dhabi, Noor Islamic Bank

4 Cagamas Malaysia Sukuk Murabahah 619 9 8.9 HSBC, CIMB, Aseambankers

5Perusahaan Penerbit SBSN Indonesia

Indonesia Sukuk Ijarah 512 2 7.4Mandiri Sekuritas, Danareksa Sekuritas, Trimegah Securities

6 Khazanah Nasional Malaysia Musharakah MTN 453 2 6.5 CIMB, AmInvestment

7 MRCB Southern Link Malaysia Sukuk Istisna 320 20 4.6 HSBC, CIMB

8 Tamweel Sukuk UAE Sukuk 299 1 4.3Badr Al Islami, Dubai Islamic Bank, Standard Chartered

9 PLUS SPV Malaysia Musharakah MTN 234 7 3.4 CIMB

10 Tadamun Services Malaysia Musharakah MTN 92 1 1.3 CIMB, Standard Chartered

11 Bank Muamalat Indonesia Indonesia Sukuk Mudarabah 43 1 0.6Bahana Securities, Danareksa Sekuritas, Andalan Artha Advisindo, CIMB Securities Indonesia

12 Aneka Gas Industry Indonesia Sukuk Ijarah 24 1 0.3 Andalan Artha Advisindo

13 Pak American Fertilizers Pakistan Sukuk 22 1 0.3National Bank of Pakistan, JS Bank, Standard Chartered

14 Royal Bank of Scotland Indonesia Sukuk Ijarah 22 1 0.3Andalan Artha Advisindo, Kresna Graha Sekurindo

15 Arpeni Pratama Ocean Line Indonesia Sukuk Ijarah 16 1 0.2 CIMB Securities Indonesia

16 Horizon Hills Development Malaysia Murabahah MTN 15 2 0.2 AmInvestment

17 Mukah Power Generation MalaysiaMudarabah and Istisna MTN

14 3 0.2 RHB

18 Metrodata Electronics Indonesia Sukuk Ijarah 11 1 0.2 Andalan Artha Advisindo

19 Aeon Credit Service (M) Malaysia Musharakah MTN 9 1 0.1 Amseambankers, CIMB

20 Instacom SPV Malaysia Murabahah MTN 2 1 0.0 MIDF Amanah Investment Bank

Total 6,951 63 100.0



For all enquires regarding the above information, please contact:

Catherine Chu

Email: [email protected]: +852 2804 1223; Fax: +852 2529 4377

ISLAMIC BONDS BY CURRENCY JUNE 2008 – SEPTEMBER 2008

Amt US$ m Iss. %

Malaysian ringgit 3,886 56 49.0

UAE Dirham 4,414 35 5.0

Indonesian rupiah 628 9 7.0

Total 6,951 100 63.0

ISLAMIC BONDS BY CURRENCY SEPTEMBER 2007 – SEPTEMBER 2008

Amt US$ m Iss. %

Malaysian ringgit 15,408 60 239.0

UAE dirham 6,621 26 10.0

Saudi Arabian riyal 1,333 5 1.0

US dollar 1,004 4 5.0

Total 25,606 100 279.0

ISLAMIC BONDS SEPTEMBER 2007 – SEPTEMBER 2008

Manager or Group Amt US$ m Iss. %

1 CIMB Group 4,416 90 17.3

2 Malaysia Government bond 3,757 4 14.7

3 Aseambankers 1,565 47 6.1

4 AmInvestment 1,474 45 5.8

5 HSBC 1,347 44 5.3

6 Dubai Islamic Bank 1,269 6 5.0

7 Calyon 1,016 2 4.0

8 RHB Capital 849 63 3.3

9 Barclays Capital 826 3 3.2

10 Citigroup 713 12 2.8

11 Oversea-Chinese Banking 685 16 2.7

12 Emirates NBD 677 4 2.6

13 Lehman Brothers 638 2 2.5

14 Royal Bank of Scotland 622 8 2.4

15 Deutsche Bank 511 1 2.0

16 Standard Chartered 429 15 1.7

17 Noor Islamic Bank 346 4 1.4

18 National Bank of Abu Dhabi 346 4 1.4

19 First Gulf Bank 346 4 1.4

20 Abu Dhabi Commercial Bank 346 4 1.4

Total 25,606 279 100.0

ISLAMIC BONDS BY COUNTRY SEPTEMBER 2007 – SEPTEMBER 2008

Amt US$ m Iss. %

Malaysia 15,408 60 239.0

UAE 6,783 26 10.0

Saudi Arabia 1,333 5 1.0

Indonesia 711 3 9.0

Pakistan 529 2 15.0

Bahrain 350 1 1.0

Total 25,606 100 279.0

ISLAMIC BONDS JUNE 2008 – SEPTEMBER 2008

Manager or Group Amt US$ m Iss. %

1 Malaysia Government bond 2,127 2 30.6

2 CIMB 851 42 12.2

3 Noor Islamic Bank 346 4 5.0

4 National Bank of Abu Dhabi 346 4 5.0

5 First Gulf Bank 346 4 5.0

6 Abu Dhabi Commercial Bank 346 4 5.0

7 HSBC 313 29 4.5

8 AmInvestment 242 4 3.5

9 Dubai Islamic Bank 227 2 3.3

10 Citigroup 219 3 3.2

11 Aseambankers 211 10 3.0

12 (Persero) Danareksa 181 3 2.6

13 Trimegah Securities 171 2 2.5

14 Royal Bank of Scotland 171 2 2.5

15 Standard Chartered 153 3 2.2

16 Lehman Brothers 128 1 1.8

17 Credit Suisse 128 1 1.8

18 Barclays Capital 128 1 1.8

19 RHB Capital 121 23 1.7

20 Mashreqbank 100 1 1.4

Total 6,951 63 100.0

ISLAMIC BONDS BY COUNTRY JUNE 2008 – SEPTEMBER 2008

Amt US$ m Iss. %

Malaysia 3,886 55.9 49.0

UAE 2,414 34.73 5.0

Indonesia 628 9.03 7.0

Total 6,951 100.00 63.0

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AAOIFI 10ABG 10ACR ReTakaful Holdings 9ADCB 9ADCB Meethaq 9ADIC 8ADIC-UBS Infrastructure 27Ahli Bank 12Ahli United Bank 12Ajman Bank 9Al Ahli Bank 9Al Khaleej Islamic Bank 10al khaliji 9Al Meezan Investment Management 4Al Osra 10Al Rajhi Bank 7Al Rayan Holding 9Alfardan Automobiles 7Alico 11Amiri Capital 7AmIslamic Bank 6Amlak Finance 8AMMB Holdings 6Amreli Steel 6AMZ Securities 2Anugrah Life Insurance 11ANZ Banking Group 6Askari Bank 6Bank Alfalah 2, 6Bank Islam 6, 9Barclays 27BBK 10

BIBD 3BIMB Holdings 6BLC Bank 9BLOM Bank Egypt 9Bursa Malaysia 5, 11CBB 7CBI 12Central Bank of Kenya 2CIMB-Principal Asset Management 5Citigroup 8Clyde & Co 8CMA 9Commercialbank 7Coronation 7Credit Suisse 27CresBank 6Dar Al Arkan Real estate Development 10Dawood Islamic 6Deloitte 8Deloitte Corporate Finance 8Deutsche Bank 8DFSA 8DIB 8, 9DIC 8DIFC 3, 8DIFC-LCIA 10DLA Piper 27DME 27Dubai Bank 9Dubai Banking Group 9Dubai Holding 9Emirates NBD 7

Etiqa Insurance 11Faysal Bank 6Fitch 12GIH 9, 10Habib Metropolitan Bank 6HSBC Holdings 10IBM Malaysia 2Industrial Development Bank of Jordan 8ING Bank 8ING Private Banking 27Ithmaar Bank 10Jasper Capital 8Jasper Corporate Finance 8Jordan Dubai Islamic Bank 8Karachi Stock Exchange 4KFH 5, 7Kuala Lumpur Kepong 12Latham & Watkins 27Lehman Brothers 7Linklaters 27MAS 11Maybank 11Meezan Bank 6MIFC 3Misr Romanian Bank 9Mondial Assistance 11Moody’s 4Naseej Holding 10National Bonds 27National Real Estate 9NBAD 7NBK 7

Norkom Technologies 9OCBC Bank 5OCBC Malaysia 3Pakistan Kuwait Investment 6Panin Life 11Prudential Assurance 27QIB 9QNB 7, 12RAM Ratings 12RBI 27RHB 2Riyadh Bank 7SAMBA Financial Group 7Saudi Arabia Monetary Agency 11Saudi French Bank 7Saudi Pak Leasing 6SBP 5, 6SHUAA Capital 7Sitara Peroxide 2Social Insurance Organization 10Solidarity Family Takaful Egypt 11Solidarity Group 11Soneri Bank 6StanChart 6, 11Sunway City 12Swedish Financial Supervisory Authority 6Takaful Malaysia 6UBL Ameen 6UBS 27United Bank 2

NE-IFN05/35

Company Index

Company Page Company Page Company Page Company Page

Country Index

Bahrain CBB’s Islamic securities proves successful 7 ABG’s income surges by 81% in fi rst half 10 BBK to launch Islamic bank 10 Finding Solidarity in Egypt 11 StanChart, Alico in bancassurance partnership 11Brunei BIBD launches redesigned credit cards 3Egypt BLOM Bank Egypt to increase capital 9GCC Islamic banks top the list 7Hong Kong Moody’s: Asian market remain cautious 4India Call for Islamic banking 4Jordan DIB eyeing majority stake in Jordanian bank 8Kenya The next hub of Shariah compliant banking? 2Kuwait GIH launches education fi nancing program 9 NRE Sukuk in the offi ng 9Malaysia RHB’s moves to become a top three 2 Still the largest Sukuk marker globally 2 Malaysian IFIs need to venture out 3

Malaysia Bank Islam looks for M&A 3 OCBC targets 20% growth 3 Non-ringgit Sukuk now tax-exempt 5 Increased demand prompts bigger fund 5 Profi t increase for Islamic fi rm 6 Penetration into new markets abroad 6 Takaful assets see a growth of 25% 11 Maybank calls off plans on Panin tie-up 11 MAS launches online travel insurance 11 Stable outlook for Sunway City’s ratings 12 RAM reaffi rms KLK’s Sukuk Ijarah 12Pakistan Sitara Peroxide’s Sukuk closes successfully 2 New Islamic index 4 Islamic fi nancing for agriculture sector 5 Banks arrange Amreli Steel’s Sukuk 6 Using Sukuk Ijarah to bridge defi cit 6Qatar Have you got the drive for BMW? 7 Clyde goes on Gulf recruitment drive 8 QIB branches out to Ras Laffan 9

Qatar al khaliji on track to begin UAE operations 9 Ahli Bank upgraded, outlook is stable 12 Fitch views QNB’s acquisition favorably 12Saudi Arabia Dar Al Arkan considers issuing Sukuk 10Sweden No obstacles to conduct Islamic banking but… 6UAE Clyde goes on Gulf recruitment drive JV for Deloitte’s fi rms 8 DFSA approves license for Jasper’s subsidiary 8 ADIC plans international sale in fi ve years 8 Ajman Bank to start operations soon 9 Dubai Bank sets up fi nancing program 9 ADCB launches Islamic division 9 DIB hires Norkom 9 DIFC enacts arbitration law 10 Sukuk market slumps after AAOIFI decree 10UK Amiri launches fi rst Islamic fund 7

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In this issue Europe the next hotbed for Islamic ﬁ nance?Sept... · New Islamic index PAKISTAN:...

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