August 2010 Issue

United Kingdom: a leader in Islamic finance

The Express Tribune

Peace Dividend Could Transform Sri Lanka into an ‘Islamic Financial Hub’

Sunday Times, Sri Lanka

Saudi Sukuk Double on Spending as New Islamic Issues Drop

IStock Analysis, United States

Saudi Arabian real estate and energy companies are leading Islamic bond sales from the Persian Gulf as the kingdom’s $400 billion stimulus plan, the biggest among the Group of 20 nations, boosts spending. Sukuk from borrowers in the largest Arab economy may more than double to $4.5 billion this year from $2.1 billion in 2009, as a “scarcity” of local notes that comply with the religion’s ban on interest bolsters demand from local banks, according to Riyadh-based HSBC Saudi Arabia Ltd. Saudi Arabia, the world’s largest oil supplier, announced the five-year plan in 2008 to spur economic growth and finance construction projects. Saudi Finance Minister Ibrahim al-Assaf said on Feb. 11 that gross domestic product may increase more than 4 percent in 2010, compared with 0.6 percent last year.

UAE plans to boost Shariah markets

IFE, Wordpress

The UAE, the second-largest Gulf economy, may follow Malaysia, Bahrain and Indonesia in selling Islamic securities with maturities of less than 12 months as legislators consider establishing a local debt market, according to Royal Capital. Islamic bills would give Shariah-compliant banks more investment options, said Ahmed Talhaoui, Abu Dhabi-based head of investment at Royal Capital, which is 44%-owned by United Gulf Bank, an investment bank in Bahrain. The UAE’s eight Islamic banks held $49.8bn of deposits at the end of 2009, or about 19% of the total, central bank governor Sultan bin Nasser al-Suwaidi said at an Islamic banking conference in Singapore on June 14. Banks that adhere to Shariah principles “are facing a maturity mismatch,” Talhaoui said in an interview this week. “They are keeping a lot of deposits but their options are limited. Some banks are playing a dangerous game, which is essentially to match short-term liabilities with investments in sukuk,” or Islamic bonds, which have longer maturities.

Australian Initiatives to Boost Shariah Compliant Projects

HHPOA Org

Australian government has launched a series of initiatives that when completed and hopefully adopted will make the country one of the most proactive Islamic finance markets in the Asia-Pacific Region. Australia is a relative newcomer to Islamic finance and has been left behind by the surge in interest in other Asia-Pacific countries such as Korea, China, Hong Kong, Japan, Singapore and Thailand. Muslim countries in the region, especially Malaysia, Indonesia and Brunei, are spearheading the recovery in global Islamic finance, especially through sukuk issuances and consumer finance.

Is Islamic finance the solution to India’s poverty?

Finance Markets, India

A former Supreme Court judge has launched a campaign to introduce Islamic banking and finance to India. Justice Krishna Iyer said Islamic finance has the potential to offer sustainable growth while reducing inequality. “Islamic finance has proven successful in poverty alleviation and promoting sustainable growth in many countries,” he said. “It is very relevant in our country where 20 million people are starving.” He criticised those who oppose Islamic banking on religious grounds and those who argue Islamic financial models are not viable. “The interest-free Islamic finance is a better option for countries like India,” he said. “People may doubt whether this system can survive without taking interest. “But I can tell you that a system that supports social development will never fail.” Iyer made the comments at a gathering of financial experts in the Kerala city of Kochi. He also announced plans to hold an international seminar in Kochi later this year on the prospect of introducing Islamic finance to India.

Study Shows Islamic Banks Perform Best During Economic Crisis

Eyes of Dubai, Dubai

New Research from The British University in Dubai Shows GCC-based Islamic Banks Performed Better During the Recent Recession than Conventional Banks. Islamic banking practice performed better and showed greater resilience during the recent economic crisis than conventional banking practice, according to new research released today by The British University in Dubai (BUiD), the Middle Easts leading research-based postgraduate university. Findings show that during the study period the Islamic banks were more profitable in terms of Return on Average Asset (ROAA), their assets grew much faster and higher, their net income from financing activities was higher, they had higher capital ratios, were less leveraged and had higher liquidity ratios compared with conventional banks.

Islamic finance must attract non-Muslims

Daily News, Sri Lanka

Islamic banks and finance institutions have recorded a huge growth in the last couple of years. The stakeholders interest has also increased. Addressing the Sri Lanka Islamic Banking and Finance Conference MTI Consulting, Global CEO Hilmy Cader said all Islamic finance institutions should bring novel products and services to consumers while adhering to the Shariah principle. He said most Islamic finance and banks focus on Muslim customers only and the prevailing system should be changed while initiating measures to attract more non-Muslims into their ventures. Sri Lanka is as a non-Islamic country to have legislation for Islamic banking sector. There is sufficient flexibility for conventional banks to make transactions and launch Islamic financial products.

Jordan Islamic Bank launches new corporate identity

AME Info, Dubai

Jordan Islamic bank recently announced the launch of its new corporate identity and logo during a press conference held on Wednesday June the 30th at Le Meridian Hotel. The press conference was attended by CEO for Al Baraka Banking Group Co. Mr. Adana Ahmad Yousef and Jordan Islamic Bank's Vice Chairman Mr. Mousa Abdul Aziz Shihadeh. Commenting on the launch of the new identity and logo, Mr. Yousef said, "The changes Jordan Islamic Bank is currently witnessing is a part of Al Baraka Banking Group ongoing strategy to operate under a Unified Name and Corporate Identity in all its markets. It reflects our objectives for this next phase; bringing the latest in banking and meet the ever-growing demand in compliance with the principles of Islam."

Ghana Islamic Banking Commences in September 2010

Global Islamic Finance, Malaysia

The question whether the Islamic finance can save the Western banks or not is highly spoken nowadays in the global economical crisis. The rules are simple, no dealing in alchohol, pornography or anything deemed morally harmful coupled with no interest and you have the foundation for an Islamic financial system, which has been able to withstand the current economic meltdown, presenting Islamic banks with a unique opportunity to flourish. Unlike banks in Western economies, Islamic banks have been delt less of a blow by the financial crisis and experts believe it is because the laws followed are based on those set out in Islam’s Holy book, the Quran, which for Muslims is the word of God. No interest and risk sharing. Islamic banks do not borrow in interbank markets as their funds are from their own deposits and they do not hold toxic collateralized debt obligations. Furthermore Islamic law forbids interest and encourgaes risk sharing, which means that any investment, profit or loss, is shared by both the bank and its clients.

Islamic finance: Can it save Western banks?

IFE, wordpress

Pakistan, the world’s second-largest Muslim nation, plans to expand its Shariah-compliant banking industry and attract more investors from the Persian Gulf by boosting sales of sukuk bills. State Bank of Pakistan is seeking to sell sukuk maturing in a year or less in the domestic market in the quarter ending September, spokesman Syed Wasimuddin said in an e-mail yesterday. The plan is part of an effort to double Islamic banking services in the next three years to 12 percent of the total. The securities pay profit rates rather than interest.

HSBC amanah opens its first dedicated Islamic banking branch in qatar

Zawya, Dubai

HSBC Amanah opened its first branch dedicated to Shariah compliant products and services in Qatar. To mark the occasion, HSBC Group Chief Executive Officer, Michael Geoghegan, and Governor of the Qatar Central Bank, H.E.Sheikh Abdullah bin Saoud Al Thani performed the opening ceremony today at the branch based at Salwa Road in Doha. The branch, HSBC's first dedicated Islamic banking branch in the MENA region outside of Saudi Arabia, will serve retail and corporate customers. The range of services includes HSBC Amanah Premier, an international Islamic banking service, which is an expansion of HSBC's market-leading premium banking service HSBC Premier; HSBC Advance, an international current account and banking service proposition, as well as international trade finance and corporate banking services.

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