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Islamic
Banking and Finance News
Islamic Capital
Markets Update
Islamic Financial Products
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General News
Malaysia to launch deposit insurance for Shariah compliant
deposits
Malaysia’s central bank governor said that the country will have
a deposit insurance scheme within the next six months and will
also become the first country with such a scheme that protects
deposits in Islamic banks. According to the central bank
legislation will be passed by the parliament and agency will be
set up in the next six months. Deposit insurance scheme is an
effective way to protect depositors against banks' failure.
Citibank may expand Islamic products in Malaysia
Citibank is evaluating the viability to offer more Islamic
banking instruments this year to ride on the growing consumer
interest in syariah-compliant investments. According to
Citibank’s country director the bank is currently studying the
mechanism and viability of several instruments for introduction
this year or in 2005.
Consumer Finance
Saudi Hollandi launches murabaha based car leasing
Saudi-based commercial bank Saudi Hollandi Bank (SHB) has
recently launched a new Sharia compliant car leasing service,
called Sayarat al-Iasar. The service is a part of SHB's Islamic
banking range of products. Under the new service, customers may
buy cars under the Murabaha mechanism of up to 300,000 Saudi
riyals ($80,000/65,900 euro), which are to be repaid over a
period of 60 months. The service is provided in cooperation with
Saudi Wallan, a local dealer of South Korean carmaker Hyundai.
SHB, based in the capital Riyadh, is 40 pct owned by the Dutch
banking group ABN AMRO and the rest is owned by Saudi investors.
The bank was established in 1976 and has a capital of 1.26 bln
Saudi riyals ($336 mln/277 mln euro).
UK: ABC International makes debut through mortgage launch
ABC International Bank, part of Bahrain's Arab Banking
Corporation, has launched its first Islamic banking services in
the UK for retail customers. New products will include an
Islamic mortgage to help Gulf and other non-UK nationals buy
British property. The Alburaq brand is already familiar through
ABC Islamic Bank's credit card. New products will be introduced
over the coming months, including an Islamic 'mortgage' which is
also available to help Gulf and other non-UK residents buy
property in the UK. ABC International Bank is the
London-headquartered wholly-owned subsidiary of Arab Banking
Corporation (ABC), the leading international Arab Banking group.
ABC's consolidated total assets are $30 billion and
shareholders' equity is $1.585 billion.
UAE: New consumer finance company launches four mortgage
products
Dubai-based financing company Tamweel has launched a range of
home finance products for the residential property sector in the
United Arab Emirates (UAE), backed by the power of two of the
UAE’s leading institutions. The company will offer four types of
home finance products, namely, Home Builder, Flexi Rent to Own,
Fixed Lease to Own and Home Owner. As demand for mortgages and
property financing booms in the UAE, the new mortgage products
from Tamweel are designed to satisfy demand for home finance
provided within the guidelines of Islamic financing. Backed by
the combined strength of Dubai Islamic Bank and Isthithmar, the
investment company created by the Ports, Customs and Free Zone
Corporation, Tamweel is poised to be one of the leading mortgage
providers in the UAE. Tamweel’s Home Finance products will
primarily focus on providing mortgages to individual property
owners. Tamweel anticipates that the Flexi Rent to Own product
will be the most popular amongst customers, offering up to 80
percent financing for residential properties, along with a
flexible profit rate.
Branch Distribution
Thailand: Islamic Bank opens new branch in Muslim south region
The Islamic Bank of Thailand its seventh branch, in Hat Yai
district, and attracted 100 million baht in deposits on its
first day. The bank plans to open 10 more branches nationwide,
including two in Bangkok. The new branch had about 100 million
baht held in more than 2,000 accounts and expected deposits to
increase by 20-30 million baht a month since about 40% of the
one million people in Songkhla were Muslims. The branch would
offer loans for housing and personal use in the next quarter of
this year and then extend its lending to the industrial and
commercial sectors. The bank now holds total deposits of 700
million baht.
Egyptian NBD to launch a new Islamic banking branch
Egyptian commercial and investment bank National Bank for
Development (NBD) will shortly open a new branch for Islamic
transactions in the new commercial zone at the entrance of
Alexandria, northern Egypt, bringing the total number of its
branches providing Islamic operations to 19. The bank also has
49 commercial branches throughout the country. NBD currently
operates a network of 26 independent micro-finance units and
plans to increase their number to 32 by end-2004, the chairman
added.
Wealth Management
HSBC
offers another Islamic unit trust fund
HSBC Bank Malaysia Bhd now distributes the RHB Mudharabah
Islamic Fund, an Islamic balanced third-party unit trust fund
from RHB Unit Trust Management Bhd. RHB Mudharabah is the 23rd
third-party unit trust to be distributed by HSBC.
National Bank Abu Dhabi starts $54mln Islamic fund
The National Bank of Abu Dhabi (NBAD.AD) launched a 200 million
dirham ($54.5 million) Islamic fund on Wednesday, with 50
million dirhams held by the bank itself. According to the bank
the fund will be based on short-term investments in the United
Arab Emirates and the Gulf. It would engage in capital and
equity investments in the oil-rich region. The bank said the
bank's previous fund had achieved a return of 79 percent since
it was set up three years ago.
Brunei: HSBC
launches first Islamic Fund
For the first time, HSBC is launching in Brunei a capital
protected investment fund in compliance with the syariah
(Islamic jurisprudence). Mr Iqbal Khan, CEO of HSBC Amanah
Finance (the Islamic finance division of HSBC) talked to us
about this product and the other Islamic financial services
offered by HSBC around the world. The Dynamic Allocation Shield
Fund is the fifth capital-protected equity fund launched by HSBC
Amanah Principle Protected Funds Ltd, our investment company
wholly dedicated to launch syariah-compliant mutual funds.
However, this is the first time that the bank have received
approval by the regulators in Brunei to distribute an Islamic
fund locally.
ABN AMRO: Al-Diraa Islamic investment product proving popular
Dutch national bank ABN AMRO has reported that the bank's first
Islamic fund, Al-Diraa Global Protected Equity Fund is proving
to be extremely popular among the bank's Islamic customer base
in the United Arab Emirates (UAE) and the Kingdom of Saudi
Arabia. The fund has been endorsed by prominent Islamic
economist Mohamed Elgari and is the result of a partnership that
combines the expertise of ABN AMRO Asset Management in
international equities and structured investments, and the
experience of Saudi Hollandi Bank in Islamic investing. To seek
capital protection, the fund invests in Murabahah contracts,
which are commodity transactions which have the goal to return
the investment amount and to seek capital growth the fund
invests in an Arboun contract, which are Sharia complaint
options approved by the Sharia advisor.
Real Estate Trusts
Guidance Financial Group launches Islamic securities program in
the US
Guidance Financial Group, an international Islamic financial
services company, announces the launch of the Guidance Fixed
Income Fund to American customers. The Fund will hold securities
that are backed by Shariah-compliant real estate finance assets.
The securities will be issued and guaranteed by the Federal Home
Loan Mortgage Corporation (Freddie Mac). In order to originate
the assets that back the Freddie Mac securities, Guidance has
worked with Freddie Mac to create a Shariah-compliant home
financing product. This product is available across the United
States to Guidance’s retail customer base. To date, Guidance has
originated over $200 million of mortgage assets under this
program. Fixed income investments form an overwhelming majority
of bank assets. Among those investments, residential mortgages
are a preferred investment, constituting 58 percent of the fixed
income investments of US banks in 2003. The mortgage backed
securities market is the largest component of the US dollar
fixed-income market. In 2003, the average daily trading volume
of the mortgage backed securities market was $207 billion.
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