Bahrain
 

Construction project $120 million Sukuk oversubscribed
Gulf Finance House sets up commercial bank.

Indonesia

New guidelines to be issued, assets to grow 85 percent
Retirees bank, BTPN to market Islamic pawn product

Kuwait

First Takaful Insurance to issue IPO
Newly converted Islamic bank re-brands with new name

Malaysia

Stanchart to grow Islamic business to seven percent
Bank Islam secures $15 million trade finance facility
Sarawak $350M Islamic Bond three times oversubscribed
IFC Lifts Size, Sets Price Of Islamic Bond Deal
AMMB gets licence to set up Islamic banking unit
 

Thailand

Asset Manager increase fund size to attract Middle Eastern investors

Saudi Arabia

Al-Rajhi Bank to double paid up capital to $886 million

Sudan

Al Salam Bank Capital Increase Approved
UAE investors take lead role in Emirates and Sudan Bank launch

UAE

Islamic Arbitration Centre to approves rules
Mashreqbank to create new Islamic finance company
National Bank of Sharjah approve threefold increase in capital, name change
Abu Dhabi Commercial Bank plans alliance with an Islamic bank
Abu Dhabi Islamic Bank and Etihad Airways signs travel finance package
UAE Amlak gets $10m for Turkish group
Sharjah banks create Islamic entity

United Kingdom

UK provident fund to offer HSBC Islam fund

Bahrain

Construction project $120 million Sukuk oversubscribed

It was announced today that the USD120 million Issue of Islamic Istisna'a Ijarah-based Sukuk for the Durrat Al Bahrain project has been oversubscribed by USD32.5 million as reported by the Liquidity Management Centre (LMC), the Arranger of the Issue, and Kuwait Finance House, Bahrain, which equally owns the project's development company, Durrat Khaleej Al Bahrain, with the Government of Bahrain. Underwriting and investment commitments of US$152.5 million have been received for the Issue, which starts early January 2005 and matures after 5 years with an option for early redemption. The proceeds from the issue will constitute part of the financing facility for the construction of the US$1 billion Durrat Al Bahrain project - currently the Kingdom's largest development project. The return on the Sukuk is 125 basis points over 3 months LIBOR payable quarterly. The Sukuk transaction structure was also endorsed by the International Islamic Financial Market (IIFM). The Sukuk is expected to be listed and traded on the Bahrain Stock Exchange as well as being traded at prevailing market prices, in the over-the-counter market.

Gulf Finance House sets up commercial bank

Bahrain-based Gulf Finance House (GFH), an Islamic investment bank, will launch a Islamic commercial bank with capital of $80 million early 2005. Gulf Finance House Commercial Bank will focus on real estate projects in Bahrain and later in the Gulf, GFH Chief Executive Officer Esam Janahi told reporters.GFH is involved in major real estate projects, including the $1.3 billion Bahrain Financial Harbour. Bahrain is the Gulf region's hub for Islamic and conventional banking.

Indonesia

New guidelines to be issued, assets to grow 85 percent

Bank Indonesia said it will issue a set of regulations on shariah banks including the minimum capital adequacy ratio (CAR) that Islamic banks must have in 2005. The regulation will determine the standards for shariah banks , that operate under Islamic rules, to be categorized as healthy, deputy governor of the central bank Maulana Ibrahim said. Shariah banks receive and offer no interest and are prohibited to finance projects related to gambling and weapons. Bank Indonesia director in charge of shariah banks Harisman said the assets of bank shariah in the country are predicted to rise 70 per cent to sets Rp24 trillion (US$2.6 billion) in 2005. Harisman estimated that shariah banks grew 80.56 per cent in business volume in 2004 and their financing increased by 101.08 per cent. Under such development, syariah banks shares in national banking industry has surpassed its phsycological level at one percent, after previously it has 1.05 percent of shares. The central bank predicted that its shares in 2005 could reach 1.85 percent in 2005 and hope that syariah banks shares could reach 9.1 percent in 2011. There are 3 independent shariah banks, 12 shariah units of conventional banks and 89 units of shariah People's Credit Banks, with 377 offices all over the country.

Retirees bank, BTPN to market Islamic pawn product

Bank BTPN planned to launch Islamic pawn product and motorized vehicle loans business in 2005 to expand its business from the present focus on retirees. The company planned to keep creating some banking products other than those the bank already had in line with the development of the market demand. At the same time the bank was also developing its information technology to support such development. The bank said that the products of motorcycle loans and pawn would be among the business the bank planned to develop. Regarding with the two plans, the bank was now developing its state of the art information technology. The development of IT master plan of the bank was closely related to the medium term plan of the bank, in accordance with the guidance of Bank Indonesia. The bank planned to concentrate in the business of motorcycle loans as the demand of such vehicle was increasing significantly. The bank would develop Islamic pawn business as the trend of the business was increasing while the procedure was not complicated and easy to trench.

Kuwait

First Takaful Insurance to issue IPO

Kuwaiti Sharia-compliant insurer First Takaful Insurance got listed on the Kuwait Stock Exchange (KSE). The company, to be traded under the FTI symbol, will become the sixth Kuwaiti insurance company listed to the KSE. First Takaful Insurance ( www.firsttakaful.com ) was established in July 2000. The company has an authorised capital of 10 mln Kuwaiti dinars ($33.9 mln/25.4 mln euro) and a paid-up capital of 5.0 mln dinars ($17 mln/12.7 mln euro). It has 100 million issued shares at a par value of 100 fils ($0.339/0.254 euro), which are 50 pct paid-up. The shareholders of First Takaful Insurance include Kuwait Finance House, International Finance Company, The International Investor, Nouf Real Estate Company, Al-Ahliah Holding Group, Securities Group Company and Gulf Project Investment Company.

Newly converted Islamic bank re-brands with new name

The management of Kuwait Real Estate Bank (KREB) is said to have chosen Kuwait International Bank as the bank's new name. The names which were previously reviewed included Bank al-Deira and Islamic Bank (as given by the source). KREB is understood to have submitted the new name for approval by the Central Bank of Kuwait and the bank is expected to start operations as Kuwait International Bank from April 1, 2005. The change in the name comes to reflect KREB's conversion into an Islamic bank. KREB posted a net profit of 12.2 mln Kuwaiti dinars ($41.4 mln/30.4 mln euro) for the first nine months of 2004, up from 11.64 mln dinars ($39.5 mln/29.1 mln euro) in the same period of 2003. The bank was established in 1973 and was listed on the Kuwait Stock Exchange (KSE) in 1984.

Malaysia

Stanchart to grow Islamic business to seven percent

STANDARD Chartered Bank Malaysia (Stanchart) became the first international bank to raise Islamic principle-based ringgit capital in Malaysia, its chief executive officer (CEO) Shayne Nelson said, adding that the bank is aiming to increase its Islamic banking business and assets. In a venture, Stanchart will receive RM380 million financing from the Employees Provident Fund (EPF) to expand its Islamic home mortgage and other Islamic banking businesses. The bank will pay the EPF a yield of between 6 and 7 per cent on RM186 million of Islamic notes over at least seven years, and the EPF may also receive shares in Stanchart's Islamic banking unit, or cash, in return for its investment. Nelson said the venture with EPF would bolster the bank's Islamic banking business and assets. He expects to see an increase in Islamic banking assets to 7 per cent of its total banking assets in Malaysia by 2005 from the current 2 per cent. The bank stated that the arrangement is also the first capital raising exercise for a bank-owned Islamic window in Malaysia and the first Islamic joint-venture capital market exercise by an international bank here. Nelson said the capital raised will be deemed "halal" and will offer Stanchart greater leverage to widen its pool of Islamic assets. Islamic banking industry constitutes about RM89 billion, or 10 per cent, of the total assets of the overall banking system in Malaysia. Both deposits and financing constitute 11 per cent, or RM69 billion and RM55 billion respectively in terms of market share.

Bank Islam secures $15 million trade finance facility

In conjunction with the opening of an offshore branch in Labuan, Bank Islam Malaysia announced that it had secured a US$15 million Islamic Trade Finance Facility Agreement. Bank Islam inked the agreement with South African-based Dimol Holdings (Pty) Ltd which was involved in supplying lithium-based and specialised grease to mining companies and lubricant products. The move to convert its existing subsidiary into a branch will definitely provide Bank Islam Labuan offshore branch greater access to broader capital base, enhance functionalities and infrastructure, and wider-based network and alliances with Bank Islam. Bank Islam was optimistic that its new offshore branch would continue to reinforce the bank's position at the Labuan IOFC and further boost its presence abroad. The new outfit offers a range of Treasury and Fund Management services, including foreign exchange services, Islamic money market, Islamic capital market, liquidity management, fund transfers and trading agent for Labuan Financial Exchange. With the establishment of the branch, the bank's full-fledged offshore subsidiary, Bank Islam (L) Ltd in Labuan IOFC, established in 1997, would cease its operation effective today.

Sarawak $350M Islamic Bond three times oversubscribed

The Malaysian state of Sarawak is awaiting a final signature to allow it to go ahead with a larger-than-originally-anticipated Islamic bond. A $300 million deal was ready to price but strong demand prompted the issuer to increase the size to $350 million. However, that required additional documentation to approve the physical assets involved in the deal. The final approval still pending is related to the additional assets. Machinery constituted the assets backing the $300 million deal and it is unclear what the additional assets consist of. The five-year offering - lead managed by UBS AG has drawn around $1 billion in demand. Some $25% of demand is reported to have come from Europe and the Middle East with the rest coming from Asia. Between 15% and 20% of demand is from Islamic investors, mainly from the Middle East. Allocation has already been completed and pricing could take place now. A portion of the funds raised will be passed on to semiconductor foundry 1st Silicon (Malaysia) Bhd. (SLC.YY), which got approval Dec. 1 to prepay $250 million in high-cost bonds. The foundry is part-owned by the Sarawak government. The $350 mln (263.7 mln euro) Sarawak Corporate Sukuk bonds, managed by the Swiss UBS Group and its Bahraini Sharia-compliant subsidiary Noriba Bank, will be reportedly listed on the Luxembourg Stock Exchange (LSE). The bonds will also be listed on a stock exchange in South Asia, while their listing on the Bahrain Stock Exchange (BSE) is being presently reviewed.

IFC Lifts Size, Sets Price Of Islamic Bond Deal

The International Finance Corp. priced its inaugural Islamic three-year ringgit bond at par to yield 2.88%, 0.10 percentage point below comparable three-year Malaysian government securities. The size of the offering was raised to 500 million ringgit, or about $130 million, from the 400 million ringgit the World Bank unit originally sought, said HSBC Bank (Malaysia) Bhd. The pricing is within indicative yields of 2.87% to 2.89%, or 0.09-to-0.11 percentage point below equivalent Malaysian government securities, the country's local sovereign debt. The other lead manager for the bond is Commerce International Merchant Bankers Bhd. The bond was five times subscribed and that the leads were expecting further orders.

AMMB gets licence to set up Islamic banking unit

AMMB Holdings Bhd may well be Malaysia's sixth financial institution to set up an Islamic banking subsidiary. It told Bursa Malaysia Bhd that Bank Negara Malaysia granted it approval in principle on November 29 to undertake Islamic banking business. AMMB Holdings said the Islamic banking license will be issued by the Minister of Finance when all the pre-licensing conditions have been satisfactorily fulfilled. Last October, Bank Negara gave the same approval to Hong Leong Bank Bhd, which paved the way for the bank to be the fifth financial institution to have an Islamic banking subsidiary. The other banks which have secured such a licence are RHB Bank Bhd, Bumiputra-Commerce Bank Bhd, Bank Islam Malaysia Bhd and Bank Muamalat Bhd. Bank Negara late this year awarded licenses for full-fledged Islamic banking to three foreign financial institutions, namely Kuwait Finance House; a consortium led by Rusd Investment Bank; and Saudi Arabia's Al Rajhi Banking and Investment Corp.


Thailand

Asset Manager increase fund size to attract Middle Eastern investors

MFC Asset Management PCL said it plans on increasing its Islamic investment fund to five billion baht in the future, from an initial value of two billion baht. MFC Asset Management's President, Pichit Akrathit, said the MFC Islamic Fund is being offered to domestic and foreign investors, but mainly those in the Middle East. Subscription to the investment fund has been open since November 25. The Government Savings Bank, the Islamic Bank of Thailand, the SET, the Social Security Fund and Thai Military Bank PCL signed an agreement to jointly invest in the fund. Pichit said Thai Military Bank would invest 20 million baht in the fund, while the other four institutions would invest 100 million baht each.

Saudi Arabia

Al-Rajhi Bank to double paid up capital to $886 million

The management board of Saudi Al-Rajhi Banking and Investment Corp (Al-Rajhi) recommended a capital increase to 4.5 bln Saudi riyals ($1.2 bln/886 mln euro) from 2.25 bln riyals ($600 mln/443 mln euro). The capital increase will be carried out via a one-for-one bonus issue and will be financed by 2.25 bln riyals from Al-Rajhi's general reserve. The board also proposed a cash dividend of 35 riyals ($9.33/6.89 euro) per share. Riyadh-based Al-Rajhi operates according to the Islamic Sharia law, which forbids the payment and receipt of interest. The bank was established in 1987 and is currently wholly-owned by Saudi investors. Al-Rajhi registered a 46.9 pct year-on-year increase in net profit to 2.14 bln riyals ($571 mln/421 mln euro) for the first nine months of 2004.

Sudan

Al Salam Bank Capital Increase Approved

Al Salam Bank, the newest and largest addition to Sudan's banking sector, Monday announced it had received central bank approval to absorb all of the $31 million raised through its Initial Public Offering (IPO) to increase its paid-up capital to $100 million from the $75 million initially targeted. The offering launched on October 9 was an overwhelming success. Demand for the shares from investors in the UAE and GCC in general far outstripped expectations, netting $31 million 65 per cent more than the $18, 250 million the founders had aimed for to top up their $57 million investment. The bank had been expected to return the excess capital raised to investors following the allocation of the shares. But in a move designed to satisfy investor demand Al Salam Bank's founders' council has opted to increase the bank's capital by extending the shareholder base to include all those who subscribed for the shares. As a result all of the $31 million will be absorbed into the bank's paid-up capital together with a further $12.75 million contribution from the founders to lift the total to $100 million. A date for the launch of the bank's operations is expected shortly and the process of setting up its headquarters offices in Khartoum is underway.

UAE

Islamic Arbitration Centre to approve rules

The constituent assembly for the Islamic Arbitration Centre will hold its meeting in Dubai next March to approve the IAC's bylaws and board members. The announcement came at the end of the coordinating committee meeting chaired by Khaled Ali Al Bustani, assistant under-secretary for budget and revenues in the Ministry of Finance and Industy (Mofi). Representatives of Mofi, the Islamic Bank for Development, the General Board of Islamic banks and institutions, and Dubai Islamic Bank attended this coordinating meeting that prepares for the Islamic Arbitration Centre [IAC] constituent assembly general meeting. The IAC board members to be selected will most probably be representatives of some Islamic banks and commercial banks that run some of their operations under the Islamic financing umbrella. Other probable board members would include representatives of development funds from all over the world," he added.

UAE investors take lead role in Emirates and Sudan Bank launch

Sudan's central bank has given its approval for the fully Islamic USD 200 million Emirates and Sudan Bank to be set up in Khartoum, the country's capital, it was announced yesterday. The new bank, which is backed by a number of leading Islamic financial institutions, is expected to begin operations next year and plans to quickly expand out of its Khartoum headquarters and create a network of branches throughout the country. All its operations, services and products will be fully Shariah compliant. The crucial backing of Sudan Bank, the central bank, has opened the door to the full establishment of Emirates and Sudan Bank with a declared capital of $200 million and paid capital of $100 million. The bank would soon offer services to both business and retail customers. He sees a crucial role for the bank in inter-bank and regional financial transactions and investment.

Mashreqbank to create new Islamic finance company

Mashreqbank will create an Islamic financial institution in order to meet the region's need for Sharia-compliant financial instruments, a company official said. The new institution will be a financial institution and thus does not need a banking licence. The new entity will be a fully owned subsidiary of the bank, and will be capitalised initially at Dh200 million. The Islamic finance segment is growing faster than the conventional finance sector. By establishing a fully Islamic finance company, the bank plan aim to participate in the growing market for Sharia-compliant financial instruments. The new company will have the option of increasing its capital, but at a later stage. The scale of Islamic financing activities in the UAE has grown recently. The UAE has seen the birth of new Islamic financial institutions during the last three years. The National Bank of Sharjah became the first conventional bank to be converted into an Islamic bank, under its new name of Sharjah Islamic Bank. This was followed by Middle East Bank, which changed itself into an Islamic entity two months ago with the new name of Emirates Islamic Bank. There have been reports that Sharjah's four banks also are working on a plan to create an Islamic finance company.

National Bank of Sharjah approve threefold increase in capital, changes name

National Bank of Sharjah is planning to increase its capital from Dh386 million to Dh1 billion through a rights issue which is likely to go through by February. The rights issue will be in the ratio of 2.6 shares against each share held. The board of NBS has proposed a premium of 2.5 UAE dirhams ($0.68/0.51 euro) per share for the rights issue, which is to raise the bank's paid-up capital to 1.0 bln dirhams ($272 mln/204 mln euro) from 385.684 mln dirhams ($105 mln/78.6 mln euro). The board of directors decided to seek approval for the rights issue from the Ministry of Planning and National Economy. The board's proposal for the rights issue will be presented to the shareholders for ratification in January. The bank has chalked out an ambitious growth plan including the expansion of the branch network to 15 in the coming year. Besides, NBS has its eyes set on the fast-growing international Islamic finance market, where the bank hopes to have a strong presence in the future. The bank, which announced the launch of its Islamic card a few days ago, created a separate division for retail banking two months ago.

Abu Dhabi Commercial Bank plans alliance with an Islamic bank

Abu Dhabi Commercial Bank, which has been undergoing extensive restructuring since early 2003, is planning to create an ongoing alliance with an Islamic bank which according to the bank will help the bank enter the fast-growing segment of Islamic banking. According to the spokesperson the bank intends to have a foothold in this area through a tie-up with an existing Islamic bank from either Dubai or Abu Dhabi. ADCB, which has the highest net worth of about Dh5 billion, recently entered into a strategic alliance with banks in other countries such as Lebanon.

Abu Dhabi Islamic Bank and Etihad Airways signs travel finance package

Abu Dhabi Islamic Bank (ADIB), one of the leading Islamic financial institutions in the region, and Etihad Airways launched 'Terhal', the first ever travel finance package of its type in the region. It offers no profit being charged for the first six months when passengers purchase their travel packages or tickets from Etihad. Terhal, which will be available with Etihad Airways and other travel agencies, is designed to offer 100% financing from Abu Dhabi Islamic Bank on tickets, Haj and Umrah, and business and holiday travel to any destination across the seven continents. The introductory offer provides for no profit being charged to customers for the first six months in connection with the purchase of Etihad Airways travel packages/tickets. Terhal provides a less expensive and convenient alternative to conventional personal loan or credit card modes of financing travel. In addition to travel finance, a complimentary free Islamic Visa Covered Card is part of the package that gives target customers of ADIB and allied airlines additional liquidity for a hassle free holiday, business, Haj, Umrah, or any other trip of choice to the customer. ADIB is optimistic and confident of Terhal's success as this product has been well researched. In fact, the bank believes that this strategic alliance fills a big gap in the market for co-branded travel finance packages and is fully loaded with values unmatched by the competition. Valued customers of both Etihad Airways and ADIB can expect more pleasant surprises in the coming months.

UAE Amlak gets $10m for Turkish group

Amlak Finance has acted as the sole lead arranger for a $10 million (Dh36.7 million) Murabaha facility for Kombassan Holding. It is one of the largest industrial and manufacturing groups in Turkey. This is the first time the Dubai-based financial services company has acted as the lead arranger for a corporate facility. The other participants are Emirates Islamic Bank, Dubai Islamic Insurance and Reinsurance Company, Al Salam Bank of Sudan and Al Baraka Islamic Bank of Bahrain. The tenor will be two years. "Our role as lead arranger of this significant deal for Kombassan reinforces our commitment to diversifying and expanding our core capabilities in corporate finance," said Mohammad Ali Al Hashimi, chief executive officer of Amlak Finance.

Sharjah banks create Islamic entity

As a growing number of UAE banks and financial institutions work to convert themselves into Islamic entities, four Sharjah-based banks have united to create a large Islamic financial institution. The Bank of Sharjah (BOS), National Bank of Sharjah (NBS), United Arab Bank and InvestBank will set up an Islamic financial institution, the Islamic Finance Company (IFC), catering to the country's wholesale Islamic finance requirements, according to informed sources. The proposal to establish the IFC has been forwarded to the authorities. The new Islamic financial institution's headquarters will be in Sharjah. It will be capitalised at Dh1 billion and its promoters the four banks, along with some high net worth UAE investors will provide 45 per cent of the capital. The new company was likely to float an initial public offering (IPO) to raise the remaining portion of the capital Dh550 million which will form 55 per cent of the capital of the new institution. Once established, it will be the second largest Islamic financial institution in the country after the Dubai Islamic Bank (DIB), which has a paid up equity capital of Dh1.5 billion. Although NBS is an Islamic bank, it is more into financing medium-sized projects, and of late, focuses more on retail banking by creating a separate division. With the economy growing at a much faster pace, there will be opportunities for a large number of deals in Islamic finance. Larger institutions, such as the Department of Civil Aviation (DCA), Emirates airline and Emaar Properties, have been becoming increasingly dependent on Islamic finance for their financing requirements and this offers great scope for more Islamic institutions to be established in the UAE.

United Kingdom

UK provident fund to offer HSBC Islam fund

FRIENDS Provident has announced that it will add the HSBC Amanah Global Equity Index fund to a corporate pensions proposition. It is the first provider to link up with HSBC and make the fund, which complies with Islamic law, available in defined contribution schemes. The product was created for Muslims who want to abide by the rules covering investment and borrowing that are laid down under sharia law. The fund will be available for both employer and trustee-based schemes through the New Generation pensions platform for new and existing clients from this week. The fund tracks the Dow Jones Islamic Market Titans Index, which includes the top 100 companies engaged in sharia-compliant activities. Friends Provident is the first to add the HSBC Amanah Fund to a corporate pensions proposition. It gives Muslim employees access to a Sharia fund and allows for investment in pensions where they may otherwise have been excluded.