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Sukuk sector
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as new trends
begin to emerge
...9

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ADIB charts its


course setting
a precedent in
the emirate...10

1MDB unlikely
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IdealRatings

3rd June 2015 (Volume 12 Issue 22)

COVER STORY

Private equity participation: New


movement for Islamic finance?
Private equity is one of the
conundrums of the Islamic finance
industry. On the surface it is the ideal
opportunity equity investments
based on participation, risk-sharing
and profit partnerships. Yet for a
variety of reasons the sector has not yet
garnered the attention, dierentiation
or innovation that it perhaps needs in
order to grow into a viable pillar
despite its vast potential as a catalyst
to drive economic growth. As 2015
demonstrates encouraging signs for
emerging market activity, LAUREN
MCAUGHTRY looks at the current
landscape.

Challenges to growth
A primary issue is the absence of a
universe of dedicated Islamic private
equity funds, which many feel could be
due to a weighted focus on the Islamic
capital markets including Sukuk
and listed equities meaning that
institutional demand for private
equity has been limited, and
the industry has not necessarily
focused on developing and
marketing products to the same
extent as in other areas while due
to the global financial headwinds
of the last decade, products may not
always have returned as well as
expected. Sukuk has been the
success story, the flag bearer of

Islamic finance, agreed Mohamad Safri


Shahul Hamid, deputy CEO of CIMB
Islamic. However, that does not mean it
is the be-all and end-all of the industry.
When we talk of Islamic banking or
Islamic finance, the first thing we think
and perceive is Sukuk, emphasized
Mohamed Kamran Wajid, CEO of
Emirates NBD Capital, to IFN. But the
fact is that Islamic finance is so much
more than just Sukuk.
In order for us to reach the depths that
we want globally, we need to minimize
the words finance and banking and
emphasize the word investment in the
Islamic finance and investment market,
suggested Jawad Ali, the managing
partner of the Middle East oces of
King & Spalding, to IFN. We need to
focus more on equity investment to
deepen the market. We are all looking
for a projected return, so the
industry will always take a
cautionary approach. The
problem is that with the
new banking regulations
that we have
globally and in every
jurisdiction imposed
on banks including
Islamic banks, the
environment
is necessarily
restricted, so I

dont know how much growth we will


actually see.

Risk averse
One issue is that banks are often
reluctant to make high-risk investments
with client funds in areas where they
are not necessarily experienced
and unlike the major multinational
institutions, Shariah compliant banks
can often lack the necessary expertise to
enter specific markets. Given the past
experiences during the global crisis and
the lack of specialized sectoral resources
within, the banks generally shy away
from entering into private equity
investments, explained Kamran. The
responsibility of managing depositors
money is huge and there is enough
potential in debt markets to deploy such
money for moderate returns from lowrisk businesses.
Another challenge is often the
resistance by the entrepreneurs and
family businesses to let go, separate
management from ownership and be
more transparent in their operations
and reporting standards. But there is
also blame on the investor side they
dont understand the industries very
well, insisted Jawad. Even when they
recruit a team to evaluate these deals,
they tend to go for the generalist type,
continued on page 3

REAL-TIME ONLINE ISLAMIC


BANKING SOLUTION
w w w. e i g e r t r a d i n g . c o m

IFN RAPIDS
Volume 12 Issue 22

DEALS

Sukuk Murabahah to
Lembaga Tabung Haji

IFN Rapids ................................................... ..2

SP Setias Sukuk
Musharakah program due
and payable on the 15th June

NASDAQ Dubai admits


Indonesian sovereign
Sukuk programs for trading

Largest Islamic
microfinance group in
Indonesia plans inaugural
Sukuk; expected first week
of June

RA Holding fully
redeems Sukuk following
monetization of multiple
investments

Keynote address:
Facilitating innovation in the Islamic capital
market ............................................................ 6
IFN Reports:
Asia a key focus for industry leaders
Sukuk sector regains ground as new
trends begin to emerge ADIB charts its
course in equity, credit and retail markets,
setting a precedent in the emirate IFN
Global Trendswatch 1MDB unlikely to
disproportionately affect Sukuk market
Company Focus: Bosna Bank International
New rules to bring in more business for
Malaysian Islamic banks IFN Weekly Poll:
Is Islamic finance in the UAE becoming
overbanked? REDmoney launches IFN
Education; a facilitative medium for Islamic
finance education Sovereign Sukuk:
Regular Sukuk auctions and Omans debut
before Ramadan .................................... 8
IFN Analysis:
Saudi Arabia: Poised for greater growth ............15
Private banking and wealth management in Islamic
finance.......................................................................... 16
Case Study:
Hong Kongs sophomore Sukuk first Wakalah paper
by a triple A sovereign ............................................ 17
Shariah Pronouncement: ....................... 18
IFN Country Correspondent:
Hong Kong; Australia; Kenya .................... 19
IFN Sector Correspondent:
Real Estate; Takaful & re-Takaful .............. 21
Special Report:
Key consideration in making third party
debt order for an Islamic banking account:
An overview of the positions in England and
Malaysia .................................................... 23
Low mortgage rates and Islamic finance: How the
two work together ......................................... 25
Country Feature:
Luxembourg takes steps to strengthen Islamic
finance cooperation ........................................ 26
Islamic Finance news ................................... 27
Deal Tracker ................................................. 34
REDmoney Indexes .................................... 35
Eurekahedge data ....................................... 37
Performance League Tables....................... 39
Events Diary................................................. 43
Company Index ........................................... 44
Subscription Form ....................................... 44

Foreign currency Sukuk in


the cards for Cagamas, says
CEO

Capital Market Authority


approves The National
Shipping Company of
Saudi Arabias Sukuk

Khazanah Malaysia plans


to oer SRI Sukuk to retail
market next year

NEWS

Central Bank of Bahrain


achieves oversubscription
of 166% on latest Sukuk
Salam sale
Oman focusing on Waqf;
issuing US$1 billion
sovereign Sukuk before
Ramadan
Indonesia to sell Islamic
treasury bills on the 3rd June
Dubai Islamic Bank
completes five-year US$750
million Sukuk
Garuda Indonesia sells US
dollar corporate Sukuk; first
for the Republic
Saudi British Bank
completes private
placement of its SAR1.5
billion (US$399.87 million)
Tier II Sukuk
Abu Dhabi Islamic Bank to
decide on Tier 1 Sukuk and
rights issue on the 21st June
Saudi Binladin Group to
raise up to SAR1 billion
(US$266.58 million) in
Sukuk
K-Electric issues Pakistans
largest listed corporate
Sukuk
Malaysian governments
RM3 billion (US$818.98
million) GII Murabahah
twice oversubscribed
TH Plantations issues RM1
billion (US$272.99 million)

AlHuda CIBE signs


agreement with Islamic
Chamber of Commerce to
promote Islamic banking
IDB to launch
representative oce in
Egypt in the third quarter
Kenya-based National
Bank implements Path
Solutionss iMAL Islamic
core banking system
Arcapita exits US
investment; exit proceeds
reach US$2.5 billion over
two years
Time is right for Malaysia
to do more complex Sukuk,
says Islamic banking
veteran

Public Mutual declares


distribution for Islamic
funds

TAKAFUL
Al Rajhi Bank Malaysia
forms bancaTakaful
partnership with AIA
PUBLIC Takaful; rolls out
medical plan

RATINGS
S&P arms Oman at A-/A2 with a stable outlook
Outlook for Malaysian
banking system stable
although operating
environment deteriorating,
says Moodys
S&P downgrades
Hannover ReTakafuls
outlook to negative
as capital adequacy
deteriorates
RAM maintains Al Bayan
Holding Companys Sukuk
rating at AA3(s)/Stable
Moodys upgrades
Qatar Islamic Insurance
Company by one notch to
reflect improved and solid
capitalization

MOVES

State Bank of Pakistan


calling for tax amendments
for Shariah banks

Bank Dhofar names


Issam Mohsin as head of
compliance

Bank Aceh eyes fullyfledged Islamic bank status;


shareholders to vote on
asset conversion

Absa Islamic Banking


appoints Uwaiz Jassat as
Islamic banking head

ASSET
MANAGEMENT
Waha Capital to launch
US$500 million Islamic
infrastructure fund focusing
on MENA and Turkey
RHB Islamic International
Asset Management targets
developed markets with
new retail Shariah fund

Commercial Bank
International hires head of
Islamic banking
Dr Fareed Mohammed
Hadi resigns from
position as chairman
of Shariah Supervisory
Board of Al Hilal Islamic
Banking Services; board
reconstituted
Former CEO of EXIM
Bank now leads Alkhair
International Islamic Bank

Disclaimer: IFN invites leading practitioners and academics to contribute short reports each week. Whilst we have used our best
endeavors and eorts to ensure the accuracy of the contents we do not hold out or represent that the respective opinions are
accurate and therefore shall not be held responsible for any inaccuracies. Contents and copyright remain with REDmoney.

3rd June 2015

COVER STORY
Private equity participation: New movement for Islamic finance?
Continued from page 1

Another argument frequently made is


that private equity is by nature largely
compliant anyway, making it dicult for
Islamic firms to dierentiate themselves.
And there are some challenges for
Islamic private equity that conventional
operations do not face. Philip Dowsett, a
partner with Morgan, Lewis & Bockius,
pointed out that: Islamic private
equity is generally more expensive
than conventional as more complicated
structures can be required for investment
and any leveraging is generally more
expensive. Also, Islamic PE funds
have limitations and restrictions that
similar conventional funds would not
have. Speaking to IFN, he noted that
some trends he sees with his clients on
a day-to-day basis are an increasing
nervousness over traditional funds, and a
move towards pledge funds and singleasset plays or funds with predetermined
investments or seed assets.

Asian opportunities
While the Middle East is seeing
increased activity and the US has
long been a focus for private equity
investment especially in real estate,
Islamic investors are broadening
their outlook and seeking the next
opportunity. From a GCC investor
perspective, the next growth markets are
Asia, commented Kamran.
Alex Armstrong, the managing director
and head of financial institutions and
structured finance at
QInvest, agreed. We
have to look outside
the US, Europe and
the GCC for growth
opportunities, and
Asia is certainly
very interesting for
us. QInvest entered
the private equity
sector around two
years ago,
although
it is taking
cautious
steps

500
US$ billion

Barriers to entry

Chart 1: Emerging markets as a percentage of global private equity fundraising


25%

400
300
200

20%

17%
13%

20%

20%

15%

15%

12%

10%

11%

100

5%
N/A

0
2008

2009

Developed Asia (JANZ)


United States

2010

2011

2012

Western Europe
Emerging Markets

2013

2014

0%

EM as % of Global Total

investment bankers and consultants


who can crunch numbers. But there is
a lack of specificity they dont have
sector experts, and most of the PE deals
in the Middle East are being done by
generalists at the moment.

Q1 2015

EM Fundraising as %
of Global Total

Source: Developed Asia - Asia Private Equity Review, US - PitchBook,


Western Europe - EVCA, EM - EMPEA

forward. We have a dierent


risk profile and one of the
reasons why we do it is to
develop a partnership with
private equity partners
and sponsors for our
bigger financing business,
explained Armstrong.
Our main challenge is
convincing GPs that
we operate on the
same principles
as conventional
investors, but use unfamiliar
documentation in order to subscribe. Its
an educational hurdle.
And in Asia, investors are facing
additional obstacles to investment.
Three years ago when QInvest first
brought their balance sheet to the
region, prospects were looking good.
We had fantastic meetings with
companies and were excited about the
depth of opportunity in the market,
recalled Armstrong. However, the
challenge at that time was that the firm
was bringing expensive US dollars and
the market was too well-banked and
local currency too cheap to need them.
As a foreigner coming to a market,
which is saying you have to pay 22, 23,
24 x price to earnings multiples on entry
point, it makes it dicult to understand
if you are getting in at the right value
and its harder for you to assess growth
than the local banks, who oer capital
that is local currency denominated and
priced at a lower risk premium than
foreign investors capital, Armstrong
explained.
Our challenge as a foreign
investor was: how do we
get in at the right time, and

how do we manage the currency


risk? Last year, we thought we
were getting in at an expensive
time so we decided to delay.
We hope that was the right
decision but to be honest there
arent many companies [in
Asia] that need dollar capital;
they can get cheaper financing in
local currency and that is a
major hurdle to private
equity investment in the
region.

Positive steps
Yet despite the headwinds across much
of the world, pockets of growth keep
positivity up and while Asia may
be struggling and the Islamic aspect of
the industry faces challenges in terms
of dierentiation, overall emerging
markets are producing encouraging
results. From a slump of 11% in 2013
(down from a high of 20% the previous
year) the total percentage of global
fundraising accounted for by emerging
markets rose back to 15% in 2014 (see
Chart 1) and looks set to keep going this
year.
The GCC is a prime example of a region
where despite the lower oil prices and
strong dollar, private equity is moving
apace. There is definitely capital in
the Middle East but at the same time,
there are a lot of opportunities to deploy
that capital in the Middle East itself,
pointed out Kamran.
From around US$900 million raised in
new money in 2012 and US$700 million
in 2013, the MENA Private Equity
Association expects figures to bounce
continued on page 4

3rd June 2015

COVER STORY
Private equity participation: New movement for Islamic finance?
Continued from page 3

back in 2014 as new players enter while


big names return to the field. Even
Arcapita appears to be throwing its hat
back in the ring following its Chapter
11 Bankruptcy: with rumors of a new
investment fund of up to US$1 billion for
next year focusing on income-generating
real estate investments including
a reported US$200 million deal for a
project on Abu Dhabis Saadiyat Island
and plans for three to four US-based
deals in 2016.

Asia has
a number
of vibrant and
developing markets.
However, for some
reason Shariah
compliant GCC
capital is not
inding a home in
these
markets
In the last quarter of 2014, the Gulf
saw two of the biggest regional fund
vehicles since the global financial crisis:
the US$750 million GCC-focused GC
Equity Partners Fund III from Abu
Dhabis Gulf Capital (bringing total
assets up to around US$3.5 billion), and
a US$310 million MENA-focused fund
(exceeding the US$300 million target for
NBK Capital Equity Partners Fund II)
from National Bank of Kuwaits NBK
Capital. Major player Investcorp, which
has around US$11 billion under
management, has invested in 13
countries across the US, Europe
and MENA regions over the
past two months, with a deal
around every two months a
record pace for the firm.

Social services
Of the top opportunities
currently driving
private equity, especially
in the Gulf region,

social investments such as healthcare,


education, assisted living and student
housing are gaining ground. In
particular, the social infrastructure
sector like hospitals and education are
in demand as they oer investors a
combined real estate and private equity
investment in one, agreed Jawad.
In February of this year for example,
Saudi-based Alkhabeer Capital acquired
a majority stake in Eed Group, a Saudi
Arabian healthcare provider, through its
Shariah compliant Alkhabeer Healthcare
Private Equity Fund, launched at
the end of 2014 to take advantage of
targeted opportunities in the healthcare
sector. In Saudi Arabia, private
healthcare providers account for 32%
of the total market, providing plenty of
opportunities for private equity growth
and M&A activity while the countrys
budget for health and social aairs
expanded to a reported SAR108 billion
(US$28.7 billion) and new initiatives such
as health insurance programs are also
likely to drive the sector forward.

International attraction
International investors are also looking
towards the Gulf with Gulf Capital
commenting at the launch of its latest
fund that 60% of capital came from
investors in Europe, the US and Asia.
Were seeing increasing activity from US
and UK investors into the Middle East.
Also, we are seeing funds start to look
at exiting and realizing investments as
such are approaching the end of their life,
which is leading to increased activity,
said Dowsett.
Newer industry players are now moving
in while regional firms are looking abroad
for collaboration. Abraaj Capital and TPG
in April this year completed a Shariah
compliant debt investment in Saudi food
chain Kudu through a joint vehicle the
first entry into the region for the
US-based TPG. We are working
on a number of PE deals, and
worked with our US oce
on the recent merger of the
Dubai-based Olive Group
with Constellis, Dowsett
confirmed to IFN. We also
continue to work with Dubai
International Capital,
TVM Capital and STC
Ventures, among others,
on a number of matters.

Looking outward
And while hotspots such as the UAE
and Saudi Arabia are attractive,
regional Gulf firms are also turning
their attention towards growing their
outbound investment, raising capital
in the Middle East and deploying it
across global markets and upcoming
investment destinations such as
Africa, which saw overall GDP grow
3.9% in 2014. Gulf Capital this month
announced a US$25 million investment
in an Egyptian petrochemical firm
marking a spate of renewed private
equity interest in the country, which
is already now home to 11 private
equity firms (according to data from
the Emerging Markets Private Equity
Association). Dubais Abraaj Capital,
which manages over US$9 billion in
assets, also recently raised over US$1.3
billion for two Africa-focused private
equity funds. EFG Hermes, which holds
private equity assets of around US$800
million, also sees considerable potential
in Egypt but is looking even further
afield to Europe where last year it
acquired 49% in French wind energy
firm EDPR France for US$208 million.

Working together
But some of the biggest opportunities
will only occur when investment
firms take a cross-border attitude and
start working together to encourage
international equity investment. The
GCC is competing very well and
keeping a lot of new investment dollars
invested in the region, specifically in
Saudi and the UAE, said Jawad. [But]
I would like to see it go towards Asia
and Africa there are a number of
opportunities in the pure private equity
sector where healthy cash-needing
businesses can be invested in and then
taken back to the Middle East where the
investors themselves reside.
Asia has a number of vibrant and
developing markets. However, for some
reason Shariah compliant GCC capital
is not finding a home in these markets
for example, high-potential countries
like Indonesia need more investment
but for whatever reason, the people
who are trying to attract the investment
and the people who have the capital
are not speaking the same language,
he suggested. GCC investors are
continued on page 5

3rd June 2015

COVER STORY
Private equity participation: New movement for Islamic finance?
Continued from page 4

As family
ofices look to
grow and become
increasingly
sophisticated in
terms of structure
and governance,
private equity sales
offer an alternative
to IPOs and offer
value beyond just
capitalraising
looking for new markets, and the smart
trading houses in Asia and Africa have

something to gain if they can


start learning how to speak
the same language and
attract the much needed
capital.

Growing up
While challenges remain,
the market is undoubtedly
maturing as sellers understand
the opportunities better. As
family oces look to grow and
become increasingly sophisticated
in terms of structure and governance,
private equity sales oer an alternative
to IPOs and oer value beyond just
capital-raising, in terms of experience,
expertise and encouragement to expand.
However, in order to truly carve a niche
for itself in the mainstream market, the
Islamic industry must focus on its own
strengths rather than emulating the
conventional channel. The investment
unit and the investors together should
participate in the risk and share in the
reward rather than focusing on a
straightforward exchange of funds in
exchange for a promised return.

There has to be participation


in the risk that is the only
way that the Islamic industry
can compete or attract the
attention of conventional
industries, agreed Jawad.
You have to have businesses
that operate regionally or
globally on a Shariah
compliant basis, that
own assets and that
attract Islamic
investors and funders alike. At the
moment we attract attention because we
are playing the numbers game, citing
the impressive growth of Shariah
compliant assets which are mostly in
the form of deposits and financial
instruments. The growing childs noise
has to stop it is high time for the
Islamic finance and investment industry
to act like the young adult it has
become. We need to grow up and carve
our own path which must be
distinctly dierent from the
conventional banking and finance
market.

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back the full amount that he invested. Past performance is not an indicator nor a guarantee of future performance.
2015 Franklin Templeton Investments. All rights reserved.

3rd June 2015

KEYNOTE ADDRESS
Facilitating innovation in the Islamic capital market
Keynote address by Dr Nik Ramlah
Mahmood, deputy CEO of the
Securities Commission Malaysia (SC)
at IFN Asia Forum 2015 on Tuesday, the
26th May 2015.
1. Let me first thank IFN for inviting me
to speak at this flagship IFN Forum
2015. I am pleased to note that this
event has over the years grown from
strength to strength and is now a key
event in the calendar of the global
Islamic financial services industry.
2. Typically, innovation in the global
capital markets or the financial
services industry is driven by the
industry, by the forces of demand and
supply. The size of global financial
assets which currently stands at
US$305 trillion and is more than
four times the world GDP (US$75.6
trillion) reflects the frenetic pace of
innovation in the financial markets.
Overall, these innovations have
resulted in the increasing variety and
diversity of products and services
and more innovative distribution
channels, thus oering more choices,
lower costs and better returns for
investors and issuers. This process
continues in the pursuit of the
ever-growing commercialization of
financial products and services.
3. Unlike in nascent or developing
markets where regulators typically
have the legal mandate to facilitate
market development, in developed
markets, policymakers and regulators
do not need to provide a helping
hand to facilitate innovation. That
is until and unless the innovation
in the market causes harm to the
investors, threatens the fair and
orderly operation of the market
or poses systemic risks. This is
when regulators will take a more
interventionist role in order to ensure
that the objectives and principles of
regulation are not compromised. We
have seen many examples of this in
many parts of the world, especially
after the global financial crisis.
4. The same hands-o stance, however,
cannot be adopted with respect
to the Islamic financial services
industry and more specifically
the Islamic capital market (ICM).
Policymakers and regulators, whether
in developed or developing markets,

have a significant, indeed crucial,


role in developing the market and
facilitating innovation. There are
several reasons for this the obvious
one being the fact that the ICM,
unlike the conventional market, is
still in a state of relative infancy.
Additionally, facilitating growth
and innovation in the ICM often
involves numerous complexities such
as regulatory, legal, tax and Shariah
aspects that cannot be resolved just
by the industry. It is fair to say that in
Malaysia, the size of our ICM could
not have reached RM1.64 trillion
(US$449.07 billion) as at the end of
April 2015, without the government,
regulators, the Shariah experts and
others working together with the
industry to facilitate innovation.
5. Over the last decade, the ICM has
witnessed numerous innovations
whether in the form of products,
services or market infrastructure.
However, many of these involve
replicating and adapting what is
available in the conventional space to
make them Shariah compliant. While
such innovations have to a certain
degree served industry needs, this
may not be sustainable as market
demand and expectations evolve.
6. To be sustainable, the appeal of
the ICM cannot be based only
on liquidity, competitive cost of
capital or returns on investment.
For instance, while currently Sukuk
represents an ecient means to tap
capital in several countries including
Malaysia, when it becomes cheaper
to tap the conventional bond market,
issuers who are guided solely by
considerations of costs and liquidity
are likely to shift there. Similarly,

if Islamic funds are sold solely on


the basis of competitive returns, a
period of lower returns could see
investors shift their investments to
conventional funds.
7. To develop the ICM in a manner that
dierentiates it from the conventional
market and put it on the path of
sustainability, many aspects of
innovation must be pursued.
8. The first is innovation to keep pace
with the level of sophistication in
the global financial market. This is
intended to ensure the ICM remains
viable, relevant, competitive and
continues to meet the demands
of issuers and investors. This is
financial innovation which has seen
the introduction of many Shariah
compliant products serving diverse
investors. Financial innovation is
usually pursued by the industry
with little if any need for facilitation
or incentives as the innovators
themselves will reap the benefits from
their innovation. Recent examples of
such innovation include Basel IIIs
Tier-1 and Tier-2 compliant Sukuk.
9. As we are all aware, there has been
growing calls for Islamic finance to
embrace the true objectives of Shariah
(Maqasid Shariah). The second aspect
of innovation is therefore to ensure
that the ICM embraces and is built
on the core values embedded in the
Maqasid Shariah. ICM products and
services should therefore incorporate
sustainable values towards the
environment and society, ensuring
financial products are financially
inclusive and incorporating

continued...

3rd June 2015

KEYNOTE ADDRESS
Continued

environment, social and governance


principles. This includes making the
ICM accessible to a larger segment of
society especially those with limited
access to savings, investments and
financial services. ICM products
such as Islamic unit trusts and
retail Sukuk can serve as a catalyst
to achieving financial inclusion
by enabling greater retail investor
participation. Additionally, SME and
microfinancing should be facilitated
as SME financing remains a critical
challenge in most markets.
10. Another aspect of innovation is
the need for Islamic finance to be
linked to the real sector especially
through the wider use of risk-sharing
structures. Financing that is linked to
the real sector allows Islamic finance
to be dierentiated from conventional
finance. More work needs to be done
so that risk-sharing structures can be
made more appealing to investors.
Key stakeholders must take proactive actions to incentivise risksharing structures.
11. The role of Shariah scholars and
experts in facilitating innovation in
the ICM is critical. Innovation in the
ICM cannot be achieved without their
strong support and pronouncements
with respect to the application of the
guiding principles in Fiqh Muamalat
to financial products and services.
Shariah advisors, experts and
Shariah research institutions all play
a role in contributing to the Islamic
financial industry. Shariah councils or
committees and supporting research
institutions have often demonstrated
their ability to proactively issue
various guidance or research findings
for the industry to pursue in terms of
new product development.
12. The issuance of the innovative stapled
security REITs of KLCC Property
Holdings is a fine example of how the
Shariah Advisory Council (SAC) of
the SC has been most responsive in
issuing the relevant Shariah rulings
to facilitate the introduction of the
worlds first Islamic stapled security.
In this case each component security,
that is, the REITs units and ordinary
shares, must be Shariah compliant
based on the Guidelines for Islamic
Real Estate Investment Trusts and
equity screening methodology

respectively. Similarly, the SAC has


issued Shariah Parameters on Islamic
Exchange-Traded Fund (i-ETF) based
on gold and silver that provides
clarity, certainty and guidance to
the industry for the development
of new products. We can expect the
SAC to issue more of such Shariah
parameters to facilitate innovation in
the ICM in the future.
13. To complement the work of our
SAC, the SC has been given the
legal mandate to develop the capital
market, facilitate innovation in the
ICM through the introduction of
frameworks and regulations for
products and services, and review
and amend existing regulations and
laws or the introduction of new ones.
14. One area where the SC had played
a prominent role in facilitating
innovation is in the promotion
of sustainable and responsible
investment (SRI). The Capital
Market Masterplan 2 first identified
the importance of sustainability
and recognized that the role of the
capital market can be expanded to
support this agenda by providing
market-based solutions that will
bring scale and financial discipline in
mobilizing investments to companies,
projects and products that promote
sustainable development.
15. Pursuant to this, in August 2014
the SC introduced the SRI Sukuk
Framework within the Sukuk
Guidelines to facilitate the financing
of SRI initiatives. In coming out with
the framework, the SC had engaged
various stakeholders at all levels,
from the Ministry of Finance (on
the tax incentives) to other industry
stakeholders including potential
issuers. Engagements through
roundtable discussions and industry
dialogue were held in the course of
formulating the framework.
16. But guidelines without actual
issuance will not bring about
innovation in the ICM. It is thus
most heartening to note that earlier
this month Khazanah Nasional has
announced a RM1 billion (US$273.82
million) Sukuk Ihsan program as the
first social impact Sukuk in Malaysia.
Khazanah will use the proceeds to
fund selected government schools

under the Trust Schools program,


with clear key outcomes that are
linked to an SRI-based step-down
yield mechanism with the sole aim of
enhancing the quality of governmentrun schools.
17. The Shariah compliance and
governance aspects of the SRI Sukuk
Framework were carefully crafted
so as to ensure the universality of its
application. In this regard, the SAC
played a significant part in facilitating
and supporting Shariah innovation.
The very fact that proceeds from the
issuance of an SRI Sukuk can also
be channeled towards developing
Waqf assets reflects the foresight
and wisdom of the SAC in linking
SRI with a socially oriented agenda
benefiting the society at large.
18. Another example of how the SC has
facilitated innovation is in the fund
management industry. The ASEAN
CIS Framework for Cross-Border
Oering of Funds, an initiative of
the ASEAN Capital Markets Forum,
allows collective investment schemes
(CIS) including Islamic CIS to be
distributed in three participating
countries namely Malaysia, Singapore
and Thailand. The Islamic fund
management industry is expected
to greatly benefit from this by
having access into new markets.
The recent launch of the first Islamic
equity fund under the framework
- Maybank-Bosera Greater China
Asean Equity-i-Fund by Maybank
Asset Management in partnership
with Hong Kong-based Bosera Asset
Management is the first Islamic
product oered under the framework
and should be a precursor to more
innovative cross-border oerings.
We consider this a significant
development in the ICM as it oers
tremendous growth opportunities
for Malaysias capital market service
providers.
19. Innovation is key for the ICM to
continue on its growth trajectory.
Such innovation may involve
financial, social or Shariah aspects but
one thing is clear: all stakeholders,
policymakers, regulators, Shariah
experts and the industry must work
together to facilitate the innovation.
Thank you.

3rd June 2015

IFN REPORTS
Asia a key focus for industry leaders
IFN Asia Forum 2015 held on the
25th-26th May in Kuala Lumpur was
a phenomenal success; serving as
an avenue for thought-provoking
discussions on some of the industrys
biggest issues and opportunities.
VINEETA TAN provides an overview of
the two days.

IFN Issuers Day


Market players are strengthening their
focus on Asia as the region is exhibiting
greater potential for Islamic finance
driven by a stronger push for ethical
finance by various governments in
the region against the backdrop of
rising living standards and a growing
population, said industry captains at IFN
Asia Forum 2015 Issuers Day.
Held on the 25th May at Kuala Lumpur
Convention Center, the two-day forum
kicked o on a high note welcoming
over 600 delegates to a stimulating array
of discussions by an impressive lineup of speakers and panelists, inviting
insightful debates and conversations.
However, despite the lucrative appeal
of Asia, there remains challenges to
be tackled including market liquidity
management concerns and the lack
of an enabling legal infrastructure in
some jurisdictions. Another issue, as
highlighted by Jawad Ali, the managing
partner of King & Spaldings Middle
East oces, is the lack of understanding
between capital seekers and capital
providers. For example in Indonesia,
there is a need for investment but I think
that the people who are trying to attract
the investment and the people who have
the capital are not speaking the same
language. GCC investors are looking for
new markets; the smart trading houses
in Asia and Africa have something to
gain if they can start speaking the same
language.
Among key areas for growth are
infrastructure and private equity.
Professor Dr Rifaat Ahmed Abdel Karim,
CEO of International Islamic Liquidity
Management Corporation, emphasized
in his opening keynote address that
Islamic finance players would be remiss
if they did not recognize the huge
infrastructure needs of Asia and the
opportunities they oer.
In terms of Sukuk, while the market
has been experiencing a slowdown,

attributed largely to the anticipation


of increasing interest rates, issuers
and regulators remain committed to
developing the asset class with several
issuances in the pipeline. Malaysias
Khazanah Nasional, for example, is
looking at expanding its SRI Sukuk
program the first issuance under
the Securities Commission Malaysias
SRI Sukuk Framework to the retail
market next year, according to the chief
investment ocer Mohd Izani Ghani;
while Cagamas is planning to oer
foreign currency Sukuk in the near
future, said CEO Chung Chee Leong.

markets, however, the replication and


adaptation of conventional instruments
to fit the Shariah mould may not be
sustainable as market demand and
expectation evolve.

While one cannot discuss the success


of Asias Islamic finance story without
mentioning torchbearer Malaysia, an
emerging theme from the forum was the
stronger presence by emerging markets,
such as Japan and China, in the Islamic
finance space as they adopt ethical
and SRI finance in a bid to stabilize the
financial system and push the Islamic
finance agenda to attract Muslim wealth.
This diversification is most welcomed by
industry players as it signals a maturing
market. Malaysias dominance in
this segment must be joined by other
countries in the near to medium-term,
said Mohamad Safri Shahul Hamid, the
senior managing director and deputy
CEO of CIMB Islamic.

Reasserting its lead and ambition as


the worlds leading Islamic finance
power outside of the Muslim world,
the UK will be strengthening bilateral
ties with Malaysia. Addressing the
audience, Alan Yarrow, the Rt Hon
the Lord Mayor of the City of London,
said that London will explore further
Shariah financial opportunities with
the Southeast Asian Islamic finance
powerhouse, including in the area of
education and training.

IFN Investors Day


Continuing the strong momentum of the
first day of IFN Asia Forum 2015, IFN
Asia Investors Day gathered an upward
550 delegates to an event-packed day at
the Kuala Lumpur Convention Center
on the 26th May. Adding to the wide
range of topics covered on the first day,
the second day of the forum explored
various themes in the investment space
including: asset management trends,
Waqf, crowdfunding, Islamic treasury
products, cross-border activities and
human capital development among
others.
The event commenced with a keynote
address by Dr Nik Ramlah Mahmood,
the deputy CEO of Securities
Commission Malaysia (SC), who brought
to attention the vital need to refocus the
industrys eorts towards creating risksharing structures to enhance the appeal
of Shariah finance among investors. Dr
Nik emphasized that while innovation is
a persistent theme of the Islamic capital

To that end, Dr Nik confirmed that the


SC, which launched a joint publication
on Islamic Capital Markets: Principles
and Practices in collaboration with
International Shariah Research
Academy for Islamic Finance during the
forum, will be issuing further Shariah
parameters to facilitate innovation and
development in the industry.

Industry leaders are also optimistic that


the Islamic wealth management sector
is poised for further growth over the
next five to ten years as the Asian region
continues to be home to rising auence
on the back of increasing demand for
Shariah wealth management solutions.
Given the current yield climate, this
will spur interests in investment-linked
product and unit trusts, opined Syed
Abdul Aziz Syed Kechik, CEO of OCBC
Al-Amin Bank.
Another prevalent theme was the
avenues Asian passporting funds could
open for the Islamic funds industry. The
ASEAN Collective Investment Scheme
was a particular focus and while the
infrastructure is most welcomed by the
industry, however, market players noted
that for the Islamic funds segment to
truly capitalize on the ASEAN CIS, more
countries particularly Indonesia, will
need to come onboard. Gerald Ambrose,
CEO of Aberdeen Islamic Asset
Management, suggested the Asia Region
Fund Passport (expected in 2016), which
includes more jurisdictions including
the Philippines, as another option for
Islamic fund managers to reach a wider
investor base.

3rd June 2015

IFN REPORTS
Sukuk sector regains ground as new trends begin to emerge

One notable trend is that the higheryielding indices are currently


outperforming perhaps unsurprising
in todays market conditions (see Chart
1). From 2013, what we see is that the
AA and BBB Sukuk are outperforming.
The BBB rolls around 6.13% and the AA
around 7.29% in a one-year time frame,
commented Leung. However, it is worth
noting that the AA issuance is mainly
driven by Saudi Electric, which has been
a very active issuer in the past few years.
Longer-maturity Sukuk have also
outperformed, and by a significant margin
suggested the increased popularity of
project and infrastructure issuance and
a higher tolerance from investors for a
longer time frame (see Chart 2). If we
look at just a one-year time frame, the
index rose 8.8%, pointed out Leung. The
short-term is not performing anywhere
near as well as the long-term at the
moment. To corroborate this trend, she
notes that new issuance is also moving
towards longer tenors: predominantly 10year and 30-year.
Another key trend is regarding the country
of exposure. Usually Malaysia dominates
local currency Sukuk, representing around
56%, and in the US dollar space the GCC
are the more active issuers. But so far this
year, we see that Malaysia Sukuk has
outnumbered GCC Sukuk in the US dollar
space, explained Leung. Major issuances
pushing Malaysias global Sukuk portfolio
higher include the US$1.25 billion Petronas

113
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5

In 2014 Sukuk issuance in the US dollar


market reached US$14 billion, which is
on a par with 2012, so we have picked up
from the drop in 2013 when the global
markets slowed down somewhat,
explained Michele Leung, the director of
fixed income indices at S&P Dow Jones
Indices (S&PDJI). In terms of total Sukuk
performance, year-to-date returns are
around 2% but looking at a one-year
timeframe this increases to around 4.3%,
which is very comparable to the Malaysian
ringgit market, which is also around 4.3%.

Chart 1: Rating-based sub-indices Total return performance

Dow Jones Sukuk A Rated Total Return Index


Dow Jones Sukuk AAA Rated Total Return Index
Dow Jones Sukuk AA Rated Total Return Index
Dow Jones Sukuk BBB Rated Total Return Index

Source: S&PDJI as of the 19th May 2015

Chart 2: Maturity-based sub-indices Total return performance


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Sukuk saw a minor dip in 2013,


accompanying the wider global
slowdown, but in 2014 issuance
resumed its 2013 levels and the sector
looks to continue its successful storm
forward. LAUREN MCAUGHTRY
speaks to S&P DOW JONES INDICES
for an exclusive peak at key current
trends for the sector.

Dow Jones Sukuk 1-3 Year Total Return Index


Dow Jones Sukuk 3-5 Year Total Return Index
Dow Jones Sukuk 7-10 Year Total Return Index
Source: S&PDJI as of the 19th May 2015
Chart 3: Country of risk by par amount
US Bahrian
1% 3%
Turkey
11%
Supra
11%

UK
1%

UAE
24%

South Africa
1%
Qatar
Malaysia
13%
10%
Saudi
Arabia
Indonesia
13%
10%
Hong Kong
2%
Source: S&PDJI as of the 19th May 2015

Sukuk, and the Malaysian governments


US$2.5 billion issuance. So far this
year, Malaysian US dollar exposure has
outpaced GCC dollar exposure which is
a reversal of the traditional movement that
we see.

In terms of country of risk however, 53%


of total outstanding is now from the GCC
(see Chart 3). The GCC has been a really
hot item in the market, everyone is talking
about how it is growing, confirmed
Michele. In contrast, she notes that (outside
of Malaysia) it is taking some time for
Sukuk in Asia to develop. However:
We are seeing some new collaborations,
for example with Chinese investors,
which should bring some interesting
developments in the next few years.
In terms of oil price and Sukuk
performance, S&PDJI also ran correlations
between oil price and MENA Sukuk. In a
one-year time frame the correlation was
found to be only around 1% not
meaningful at all, pointed out Leung. So
people sometimes claim that oil prices are
aecting Sukuk performance but in
terms of total performance, there is very
little impact.

3rd June 2015

IFN REPORTS
ADIB charts its course in equity, credit and retail markets,
setting a precedent in the emirate
Abu Dhabi Islamic Bank (ADIB)
in a recent statement announced its
intentions to raise capital through
a rights issue and a potential Tier-1
Sukuk issuance. With strong financial
results for the year 2014 and the first
quarter of 2015, NABILAH ANNUAR
takes a closer look at the banks
expansion plans.
Said to have experienced a period of high
growth, ADIB reported 20.7% growth
in net profit in 2014, with customer
financing increasing 18.2% from the
previous year. For the first quarter
of 2015, the bank witnessed a 10.1%
increase in net profit, with net customer
financing growing 13.3% to AED72.3
billion (US$19.67 billion). Expecting this
trend to continue, ADIB has scheduled an
extraordinary general meeting (EGM) at
the end of this month to vote on capitalraising proposals to fuel this growth.
ADIB has experienced a period of
strong expansion and we expect this
growth trajectory to continue. In order to
support our growth, the bank is looking
to raise additional capital and as such
we are now inviting our shareholders to
participate in a rights issue. We are also
keeping our various capital instrument
issuance programs up to date, should an
opportunity present itself in the future
to raise alternative forms of capital,
explained Tirad Al Mahmoud, group
CEO of the bank.

Keeping all its funding options open,


ADIB seeks to explore possibilities in
both equity and debt capital markets.
The proposed issue of 168 million new
shares (fully underwritten), will be
priced at AED3 (82 US cents) per share,
which represents a 40% discount to
the current share price and is expected
to raise AED504 million (US$137.18
million) in share capital. Shareholders
will receive the right to buy 56 rights for
every 1,000 shares they own. Paving the
way for the rights issue, shareholders
during the EGM will be asked to vote
on an amendment of ADIBs Articles
of Association to increase the banks
authorized share capital from AED3
billion (US$816.54 million) to AED4
billion (US$1.08 billion).
Supporting capital market development
in the emirate, the rights issued by
ADIB will for the first time in the UAE
be traded on the Abu Dhabi Securities
Exchange through approved brokers.
As rights issues are relatively rare in
the country and options have not been
traded in the past, the transaction would
raise the level of sophistication of the
local market for retail investors. This
process is projected to be educational
for many retail investors, encouraging
companies to list on the UAE markets.
It will further demonstrate that capitalraising through equity markets does not
stop at an IPO stage, and that the UAE

exchanges can also be a platform for


growth.
On the credit side, ADIB also proposed
to increase the banks mandate for
issuing Shariah compliant Tier-1 capital
instruments from the existing approved
limit of US$2 billion to US$3 billion.
As part of a long-term capital-raising
program, shareholders during the EGM
will vote on the expansion of the banks
current Tier-1 Sukuk program. The
Sukuk is expected to materialize later in
the year.
With a focus to expand its network across
the UAE, ADIBs wholesale banking
division plans to magnify financings
in the SME sector as well as large and
emerging corporate segments, where
demand for financing and ancillary
services are seen to rapidly develop. In
retail banking, ADIB is currently moving
to aggressively expand in the Dubai
expatriate market, pioneering new levels
of digital banking in the UAE, while
growing its branch network.
As of the 31st March 2015, ADIBs capital
adequacy ratio under Basel II stood at
14.74% (well above the 12% requirement
set by the Central Bank of the UAE)
compared to 15.71% a year earlier. While
its capital base remains strong, the bank
still foresees that it requires additional
capital to sustain its growth.

Islamic Finance Q
Qualification (IFQ)
23rd 25th August 2015, Dubai
Key Highlights:
Key Islamic Finance Principles
How Islamic and Conventional Finance Differ
Structuring Rules for Islamic Financial Products
Sukuk & Islamic Securitization
Islamic Asset & Fund Management
Takaful
Financial Statements for Islamic Banks
Corporate Governance for Islamic Finance
www.redmoneytraining.com
dubaicourse@redmoneygroup.com

10

3rd June 2015

IFN REPORTS
IFN Global Trendswatch
Whats been going on in the world this
week? LAUREN MCAUGHTRY brings
you an update of the most significant
economic, regional and global events,
issues and trends that have the
potential to aect the Islamic finance
industry.
Foreign investors flood into China
with over US$4 billion flowing in
over the past week just as the
Shanghai market plummeted over
6% yesterday.
Chinas falling stock market
combined with a decline in the S&P
500 and weakening oil prices make a
choppy climate for European and US
equity investors.
Brent Crude touches its lowest level
for a month.

Japan story looking relatively


positive in comparison, with stock
market up and unemployment at its
lowest since the 1990s.
Could liquefied natural gas be the
big new energy story, as it is set
to replace iron ore this year as the
second most valuable commodity
after oil, with Goldman Sachs
predicting it to reach US$120 billion?
Royal Bank of Scotland prepares
to sell o shares as new UK
government makes clear indication
of desire to ooad its 80% stateowned holding as quickly as
possible, even if that means making
a loss. Could this be an opportunity
for a foreign bank to gain a cheap
foothold in the UK market?

Israel nears a landmark deal to


develop massive US$6.5 billion
Leviathan oshore gasfield, after
the resignation of David Gilo, the
antitrust chief blocking the deal by
declaring it a cartel, says the FT.
Ali al-Naimi, the Saudi oil minister,
announced at a Paris conference this
week that the Kingdom could phase
out fossil fuels as early as midcentury: I dont know when, in
2040, 2050 or thereafter, and thus
plans to become a global exporter in
solar and wind energy, and export
electricity instead of oil.

1MDB unlikely to disproportionately affect Sukuk market


Deep in debt and controversies,
Malaysias investment vehicle
1Malaysia Development (1MDB) has
not been able to escape public scrutiny
and the considerations of international
rating agencies. VINEETA TAN
examines the possible collateral
damage the fund may incur to the
worlds most sophisticated Islamic
finance market and Sukuk industry in
general.
Moodys Investors Service may revisit
its positive outlook on Malaysias A3
rating if the governments aid to debtladen funding vehicle 1MDB aects
the countrys deficit reduction exercise.
[Government] support is probably
forthcoming; in fact support already
has come in the form of a line of credit
earlier this year. The question we are
asking ourselves is: Will the magnitude
of support eventually derail the trend of
fiscal consolidation? If so, it may cause
us to relook our outlook, said Christian
de Guzman, the vice-president and
senior analyst for Moodys sovereign
risk group.
Speaking to reporters, de Guzman
however added that while contingent
risks from 1MDB and non-financial
corporate debt are a rating concern,
Malaysias credit fundamentals are

unlikely for the Sukuk market to be hit


disproportionally as compared to the
conventional segment.

resilient enough to weather a harsher


global economic environment and
more significantly, 1MDB does not pose
a policy risk. From a fundamental
perspective, the 1MDB issue is not
systemic to public finances, the economy
or the banking system. But it does
have a disproportionally large eect
on the political situation and public
sentiments, he explained.
As of March 2014, 1MDBs debt reached
RM41.9 billion (US$11.53 billion);
of which US$1.25 billion was raised
through Sukuk which will mature
in June. The state-owned investment
company previously planned what
would have been the largest Sukuk
oering of 2014, a program of up to
RM8.4 billion (US$2.4 billion) but
decided to call it o.
On the potential impact of a possible
default of the Islamic facility, Khalid
Howladar, the global head for Islamic
finance at Moodys, opined that it is

11

It was recently revealed by the


Malaysian second finance minister,
Ahmad Husni Hanadzlah, that the firm
will ooad all its energy assets via
Edra Energy and spin o Tun Razak
Exchange and Bandar Malaysia as
stand-alone companies, as part of a
strategy to reduce its debt levels. 1MDB
will also be receiving a US$1 billion
payment from Abu Dhabis International
Petroleum Investment Company and
its subsidiary Aabar Investment by the
4th June as part of a binding agreement,
to be used to repay a US$975 million
syndicated loan ahead of maturity.
The investment vehicle has been mired
in controversies with members of the
public and political sphere questioning
the handling of public funds. This is
further aggravated by the firms lack of
transparency. We certainly do not
expect this level of opacity from 1MDB
especially from a sovereign to which we
have assigned a rating of A3, said de
Guzman who added that the rating
agency will be monitoring the situation
closely.

3rd June 2015

IFN REPORTS
Company Focus: Bosna Bank International
As Bosnia and Herzegovinas sole
Islamic banking player, Bank Bosna
International (BBI) has over the years
adapted and created a model best
suited to further the Islamic finance
proposition in an environment that is
less than conducive. VINEETA TAN
recently caught up with CEO Amer
Bukvic to bring you an exclusive peek at
BBIs project pipeline and performance.

Exponential growth
Although BBI only account for 3% of the
countrys total banking market share, the
Islamic bank has achieved an average
annual growth of 25% for the last decade,
reflecting the rising acceptance of Shariah
compliant products in the Southeastern
European nation, despite its limiting
regulatory landscape.
From the first time when this market
[welcomed] a bank running its operations
according to Islamic principles, which
was completely unknown to the market
then, and even subjected to prejudices
against Islamic banks, we proudly
emphasize the fact that BBI clients today
come from all ethnic and religious
groups including Christians and Jews,
said Bukvic.

International involvement

Looking ahead

While BBI has been busy on the home


front running various awareness
campaigns and developing its business,
the bank has also begun expanding
its clout abroad. Equipped with its
experience and expertise, BBI has been
engaged by the United Bank of Albania
to assist with management and the
rolling out of Islamic products with
hopes to eventually establish a proper
Shariah banking infrastructure in the
country.

However, despite the promising progress,


Bukvic acknowledges that there is room
for improvement and that the bank (as
well as aspiring Islamic finance players)
face a multitude of challenges from
unaccommodating legal infrastructure to
the complex web of ethnic tensions.

New asset class


Aside from assisting its Balkan
neighbor, Bukvic revealed that the bank
is looking at expanding its portfolio to
include Salam instruments as well as
to launch a private equity fund. These
plans are part of a wider strategy to
capitalize on the countrys agricultural
sector with the eventual goal of creating
an Agriculture Investment Corporation
to support local agricultural producers
and export activities. The future of
Bosnia and Herzegovina lies in the
development of agricultural potentials
which is abundant in the region, said
Bukvic.

As far as regulators are concerned,


they have been supportive so far;
however, they also need more technical
enhancements especially in the fields of
Islamic accounting, shared Bukvic.
Claiming that the Bosnian market is
overbanked, Bukvic believes that another
key growth driver for Islamic finance is
in the area of investment banking and
Takaful which is currently absent from
the jurisdiction.
Realistic and cautiously optimistic,
Bukvic recognizes the challenging times
ahead for Islamic finance in Bosnia and
Herzegovina but he arms that: While
the market in the country remains
turbulent, BBI will continue on its path as
a stable partner to the local business
community and catalyst for foreign
partnerships.

New rules to bring in more business for Malaysian Islamic


banks
As the deadline to reclassify banking
deposits into either Islamic deposits
or investment accounts approaches
(mid-year), Malaysian Islamic banks
are in the midst of rolling out their
re-engineered products as well as
introducing new solutions to meet the
requirements of the Islamic Financial
Services Act 2013 (IFSA 2013). VINEETA
TAN takes a look at how Malaysian
Islamic banks are coping amid concerns
over potential loss of market share
during this period of transition.
The countrys pioneering Shariah
financier, Bank Islam Malaysia, is
confident that income streams would not
be negatively aected and is optimistic
that business would continue to grow
following full implementation of the
regulation.
The bank this week expanded its suite

of products with three new investment


accounts (Special Investment Account
Mudarabah (SIA Mudarabah), Waheed
Investment Account Wakalah (WIA
Wakalah) and Al-Awfar Account),
becoming the first player to roll out
products in compliance with IFSA 2013.
Two out of the three (SIA Mudarabah
and WIA Wakalah) are designed for
corporate customers as Bank Islam seeks
to bolster its corporate line and reduce
dependency on its retail business. Chief
strategy ocer Hizamuddin Jamalludin
confirmed to the media that the bank is
looking at diversifying its portfolio to
boost its corporate financing assets and
retail financing assets ratio to 30:70 from
the current 24:76.
Admitting that the banks consumer
operations have consistently
outperformed its corporate business
which makes it challenging to

12

augment the construct of its portfolio,


Hizamuddin said that Bank Islam is
keen to attract large corporates in order
to capitalize on the value chain or chain
of vendors. He added that the bank is
targeting a financing growth twice that
is projected of the wider industry on the
back of the groups current balance sheet:
15% against 7-8%.
Previously, Mudarabah and Wakalah
products were considered as deposit
accounts; however, the Malaysian
government is moving towards
enhancing the Shariah compliance of its
Islamic financial industry which
culminated in the IFSA 2013. Under the
new regulation, Mudarabah, Wakalah
and Musharakah instruments will be
distinguished as investment products to
be backed by the banks portfolio of
assets, instead of the Malaysia Deposit
Insurance Corporation.

3rd June 2015

IFN REPORTS
IFN Weekly Poll: Is Islamic inance in the UAE
becoming overbanked?

Said to be overbanked, the UAE


banking sector comprises 57 banks
(23 are local banks and financial
institutions; and 34 foreign banks),
including eight Islamic banks. With
local banks also oering Shariah
compliant products, one cannot help but
wonder if the Islamic banking space in
the country is in fact overcrowded. This
week IFN asks the hard question that
has been playing on everyones minds.
NABILAH ANNUAR reports.

Is Islamic nance in the UAE becoming overbanked?

Yes
No
33%

67%

Contrary to popular belief, although the


UAE itself is viewed as overbanked, the
Islamic finance sector is not. The majority
of players (67%) believed that there is
still scope for more. Industry sources
have suggested that Shariah compliant
sector only commands 18% in terms of
banking assets and 25% when Islamic
windows are included the figures
are considerably lesser than the likes of
Malaysia and Saudi Arabia.

the banking sector is believed to possess


a strong capital base. Heeding the central
banks recommendations, financial
institutions in the emirate managed in
the first quarter of 2015 to exceed 12%,
with an 8% increase in Tier 1 capital in
line with the central banks decision.

According to local reports, the Central


Bank of the UAE opined that the
countrys banking sector is in a strong
position and expected to perform well
throughout 2015. With cash reserves
calculated at AED311.1 billion (US$84.67
billion) as of the first quarter of this year,

However, despite the healthy outlook


and ample capacity in the UAEs Islamic
finance market, the Middle East itself is
being viewed as overbanked and highly
liquid. The regions banking landscape
has been described to resemble Europes
banking industry 25 years ago a dense

banking market where the majority of


institutions seek to put their loans to
work. As a consequence, it is harder to
develop client desire to enter the capital
markets when banks insistently oer to
lend.
It is yet to be proven whether the Islamic
banking system would be adversely
aected by its overbanked counterpart.
No matter how resistant the sector is
projected to be, in the larger picture it
would at least experience spillover eects
of the situation.

REDmoney launches IFN Education; a facilitative medium for


Islamic inance education
It has been suggested that emerging
markets would require approximately
50,000 Islamic finance professionals
in the next few years to maintain the
progress of the global Islamic finance
sector. Acknowledging this call to
develop sustainable human capital for
the global Islamic financial services
industry, REDmoney has launched IFN
Education, a one-stop multi-faceted
resource portal featuring a newsletter, a
comprehensive and searchable almanac
of all educational institutions oering
Islamic finance-based courses and
access to data otherwise unavailable.
Addressing the talent development

market at all angles, IFN Education


provides industry stakeholders an
avenue to keep informed of human
capital advancements. With an exclusive
focus on the talent development sector,
IFN Education delivers a quarterly
newsletter (a sister publication to
IFN) which tackles employment and
educational issues, provides a list of
useful industry events and a dedicated
news section covering all the latest
developments in the market segment.

worldwide, while the IFN Education


Almanac provides an annual report
featuring data from the exclusive
database, reports on the industry, and
insights into the future development
of the Islamic finance education sector
providing detailed analysis on how the
market views the current industry and
what they require moving forward.
Kindly visit www.islamicfinancenews.
com for a softcopy of the publication.

Scheduled to launch soon, the directory


which will be available on the IFN
Education website gives access to all
Islamic finance-based courses available

13

3rd June 2015

IFN REPORTS
Sovereign Sukuk: Regular Sukuk auctions and Omans debut
before Ramadan
Managing liquidity in their respective
countries, Indonesia, Bahrain and
Malaysia have all successfully
conducted their regular Sukuk auctions.
Oman on the other hand which is
pushing the development of Waqf
Sukuk in the Sultanate, has confirmed
during the recent IFN Asia Forum that
it targets to debut its maiden Sukuk
before Ramadan. As usual, NABILAH
ANNUAR keeps abreast of the latest
developments in the sovereign Sukuk
arena.

Upcoming sovereign Sukuk

Following Hong Kongs successful


issuance last week (see Case Study
on page 16), Oman has stepped up
cementing its plans for its sovereign
Sukuk. Kemal Rizadi Arbi, advisor to
the Omani Capital Market Authority
confirmed during the IFN Asia Forum
2015 that the government is targeting
to issue its proposed sovereign Sukuk
before Ramadan to the tune of US$1
billion, with subsequent programs
planned.
According to local reports, authorities
have agreed that the Sukuk auction will
be made through a private placement
process and marketed primarily to
Islamic financial institutions, and
sophisticated investors with a minimum
subscription amount of OMR500,000
(US$1.29 million). As a means to address
the Sultanates 2015 budget deficit, the
Sukuk is believed to adopt an Ijarah
structure with maturities of five or seven
years and the underlying asset being a
selected public project with a readily
available income stream of the right
proportions. Also in the Sukuk space,
seeing major potential in Waqf assets,
industry players are trying to push for
the development of Waqf Sukuk in the
Sultanate.

Country

Amount

Expected date

Oman

US$1 billion

Before Ramadan
2015

Kazakhstan

TBA

2016

Turkey

TRY1.5 billion

TBA

Bangladesh

TBA

TBA

Hong Kong

US$500 million to US$1 billion

TBA

Ningxia Hui Autonomous Region

US$1.5 billion

TBA

Indonesia

TBA

2015

Ivory Coast

XOF300 billion

2015-20

Kenya

TBA

2016

South Africa

TBA

2016

Senegal

TBA

TBA

Niger

XOF150 billion

TBA

Tunisia

US$500 million

2015

Jordan

JOD564 million

2015

UAE

TBA

2015

Luxembourg

TBA

TBA

Across the sea, the Malaysian


government on the 29th May issued
Murabahah government investment issue
worth RM3 billion (US$813.79 million),
receiving 264 bids amounting to RM6.26
billion (US$1.71 billion).
In Bahrain, the central bank last week
concluded the Sukuk Al-Salam Islamic

ISLAMIC TREASURY &


RISK MANAGEMENT PRODUCTS
8th 10th September 2015, KUALA LUMPUR

Moving to regular sovereign issuances,


Sukuk recently auctioned by the
Indonesian government via Perusahaan
Penerbit SBSN Indonesia III have been
admitted to trading on the NASDAQ
Dubai on the 31st May. According
to an ocial statement, the eight
facilities amounted to US$6 billion. The
Indonesian finance ministry will on the
3rd June 2015 hold an Islamic treasury
bills auction, oering four facilities at
an indicative target set at IDR2 trillion
(US$151.2 million).

auction worth BHD43 million (US$113.16


million). Carrying a maturity of 91 days,
the Sukuk (which began on the 27th May
2015 and matures on the 26th August
2015) was oversubscribed by 166%, with
an expected return of 1.2%, compared to
0.92% for the previous issue on the 22nd
April 2015.

Course Highlights:
Identify and manage risk in Islamic Treasury products
Comparative analysis of treasury and risk management products in
various jurisdictions
Application of various Islamic toolkits in the Islamic money markets
Manage foreign exchange instruments and associated rate risks

www.REDmoneytraining.com | enquiry@redmoneytraining.com

14

3rd June 2015

IFN COUNTRY ANALYSIS


ANALYSIS
SAUDI
ARABIA

Saudi Arabia: Poised for greater growth


As one of the worlds leading Islamic finance powerhouse, Saudi Arabia has a lot to oer especially with the opening
of its stock market to qualified foreign investors this month. VINEETA TAN provides a snapshot of the Kingdoms
Islamic finance and banking industry.

Theoretically, all banking transactions


in Saudi Arabia are supposedly Shariah
compliant; this however is not the case.
While the Kingdom practices Shariah
law, its banking laws make no reference
to Islamic banking as the country adopts
a single regulatory framework for all
banks.
Shariah compliance supervisory rests
largely on the shoulders of individual
Shariah boards of respective banks as
there is not a specific body at a national
level which oversees the Shariah
compliance of financial transactions and
products; all banking matters, however,
fall under the purview of the Saudi
Arabia Monetary Agency (SAMA) which
acts as the central bank. Whereas the
nations capital markets are regulated by
the Capital Markets Authority (CMA).

Banking and inance


Saudi Arabia is the largest Shariah
banking market globally (after Iran),
commanding 31.7% of the international
market share. According to EYs World
Islamic Banking Competitiveness Report
2014-15, the Kingdoms Islamic banking
assets account for 48.9% of the total
domestic banking segment in 2013. This
figure is projected to reach 70% by 2019,
expanding Saudi Arabias global market
share to over one-third at US$683
billion. Over 2009-13, the Shariah
banking industry doubled in size and
more than half (54%) of all financing
transactions in the country in 2013 were
Shariah compliant.
There are 12 licensed banks in Saudi
Arabia according to SAMA. Out of the
12, four are fully-fledged Islamic banks:
Al Rajhi, Aljazira, Alinma, Albilad;
with the rest oering Shariah compliant
products on a window basis. Jadwa
Investment is another CMA-licensed
Islamic investment bank. Despite
declining profits, Al Rajhi remains the
largest Islamic bank in the world by
assets at SAR298.71 billion (US$79.62
billion) as at the 30th September 2014.
National Commercial Bank (NCB) which
floated the worlds second-largest IPO

in 2014 is committed to become fully


Shariah compliant within five years
from its IPO oering.

Islamic funds
Saudi Arabia has a deep funds industry,
reflected by it being the largest fund
domicile of the Arab world. The first
Islamic mutual fund was launched by
NCB in 1987, which also rolled out the
first Shariah compliant global equity
fund. As at the 26th May 2015, there are
182 mutual funds registered as Shariah
compliant on the Saudi Stock Exchange.
Traditionally, funds in the Kingdom
were designed for the retail base in the
public sphere; however, it has been
observed that there is an increasing shift
towards privately placed funds due to
relative ease in establishment.

Sukuk
Despite the depth and breadth of the
Saudi Islamic banking, funds and
insurance sectors, the countrys Shariah
debt capital segment lags behind. This is
attributed to the competitive financing
rates oered by cash-rich banks; there
are more demand for Islamic financing
facilities as compared to Sukuk. This,
however, is expected to change as the
Saudi market prepares to liberalize its
US$568 billion stock market.
According to Aljazira Capital, a total
of US$15.2 billion-worth of Sukuk
was issued out of Saudi Arabia in
2013, marking a 36.4% increase on a
yearly basis. Data from Gulf Bond and
Sukuk Association show that in 2014,

total Saudi Sukuk issuance reached


approximately US$10.43 billion. So far
in 2015, the IDB is the only Saudi entity
which sold Sukuk, a US$1 billion US
dollar facility.

Takaful
Regulated by SAMA, the Islamic
insurance industry in Saudi Arabia is
regulated by the Law on the Supervision
of Cooperative Insurance Company.
Practicing a unique cooperative model,
the country is considered the worlds
largest Takaful market, with 37 licensed
insurance and reinsurance companies,
and 76 brokers as well as 76 insurance
agencies. At US$8.1 billion in premiums
in 2014, the Kingdom is not only the
largest insurance player in the GCC but
also the regions second-fastest growing
market with an eight-year compound
annual growth rate of 20.3%, according
to Moodys Investors Service.
However, despite the astounding
growth of the segment, Saudi Arabia
remains a severely underserved and
highly concentrated market. At 1.1%, the
insurance penetration level of the
Kingdom is the lowest as compared to
regional peers. The industry is also
highly skewed towards the medical and
health insurance segment. However,
Moodys is optimistic that the market
would be more inclusive of other
products including life and non-life
insurance in the coming years buoyed
by the increasing wealth of the
population and greater market
awareness.

Chart 1: Total Islamic banking assets of fully-edged Islamic banks


in Saudi Arabia (in US dollar)
150 b

117.6 billion
107.58 billion

Amount

Legal and regulatory

100 b

71.24 billion
86.86 billion

55.39 billion
50 b

63.09 billion

0b
2008
2009
Source: Islamic Banking Intelligence

15

2010

2011

2012

2013

3rd June 2015

IFN SECTOR ANALYSIS


PRIVATE BANKINGANALYSIS
& WEALTH MANAGEMENT

Private banking and wealth management in


Islamic inance
An exclusive area of the industry, private banking and wealth management in Islamic finance has been suggested
to be an area that is in need of expansion. Catering to a specific group of clients, private banking and wealth
management involves protecting and growing assets in the present, providing specialized financing solutions,
planning retirement and passing wealth on to future generations. Providing an overview of this market segment,
NABILAH ANNUAR writes on recent developments across this niche area.

Private banking
The private wealth landscape attributes
its growth to be in parallel with market
behavior. In recent years, one of the
major driving factors for private banks
operating in the Shariah compliant scene
is the strength of the Sukuk market.
Private banks make up a relatively
significant portion of each Sukuk
oering. This is demonstrated in Noor
Banks US$500 million Sukuk where
6% of the investors were private banks.
Similarly, this response was also seen
in Malaysias US$1.5 billion sovereign
Sukuk with 1% participation from these
banks; and 4% in DIFC Investmentss
US$700 million Sukuk. Testament to
the instrumental subscription of private
banks in Sukuk issuances, Dubai
Islamic Bank in its Tier 1 issuance last
year ensured the inclusion of a 25%
rebate in order to keep the private bank
community engaged.
On the retail and commercial side,
several initiatives were announced by
various financial institutions to develop
its private banking services. Standard
Chartered, the parent bank of Standard
Chartered Saadiq, stated that it plans
to increase assets under management
in wealth management and private
banking business by at least 10% in 2015.
Bank of London and The Middle East,
the UKs largest Islamic bank, plans
to launch Shariah compliant private
banking services this year in partnership
with Malaysias Bank Muamalat.
Islamic financier Kuwait Finance House
introduced the Visa Infinite, a debit
card exclusively for its private banking
clients. The Islamic Bank of Britain,
following its rebranding to Al Rayan
Bank, itemized that the GBP100 million
(US$152.83 million) capital injection
by its parent, Masraf Al Rayan will
be utilized to enhance its capabilities
and resources including widening its
product and service range to encompass

real estate finance, commercial and


development finance and private
banking for GCC clients.
Geographically, market observers see
potential in countries such as Brunei
where increasing service providers
could assist the country in gaining a
majority share of its domestic financial
system more eectively. As one of the
richest countries in the world (GDP
US$48,000 per capita), the small oil-rich
nation of about 417,000 people presents
itself as a lucrative market for Islamic
private banking services. Another is
the UAE where it was suggested that
the emirate leverage on the historic
and growing ties between the GCC and
Africa to position itself as a hub for
business meetings and private banking
between Africa and Asia. Many banks
are rapidly building their African
divisions and assets under management
and importantly, and in contrast to
Russian assets, UAE intermediaries
view African private capital inflows as a
longer-term, more structural trend.

enabling Waqfs to invest in all types


of assets without any geographical
limitation, under an independent
portfolio, free of administrative
complexities.
Another recently popular area among
wealth management operators is the
education sector. Saudi Arabian Islamic
private wealth management company,
SEDCO Holding Group acquired a 50%
stake in Mektebim Okullari, a company
operating in the private education
sector in Turkey. Under a partnership
agreement SEDCO Holding Group owns
50% of the companys shares and plays
an active part in the companys ambitious
growth strategy in the region.

Wealth management

Over in Malaysia, Securities Commission


Malaysia is designing a blueprint for
the countrys Islamic fund and wealth
management industry, expected to be
ready by the end of 2015. The blueprint
will chart a medium and long-term
strategic direction for the industry on the
back of the governments move to create
a private pensions sector of around RM73
billion (US$19.93 billion) by 2020.

In terms of wealth management over the


past eight months, Shariah compliant
wealth management companies have
dabbled in several new avenues in
managing their investments. Viewed
as a potentially eective wealth
management instrument, Waqf holds
significant prospects for large-scale social
development and poverty alleviation.

Opening up the UKs Islamic wealth


management market, London Central
Portfolio launched the London Central
Apartments II, a residential property
fund which represented a pioneering
step forward for the Islamic wealth
management sector which is still in its
infancy.

Ocially tapping into this market, Saudi


Arabias Alkhabeer Capital seeks to
provide advisory services on structuring
and managing Waqf assets, becoming the
first Capital Market Authority-licensed
entity in Saudi Arabia to be advising
on this segment. Targeting educational
and charitable organizations, family
oces, high-net-worth individuals and
philanthropists, the company will oer
services in structuring Waqf entities,

16

Outlook
With a constructive outlook on Islamic
private banking and wealth management,
industry players especially in the Middle
East favor this promising growth. Wealth
managers should maximize opportunities
in equity markets and new asset classes
while innovative eorts ought to
encompass creation of products, service
level, and the structure of a private
banking business.

3rd June 2015

CASE STUDY

Hong Kongs sophomore Sukuk irst Wakalah


paper by a triple A sovereign
Following its historical debut last year,
the Hong Kong Special Administrative
Region (HKSAR) once again, ahead
of its peers, tapped the global Sukuk
market. Oered under the government
bond program, the standalone US$1
billion five-year paper was priced on
the 27th May 2015 at the tight end of
the initial price guidance at 35bps over
five-year US Treasuries, or 1.894%. In
an exclusive interview with the Hong
Kong Monetary Authority (HKMA),
NABILAH ANNUAR provides a
detailed account of this notable
transaction.
Adopting a unique arrangement, the
transaction utilizes a Wakalah structure
comprising one-third tangible assets
(selected units in an oce building in
Hong Kong), and two-thirds Shariah
compliant commodities. Selection of the
Wakalah structure with a lower amount
of tangible assets was to demonstrate
the flexibility of the Hong Kong Sukuk
issuance platform to potential issuers
from the private sector. The engineering
of the Sukuk achieved several milestones
in the Sukuk space. Hong Kong was the
first sovereign Sukuk to utilize one-third
tangible assets, and the issue was the
first Wakalah Sukuk issued by a non-OIC
sovereign and the first to be oered by a
triple A-rated sovereign.
Compared to its previous issue, the
HKSARs debut Sukuk in 2014 was
based on an Ijarah structure consisting
of 100% tangible assets. In this structure,
the tangible assets were one-third and
two-thirds were Shariah compliant
commodities to be sold on a Murabahah
basis. In terms of profit rate, this current
oering was priced at 1.894%, lower than
its debut Sukuk which was 2.005%.
The transaction demonstrates that
the legal, regulatory and taxation
frameworks in Hong Kong can well
accommodate Sukuk issuance and pave
the way for local and international
fundraisers to follow suit, said the
HKMA. Proceeds from the issuance is
to be credited to the Bond Fund (set up
pursuant to resolution (Cap. 2S) passed
on the 8th July 2009 under Section 29 of
the Public Finance Ordinance (Cap. 2))
and then placed with the Exchange Fund.

Commenting on the challenges faced


during the issue, the HKMA conveyed:
One challenge was to ensure that the
Wakalah structure was compatible with
the Inland Revenue and Stamp Duty
Legislation (Alternative Bond Schemes)
(Amendment) Ordinance 2013 so that
the Sukuk benefited the tax neutrality
provisions therein.

The government of the Hong Kong


Special Administrative Region
US$1 billion Reg S five-year
Wakalah Sukuk
US$1 billion
3rd June 2015

The Sukuk
issuance will
serve to catalyze
further growth of
the Sukuk market in
Hong Kong and the
Greater China region
as well as attracting
more issuers
and investors to
participate in the
HKSARs Islamic
inance
platform
Attracting interest from a diverse group
of both conventional and Islamic
investors, the Sukuk received orders
from 49 international institutional
investors where 42% was allocated to the
Middle East, 43% to Asia and 15% to
Europe. According to the HKMA, the
success of both this issuance and its
maiden oering last year demonstrates
the robustness and flexibility of the
administrative regions Islamic finance
capabilities. The Sukuk issuance will
serve to catalyze further growth of the
Sukuk market in Hong Kong and the
Greater China region as well as attracting
more issuers and investors to participate
in the HKSARs Islamic finance
platform, armed the central bank.

17

Issuer
Obligor

Size of issue
Tenor
Issuance price
and profit rate
Payment
Currency
Maturity date
Lead managers

Hong Kong Sukuk 2015


The government of the
Hong Kong Special
Administrative Region
of the Peoples Republic
of China
US$1 billion
Five years
US$1 billion: 1.894%

Semi-annual
US dollar
3rd June 2020
HSBC, Standard
Chartered, National
Bank of Abu Dhabi,
CIMB
Co-managers
BOCOM Hong Kong
Branch, Maybank, Hong
Leong Islamic Bank,
NCB Capital
Bookrunners
HSBC, Standard
Chartered, National
Bank of Abu Dhabi,
CIMB
Governing law
English/Hong Kong law
Legal advisors
Allen & Overy (issuer
counsel)
Linklaters (arrangers
counsel)
Listing
Hong Kong Stock
Exchange/Bursa
Malaysia (Exempt
Regime)/NASDAQ
Dubai
Underlying assets Selected units in
government-owned
buildings and Shariah
compliant commodities
Rating
AAA (S&P)/Aa1
(Moodys)
Structure
Wakalah
Investor
By geography: Asia
breakdown
(43%), Middle East
(42%), Europe (15%)
By investor type: Banks
(74%), central bank/
sovereign wealth funds
(23%), others (3%)

3rd June 2015

SHARIAH
PRONOUNCEMENT
This Fatwa is brought to you exclusively by IFN in collaboration with Dar Al Sharia Legal & Financial Consultancy-Dubai. The Fatwa
appearing in this space was obtained by Dar Al Sharia for issues faced by their clients and the documents stated in the Fatwa were
developed at Dar Al Sharia. This Fatwa was compiled by Dr Muhiuddin Ghazi.
www.daralsharia.com

Query:
An Islamic bank has approved a Mudarabah facility for a customer whereby the customer will receive Mudarabah capital
from the bank for investment in Shariah compliant business activities and the realized profit shall be distributed between
the Islamic bank and the customer as per an agreed ratio.
The Mudarabah facility is approved for a period of one year; however, the Islamic bank would like to explore the possibility
of receiving the Mudarabah profit on a quarterly basis, rather than waiting for the maturity of the Mudarabah facility after a
year.
Shariah guidance is sought in this regard keeping in consideration that the customer has no objection to the banks desire.

Pronouncement:
As per Shariah principles governing Mudarabah transactions, the Mudarabah profit can be distributed once it is realized and
the only way to realize the profit is the liquidation of the Mudarabah capital.
Such liquidation may either be actual by converting the Mudarabah assets into cash by way of sale to a third party, or on a
constructive basis by evaluation of the Mudarabah investment as per the current market price.
If the customer considers that it will be possible to liquidate the Mudarabah assets quarterly since the nature of the
Mudarabah project allows it, then the bank can agree with the customer in the Mudarabah agreement that the Mudarabah
investment shall be liquidated for each quarter on the agreed liquidation date, and in case the starting Mudarabah capital
remains intact and the profit has been realized over and above the capital, the actual realized profit shall be distributed
between the parties as per the agreed ratio and a new Mudarabah transaction shall take place based on the new Mudarabah
agreement and by reinvesting the Mudarabah capital by the parties for the subsequent quarter.
However, if actual or constructive liquidation of the Mudarabah facility is not practically possible on each quarter, then the
parties may agree on a periodic distribution of the Mudarabah profit on the basis of on account distribution, provided
that the parties believe the Mudarabah investment continues to remain profitable and there is adequate cash to allow such
distribution.
It is important to note that the on account profit distribution must not be considered as the final profit distribution.
Therefore, a final liquidation of the Mudarabah investment shall be required at the end of the Mudarabah term, and the
amount which was distributed between the parties in advance on the on account basis shall be subject to adjustment that
commensurate with the actual results of the Mudarabah investment.
As such, if it is ascertained that the Islamic bank or the customer was paid in excess of its share of profit, the bank or the
customer shall be required to return the excess amount to the other party.

Dr Hussain Hamed Hassan


Chairman of the DIB Shariah Board,
Managing director, Dar Al Sharia Legal & Financial Consultancy, Dubai, UAE

18

3rd June 2015

IFN
IFNCOUNTRY
SECTOR
CORRESPONDENTS
One belt, one road
HONG KONG
By Amirali Bakirali Nasir
Prophet Mohammed (SAW) had guided
people to go to China to learn. Was the
advice to go by sea or by road? Either
way, if the focus was on China, then
all roads lead to China. The road could
be a silk road to opportunities for
investments in accordance with Shariah.

The Silk Road


will require
a trillion dollar in
inancing, which
means large,
medium and small
projects all stand a
chance to
invest
President Xi Jinping announced Chinas
One Belt, One Road initiative in 2013 in
Kazakhstan and Indonesia. The initiative
aims at advancing the national aspiration
for economic growth by re-establishing
economic links along the historical,
mystical and magical Silk Road. The
One Belt, One Road initiative consists of
a land route and a marine route. The land
belt runs along the majestic mountains
of Central Asia, connecting China to
Europe. The marine silk route sails along
the blue-green seas and oceans of China,
the Pacific, India and the Mediterranean,
re-establishing historical links along
economic zones, as well as new links
along the Suez canal.
From a neutral and purely economic
perspective, the Silk Road is an
infrastructure mega project, ideal
for Islamic financial products which
require underlying economic activity
in accordance with Shariah. This is a
golden-silk opportunity for those seeking
Halal investments and opportunities for
diversification of their Halal investments.
There were comments previously
about road bumps and barriers such

IFN Country Correspondents


as language, transparency, dierent
business culture, currency restrictions
and the rule of law. Whether these
existed in the past and to what extent is
not clear. But how is that any dierent
from trading in other countries? What
is irrefutable is Chinas acceptance of
these so-called barriers and its ability to
change and adapt at a phenomenal pace,
unheard of in the history of mankind. A
positive attitude and early entry secures
profits.
Who then are these early players? It
includes those that had entered the
market before the initiatives and gained
knowledge of the market and opened
communications. The Hong Kong
government with its Sukuk, Shamil
Banks China Realty, Deutsche Banks
global fund, Gulf Finance Houses
infrastructure projects and Al Rajhi
Investmentss property investments are
but a few of the early entrants.
Speaking of Hong Kong, a second AAArated Sukuk was announced by the Hong
Kong government in as many years,
following on from its inaugural Sukuk
Ijarah. This second Sukuk is a light
Sukuk Wakalah and the first AAA-rated
Sukuk Wakalah of US$1 billion for a term
of five years and priced at 1.894% of the
initial price guidance. This pushes up yet
again the Hong Kong government and
Hong Kong's ranking for the issuance of
AAA-rated Sukuk.
Financial support for the new initiative
may come initially from the Asian
Infrastructure Investment Bank (AIIB)
through international participation in the
creation of opportunities for the issuance
of infrastructure Sukuk. Who then will
enter the market early? The IDB is now
said to be in discussions with AIIB and it
will be interesting to see what is
achieved. The Asian Development Bank
is said to be keen to step on to the Silk
Road with multi-party Sukuk. The Silk
Road will require a trillion dollar in
financing, which means large, medium
and small projects all stand a chance to
invest. It is a golden opportunity for
short-term gains along the long and
winding Silk Road.
Amirali Bakirali Nasir is the managing
partner and solicitor at Nasirs Solicitors and
the chairman of the Law Society of Hong
Kong working party on Islamic finance. He
can be contacted at abn@nasirs.com.hk.

19

AFGHANISTAN: Dr Alam Khan Hamdard


president, Afghanistan Islamic Finance and Consulting Co
AUSTRALIA: Chaaban Omran,
Principal, Crescent Professional Services
BAHRAIN: Dr Hatim El-Tahir
director of Islamic Finance Knowledge Center, Deloitte &
Touche
BANGLADESH: Md Shamsuzzaman
executive vice president, Islami Bank Bangladesh
BELGIUM: Prof Laurent Marliere
CEO, ISFIN
BERMUDA: Belaid A Jheengoor
director of asset management, PwC
BRAZIL: Fbio Figueira,
partner, Veirano Advogados
BRUNEI: Dr Aimi Zulhazmi, Islamic finance consultant,
Draznine Advisory
CANADA: Jerey S Graham
partner, Borden Ladner Gervais
EGYPT: Dr Walid Hegazy
managing partner, Hegazy & Associates
FRANCE: Kader Merbouh
co head of the executive master of the Islamic finance, ParisDauphine University
HONG KONG: Amirali Bakirali Nasir
Chairman, The Law Society of Hong Kong working party on
Islamic finance
INDIA: H Jayesh
founder partner, Juris Corp
INDONESIA: Farouk A Alwyni
CEO of Alwyni International Capital and the chairman
of Centre for Islamic Studies in Finance Economics and
Development
IRAN: Majid Pireh
Islamic finance expert, Securities & Exchange Organization
of Iran
IRAQ: Khaled Saqqaf
partner and head of Jordan & Iraq oces, Al Tamimi & Co
ITALY: Stefano Padovani
partner and head of Banking & Finance, NCTM Studio Legale
Associato
JAPAN: Kaoru Haraguchi
founding attorney, Haraguchi International Law Oce
KENYA: Mona K Doshi,
senior partner, Anjarwalla & Khanna Advocates
KOREA: Yong-Jae Chang
partner, Lee & Ko
KUWAIT: Alex Saleh
partner, Al Tamimi & Co
LEBANON: Johnny El Hachem
partner corporate, Bin Shabib & Associates
LUXEMBOURG: Said Qaceme
senior manager of Advisory & Consulting, Deloitte Tax &
Consulting
MALAYSIA: Abdullah Abdul Rahman
partner, Cheang & Ari
MALDIVES: Aishath Muneeza
deputy minister, Ministry of Islamic Aairs, Maldives
MALTA: Reuben Buttigieg
president, Malta Institute of Management
MAURITIUS: Sameer K Tegally
associate, Conyers Dill & Pearman
MOROCCO: Ahmed Tahiri Jouti
managing consultant, Al Maali Consulting Group
NEW ZEALAND: Dr Mustafa Farouk
counsel member for Islamic financial institutions, The
Federation of Islamic Associations of New Zealand (FIANZ)
NIGERIA: Auwalu Ado;
Shariah auditor, Jaiz Bank
OMAN: Riza Ismail;
senior associate, Trowers & Hamlins
PAKISTAN: Muhammad Shoaib Ibrahim
managing director & CEO, First Habib Modaraba
PHILIPPINES: Rafael A Morales
managing partner, SyCip Salazar Hernandez & Gatmaitan
QATAR:Amjad Hussain
partner, K&L Gates
RUSSIA: Roustam Vakhitov
managing partner, International Tax Associates
SAUDI ARABIA: Nabil Issa
partner, King & Spalding
SENEGAL: Abdoulaye Mbow
Islamic finance advisor, Africa Islamic Finance Corporation
SOUTH AFRICA: Amman Muhammad
CEO, First National Bank-Islamic Finance
SINGAPORE: Suhaimi Zainul-Abidin,
advisor, 5Pillars
SRI LANKA: Imruz Kamil
head of Islamic banking, Richard Pieris Arpico Finance
SWITZERLAND: Khadra Abdullahi
associate, Investment banking, Faisal Private Bank
SYRIA: Gabriel Oussi,
general manager, Oussi Law Firm
TANZANIA: Khalfan Abdullahi
head of product development and Shariah compliance, Amana
Bank
TURKEY: Ali Ceylan
partner, Baspinar & Partners
UAE: Rima Mrad
partner, Bin Shabib & Associates
UK: Fara Mohammad
director of Islamic finance, Foot Anstey
US: Joshua Brockwell
investment communications director, Azzad Asset Management
YEMEN: Moneer Saif; head of Islamic banking, CAC Bank

IFN Correspondents are experts in their respective fields


and are selected by Islamic Finance news to contribute
designated short country reports. For more information
about becoming an IFN Correspondent please contact
sasikala.thiagaraja@redmoneygroup.com

3rd June 2015

IFN COUNTRY
CORRESPONDENTS
Taking a closer look at Waratah
Chart 1: Revenue and expense of WGO (2010-14)

By Dr George Mickhail

Revenue

On the 14th April 2015, the Australiabased Waratah Resources (WGO)


entered into a non-binding agreement
with the Malaysia-based Amanie
Holdings to form a joint venture for
the purpose of funding and expanding
its commodity trading business.

However, the Australian money supply


has been drying up, with the issue price
dropping from as much as US$1.20 at
the end of 2011 to one US cent in less
than three years, after investors became
aware of the hype cycle. This may help
explain why its share price remained
unchanged after its joint venture with
Amanie Holdings was announced on the
13th April 2015.

798,316.00

125,332.00

2011

12,532.00

2012

2013

2014

-1,061,191.00

-2,486,266.00
-6,597,472.00
-9,038,037.00

-15,560,000.00
Source: Authors own analysis
Chart 2: Share performance of WGO on the ASX
WGO
-94.87%
5D 1M 3M 6M YTD 1Y 5Y 10Y ALL
+ 300%
+ 200%
+ 100%
0%
- 100%

2010

2011

2012

2013

2014

May 15

May 14

Sep 13

Jan 13

Sep 11

Jan 11

- 200%
Jan 10

The perpetually choreographed


pronouncements of WGO went
something like this: securing new
licenses, exploration, drilling,
preliminary promising results, sending
samples for independent testing
(without hearing back regarding those
test results), halting trade on the ASX
in its securities, raising needed capital
for further development, then acquiring
new licenses, and so on. Such a hyped
cycle of pronouncements oer much
needed movement and circulation to
ensure the money supply does not dry
up.

Expense

% Change

A case in point is profit growth. Its total


revenue (US$798,316) in 2014 was 2.36
times the combined revenue for the
years 2010 to 2013. On a closer look,
the 2014 result was due to the profit on
sale of plant and equipment (US$5,200),
interest received (US$16,415), other
income (US$8,758), R&D tax incentive
(US$497,410) and surplus on revaluation
of plant and equipment (US$270,533).
For the past three years, its performance
has not matched its hyped promises of
growth.

91,286.00

2010

Jan 09

The news did not come as a complete


surprise, as WGO had to seek other
overseas sources of funding, given that
Australian investors were no longer
interested in pronouncements promising
cash flow and profit growth without any
credible growth results to date.

108,809.00

May 12

AUSTRALIA

2015

Source: ASX.com.au

It remains to be seen if WGO shifting its


focus from Asian markets to the Middle
East, and securing funding
arrangements from its Shariah partners
would enable WGO to come good on its
overdue promise of cash flow and profit
growth.
Dr George Mickhail is a senior lecturer
at the School of Accounting, Economics
and Finance, University of Wollongong,
Australia. He can be contacted at george@
uow.edu.au.

20

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3rd June 2015

IFN
IFNCOUNTRY
SECTOR
CORRESPONDENTS
Takaful operational guidelines
KENYA
By Mona Doshi
There are new guidelines drafted by
the Insurance Regulatory Authority
(Authority) to permit insurance
companies in Kenya to open Takaful
windows in a similar fashion to the
way conventional banks in Kenya are
opening Islamic banking windows. The
Authority has recognized that Takaful
is one of the ways to increase insurance
penetration in Kenya and increase
the contribution of insurance to the
countrys GDP.
It has therefore issued Takaful
Operational Guidelines (Guidelines),
which are still awaiting parliamentary
approval, to provide guidance for
Takaful operators and establish duties
and responsibilities for such operators.
The Guidelines also set out the manner
in which a Takaful window operator will
conduct itself so that the Takaful business
is totally separate from the conventional
business and there are separate financial
reporting requirements for Takaful
windows from their parent firm.
It was expected that the Guidelines
would come into force on the 1st

June 2015; however, it is awaiting


parliamentary approval. As and when
the Guidelines come into force, a
Takaful operator or a Takaful window
operator shall apply for a licence from
the Authority. In the current draft
Guidelines, all existing Takaful operators
who are non-compliant with the
requirements set out in the Guidelines
shall have up to the 31st December 2015
to comply with the Guidelines. Failure to
comply with the Guidelines and/or with
Shariah principles entitles the Authority
to impose sanctions.

The Authority
has recognized
that Takaful is
one of the ways to
increase insurance
penetration
in Kenya

oering Takaful insurance products


and expand its business. The Shariah
Supervisory Council appointed by a
Takaful operator will act as the advisory
and supervisory body on matters relating
to Takaful operations.
This potential development in the
insurance sector is a good example of
how the Kenyan financial sector players
are keen to develop Islamic finance.
Pakistan and Indonesia also allow
Takaful windows, which enable
insurers to oer Shariah compliant and
conventional products.
In 2011, Kenya's first fully-fledged
Takaful firm was launched, Takaful
Insurance of Africa. First Community
Bank, a fully-fledged bank also operates
a Takaful scheme whereas Kenya
Reinsurance Corp has developed a
Shariah compliant reinsurance product.
Once the Guidelines come into force it is
likely that we will see new Takaful
windows being opened.
Mona Doshi is a senior partner at Anjarwalla
& Khanna. She can be contacted at mkd@
africalegalnetwork.com.

The introduction of the Guidelines will


allow insurers to add a new department

Blue for go
REAL ESTATE
By Philip Churchill
I havent broached politics before, but
here goesI was absolutely delighted
that the Conservatives managed to
achieve a majority in the UK election
two weeks ago, and so, I firmly believe,
were many Islamic investors.
In visits to the Middle East and
Malaysia, investors had been asking
about what I thought would happen
for the past six months or so. I had
been expecting another coalition
government, but had found an article
in The Economist very interesting,
which gave the theory of Shy
Conservative Voters, who will not
reveal their plans to pollsters, but will
put a cross next to the blue candidate
when actually voting.

Anyway, so what? Well, positive


sentiment is already being seen and felt
in the residential sector. Labour had
promised an annual tax on properties
worth more than GBP2 million
(US$3.08 million) and rent controls on
the private rented sectors, eectively
hitting purchaser and investor interest
at both ends of the value spectrum. As
a result of the election result, enquiries
from purchasers interested in our
Central London Saudi-backed Aldwych
Chambers development have spiked
and estate agents report record activity
across London for the past two weeks.
The Qataris certainly didnt waste any
time with the front page of Londons
Evening Standard paper reporting on
their GBP40 million (US$61.68 million)
acquisition of a home in Mayfair, just
o Park Lane and close to the Al Thanis
existing GBP200 million (US$308.38

21

million) Dudley House, with the paper


seeking to identify this area as now
being Little Doha.
On the non-residential side, while you
wouldnt have noticed it with the level
of activity over the last year or so, some
of our investors were pausing to see
what the election result would bring,
and are now firmly in the what have
you got? camp.
So, with five years until the next election
I am very positive about what the UK
can achieve in this time and hope and
trust that many Islamic investors will be
along for the ridetime for another
Churchill at Number 10?!
Philip Churchill is the founder and
managing partner at 90 North Real
Estate Partners. He can be contacted at
pchurchill@90northrep.com.

3rd June 2015

IFN SECTOR
CORRESPONDENTS
The importance of the Sukuk market for
the Takaful industry
TAKAFUL & RE-TAKAFUL
By Dr Sutan Emir Hidayat
Being the Shariah compliant
alternative to insurance, the activities
of Takaful are also divided into
underwriting and investment.
Like insurance companies, Takaful
companies also invest the funds
collected from policyholders into an
investment portfolio. The dierence
is that the Takaful fund can only
be invested in Shariah compliant
investment avenues.

Sukuk default
or a near
default case will
surely affect the
investment income
of Takaful
companies
One of the important investment
avenues for Takaful companies is the
Sukuk market. Currently, despite its
double-digit growth during recent
years, the Sukuk market is still far
less developed than the conventional
bond market. This situation leaves
Islamic financial institutions (IFIs)
including Takaful companies with
limited investment options. As a result,
the situation creates diculties for the
operators to establish a good Sukuk
portfolio.
The situation gets worse when there is
a default or near-default case made by
a Sukuk originator. The recent case of
1Malaysia Development (1MDB) can be
used as an example. In 2009, Syarikat
Takaful Malaysia invested RM85
million (US$23.3 million) in a 30-year
tenure Sukuk issued by Terengganu
Investment Authority, now known
as 1MDB. This long-term investment
currently represents around 2-3%
of the total companys assets. Even
though it is relatively small, the default

of 1MDB in servicing its obligations


to Sukukholders somewhat aects
the financial performance of Syarikat
Takaful Malaysia and other IFIs that
invested in the Sukuk.
A similar case happened in November
2009 when Nakheel announced the
delay in the repayment of its US$4
billion Sukuk. The delay aected the
financial performance of IFIs including
Takaful companies that invested their
funds in the Sukuk. Sukuk default or
a near default case will surely aect
the investment income of Takaful
companies. In addition, more provisions
allocated by the companies will in turn
aect the profitability, asset quality and
liquidity of the companies.
All of these clearly show the importance
of the Sukuk market for the Takaful
industry. In the event of a Sukuk default
or a near default, a clear mechanism for
the protection of Sukukholders should
be in place to minimize the impact on
the Takaful fund.
Dr Sutan Emir Hidayat is an assistant
professor and academic advisor for Islamic
finance at the University College of Bahrain.
He can be contacted at sutan@ucb.edu.bh.

Join the most active Islamic


finance focused group on
Linked-In

IFN Sector Correspondents


CROSS-BORDER FINANCING
Fara Mohammad, Director Of Islamic Finance, Foot Anstey
DEBT CAPITAL MARKETS:
Muhammad Shoaib Ibrahim, managing director & CEO,
First Habib Modaraba
DERIVATIVES
Suhaimi Zainul - Abidin, treasurer for Gulf-Asia Shariah
Compliant Investment Association and advisor to 5Pillars
GLOBAL ECONOMIC OUTLOOK
Tariq Alrifai, expert, Islamic investment products and
market trends
LAW (EUROPE):
Ayhan Baltaci, attorney at law, Bereket & Baltaci Law Firm
LAW (MIDDLE EAST)
Bishr Shiblaq, head of Dubai oce, Arendt &
Medernach
LEASING:
Prof Shahinaz Rashad Abdellatif, executive director,
Financial Services Institute, Egyptian Financial
Supervisory Authority.
MERGERS & ACQUISITIONS
Jamal Hijres, CEO, Cappinova Investment Bank
MICROFINANCE (ASIA):
Dr Mahmood Ahmed, executive vice president and
director training, Islami Bank Training and Research
Academy
MICROFINANCE (AFRICA):
Mansour Ndiaye, director of microfinance, Assistance and
Consulting for Development
PRIVATE BANKING & WEALTH MANAGEMENT:
Thomas Woods, product development, wealth
management, The Islamic Bank of Asia
PRIVATE EQUITY & VENTURE CAPITAL:
Arshad Ahmed, partner, Elixir Capital
PROJECT & INFRASTRUCTURE FINANCE
Anthony Coleby, head of corporate commercial
department, Said Al Shahry Law Oce (SASLO)
REAL ESTATE
Philip Churchill, founder partner, 90 North Real Estate
Partners
REAL ESTATE (MIDDLE EAST):
Yahya Abdulla, head of capital markets Middle East,
Cushman & Wakefield
REGULATORY ISSUES (ASIA)
Intan Syah Ichsan , chief operating ocer, Samuel Aset
Manajemen
REGULATORY ISSUES (MIDDLE EAST):
Mohammad Abdullah Malik Dewaya, head of Shariah
compliance and audit, Maisarah Islamic Banking Services
RETAIL BANKING:
Chowdhury Shahed Akbar, Ocer, Southeast Bank,
Bangladesh.
RISK MANAGEMENT:
Hylmun Izhar, economist, Islamic Research and Training
Institute, Islamic Development Bank Country
SECURITIES & SECURITIZATION:
Nidhi Bothra, executive vice president, Vinod Kothari
Consultants
STOCK BROKING & TRADING:
Athif Shukri, research analyst, Adl Capital
STRUCTURED FINANCE:
John Dewar, partner and head of Islamic finance, Milbank,
Tweed, Hadley & McCloy
SUKUK
Anthony Coleby, head of corporate commercial
department, Said Al Shahry Law Oce (SASLO)
SYNDICATED FINANCE
Elina Khayrullina, investor relations manager, AK BARS
Bank
TAKAFUL & RE-TAKAFUL:
Dr Sutan Emir Hidayat, assistant professor and academic
advisor for Islamic finance, University College of Bahrain
TAKAFUL & RE-TAKAFUL (AFRICA):
Uwaiz Jassat, acting head of Islamic banking, Absa Islamic
Banking
TAKAFUL & RE-TAKAFUL (EUROPE):
Ezzedine Ghlamallah, director, Solutions Insurance and
Islamic Finance in France (SAAFI)
TRADE FINANCE
Anthony Coleby, head of corporate commercial
department, Said Al Shahry Law Oce (SASLO)

Linkedin/
ISLAMICFINANCENEWS

22

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advisor
IFN Correspondents are experts in their respective fields
and are selected by Islamic Finance news to contribute
designated short sector reports. For more information
about becoming an IFN Correspondent, please contact
sasikala.thiagaraja@redmoneygroup.com

3rd June 2015

SPECIAL
REPORT

Key consideration in making third party debt


order for an Islamic banking account: An overview
of the positions in England and Malaysia
When the claimant in a suit obtains a monetary judgment against the respondent and the respondent refuses or
fails to comply, there are several ways to enforce the judgment. In this article, ABDULLAH ABDUL RAHMAN and
APNIZAN ABDULLAH provide an overview of a common method of enforcement that is known as the third party
debt order.
THIRD PARTY DEBT
ORDER
By Abdullah Abdul
Rahman & Apnizan
Abdullah
In England, the third party debt order
proceedings are governed by Part 72
of the Civil Procedure Rules. These
proceedings are the successors to
the garnishee proceedings under the
repealed Rules of the Supreme Court
(Revision) 1965. In Malaysia, the term
garnishee proceedings is still retained
and these proceedings are governed by
Order 49 of the Rules of Court 2012.

A third party
debt order
may only be issued
in respect of a
debt
The person in whose favor the judgment
is obtained is called the judgment
creditor. The person against whom
the judgment is entered is called the
judgment debtor. A third party may
have debt due or accruing due to the
judgment debtor. Upon the application
of the judgment creditor, the court may
make a final order requiring the third
party to pay the judgment creditor the
amount of any debt due or accruing due
to the judgment debtor from the third
party. The amount payable by the third
party is limited to the judgment amount
owing by the judgment debtor to the
judgment creditor and the costs of the
third party debt order proceedings. The
third party would be discharged of his
debt obligation to the judgment debtor
upon payment to the judgment creditor

to the extent of the amount paid. In


Malaysia, the third party is known as the
garnishee.
For this purpose, debt that is due
means that it is instantly payable. On the
other hand, debt that is accruing due
means that it is payable in the future
but by reason of an existing obligation
(see Merchant International Company
v Natsionalna Aktsionerna Kompaniia
Naftogaz Ukrainy & Anor [2014] EWCA
Civ 1603 (10 December 2014)).
The third party debt order proceedings are
initiated by the judgment creditor applying
to the court, without notice to any other
party, for an interim third party debt order.
Under the interim order, the third party is
directed not to make any payment which
reduces the amount he owes the judgment
debtor below the amount specified in the
order until the final third party debt order
is issued. Notice will then be given to the
third party and the judgment debtor of a
further hearing date where the court will
consider whether to make the final third
party debt order. In Malaysia, the interim
order is known as the garnishee order nisi.

Why it is common to take a


third party debt order against
a bank account?
It is common for a judgment creditor
to take third party debt order
proceedings against a bank in respect
of a conventional non-Islamic current
or deposit account maintained by the
judgment debtor with the bank. This
is because the relationship between a
bank and its customer in relation to
such current or deposit account is a
relationship of debtor and creditor, with
the bank as the debtor and the customer
as the creditor. When the customer
deposits his money with the bank, he
actually lends his money to the bank.
Thus, the money becomes the property
of the bank. The banks obligation is to

23

repay the debt upon demand by the


customer.
In respect of a current account, whenever
the customer demands against the
bank to withdraw an amount from
the account, the money so demanded
constitutes a debt due from the bank
to the customer and the bank must
repay that amount to the customer (see
Joachimson v Swiss Bank Corporation
[1921] 3 KB 110). In third party debt
order proceedings, the requirement for
the demand is satisfied by the service of
the interim third party debt order on the
bank (see Rekstin v Severo Sibirsko & Co,
Bank for Russian Trade [1933] 1 K.B 47).
Therefore, the bank is the third party or
garnishee and must pay the judgment
creditor as required in the final third
party debt order.

The underlying contracts in


Islamic banking accounts
The main dierence between Islamic
banking and conventional banking is
that an Islamic bank does not accept or
pay interest as practiced in conventional
banking. As a result, Islamic banks have
employed various types of underlying
contracts for the products they oer. The
underlying contracts employed for the
saving account, current account, fixedterm deposit and investment account
include Qard, Mudarabah, Wadiah Yad
Dhamanah, Wakalah and Tawarruq.

continued...

3rd June 2015

SPECIAL
REPORT
Continued

The key consideration in deciding


whether a third party debt order may be
made in respect of an account maintained
at an Islamic bank depends on whether
the relationship between the Islamic bank
and the customer under such an account
is a relationship of debtor and creditor
and whether there is a debt obligation
on the part of the bank towards the
customer. Consequently, it is imperative
to ascertain the nature of each contract
underlying the Islamic banking accounts
to make that determination.
It is trite that with regard to placement
of money by the customer with the
bank, Qard, Wadiah Yad Dhamanah and
Tawarruq are examples of contracts that
create a debtor and creditor relationship
between the parties and a debt obligation
on the part of the bank towards the
customer. On the other hand, placements
of money by the customer with the bank
under the Mudarabah and Wakalah Bi
Al-Istithmar contracts are in the nature
of investment management where the
investment manager is not allowed under
the Shariah to provide any capital and
profit guarantee to the investor. As such,
these contracts do not create any debt
obligation on the part of the bank.
Accordingly, only accounts that create a
debt obligation on the part of the bank
towards the customer, such as Qard,
Wadiah Yad Dhamanah and Tawarruq,
may be subjected to third party debt
order or garnishee proceedings. On
the other hand, where the underlying
contracts of the accounts do not create a
debt obligation such as the Mudarabah
and Wakalah Bi Al-Istithmar contracts,
these accounts may not be the subject
of third party debt order or garnishee
proceedings. This is notwithstanding
that these Mudarabah and Wakalah Bi
Al-Istithmar contracts may be employed
for the operation of a current, saving or
fixed-term account.

Provisions of IFSA 2013


In Malaysia, section 2 of the Islamic
Financial Services Act 2013 (IFSA) makes
a distinction between an Islamic deposit
and an investment account.
To qualify as an Islamic deposit, the
money is required, among others, to be
paid and accepted by the bank on terms
that it will be repaid in full. On the other
hand, to come within the definition of
an investment account, the money is

provision has the eect of overcoming


any condition or restriction to the mode
of withdrawal such as the need for a
demand as required in the aforesaid
Joachimson v Swiss Bank Corporation
case.

required, among others, to be paid and


accepted by the bank for the purposes
of investment on terms that there is no
express or implied obligation to repay
the money in full. Therefore, it is clear by
definition, that there is no debt obligation
by the bank to the customer under the
investment accounts as defined in IFSA.
That being the case, an investment
account, as defined in IFSA, may not be
subjected to the garnishee proceedings.
This would include accounts opened
under the principles of Mudarabah and
Wakalah Bi Al-Istithmar.
With regard to an Islamic deposit,
the nature of the banks obligation to
repay in full must be examined. If it is
based on a debt obligation on the part
of the bank, it may be subjected to the
garnishee proceedings. If there is no
debtor and creditor relationship, the
judgment debtors account at the bank
may not be subjected to the garnishee
proceedings. However, accounts opened
under the principles of Qard, Wadiah
Yad Dhamanah and Tawarruq create a
debtor and creditor relationship between
the bank and the customer with a debt
obligation on the part of the bank.
Accordingly, these accounts may be
subjected to the garnishee proceedings.

Current and deposit accounts


in Malaysia Issue to be
resolved
In Malaysia, O.49 r.(1)(3) of the Rules of
Court 2012 has been introduced which
defines any debt due or accruing
due as including a current or deposit
account with a bank or other financial
institution, whether or not the deposit
has matured and notwithstanding any
restriction as to the mode of withdrawal.
This is a provision which was absent in
the Rules of the High Court 1980, which
is the predecessor to the Rules of Court
2012 and which has no equivalent in
the English Civil Procedure Rules. This

24

However, this provision poses an issue


as to whether it includes Islamic banking
accounts, grouped under the umbrella of
current account and deposit account
products, but being accounts where
the Islamic bank has no debt obligation
to the customer based on the Shariah
contracts employed.

In an Islamic
bank, not all
accounts opened by
the customers for
placement of money
with the bank create
a debt obligation on
the part of the
bank
Conclusion
A third party debt order may only be
issued in respect of a debt. Against
conventional banks, this order is
normally taken in respect of deposit and
current accounts because these accounts
create a debt obligation on the part of the
bank to the customer. However, in an
Islamic bank, not all accounts opened by
the customers for placement of money
with the bank create a debt obligation on
the part of the bank. The nature of the
relationship between the bank and the
customer created by the opening of the
accounts in an Islamic bank must be
examined to determine whether the
accounts may be subjected to the third
party debt order proceedings.
Abdullah Abdul Rahman is a partner
(Dispute Resolution & Islamic Finance) at
Cheang & Ari while Apnizan Abdullah
is a PhD candidate at the International
Islamic University Malaysia. They can be
contacted at abdullah@cheangari.com and
hureen1508@yahoo.com respectively.

3rd June 2015

SPECIAL
REPORT

Low mortgage rates and Islamic inance: How


the two work together
Anyone with even a passing understanding of Ijarah loans knows this form of Islamic financing needs to have a
relationship with more conventional western mortgages. Even if you have just looked at getting one of these loans or
actually work in the industry, youll know that while Ijarah loans take great care to stay Shariah compliant and away
from Riba through the use of a trust, the western concept on mortgage rates does come into play for several dierent
and important concepts. Therefore, SHOEB M SHARIEFF attempts to bring readers in other parts of the world up to
speed on the current issues with mortgage rates in North America and what they mean on the Islamic finance front.
MORTGAGE RATES
By Shoeb M Sharie
As you may or may not know, the
mortgage rates have been at historic
lows as the North American housing
market struggles to regain the ground
lost during whats being called the
Great Recession. Whats more, it does
not look like these rates are going to rise
anytime soon according to experts in the
field, and noteworthy publications like
the NY Times predicted last year falling
oil prices would do their part to keep
mortgage rates low well into 2015.

Lease to purchase
Fair enough, you might say, but what
does all that have to do with Islamic
finance and the rejection of the notions of
usury? Well, first you need to remember
that the Lease To Purchase model we
use creates interest-free financing for
Muslims that want to enjoy all the rights
of homeownership in the US and Canada
without running afoul of Shariah law.
It is also important to note the contract
upholds the basic duties, rights and
obligations of a conventional mortgage
while retaining the tax deductibility
benefits.
An example of a lease works this
way. After selecting the property, the
individual puts together a downpayment
on the property that is traditionally
3.5% to 20% or even higher if the person

decides on a bigger amount. A trust holds


the title to the property and the lessee
pays a monthly rent to this trust. When
the lease is finished, the lessee buys the
property back for one dollar. So, for the
North American Muslim thinking about
getting involved in real estate in either
Canada or the US, the real question
becomes: What eect do these lower
rates have on the housing market they
hope to enter?.
Here are a few things to be kept in mind:
Lower mortgage rates mean more
people should be entering the market
and there will be more competition
in the particular area someone is
interested in with prices going up.
Even a 1% dierence in the mortgage
rates means there will be a 10%
dierence in the amount someone
pays for a conventional mortgage
and, of course, that holds true when

those rates drop. Notice that there


are italics around the word should.
Thats because a drop in the mortgage
rates does not necessarily mean
people looking for Ijarah loans or
western-style mortgages will jump at
the chance to own a house. For many
people, saving for a downpayment is
a bigger obstacle than the loan itself.
Low rates are not always a good
thing in the long run. By their very
nature, low mortgage rates signal
an economy that is struggling
with a below-average demand for
borrowing money. Even those who
have Ijarah loans can feel the pinch in
the long run since their home prices
are generally much lower in bad
economic times and will need to hang
on longer to make sure the price goes
back up.
A final point that people looking for
Ijarah loans in North America need to
consider is the length of the lease. If you
plan on selling the property in a few
years time, an adjustable lease where the
mortgage rates fluctuate with the market
makes more sense. A long-term
commitment is better served with a fixed
lease for those who plan on staying put
for some time to watch their money
grow.
Shoeb M Sharie is the president and CEO
of IjaraUSA.com. He can be contacted at
shoeb@ijaraloans.com.

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25

3rd June 2015

COUNTRY
FEATURE

Luxembourg takes steps to strengthen Islamic


inance cooperation
Over the past few months, several actions have been carried out by the Ministry for Sustainable Development and
Infrastructure under the tutelage of minister Franois Bausch to develop strong cooperation between Middle Eastern
countries and Luxembourg. Led by Pierre Gramegna, the Grand Duchys minister of finance, Luxembourg has taken
actions to strengthen its relationship with the Sultanate of Oman and the UAE, both in the field of Islamic finance
cooperation. AMMAR DABBOUR writes.
LUXEMBOURG
By Ammar Dabbour
In this regard, Bausch during his
recent visit to Oman invited the Omani
finance minister Darwish Al Balushi
to Luxembourg since both countries
appear to have great potential in
financial cooperation. Considering the
Grand Duchys prominent standing in
Shariah financial transactions, Bausch
highlighted that Islamic finance is
one of the main potential areas for the
cooperation.

The private
sector is
and will remain
the leverage of
Luxembourgs
governmental
positioning towards
the world of Islamic
inance
At the same time, Gramegna signed on
the 3rd March 2015 an MoU with his UAE
counterpart Obeid Humaid Al-Tayer.
The relationship materialized within the
framework of development not only in
Islamic finance/banking synergies and
best practices exchange but also on a
larger scale, which will help maintain
Luxembourg as the most attractive
financial place in continental Europe for
the development of the Islamic finance
industry.
In fact, from a more general point of
view, such eorts are developed by

the Luxembourgish authorities within


the entire GCC, with many local
institutions, aiming to highlight and
facilitate cooperation between GCCbased companies and Luxembourg-based
companies.

Taking a growing market


share in the industry
The year 2014 was noted not only for the
success of the sovereign Sukuk issuance,
but also for the listing of two new Sukuk
on the Luxembourg Stock Exchange,
for Goldman Sachs and the Republic of
South Africa respectively, which brings
the total of listed Sukuk in Luxembourg
to 19 since it listed the first one in 2002.
The Luxembourg Stock Exchange was
the first European stock exchange to
list Sukuk. The funds industry also saw
some MENA Shariah funds electing to
be domiciled in Luxembourg and other
ongoing projects.

On the ground
While the Islamic finance industry
is expanding in Luxembourg, the
expansion of the consulting and advisory
sector proper to the industry is not to be
underestimated, as it starts exporting its
knowledge and expertise abroad.
It is worth noting that Luxembourg
has seen the emergence of some very
specialized Islamic finance consulting
boutique advisory firms not only
promoting and focusing on this
particular niche, but making Islamic
finance their sole core business, taking
advantage of the expertise they have
been developing for close to a decade.
The scope of the expertise goes from
administration services to product
structuring, encompassing all capabilities
needed to nurture the development of
a strong onshore Shariah compliant
investment activity. Considering such
availability of skills, one can definitely
say that the private sector is and will
remain the leverage of Luxembourgs

26

governmental positioning towards the


world of Islamic finance.
Indeed, and also noted by the Ministry
of Finance, the governmental bodies are
not the practitioners and therefore such
eorts to promote the financial place
should only be there to assist the private
sector in developing new frontiers.
In this regard, two boutique advisory
firms are seeing their operations grow:
Euris Group and Eethiq Advisors, both
specialized as advisory firms and in
Shariah compliant project management,
are able to serve institutional clients from
MENA to Europe, and also exporting
their expertise out of Luxembourg which
contributes to reinforcing the positioning
of Luxembourg as a hub in continental
Europe for the Islamic finance industry.
Nevertheless, Euris Group and Eethiq
Advisors remain convinced that eorts
should focus on creating complete
ecosystems to be able to serve highcaliber institutions and that is not only by
being able to provide advisory services
but also bringing the technicality of the
Islamic finance industry into practice
such as proper accounting methodology,
funds administration, asset management
and last but not the least, creating the
right environment for the emergence of
an Islamic bank.
Such a platform deployment would
definitely place Luxembourg as a
prominent market player of the industry.
Ammar Dabbour is the managing director of
Euris Group. He can be contacted at ammar.
dabbour@euris-group.com.

3rd June 2015

NEWS

DEALS

Sukuk before Ramadan to the tune of


US$1 billion, with subsequent programs
planned.

MALAYSIA: The RM700 million


(US$194.75 million) in nominal value
Sukuk Musharakah program of SP Setia
will be due and payable on the 15th June,
according to an announcement on Bank
Negara Malaysias website.

Indonesia plans Islamic T-bill


sale

SP Setias Sukuk due

PBMT plans inaugural Sukuk


INDONESIA: Perhimpunan BMT
Indonesia (PBMT), one of the Republics
largest Shariah microfinance group,
is expecting to issue a Sukuk of up to
US$200 million in the first week of June,
Jamil Abbas, a project manager at PBMT,
told IFN. The Sukuk is said to be the first
from a microfinance entity in Indonesia.

Cagamas plans international


Sukuk
MALAYSIA: National mortgage
corporation Cagamas is exploring the
possibility of issuing a foreign currency
Sukuk in the near future, revealed CEO
and president Chung Chee Leong at the
IFN Asia Forum 2015. Chung explained
that this is driven by the great appetite
demonstrated by international investors
for Malaysian Sukuk and bonds.

Khazanah eyes retail market


MALAYSIA: Khazanah Nasional is
planning to open their SRI Sukuk for
education to the retail market next year,
Mohd Izani Ghani, the executive director
and chief financial ocer of Khazanah,
revealed at the IFN Asia Forum 2015.

CBB Sukuk oversubscribed


BAHRAIN: The Central Bank of
Bahrains 27th May Sukuk Salam program
has been oversubscribed by 166%,
according to a press release. The 91day BHD43 million (US$113.09 million)
facility will mature on the 26th August
and carries an expected return of 1.2%.

Omani Sukuk before


Ramadan
OMAN: Oman is trying to push for
the development of Waqf Sukuk in the
Sultanate, said Kemal Rizadi Arbi, the
advisor to the Omani Capital Market
Authority. We see a lot of potential
in Waqf assets, said Kemal speaking
at the IFN Asia Forum 2015. Kemal
also confirmed that the government is
targeting to issue its proposed sovereign

INDONESIA: The Indonesian finance


ministry has announced on its website
that it will hold an Islamic treasury bills
auction, oering four facilities, on the 3rd
June 2015. The indicative target is set at
IDR2 trillion (US$151.2 million).

DIB prices Sukuk


UAE: Dubai Islamic Bank (DIB) has
priced a US$750 million five-year Sukuk
Wakalah at 125bps over midswaps,
according to a bourse filing. Carrying
a profit rate of 2.92%, the final spread
was at the tight end of revised guidance
of 125-135bps and well inside the initial
price thoughts of 140bps over the
same benchmark issued at the start of
Wednesday, the 27th May. First Gulf Bank,
HSBC, Maybank, National Bank of Abu
Dhabi, Standard Chartered and DIB
arranged the deal.

Garuda sells US dollar Sukuk


INDONESIA: Garuda Indonesia has
sold Indonesias first global corporate
Sukuk. The airline noted in a statement
that it raised US$500 million by selling
the unrated bonds due in five years with
a coupon rate of 5.95%. Dubai Islamic
Bank, National Bank of Abu Dhabi, Al
Hilal Bank, Australia and New Zealand
Banking Group, Deutsche Bank, Emirates
NBD, First Gulf Bank, Malayan Banking,
Noor Bank, QInvest, Standard Chartered
and Warba Bank arranged the sale.

SABB completes Sukuk


SAUDI ARABIA: The Saudi British
Bank (SABB) has settled its transaction
of SAR1.5 billion (US$399.87 million)
subordinated Tier II Sukuk through
a private placement oer, according
to an announcement to Tadawul. The
Sukuk will support the banks capital
base in light of the Basel III framework,
positioning the bank for further growth.
Carrying a tenor of 10 years, the bank has
the right to call the Sukuk at the end of the
fifth year. The Sukuk carries a semi-annual
profit of six months SIBOR + 1.3%.

ADIB plans Tier 1 Sukuk


UAE: Abu Dhabi Islamic Bank (ADIB)
is looking to issue Tier 1 Sukuk as well
as conduct a rights issue to raise capital.

27

The bank said in a statement to IFN


that an extraordinary general meeting
will be held on the 21st June to vote on
the proposal. The intended rights issue
would raise AED504 million (US$137.21
million) in share capital, while the
Tier 1 instruments program would be
expanded to US$3 billion from its current
approved limit of US$2 billion.

Saudi Binladin Group markets


Sukuk
SAUDI ARABIA: Saudi Binladin
Group has, according to Reuters,
begun marketing a 364-day Sukuk
issue to local investors in the Kingdom
which could raise up to SAR1 billion
(US$266.58 million), to fund the King
Abdulaziz International Airport
project. The transaction is reportedly
managed by BNP Paribass Saudi unit
and the investment banking arm of Gulf
International Bank.

Einite changes early


redemption period
MALAYSIA: Efinite Structure in an
announcement on the central banks
website has obtained the Sukukholders
approval to make early redemption
ahead of the respective maturity dates
or scheduled principal redemption on
a quarterly basis instead of a periodic
distribution payment date which is on a
semi-annual basis.

K-Electrics paper fully


subscribed
PAKISTAN: K-Electrics PKR22 billion
(US$215.43 million) Sukuk program
which included a green shoe option of
PKR2 billion (US$19.58 million), has been
fully subscribed. The company said in
a statement that the facility, to be listed
this month, is the largest listed Sukuk in
Pakistans corporate history.

THP sets up Sukuk program


MALAYSIA: TH Plantations (THP), via
SPV THP Suria Mekar (formerly known
as Pinekey), on the 28th May issued RM1
billion (US$272.99 million) in Sukuk
under its RM1.2 billion (US$327.59
million) Sukuk Murabahah program.
According to a bourse filing, the papers
were issued to national pilgrimage board,
Lembaga Tabung Haji, and proceeds
from the program will be used to finance
THPs relevant subsidiaries to restructure
respective bridging facilities of up to
RM1 billion.

3rd June 2015

NEWS
Malaysias GII oversubscribed
MALAYSIA: The Malaysian government
on the 29th May issued government
investment issue (GII) Murabahah
of RM3 billion (US$818.98 million),
receiving 264 bids amounting to RM6.26
billion (US$1.71 billion), according to
an announcement on Bank Negara
Malaysias website.

RA Holding redeems Sukuk


US: RA Holding Corp has authorized the
redemption of the remaining US$142.6
million of the outstanding Sukuk issued
pursuant to the second amended joint
plan of reorganization of Arcapita
Bank. RA Holding said in a statement

that upon the redemption, it would


have redeemed all US$550 million of
the Sukuk, in addition to about US$100
million of profit accrued. Made possible
by the companys divestment from Lusail
Golf Development, PODS, Freightliner
Group, JJill and Honiton Energy, RA
Holding expects to be in a position
to make distributions for its Class A
preferred shares as it continues to ooad
remaining investments.

Indonesian sovereign Sukuk


listed on NASDAQ Dubai
GLOBAL: Sukuk issued by the
Indonesian government via Perusahaan
Penerbit SBSN Indonesia III have been

admitted to trading on the NASDAQ


Dubai on the 31st May. According to an
ocial statement, the eight facilities
amounted to US$6 billion.

Bahri gets approval to issue


Sukuk
SAUDI ARABIA: The Capital Market
Authority of Saudi Arabia in an
announcement on its website has issued a
resolution approving the oering of The
National Shipping Company of Saudi
Arabia (Bahri)s Sukuk. The total oering
size will be determined at a later stage
by the company with a prospectus to be
published to the public in due course.

DEAL TRACKER

Full Deal Tracker on page 34

EXPECTED DATE

COMPANYS NAME

SIZE

STRUCTURE

TBA

Saudi Binladin Group

SAR1 billion

Sukuk

ANNOUNCEMENT
DATE
29th May 2015

TBA

Abu Dhabi Islamic Bank

US$3 billion

Sukuk

29th May 2015

Before Ramadan 2015


(18th June 2015)

Government of Oman

US$1 billion

Sukuk

26th May 2015

First week of June 2015

Perhimpunan BMT Indonesia

US$200 million

Sukuk

26th May 2015

26th May 2015

Government of Indonesia

IDR10 trillion

Sukuk

22nd May 2015

TBA

Masraf Al Rayan

TBA

Sukuk

14th May 2015

TBA

AEON Credit

RM1 billion

Sukuk
Murabahah

13th May 2015

TBA

Bank OCBC NISP

TBA

Sukuk

13th May 2015

TBA

Government of Oman

OMR200 million

Sukuk

11th May 2015

AFRICA

AlHuda CIBE-Islamic Chamber


of Commerce collaboration
UGANDA: AlHuda CIBE and Islamic
Chamber of Commerce have signed
an MoU to promote Islamic banking in
Uganda, according to a press release.
Under the terms of the agreement,
AlHuda CIBE shall provide consultancy,
advisory, training and capacity building,
Shariah advisory, and distance learning
programs and to procure the projects that
require the services of AlHuda CIBE.

IDB to launch new ofice in


Egypt
EGYPT: The IDB is expected to within
the third quarter of this year sign a new
agreement to launch a representative
oce in Egypt, reported local daily,

Amwal Alghad quoting the banks


director of country department,
Mohammad Al-Saati. The IDBs total
funding portfolio for Egypt has reached
US$12.5 billion, including US$3.1 billion
in 2014. The bank had also signed
financing agreements for vital and highlyimportant projects in Egypt, including
US$450 million for the South Helwan
power station, US$460 million for the
Sharm El-Sheikh Airport, and US$220
million for the Egyptian-Saudi electricity
grid linkage project.

National Bank gets new


software

AMERICAS
Arcapita divests

US: Shariah compliant Arcapita has


completed the sale of US-based retailer
J.Jill Group to TowerBrook Capital
Partners, the firm said in a statement. The
divestment from J.Jill Group has brought
Arcapitas proceeds to investors to US$2.5
billion during the past two years.

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No.1 Islamic nance based feed

KENYA: Path Solutions in a press release


has announced that Kenya-based National
Bank has successfully adopted the iMAL
Islamic core banking system for its Islamic
window, National Amanah.

28

3rd June 2015

NEWS

ASIA

Time is right for Malaysia


MALAYSIA: The time is right for
Malaysia to do more complex structured
Sukuk as we have over 30 years in
experience and the right infrastructure,
said Mohd Eendi Abdullah, the senior
vice-president and the head of Islamic
markets at AmInvestment Bank, speaking
at the IFN Asia Forum 2015. It is the right
time to test the market as investors are
also looking for new asset classes.

SBP submits tax amendment


proposal
PAKISTAN: The State Bank of Pakistan
has submitted a proposal to the finance
ministry to amend the tax laws via
Finance Bill 2015-16 for rationalizing tax
provisions related to banks, including
Shariah and microfinance banks, reported
the Business Recorder.

Bank Aceh plans Islamic


conversion
INDONESIA: The shareholders of
Bank Aceh was expected to vote last
week on converting its assets to comply
with Shariah law, as the bank seeks
to transform itself into a fully-fledged
Islamic bank, reported Bloomberg.

SC plans Shariah parameters


MALAYSIA: Securities Commission
(SC) Malaysia is looking to produce
more Shariah frameworks to develop
the countrys Islamic finance industry,
confirmed Dr Nik Ramlah Mahmood, the
deputy CEO of SC Malaysia. Speaking at
the IFN Asia Forum 2015, Dr Nik said in
her keynote address: We can expect the
Shariah Advisory Council of the Securities
Commission to issue more Shariah

parameters in the near future, to facilitate


innovation and development. The SC last
year issued Shariah parameters on Islamic
exchange-traded funds based on gold and
silver.

BNM changes method for


Islamic tender
MALAYSIA: Bank Negara Malaysia
(BNM) will use the Qard principle as
the underlying contract for Islamic
money market tender eective on the
15th June 2015, to replace the use of the
Wadiah principle in its Islamic money
market tender. In an announcement on
its website, the central bank said that the
change is to meet Shariahs requirement
and therefore this is not a new
instrument and all other parameters of
the Islamic money market tender remain
the same. Implementation of Qard is
in line with the central banks Shariah
Advisory Councils decision with regards
to custody of money in its sixth special
meeting in 2008.

SC updates Shariah compliant


list
MALAYSIA: The Securities Commission
Malaysia (SC) has in a press release
announced the updated list of Shariah
compliant securities as approved by its
Shariah Advisory Council. The updated
list, which took eect on the 29th May
2015, features a total of 674 Shariah
compliant securities. These counters
constitute 75%of the total 903 listed
securities on Bursa Malaysia.
The list includes 19 newly classified
Shariah compliant securities and excludes
13 from the previous list issued in
November 2014. Revised twice a year, the
next updated list will be made available in
November 2015.

Indonesia to see bank


consolidation
INDONESIA: Moodys in a statement
conveyed that the Indonesian government
(Baa3, stable)s Islamic finance roadmap
will encourage consolidation among
smaller Islamic banks in the country,
and foster the development of a larger
domestic Sukuk market. The roadmap
is expected to support the consolidation
of state-owned and commercial Islamic
banks, which will in turn increase the
size of the banks capital bases, improve
cost eciencies, and allow increased
underwriting in the corporate and
infrastructure sectors.

Ziraat Participation Banking


launched
TURKEY: The president of Turkey,
Recep Tayyip Erdoan, has inaugurated
the countrys first state-owned Shariah
compliant bank Ziraat Participation
Bank. According to an ocial statement,
the bank targets to open 500 branches by
2023, with the first 20 expected this year
and 50 by 2016. President Erdoan expects
the Turkish participation banking sector to
at least triple its market share in the next
decade from the current 5% to 15-20% by
2023.

Sberbanks Islamic banking


plans
RUSSIA: At a shareholders meeting
Herman Gref, Sberbanks CEO, reportedly
unveiled plans to introduce Islamic
banking in Muslim areas across Russia,
according to World Finance. With a
Muslim-majority population, the Russian
republic of Tatarstan is considered as key
in the strategy.

SHARIAH COMPLIANCE & AUDIT


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29

3rd June 2015

NEWS

GLOBAL

IAFC to close debut Islamic


syndicated deal
GLOBAL: International Airfinance
Corporation (IAFC) is seeking to raise
US$400 million through senior secured
Murabahah financing facilities to fund
the acquisition of five A330-200 aircraft
on an operating lease to Kuwait Airways.
National Bank of Abu Dhabi and
Arab Banking Corporation have been
mandated as underwriters, bookrunners
and lead arrangers for the eight-year
facility. According to a press release, the
deal is expected to close at the end of this
month.

Infrastructure megabank on
the horizon
GLOBAL: Indonesia and Turkey have
pledged a minimum of US$300 million
each to the proposed Shariah compliant
infrastructure bank to be co-founded
with the IDB, reported Indonesia
Investments quoting Indonesias finance
minister.
The proposition of an Islamic megabank
has been on the cards since 2013. All
parties involved were said to have
conducted ongoing discussions on the
feasibility of setting up the megabank
(See IFN Report Vol 12 Issue 07: Islamic
megabank: A redundancy or a need?).

University of Bolton-Aafaq
Islamic Finance collaboration

Sedco Capitals US real estate


acquisitions

GLOBAL: The Center for Islamic Finance


at the University of Bolton has signed
an MoU with Aafaq Islamic Finance for
the further development of the Islamic
Banking Professional Certification
program and the creation of an annual
Islamic finance event, according to a
statement on the universitys website.
Under the MoU, both parties expressed
their full commitment to the continued
advancement and growth of Islamic
finance collaborating on a series of
projects and initiatives that include
conducting and commissioning joint
research in the field of Islamic finance;
developing and promoting a new Islamic
Banking Professional Certification
program and hosting and organizing an
annual Islamic finance-based event.

GLOBAL: Saudi Arabias Sedco Capital


has signed three real estate deals in the
US worth US$145.5 million, reported
Trade Arabia. The acquisitions include a
neighbourhood retail center in Florida,
senior housing in Chicago, and the
construction of a private school in
Houston.

MIDDLE EAST

in a statement that it has appointed a


new independent monitoring agency
for the implementation of its Code of
Conduct by member banks, as well as
four new specialized committees in audit,
operations and payments, IT, and fraud.

Seera invests in healthcare

BAHRAIN: Shariah compliant Seera


Investment Bank has completed an
Islamic equity investment in UK Dementia
Care, a dementia care-focused housing
development in London. The bank said in a
statement that the project will be developed
on a 1.19 acre freehold site in Clapham over
a three to four-year period.

Centralized Shariah board for


the UAE
UAE: The Central Bank of the UAE has
proposed a Higher Shariah Authority to
complement and oversee Shariah boards
of individual Islamic banks. Raised
during a recent UAE Banks Federation
meeting, the association also confirmed

Mixed performance for PanArab markets


GLOBAL: The S&P Pan Arab Composite
LargeMidCap Index closed May with
a 1.9% loss due to weak performances
on the bourses of the UAE, Qatar and
Kuwait. In a statement to IFN, Tim
Edwards, S&P Dow Jones Indices index
investment strategy senior director,

ADIB offers exposure to


German exporters
UAE: Abu Dhabi Islamic Bank (ADIB)
is oering a new two-year, 100% capitalprotected, Shariah compliant note that
provides risk-averse investors access to topperforming German companies that export
globally, according to a press release.

Topaz secures Islamic facility


UAE: Topaz Energy and Marine secured
one of the largest ship finance deals
which consisted of a mix of Islamic and

30

said: With no obvious culprit for the


poor performance in the Gulf States this
month, media pundits settled somewhat
unconvincingly on the FIFA scandal and
the potential repercussions on Qatars
awarded right to host the 2022 World
Cup. Edwards, however, added that
half of the single-country equity indices
in the Middle East posted a positive total
return for the month including Jordan
and Egypt.

IDB to fund Dhaka power


project
GLOBAL: The IDB has partnered
with Asian Development Bank,
European Investment Bank and French
development finance institution, Agence
Franaise de Dveloppement to fund
power projects in Bangladesh by the
Dhaka Power Distribution Company,
according to The Daily Star.

CIBAFI forms educational


pact with IIF
GLOBAL: The General Council for Islamic
Banks and Financial Institutions (CIBAFI)
announced the launch of its new executive
program, Global Developments and
Strategic Insights, in collaboration with
the Institute of International Finance (IIF).
According to a press release, the program
will provide a perspective on the key
issues facing the Islamic finance sector and
will feature a diverse array of industry
experts who will share their insights and
thought leadership on creative approaches
and innovative strategies to industry
challenges.

conventional components. According to


a press release from transaction advisor
Dentons, the US$550 million multi-tranche
facility will be used to refinance existing
debt and fund expansion plans. Arranged
over three tranches between five and
seven years, the deal was arranged by
Standard Chartered and HSBC as joint lead
arrangers and Gulf International Bank,
Emirates NBD, Noor Bank and First Gulf
Bank as arrangers.

CUDs MBA re-accredited


UAE: Canadian University Dubai (CUD)s
flagship MBA program which oers a
specialization in Islamic banking, has
been re-accredited by the Commission
for Academic Accreditation of the UAE
Ministry of Higher Education and Scientific
Research, the university announced in a
press release.

3rd June 2015

NEWS
Alizz expands
st

OMAN: Alizz Islamic Bank on the 1 June


inaugurated its new branch in Wattaya,
Muscat, according to a bourse filing.

KFH expands e-services


KUWAIT: Kuwait Finance House (KFH)
launches e-banking services on alternative
channels including: call center, ATMs,

ASSET
MANAGEMENT
Waha Capital plans Islamic
fund

UAE: Waha Capital plans to launch


a US$500 million Shariah compliant
infrastructure fund focused on the
MENA region and Turkey, the firm said
in a presentation. The planned fund will
be the firms second installment to its
MENA Infrastructure Fund, established
in 2007.

social media, website and SMS, according


to a press release.

Al-Baraka Banks new Syrian


branch
SYRIA: Al-Baraka Bank Syria has opened
a new branch in Tartous city bringing the
number of its branch network nationwide
to 10, reported Syriaonline.

RHBIIAM rolls out Islamic


retail fund
MALAYSIA: RHB Islamic International
Asset Management (RHBIIAM) on the
28th May launched the RHB Islamic
Global Developed Markets Fund, said
to be the countrys first Islamic Shariah
fund targeting global developed markets.
The fund will invest in listed equities
of developed markets including the US,
the UK, Switzerland, Japan, Spain and
France among others. In a statement
to IFN, RHBIIAM said it appointed
Nomura Islamic Asset Management as
the external investment manager while

RESULTS

cooperation and financial linkages with


Asia and strengthening the legal and
regulatory landscape in Labuan IBFC.

TUNISIA: Al Baraka Bank Tunisia


realized a 100% growth in first quarter
net income to TND4 million (US$2.05
million) as compared to the year before.
The Islamic bank said in a statement that
total assets rose 14% to TND1.4 billion
(US$716.85 million) as at the end of
March 2015.

Syarikat Takaful Malaysia

Al Baraka Bank Tunisia

BIMB Holdings
MALAYSIA: According to its financial
statements, BIMB Holdings registered a
pre-tax profit of US$220.3 million in the
first quarter of the year, an increase from
the US$194.39 million recorded in the
corresponding period of 2014.

Labuan IBFC
MALAYSIA: The Labuan International
Business and Financial Center (Labuan
IBFC) generated a 28% growth in total
Islamic financing in 2014 to US$993.3
million. According to the Labuan
Financial Services Authority (Labuan
FSA)s annual report, Labuan FSAs
strategic directions from 2015-17 will
entail enhancing the development of
Islamic finance, creating synergy for

MALAYSIA: Syarikat Takaful Malaysia


made a profit of US$46.27 million in the
first three months of the year against
US$34.42 million the same period last
year, according to the operators financial
information. Net assets per share
attributable to ordinary equityholders of
the parent reached US$3.89.

PIDM
MALAYSIA: Perbadanan Insurance
Deposit Malaysia (PIDM), or Malaysia
Deposit Insurance Corporation, reported
a net surplus of RM290.8 million
(US$79.63 million) for the year 2014,
against a budged of RM261 million
(US$71.47 million). In a statement to
IFN, the government agency which
administers the Deposit Insurance
System and Takaful and Insurance
Benefits Protection System, said that
the four Takaful and Insurance Benefits
Protection Funds stood at RM1.23 billion
(US$336.8 million) as at the end of 2014,
registering a 7% year-on-year growth;
while the deposit insurance funds (one
conventional and one Islamic) amounted

31

TDC receives funding


OMAN: Tilal Development Company
(TDC) in a press release announced that it
has received funding from Bank Muscats
Meethaq Islamic Banking worth OMR30
million (US$77.58 million) to finance the
expansion of Muscat Grand Mall and the
Millennium Executive Apartments at Tilal
Complex.

IdealRatings has been selected as its


screening provider.

Public Mutual declares


distributions
MALAYSIA: Public Mutual has declared
distributions for 10 of its unit trust funds
including Public Ittikal Fund, Public
Islamic Equity Fund and Public Islamic
Select Treasurers Fund at 6 Malaysian
sen per unit, 2.65 sen per unit and 2 sen
per unit respectively, according to an
announcement on its website.

to RM973.1 million (US$266.46 million),


up 27% from the year before.

Maybank
MALAYSIA: Maybanks Islamic banking
business recorded a 15.4% increase
in total income to RM932.7 million
(US$255.39 million) in the first quarter.
In a statement to IFN, the bank armed
that Shariah compliant finance now
constitutes 46.3% of total domestic
financing for Maybank Group, a rise
from 43.8% in December 2014. Maybank
Group for the first three months saw
net profit grow 6.2% to RM1.7 billion
(US$465.5 million).
The groups Takaful and insurance arm
Etiqa Insurance and Takaful recorded a
9.5% accretion in total general insurance/
Takaful premium and 4.1% increase
in total life insurance/Family Takaful
premium in the first quarter. Pre-tax
profit dropped by more than half to
RM49.89 million (US$13.66 million) from
RM141.22 million (US$38.67 million)
a year earlier due to lower equity
investment gains and decline in MGS/
GII yields. Total assets reached RM27.62
billion (US$7.56 billion), marking a 4.8%
growth from the first quarter of 2014.

3rd June 2015

NEWS
Al-Madina For Finance &
Investment Co
KUWAIT: Shariah compliant Al-Madina
For Finance & Investment Co for the
first quarter of 2015 reduced net loss to
KWD2.07 million (US$6.82 million) from
KWD7.09 million (US$23.35 million)
the same period last year. Acccording
to a bourse filing, the companys total
assets as at the 31st March 2015 stood at
KWD74.41 million (US$245.09 million), a
31.35% year-on-year drop.

Global Investment House


KUWAIT: Global Investment House,
which oers Islamic financial services,
registered a net profit of KWD6.5 million
(US$21.38 million) in 2014, marking
a 242.1% year-on-year growth. In a
statement to the bourse, the company
does not have any external debt and
capital base as at the 31st December 2014
reached KWD87.3 million (US$287.17
million).

TAKAFUL

Al Rajhi partners with AIA


PUBLIC Takaful
MALAYSIA: Al Rajhi Bank Malaysia has
rolled out a new medical plan, i-Medic,
underwritten by AIA PUBLIC Takaful,
the bank said in a statement to IFN. This
bancaTakaful collaboration follows one
earlier with Great Eastern Takaful to
distribute i-Great Raudhah and i-Great
Bakti.

IFN ONLINE
DIRECTORY

Europe Forum

10th June 2015


Chambre de Commerce,
Luxembourg

Islamic Finance Prospects, Challenges and Potential Traction in Europe


Following the enormous success in 2014, the IFN Europe Forum 2015 would take place once again in
Luxembourg. With a strong turnout from market players across Europe, the forum is truly a
representation of the growing Islamic finance markets across continents.
With the unwavering support from financial regulators in Luxembourg and a large following of
industrys key decision makers, the IFN Forum is catered to meet the high expectations, featuring
interactive discussions from United Kingdom, Germany, France, Switzerland, Belgium, Turkey, Russia
and the CIS region.

Topics to be discussed:
Crowdfunding: The Birth of a New Asset Class?
Cross Border Linkages and Opportunities between Asia and Europe
Key Growth Markets for Islamic Finance in Europe
Reviewing Recent Changes to Legal & Regulatory Infrastructure Impacting Islamic Finance in Europe
What Initiatives Exist to Develop Talent and Human Capital in the Islamic Finance Services
Shariah- Compliant Capital Financing: New Assets and Structures

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MEDIA PARTNERS

3rd June 2015

NEWS

RATINGS

Omans outlook stable


OMAN: S&P in a statement has armed
its A-/A-2 long and short-term sovereign
credit ratings on Oman with a stable
outlook. The ratings on Oman are
supported by its strong government net
asset position and its external net asset
position. The ratings are constrained by
a lack of monetary flexibility and stilldeveloping institutions.

Stable outlook for Malaysian


banks
MALAYSIA: Moodys has maintained a
stable outlook on the Malaysian banking
system, expecting it to remain stable
over the next 12-18 months buoyed
by the banks strong capital and stable
funding levels. The rating agency said
in a statement, however, that high
household debt continues to pose risks if
unemployment rises, property prices fall
or interest rates rise.

weakening of the reinsurers capital


adequacy; while arming its longterm issuer financial strength and
counterparty credit ratings at A+.
The rating agency, however, added in
a statement that: Our assessment of
HRTs financial risk profile remains
strong, reflecting our expectation that
the companys capital position will be
restored to an extremely strong level
through more controlled growth in
2015/2016, supported by improved
technical results, combined with a
relatively conservative investment
portfolio and adequate financial
flexibility. Concurrently, S&P has
assigned A+ long-term local financial
strength and counterparty credit ratings
to HRTs Labuan branches, with a
negative outlook.

accumulation of a cash buer and


expectations that payments from the
government of Malaysia will remain
consistent.

Positive outlook for Encorp


Systembilts Sukuk

QATAR: Qatar Islamic Insurance


Company (QIIC)s insurance financial
strength rating has been upgraded to
Baa1 from Baa2 by Moodys, with a
stable outlook. The rating agency said
in a statement that the revision is based
on the operators improved and solid
capitalization in relation to insurance
risk with 2014 consolidated equity rising
by QAR55 million (US$15.1 million) to
QAR465 million (US$127.67 million)
since 2011.

BAHRAIN: S&P has downgraded


Hannover ReTakafuls outlook to
negative from stable following significant

MALAYSIA: Encorp Systembilt (a


subsidiary of Enfari Properties) has
had the ratings on its RM1.58 billion
(US$430.75 million) AA2-rated Sukuk
Murabahah revised to positive from
stable by RAM. According to the rating
agency, the upgraded outlook on the
facility is based on the premise of
improved financial position over the
next two years, driven by the continuous

MOVES

Commercial Bank
International

Negative outlook for


Hannover ReTakaful

Bank Dhofar

OMAN: Bank Dhofar, which oers


Islamic banking products through
Maisarah, has named Issam Mohsin
Al Balushi as its head of compliance,
according to an announcement to the
Muscat Securities Market.

Absa Islamic Banking


SOUTH AFRICA: Absa Islamic Banking
has appointed Uwaiz Jassat as the head
of Islamic banking according to specialist
publication, Cape Business News. Uwaiz
has been the acting head of Islamic
banking since October 2013.

UAE: IFN has learned that Commercial


Bank International has hired Mamoon
Abdelkader as the head of Islamic
banking. Mamoon was previously
attached to Emirates Islamic as the
regional head of corporate banking.

Al Hilal Islamic Banking


Services
OMAN: The board of directors of Al
Hilal Islamic Banking Services has
accepted the resignation of Dr Fareed
Mohammed Hadi, the chairman of
its Shariah Supervisory Board (SSB).

Al Bayans ratings afirmed


SAUDI ARABIA: RAM in a statement
has rearmed the corporate credit
ratings of Al Bayan Holding Company
at AA3/Stable/P1. Concurrently, the
AA3(s)/Stable rating of the RM1 billion
(US$271.26 million) Sukuk Wakalah
(2013/2023) issued by the groups
wholly-owned subsidiary, ABHC Sukuk
is also rearmed. The ratings reflect Al
Bayans solid track record in securing and
delivering on large government contracts
for various ministries.

QIIC upgraded

According to an announcement to the


Muscat Securities Market, the board
has approved Dr Ahmed Mohiyeldin
Ahmed as the new chairman. The
board also approved the appointment
of Dr Mustaien Ali Abdulhameed as a
member of SSB.

Alkhair International Islamic


Bank
MALAYSIA: Adissadikin Ali, the
previous president/CEO of EXIM Bank,
has been appointed as CEO of Alkhair
International Islamic Bank succeeding
Ikbal Daredia who left in May 2014,
confirmed Alkhair to IFN.

Leaders in Financial, Technical and Product Training


for the Islamic Financial Services Industry.

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For more details. Contact us:


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33

3rd June 2015

DEAL TRACKER
Expected date

Company's name

Size

Structure

Announcement Date

TBA

Saudi Binladin Group

SAR1 billion

Sukuk

29th May 2015

TBA

Abu Dhabi Islamic Bank

US$3 billion

Sukuk

29th May 2015

Before Ramadan 2015


(18th June 2015)

Government of Oman

US$1 billion

Sukuk

26th May 2015

First week of June 2015

Perhimpunan BMT Indonesia

US$200 million

Sukuk

26th May 2015

26 May 2015

Government of Indonesia

IDR10 trillion

Sukuk

22nd May 2015

TBA

Masraf Al Rayan

TBA

Sukuk

14th May 2015

TBA

AEON Credit

RM1 billion

Sukuk Murabahah

13th May 2015

TBA

Bank OCBC NISP

TBA

Sukuk

13th May 2015

TBA

Government of Oman

OMR200 million

Sukuk

11th May 2015

TBA

Najran Cement Company

TBA

Sukuk

8th May 2015

2 quarter 2015

National Shipping Company of


Saudi Arabia

SAR3.9 billion

Sukuk

7th May 2015

TBA

Riyad Bank

SAR4 billion

Sukuk

6th May 2015

Jun-15

Adira Dinamika Multi Finance

IDR500 billion

Sukuk

6th May 2015

2015/2016 fiscal year

Government of Egypt

TBA

Sukuk

5th May 2015

2015

Government of Ivory Coast

XOF300 billion

Sukuk

24th April 2015

2016

Government of Kazakhstan

TBA

Sukuk

9th April 2015

TBA

CIMB Group Holdings

RM1 billion

Sukuk

9th April 2015

TBA

Taliworks Corporation

RM210 million

Sukuk Murabahah

8th April 2015

TBA

Government of Senegal

TBA

Sukuk

6th April 2015

TBA

Oman Telecommunications

TBA

Sukuk

23rd March 2015

TBA

Zorlu Energy

TRY100 million

Sukuk

20th March 2015

TBA

Turkiye Finans

RM2.05 billion

Sukuk

20th March 2015

TBA

Government of Jordan

JOD400-500 million

Sukuk

20th March 2015

TBA

Bank Muscat

OMR500 million

Sukuk

20th March 2015

24 March 2015

Government of Indonesia

IDR2 trillion

Sukuk

18th March 2015

Apr-15

Masraf Al Rayan

TBA

Sukuk

17th March 2015

As early as April 2015

Government of UAE

TBA

Green energy Sukuk

12th March 2015

Before June 2015

BNI Syariah

IDR500-750 billion

Sukuk

10th march 2015

TBA

Treet Corporation

PKR539.51 million

Sukuk

9th March 2015

2015

Government of Hong Kong

US$500 million-1 billion

Sukuk

9th March 2015

End of March

National Shipping Company of


Saudi Arabia

SAR3.9 billion

Sukuk

5th March 2015

TBA

Sharjah Islamic Bank

TBA

Sukuk

4th March 2015

TBA

Tulip Maple

US$750 million

Sukuk

4th March 2015

TBA

Khazanah Nasional

RM1 billion

Sukuk

27th February 2015

2015

Gulf Finance House

US$230 million

Sukuk

26th February 2015

2015

Garuda Indonesia

US$500 million

Sukuk

25th February 2015

TBA

IDB

TBA

Sukuk

25th February 2015

TBA

Qatar Islamic Bank

QAR5 billion

Sukuk

23rd February 2015

11th March 2015

Government of Indonesia

IDR5 billion

Sukuk

23rd February 2015

TBA

Al Baraka Bank

TBA

Sukuk

17th February 2015

18th February 2015

Turkish Treasury

TRL1.8 billion

Sukuk Ijarah

17th February 2015

TBA

Government of Malaysia

TBA

Sukuk

16th February 2015

2016

Government of South Africa

TBA

Sukuk

13th February 2015

3 quarter 2015

SGI-Mitabu

AU$150 million

Sukuk

13th February 2015

TBA

Petroliam Nasional (Petronas)

US$ 7 billion

Sukuk

12th February 2015

TBA

Abu Dhabi Islamic Bank

TBA

Sukuk

11th February 2015

TBA

Qatar International Islamic Bank

QAR3 billion

Sukuk

10th February 2015

Government of Indonesia

IDR2 trillion

Sukuk

5th February 2015

th

nd

th

rd

th

10 February 2015

34

3rd June 2015

SHARIAH INDEXES
REDmoney Asia ex. Japan
All Cap

6 Months

Large Cap

Medium Cap

REDmoney Europe

Small Cap

All Cap

2200

1200

1890

1120

1580

1040

1270

960

960

880

650

800
Dec

Jan

Feb

Mar

Apr

REDmoney GCC
All Cap

May

6 Months
Large Cap

Medium Cap

All Cap

Small Cap

2100

1140

1816

980

1532

820

1248

660

964
Dec Jan

Feb

Mar

Apr

REDmoney MENA
All Cap

680

May

6 Months
Large Cap

Medium Cap

1020

1960

890

1670

760

1380

630

1090
Feb

Mar

Apr

Dec Jan

All Cap

Small Cap

2250

Dec Jan

Feb

Medium Cap

Mar

Apr

800

May

Dec Jan

Small Cap

May

6 Months
Large Cap

Feb

Medium Cap

Mar

Apr

REDmoney US

1150

500

Large Cap

REDmoney Global

1300

500

Dec Jan

6 Months

Small Cap

May

6 Months
Large Cap

Feb

Mar

Medium Cap

Apr

SAMI Halal Food Participation (All Cap)

Small Cap

May

6 months

2100
2020
1940
1860
1780
1700

Dec-2014

Jan-2015

Feb-2015

Mar-2015

35

Apr-2015

May-2015

3rd June 2015

SHARIAH INDEXES
REDmoney Global Shariah Index Series (All Cap)
REDmoney Asia ex. Japan
REDmoney Europe
REDmoney GCC

6 Months

REDmoney Global Shariah Index Series (Large Cap)

REDmoney Global
REDmoney MENA
REDmoney US

REDmoney Asia ex. Japan


REDmoney Europe
REDmoney GCC

1400

1300

1230

1130

1060

960

890

790

720

620

550

Dec Jan

Feb

Mar

Apr

REDmoney Global Shariah Index Series (Medium Cap)


REDmoney Asia ex. Japan
REDmoney Europe
REDmoney GCC

450

May
6 Months

Dec Jan

1900

1860

1550

1520

1200

1180

850

840
500

Feb

Mar

Apr

Mar

REDmoney Asia ex. Japan


REDmoney Europe
REDmoney GCC

REDmoney Global
REDmoney MENA
REDmoney US

2200

Dec Jan

REDmoney Global
REDmoney MENA
REDmoney US

Apr

May

REDmoney Global Shariah Index Series (Small Cap)

2250

500

Feb

6 Months

May

Dec Jan

Feb

6 Months

REDmoney Global
REDmoney MENA
REDmoney US

Mar

Apr

May

REDmoney Global Shariah


Equities are considered eligible for inclusion
into the REDmoney Global Shariah Index
Series only if they pass a series of market
related guidelines related to minimum market
capitalization and liquidity as well as country
restrictions.
Once the index eligible universe is determined
the underlying constituents are screened
using a set of business and financial Shariah
guidelines.

Telecomunication Services
2%

Utilities
2%

Basis Materials
15%
Consumer Goods Services
15%

Technology
14%
Energy
8%

Non-Cyclical
Consumer Goods Services
7%
Industrials
22%

Financials
4%
Healthcare
11%

The REDmoney Global Shariah Index Series powered by IdealRatings consists of a rich subset of global listed equities that adhere to clearly
defined and transparent Shariah guidelines defined by Shariyah Review Bureau in Jeddah, Saudi Arabia.
The REDmoney Shariah Indexes provides Islamic investors with an accurate and Shariah-specific equity performance benchmark with optimized
compliance credibility due to the intensive research conducted to ensure that index constituents do not conflict with the defined Shariah
requirements.
IdealRatings is the leading provider of Shariah investment decision support tools to investors globally, including asset managers, brokers, index
providers, and banks to empower them to develop, manage and monitor Shariah investment products and Shariah compliant funds. IdealRatings
is headquartered in San Francisco, California. For more information about IdealRatings visit: www.idealratings.com
For further information regarding REDmoney Indexes contact:

REDmoney Global Shariah Index Series

Andrew Morgan
Managing Director, REDmoney Group

RED

Email: Andrew.Morgan@REDmoneygroup.com
Tel +603 2162 7800

36

3rd June 2015

FUNDS TABLES
Eurekahedge North America Islamic Fund Index

155
145
135
125

Index Values

115
105
95
85
75
65
Apr-15

Jan-14

Oct-12

Jun-11

Mar-10

Dec-08

Aug-07

May-06

Feb-05

Oct-03

Jul-02

Apr-01

Dec-99

55

Top 10 Annualized Returns for ALL Islamic Funds


Fund

Fund Manager

Atlas Pension Islamic - Equity Sub

Atlas Asset Management

Performance Measure
22.74

Pakistan

Alkhair Capital Istanbul

Alkhair Portfoy Yonetimi

20.80

Turkey

Atlas Islamic Stock

Atlas Asset Management

17.49

Pakistan

Alkhair Capital Index

Alkhair Portfoy Yonetimi

14.19

Turkey

AmIslamic Growth

AmInvestment Management

9.08

Malaysia

Atlas Pension Islamic - Money Market Sub

Atlas Asset Management

8.49

Pakistan

Atlas Pension Islamic - Debt Sub

Atlas Asset Management

7.70

Pakistan

AmIslamic Balanced

AmInvestment Management

7.40

Malaysia

Am-Namaa' Asia-Pacific Equity Growth

AmInvestment Management

6.71

Malaysia

10

CIMB Islamic Equity

CIMB-Principal Asset Management

6.16

Malaysia

Eurekahedge Islamic Fund Index

Fund Domicile

3.23

Based on 21.57% of funds which have reported May 2015 returns as at the 2nd June 2015
Top 10 Annualized Standard Deviation for ALL Funds since Inception
Fund

Fund Manager

Performance Measure

Fund Domicile

AmIttikal

AmInvestment Management

41.40

Malaysia

Deutsche Noor Precious Metals Securities Class A

DWS Noor Islamic Funds

35.29

Ireland

AmPrecious Metals

AmInvestment Management

31.31

Malaysia

NBAD Islamic MENA Growth

National Bank of Abu Dhabi

27.95

UAE

Al Meezan Mutual

Al Meezan Investment Management

26.69

Pakistan

Atlas Islamic Stock

Atlas Asset Management

26.65

Pakistan

Atlas Pension Islamic - Equity Sub

Atlas Asset Management

23.56

Pakistan

CIMB Islamic Equity Aggressive

CIMB-Principal Asset Management

23.22

Malaysia

Al Baraka

Hermes Fund Management

20.20

Egypt

10

BIMB i-Growth

BIMB UNIT Trust Management (BUTM)

19.73

Malaysia

8.29

Eurekahedge Islamic Fund Index


Taking into account funds that have at least 12 months of returns as at the 2nd June 2015

Comprehensive data from Eurekahedge will now feature the overall top 10 global and regional funds based on a specific duration (yield to date, annualized returns,
monthly returns), Sharpe ratio as well as delve into specific asset classes in the global arena equity, fixed income, money market, commodity, global investing (which
would focus on funds investing with global mandate instead of a specific country or geographical region), fund of funds, real estate as well as the Sortino ratio. Each table
covering the duration, region, asset class and ratio will be featured on a five-week rotational basis.

37

3rd June 2015

FUNDS TABLES
Eurekahedge Islamic Fund Fixed Income Index over the last 1 year

180

103

170

102

160

101

May-15

Apr-15

Mar-15

Feb-15

Jan-15

Dec-14

Nov-14

May-15

Dec-14

Jul-14

Jan-14

Aug-13

Mar-13

Sep-12

Apr-12

95
Nov-11

90
May-11

96
Dec-10

100
Jul-10

97

Jan-10

110

Oct-14

98

Sep-14

120

99

Aug-14

130

100

Jul-14

140

Jun-14

Percentage

Percentage

150

May-14

Eurekahedge Islamic Fund Fixed Income Index over the last 5 years

Top 5 Islamic Fixed Income Funds by 3 Months Returns


Fund

Fund Manager

Performance Measure

Fund Domicile

Atlas Pension Islamic - Debt Sub

Atlas Asset Management

1.84

Pakistan

AmBon Islam

AmInvestment Management

0.22

Malaysia

BIMB Dana Al-Fakhim

BIMB UNIT Trust Management (BUTM)

-0.01

Malaysia

CIMB Islamic Sukuk

CIMB-Principal Asset Management

-3.31

Malaysia

CIMB Islamic Enhanced Sukuk

CIMB-Principal Asset Management

-4.21

Malaysia

0.07

Eurekahedge Islamic Fund Index


nd

Based on 19.23% of funds which have reported May 2015 returns as at the 2 June 2015
Top 10 Annualized Sortino Ratio for ALL Islamic Funds
Fund

Fund Manager

Performance Measure

CIMB Islamic Money Market

CIMB-Principal Asset Management

58.32

Malaysia

Atlas Pension Islamic - Debt Sub

Atlas Asset Management

25.36

Pakistan

Atlas Pension Islamic - Money Market Sub

Atlas Asset Management

3.29

Pakistan

BLME Sharia'a Umbrella SICAV-SIF Global


Sukuk - Class A USD

Bank of London and The Middle East

2.57

Luxembourg

Alkhair Capital Istanbul

Alkhair Portfoy Yonetimi

2.16

Turkey

BLME Umbrella Sicav - SIF - USD Income - Class B

Bank of London and The Middle East

1.78

Luxembourg

Atlas Pension Islamic - Equity Sub

Atlas Asset Management

1.61

Pakistan

AmIslamic Balanced

AmInvestment Management

1.49

Malaysia

Alkhair Capital Index

Alkhair Portfoy Yonetimi

1.30

Turkey

10

AmIslamic Growth

AmInvestment Management

1.22

Malaysia

Eurekahedge Islamic Fund Index

Fund Domicile

1.85
nd

Based on 23.33% of funds which have reported May 2015 returns as at the 2 June 2015
Contact Eurekahedge
To list your fund or update your fund information: islamicfunds@eurekahedge.com
For further details on Eurekahedge: information@eurekahedge.com Tel: +65 6212 0900
Disclaimer
Copyright 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 aliates provide any express or implied warranty or representations as to
originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for any purpose.

38

3rd June 2015

LEAGUE TABLES
Most Recent Global Sukuk
Priced
Issuer
Nationality Instrument
28th May 2015 Hong Kong
Hong Kong Sukuk
Sukuk 2015
27th May 2015 Garuda Indonesia Indonesia
Sukuk
Global Sukuk

Market
Euro market
public issue
Euro market
public issue

US$ (mln) Managers


1,000
Standard Chartered Bank, HSBC, National
Bank of Abu Dhabi, CIMB Group
500
Standard Chartered Bank, Deutsche Bank,
ANZ, National Bank of Abu Dhabi, First
Gulf Bank, Maybank, Emirates NBD, Al Hilal
Bank, QInvest, Warba Bank, Noor Bank
Domestic market
278
OCBC, RHB Capital, Maybank, CIMB Group
public issue
Euro market
2,000
JPMorgan, HSBC, Dubai Islamic Bank, CIMB
public issue
Group

25th May 2015

Benih Restu

Malaysia

Sukuk

21st May 2015

Perusahaan
Penerbit SBSN
Indonesia III
Dubai Islamic
Bank

Indonesia

Sukuk

UAE

Sukuk

Euro market
public issue

750

18th May 2015

THP Suria Mekar

Malaysia

Sukuk

280

15th May 2015

Jambatan Kedua

Malaysia

Sukuk

21st Apr 2015

Noor Bank

UAE

Sukuk

Domestic market
public issue
Domestic market
public issue
Euro market
public issue

17th Apr 2015

Aman Sukuk

Malaysia

Sukuk

140

8th Apr 2015

Malaysia

Sukuk

6th Apr 2015

Malaysia
Sovereign Sukuk
Point Zone (M)

Malaysia

Sukuk

Domestic market
public issue
Euro market
public issue
Domestic market
public issue

25th Mar 2015

Khadrawy

UAE

Sukuk

Euro market
public issue

913

25th Mar 2015

Danga Capital

Malaysia

Sukuk

547

24th Mar 2015

Government of
Ras Al Khaimah
DanaInfra
Nasional
Mah Sing Group

UAE

Sukuk

Malaysia

Sukuk

Malaysia

Sukuk

HSBC Amanah
Malaysia
Prasarana
Malaysia

United
Kingdom
Malaysia

Sukuk

Domestic market
public issue
Euro market
public issue
Domestic market
public issue
Domestic market
public issue
Domestic market
public issue
Domestic market
public issue

11th Mar 2015

Petronas Global
Sukuk

Malaysia

Sukuk

Euro market
public issue

1,250

10th Mar 2015

Sharjah Islamic
Bank

UAE

Corporate BondInvestment-Grade

Euro market
public issue

500

18th May 2015

23rd Mar 2015


20th Mar 2015
20th Mar 2015
17th Mar 2015

Sukuk

Global Sukuk Volume by Month


US$m
1500

Value (US$bn)

10
8

1000

750

500

250
2

10

11

12

2010

2014

1,500
219

1,000
943
146
203
541

JPMorgan, National Bank of Abu Dhabi,


Citigroup, Al Hilal Bank
RHB Capital, Maybank, CIMB Group, An
Investment Bank, AmInvestment Bank
Maybank, CIMB Group
HSBC, Maybank, Hong Leong Financial
Group
RHB Capital, Kenanga Investment Bank,
CIMB Group, An Investment Bank,
AmInvestment Bank
JPMorgan, Deutsche Bank, Morgan Stanley,
HSBC, Maybank, Mitsubishi UFJ Financial
Group, CIMB Group, Citigroup, Bank of
America Merrill Lynch
Standard Chartered Bank, HSBC, Kuwait
Finance House, Dubai Islamic Bank, Abu
Dhabi Islamic Bank, Emirates NBD, Al Hilal
Bank, Noor Bank

US$bn
US$m
Value (US$bn)
Avg Size (US$m)
18
600
16
500
14
12
400
10
300
8
200
6
4
100
2
0
0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

1250

Avg Size (US$m)

500

RHB Capital, Maybank, Kenanga Investment


Bank, AmInvestment Bank
Standard Chartered Bank, Dubai Islamic
Bank, South Indian Bank, Citigroup, Emirates
NBD, Al Hilal Bank, QInvest, Barwa Bank
RHB Capital, CIMB Group, AmInvestment
Bank
Standard Chartered Bank, HSBC, CIMB
Group
Maybank, CIMB Group, Hong Leong
Financial Group, An Investment Bank,
AmInvestment Bank
Standard Chartered Bank, JPMorgan, HSBC,
National Bank of Abu Dhabi, Dubai Islamic
Bank, Abu Dhabi Islamic Bank, Citigroup,
Emirates NBD
RHB Capital, CIMB Group

Global Sukuk Volume by Quarter

US$bn
12

560

Standard Chartered Bank, HSBC, National


Bank of Abu Dhabi, First Gulf Bank,
Maybank, Dubai Islamic Bank
RHB Capital

39

2011

2012

2013

2014

3rd June 2015

LEAGUE TABLES
Top 30 Issuers of Global Sukuk
Issuer
Nationality Instrument Market

DanaInfra Nasional Malaysia

Sukuk

Domestic market
public issue

2,479

Dubai Islamic Bank UAE

Sukuk

Euro market
public issue

1,750

Malaysia Sovereign Malaysia


Sukuk
Petronas Global
Malaysia
Sukuk

Sukuk

Euro market
public issue
Euro market
public issue

1,500

12 Months
Iss Managers
(%)
8.4 Standard Chartered Bank, HSBC, CIMB Group, Emirates NBD,
JPMorgan, Dubai Islamic Bank
6.9 Standard Chartered Bank, Deutsche Bank, HSBC, National Bank
of Abu Dhabi, First Gulf Bank, Maybank, Gulf International
Bank, Natixis, CIMB Group, Saudi National Commercial Bank,
RHB Capital, Dubai Islamic Bank
6.0 Standard Chartered Bank, RHB Capital, Maybank, CIMB
Group, AmInvestment Bank, An Investment Bank, Bank Islam
Malaysia
4.2 Standard Chartered Bank, HSBC, National Bank of Abu Dhabi,
Dubai Islamic Bank, Sharjah Islamic Bank, Emirates NBD, Al
Hilal Bank, Noor Bank, First Gulf Bank, Maybank
3.6 Standard Chartered Bank, HSBC, CIMB Group

1,250

3.0

Euro market
public issue
Euro market
public issue
Euro market
public issue
Euro market
public issue

1,000

2.4

1,000

2.4

1,000

2.4

1,000

2.4

JPMorgan, Deutsche Bank, Morgan Stanley, HSBC, Maybank,


Mitsubishi UFJ Financial Group, CIMB Group, Citigroup, Bank
of America Merrill Lynch
Standard Chartered Bank, Deutsche Bank, Dubai Islamic Bank,
Citigroup
Standard Chartered Bank, HSBC, National Bank of Abu Dhabi,
CIMB Group
Standard Chartered Bank, HSBC, National Bank of Abu Dhabi,
CIMB Group
HSBC, CIMB Group, Citigroup

Euro market
public issue
Domestic market
public issue
Domestic market
public issue
Euro market
public issue

1,000

2.4

RHB Capital, CIMB Group

992

2.4

RHB Capital, CIMB Group

948

2.3

HSBC, CIMB Group

913

2.2

Euro market
public issue
Euro market
public issue

750

1.8

750

1.8

Domestic market
public issue
Euro market
public issue
Euro market
public issue
Domestic market
public issue
Domestic market
public issue
Domestic market
public issue
Euro market
public issue

743

1.8

Standard Chartered Bank, JPMorgan, HSBC, National Bank


of Abu Dhabi, Dubai Islamic Bank, Abu Dhabi Islamic Bank,
Citigroup, Emirates NBD
Standard Chartered Bank, HSBC, Kuwait Finance House,
National Bank of Abu Dhabi, Sharjah Islamic Bank
Mashreqbank, Standard Chartered Bank, Morgan Stanley,
National Bank of Abu Dhabi, First Gulf Bank, Dubai Islamic
Bank, Union National Bank, Abu Dhabi Islamic Bank,
Emirates NBD, Al Hilal Bank, Noor Bank
Maybank, CIMB Group

700

1.7

594

1.4

560

1.4

541

1.3

533

1.3

500

1.2

Euro market
public issue
Euro market
public issue

500

1.2

500

1.2

Euro market
public issue
Euro market
public issue

500

1.2

500

1.2

Euro market
public issue
Euro market
public issue
Euro market
public issue

500

1.2

500

1.2

500

1.2

41,532

100

1
2

Perusahaan Penerbit Indonesia


SBSN Indonesia III
IDB Trust Services Saudi
Arabia

Islamic Republic of
Pakistan
7 Hong Kong Sukuk
2015
7 Hong Kong Sukuk
2014
7 Hazine Mustesarligi
Varlik Kiralama
Anonim Sirketi
7 Government of Ras
Al Khaimah
12 Danga Capital

Sukuk
Sukuk

Sukuk

Pakistan

Sukuk

Hong
Kong
Hong
Kong
Turkey

Sukuk

Sukuk

UAE

Sukuk

Malaysia

Sukuk

13 Bank Pembangunan Malaysia


Malaysia
14 Khadrawy
UAE

Sukuk

15 Sharjah Sukuk

UAE

Sukuk

15 Emaar Malls Group UAE

Sukuk

17 National Higher
Education Fund
18 Dubai International
Financial Centre
19 Mumtalakat Sukuk
Holding
20 Jambatan Kedua

Malaysia

Sukuk

UAE

Sukuk

Bahrain

Sukuk

Malaysia

Sukuk

21 Prasarana Malaysia Malaysia

Sukuk

22 Saudi Telecom

Saudi
Arabia
UAE

Sukuk

23 Republic of South
Africa
23 Noor Bank

South
Africa
UAE

Sukuk

23 Kuveyt Turk
Katilim Bankasi
23 JANY Sukuk

Turkey

Sukuk

US

Sukuk

23 IFFIm Sukuk

Sukuk

23 Flydubai

United
Kingdom
UAE

23 Al Hilal Bank

UAE

Sukuk

23 Sharjah Islamic
Bank

Sukuk

Sukuk

Sukuk

Sukuk

Sukuk

Euro market
public issue
Euro market
public issue

US$
(mln)
3,500
2,881

40

Standard Chartered Bank, Dubai Islamic Bank, Emirates NBD,


Noor Bank
Standard Chartered Bank, Deutsche Bank, BNP Paribas,
Mitsubishi UFJ Financial Group
RHB Capital, Maybank, Kenanga Investment Bank,
AmInvestment Bank
RHB Capital, Kenanga Investment Bank, CIMB Group, An
Investment Bank, AmInvestment Bank
Saudi National Commercial Bank, Standard Chartered Bank,
JPMorgan
Standard Chartered Bank, HSBC, Kuwait Finance House, Dubai
Islamic Bank, Abu Dhabi Islamic Bank, Emirates NBD, Al Hilal
Bank, Noor Bank
BNP Paribas, Standard Bank, Kuwait Finance House
Standard Chartered Bank, Dubai Islamic Bank, South Indian
Bank, Citigroup, Emirates NBD, Al Hilal Bank, QInvest, Barwa
Bank
Standard Chartered Bank, HSBC, Kuwait Finance House,
Citigroup, Emirates NBD
Saudi National Commercial Bank, Goldman Sachs, National
Bank of Abu Dhabi, Abu Dhabi Islamic Bank, Emirates NBD,
QInvest
Saudi National Commercial Bank, Standard Chartered Bank,
National Bank of Abu Dhabi, CIMB Group, Barwa Bank
Standard Chartered Bank, HSBC, National Bank of Abu Dhabi,
Dubai Islamic Bank, Emirates NBD, Credit Agricole, Noor Bank
Standard Chartered Bank, HSBC, National Bank of Abu Dhabi,
Citigroup, Emirates NBD, Al Hilal Bank

3rd June 2015

LEAGUE TABLES
Top Managers of Sukuk
Manager

Sukuk Volume by Currency US$ (billion)

12 Months
US$ (mln)

Iss

CIMB Group

6,527

56

15.7

HSBC

4,791

30

11.5

Standard Chartered Bank

4,083

29

9.8

Saudi riyal

0.8

RHB Capital

3,592

45

8.7

Euro

0.6

Maybank

3,216

36

7.7

AmInvestment Bank

2,258

29

5.4

National Bank of Abu Dhabi

2,061

16

5.0

Malaysia

Dubai Islamic Bank

1,665

11

4.0

UAE

Emirates NBD

1,453

13

3.5

24.1

US dollar
15.6

Malaysian ringgit

Sukuk Volume by Issuer Nation US$ (billion)

1,332

3.2

11

JPMorgan

1,181

2.8

Hong Kong

12

Deutsche Bank

749

1.8

United Kingdom

13

Al Hilal Bank

697

1.7

14

Natixis

658

1.6

15

Kenanga Investment Bank

564

1.4

16

Noor Bank

547

1.3

17

An Investment Bank

525

1.3

18

Kuwait Finance House

507

1.2

19

Saudi National Commercial Bank

472

1.1

20

BNP Paribas

442

1.1

21

First Gulf Bank

405

1.0

22

Hong Leong Financial Group

345

10

0.8

23

Abu Dhabi Islamic Bank

328

0.8

24

Bank Islam Malaysia

291

0.7

25

Mitsubishi UFJ Financial Group

287

0.7

26

QInvest

278

0.7

27

Gulf International Bank

278

0.7

28

Sharjah Islamic Bank

275

0.7

29

Barwa Bank

230

0.6

30

Morgan Stanley

207

0.5

41,532

136

100.0

Mandated Lead Arranger


National Commercial Bank

4.3
3.7
2.3

Turkey

2.0
1.2

Global Sukuk Volume by Sector

12 Months

12%
3%
4%

Finance
Government

8%

Transportation

43%

Construction/Building
Real Estate/Property
Other
30%

Global Sukuk Volume - US$ Analysis


US$bn
US$m
18
600
Non-US$
US$
16
500
14
12
400
10
300
8
6
200
4
100
2
0
0
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2009

Top Islamic Finance Related Project Finance Mandated Lead


Arrangers
12 Months
1

17.0

Indonesia

Citigroup

12 Months

7.9

Saudi Arabia

10

Total

12 Months

2010

2011

2012

2013

2014

Top Islamic Finance Related Project Financing Legal Advisors


Ranking
12 Months

US$ (million)
2,822

No
4

%
21.6

Legal Advisor

US$ (million)

No

Allen & Overy

6,439

26.2

Sumitomo Mitsui Financial Group

1,606

12.3

Salans FMC SNR Denton Group

3,984

16.2

HSBC

1,036

7.9

White & Case

3,354

13.6

Riyad Bank

755

5.8

Baker & McKenzie

3,109

12.7

Milbank Tweed Hadley & McCloy

2,704

11.0

Linklaters

1,631

6.6

Cliord Chance

1,380

5.6

689

5.3

Samba Capital & Investment


Management
Al Rajhi Capital

576

4.4

Mitsubishi UFJ Financial Group

529

4.0

Chadbourne & Parke

660

2.7

Mizuho Financial Group

529

4.0

Latham & Watkins

433

1.8

Banque Saudi Fransi

517

4.0

10

Norton Rose Fulbright

354

1.4

10

Alinma Bank

310

2.4

10

Pekin & Pekin

354

1.4

41

3rd June 2015

LEAGUE TABLES
Top Islamic Finance Related Financing Mandated Lead Arrangers
Ranking
12 Months
Mandated Lead Arranger
1

Samba Capital

US$ (mln)

No

1,258

7.8

Top Islamic Finance Related Financing Deal List

12 Months

Credit Date

US$ (mln)

Banque Saudi Fransi

1,077

6.7

30th Mar 2015

Abu Dhabi Islamic Bank

1,047

6.5

16th Mar 2015

HSBC

1,012

6.3

National Bank of Abu Dhabi

898

5.6

Saudi National Commercial Bank

816

5.0

Riyad Bank

816

5.0

First Gulf Bank

758

10

4.7

Borrower

30th Jun 2014


15th Jan 2015

Nationality

Saudi Aramco

Saudi Arabia

9,999

Rabigh Refining &


Petrochemical
Ma'aden Waad al-Shamal
Phosphate
SapuraKencana TMC

Saudi Arabia

2,870

Saudi Arabia

2,350

Malaysia

2,239

Saudi Arabia

1,327

19th Nov 2014 Saudi BinLaden Group


th

Alinma Bank

710

4.4

8 Sep 2014

Atlantis The Palm

UAE

1,100

10

Standard Chartered Bank

577

3.6

10th Mar 2015

Port & Free Zone World

UAE

1,100

11

Abu Dhabi Commercial Bank

561

3.5

12

Emirates NBD

468

2.9

17th Apr 2015

Turkiye Vakiflar Bankasi

Turkey

1,021

13

Dubai Islamic Bank

325

2.0

14

Sumitomo Mitsui Financial Group

314

1.9

15

Al Rajhi Capital

310

1.9

16

Mashreqbank

286

1.8

17

Arab Banking Corporation

279

1.7

18

ING

269

1.7

Saudi Arabia

19

Barwa Bank

261

1.6

UAE

20

Commercial Bank of Dubai

247

1.5

21

Union National Bank

217

1.3

22

UOB

215

22

RHB Capital

215

22

Maybank

22

22nd Mar 2015 Arab Petroleum


Investments
24th Dec 2014 National Central Cooling

Saudi Arabia

950

UAE

706

Top Islamic Finance Related Financing by Country


Nationality

12 Months
No

7,104

43.9

4,116

13

25.4

Malaysia

2,239

13.8

Turkey

1,594

9.9

1.3

Qatar

500

3.1

1.3

India

272

1.7

215

1.3

Kuwait

261

1.6

CIMB Group

215

1.3

Indonesia

90

0.6

22

AmInvestment Bank

215

1.3

27

Al Hilal Bank

191

1.2

28

Citigroup

180

1.1

29

Saudi Investment Bank

171

1.1

30

SABB

160

1.0

Top Islamic Finance Related Financing by Sector

US$ (mln)

No

Finance
Mining
Professional Services
Utility & Energy
US$ bln 0

Maybank

2,239

25.2

Samba Capital

1,327

14.9

Abu Dhabi Islamic Bank

845

9.5

Saudi National Commercial Bank

666

7.5

2014

Riyad Bank

666

7.5

2013

Alinma Bank

666

7.5

Emirates NBD

302

3.4

Noor Bank

225

2.5

2009

Dubai Islamic Bank

176

2.0

10

HSBC

161

1.8

2008
0%
0-3yrs

10

Citigroup

161

12 Months

Oil & Gas

Top Islamic Finance Related Financing Mandated Lead Arrangers


12 Months
Bookrunner

US$ (mln)

Global Islamic Financing - Years to Maturity (YTD Comparison)

2012
2011
2010

1.8

20%
3-5yrs

40%
5-7yrs

60%

80%
7-10yrs

100%
10+yrs

Are your deals listed here?


If you feel that the information within these tables is inaccurate, you may contact
the following directly: Shireen Farhana (Media Relations)
Email: shireen.farhana@dealogic.com
Tel: +852 2804 1223

42

3rd June 2015

EVENTS DIARY

events

training

JUNE 2015
th

10

IFN Europe Forum

JUNE 2015
Luxembourg

3th 5th

RMT: Understanding
& Applying Structured
Products

Kuala Lumpur,
Malaysia

7th 9th

IFT: Advanced Sukuk &


Islamic Securitization

Riyadh,
Saudi Arabia

8th 9th

IFT: Legal &


Documentation Issues
in Islamic Structured
Finance

Dubai, UAE

8th 10th

RMT: Funds Transfer


Pricing

Istanbul,
Turkey

9th 11th

RMT: Asset Liability


Management

Kuala Lumpur,
Malaysia

9th 11th

IFT: Sukuk Structuring &


Legal Documentation

Kuala Lumpur,
Malaysia

10th 11th

RMT: International Best


Practices & Regional
Standards in Regulation,
Corporate Governance,
AML, Sanctions &
Compliance

Kuala Lumpur,
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11th 12th

RMT: Managing
Counterparty Credit
Risk, Basel III & Recent
Regulatory Issues

Kuala Lumpur,
Malaysia

14th 15th

IFT: Accounting &


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Financial Products

Dubai, UAE

SEPTEMBER 2015
13th

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17th 18th

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OCTOBER 2015
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27th

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NOVEMBER 2015
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30th

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43

3rd June 2015

COMPANY INDEX
1Malaysia Development
11,22
90 North Real Estate Partners
21
Aabar Investment
11
Aafaq Islamic Finance
30
Aberdeen Islamic Asset Management
8
Abraaj Capital
4
Absa Islamic Banking
33
Abu Dhabi Islamic Bank
10,27,30
Agence Franaise de Dveloppement
30
Agriculture Investment Corporation
12
AIA PUBLIC Takaful
32
Al Baraka Bank Tunisia
31
Al Bayan Holding Company
33
Al Hilal Bank
27
Al Hilal Islamic Banking Services
33
Al Rajhi
15,19
Al Rajhi Bank Malaysia
32
Al Rayan Bank
16
Al-Baraka Bank Syria
31
Albilad
15
Aldwych Chambers
21
Alinma
15
Alizz Islamic Bank
31
Aljazira
15
Aljazira Capital
15
Alkhabeer Capital
4,16
Alkhair International Islamic Bank
33
Allen & Overy
17
Al-Madina For Finance & Investment Co
32
Amanie Holdings
20
AmInvestment Bank
29
Anjarwalla & Khanna
21
Arab Banking Corporation
30
Arcapita
4,28
Arcapita Bank
28
Asian Development Bank
19,30
Asian Infrastructure Investment Bank
19
Australia and New Zealand Banking Group
27
Bandar Malaysia
11
Bank Aceh
29
Bank Bosna International
12
Bank Dhofar
33
Bank Islam Malaysia
12
Bank Muamalat Malaysia
16
Bank Muscat
31
Bank Negara Malaysia
27,28,29
Bank of London and The Middle East
16
BIMB Holdings
31
BNP Paribas
27
BOCOM Hong Kong Branch
17
Bosera Asset Management
7
Bursa Malaysia
17,29
Cagamas
8,27
Canadian University Dubai
30
Capital Market Authority of Oman
14,27
Capital Market Authority of Saudi Arabia 15,16,28
Central Bank of Bahrain
27
Central Bank of the UAE
10,13,30
Cheang & Ari
24
CIMB
17
CIMB Islamic
1,8
Commercial Bank International
33
Commission for Academic
Accreditation of the UAE
30
Constellis Group
4
Dar Al Sharia Legal & Financial Consultancy 18
Dentons
30
Deutsche Bank
19,27
Dhaka Power Distribution Company
30
DIFC Investments
16
Dubai International Capital
4

Dubai Islamic Bank


16,27
EDPR France
4
Edra Energy
11
Eed Group
4
Eethiq Advisors
26
EFG Hermes
4
Efinite Structure
27
Emirates NBD
27,30
Emirates NBD Capital
1
Encorp Systembilt
33
Enfari Properties
33
Etiqa Insurance and Takaful
31
European Investment Bank
30
EXIM Bank
33
EY
15
First Community Bank
21
First Gulf Bank
27,30
Freightliner Group
28
Garuda Indonesia
27
GBSA
15
General Council for Islamic Banks
and Financial Institutions
30
Global Investment House
32
Goldman Sachs
11,26
Great Eastern Takaful
32
Gulf Capital
4
Gulf Finance House
19
Gulf International Bank
27,30
Hannover ReTakaful
33
Hong Kong Monetary Authority
17
Hong Kong Stock Exchange
17
Hong Leong Islamic Bank
17
Honiton Energy
28
HSBC
17,27,30
IDB
15,28,30
IdealRatings
31
IjaraUSA.com
25
Institute of International Finance
30
Insurance Regulatory Authority (Kenya)
21
International Airfinance Corporation
30
International Islamic Liquidity Management
Corporation
8
International Islamic University Malaysia
24
International Petroleum Investment Company 11
Islamic Bank of Britain
16
Islamic Chamber of Commerce
28
J.Jill Group
28
JJill
28
K-Electric
27
Kenya Reinsurance Corp
21
Khazanah Nasional
7,8,27
King & Spalding
1,8
KLCC Property Holdings
7
Kuwait Airways
30
Kuwait Finance House
16,31
Labuan Financial Services Authority
31
Labuan International Business
and Financial Center
31
Law Society of Hong Kong
19
Lembaga Tabung Haji
27
Linklaters
17
London Central Portfolio
16
Lusail Golf Development
28
Luxembourg Stock Exchange
26
Malaysia Deposit Insurance Corporation
12,31
Masraf Al Rayan
16
Maybank
7,17,27,31
Maybank Group
31
Mektebim Okullari
16
MENA Private Equity Association
3
Merchant International Company
23

Moodys
11,15,17,29,33
Morgan, Lewis & Bockius
3
Muscat Securities Market
33
Nakheel
22
NASDAQ Dubai
14,17,28
Nasirs Solicitors
19
National Amanah
28
National Bank (Kenya)
28
National Bank of Abu Dhabi
17,27,30
National Bank of Kuwait
4
National Commercial Bank
15
National Shipping Company of Saudi Arabia 28
Natsionalna Aktsionerna Kompaniia
Naftogaz Ukrainy
23
NCB Capital
17
Nomura Islamic Asset Management
31
Noor Bank
16,27,30
OCBC Al-Amin Bank
8
Olive Group
4
Path Solutions
28
Perhimpunan BMT Indonesia
27
Perusahaan Penerbit SBSN Indonesia III
14,28
PODS
28
Qatar International Islamic Bank
33
Qatar Islamic Insurance Company
33
QInvest
3,27
RA Holding Corp
28
RAM
33
RHB Islamic International Asset Management 31
Royal Bank of Scotland
11
S&P
17,30,33
S&P Dow Jones Indices
9
Saudi Arabia Monetary Agency
15
Saudi Binladin Group
27
Saudi British Bank
27
Saudi Electric
9
Sberbank
29
Securities Commission Malaysia
6,7,8,16,29
Sedco Capital
30
SEDCO Holding Group
16
Seera Investment Bank
30
Shamil Bank
19
SP Setia
27
Standard Chartered
16,17,27,30
Standard Chartered Saadiq
16
State Bank of Pakistan
29
STC Ventures
4
Swiss Bank Corporation
23,24
Syarikat Takaful Malaysia
22,31
Tadawul
15,27
Takaful Insurance of Africa
21
Terengganu Investment Authority
22
TH Plantations
27
Tilal Development Company
31
Topaz Energy and Marine
30
TowerBrook Capital Partners
28
TPG
4
Tun Razak Exchange
11
TVM Capital
4
UAE Banks Federation
30
United Bank of Albania
12
University College of Bahrain
22
University of Bolton
30
University of Wollongong
20
Waha Capital
31
Waratah Resources
20
Warba Bank
27
Ziraat Participation Bank
29

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