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Vol. 5, Issue 35 5 th September 2008

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

The international advance of Islamic nancemust include Europe, but unlike the UK, theauthorities on the Continent have largelyleft it to the private sector to set the pace.However, the double digit growth rates of Islamic nance elsewhere in the world — towhich several western banks are alreadycontributing — have prompted severalEuropean governments to move towardscreating a climate that is more amenable to

this alternative nancial model.

It has reached a stage where, while recognizing London’s ambition to be a global leader inIslamic nance, other capitals such as Parisand Rome don’t wish to be too far behind. Anadded spur is the huge liquidity overhang in

the Gulf due to the high petroleum prices forwhich Shariah compliant investments are thechannel of choice. This situation has led toEuropean states promoting their acceptanceof Islamic nance.

Europe’s acceptance of Islamic nance is anatural follow-through to the emergence of asizeable Muslim middle and upper classes, but

the players are eyeing the overall populationas a cycle of nancial and credit crises pushesconsumers to seek ethical nancial services.

Ironically, a French legislative panel found that stronger commitment was needed fromprofessionals for the development of Islamicnance to become more than just a “nice tohave” option.

Not to be left out, Italy touts itself as aviable market for a wide array of Islamicnance products, with detailed marketstudies becoming available to industryplayers. Questions have been raised on thecompatibility of Islamic activities with the

current Italian banking regulatory systembut it is felt that this can be largely abated

through approvals by the EU. The country isbanking on its close trade links with manysouthern Mediterranean countries as well as

the GCC to draw Islamic funds.

Much activity is taking place to promoteIslamic nance in Italy. Our country reports

this week are on France and Italy. One noted that Italy, “with its century-old network of cooperative banks, small territorial nancialinstitutions and the strongest movement of ethical nance in the whole EU,” is a naturalcandidate for Islamic nance in Europe.

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

An interesting IFN Report is on Bank IslamMalaysia seeking strategic partners to buyinto it and help it expand beyond the nationalborder. It is portraying itself as a viable vehiclefor those wishing to enter the Southeast Asianmarket, having posted a 30.3% increase in

gross pro t in its just-ended

nancial yearand with group gross pro t swelling by almost

50%. It also boasts of strong branding, leading market position and the increasing popularityof Islamic banking in the region.

Another IFN Report relates how MunichRe Retakaful is counting on innovation indeveloping Shariah compliant products tostay ahead of the competition. It is alsoseeking to work with other industry playersfor facultative business.

Europe the next hotbed forIslamic nance?

In this issue

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

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

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

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

Islamic Finance Services In Italy — anUpdate ........................................................15

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

Frequently Asked Questions: NotableTrends in Islamic Finance in France ......19

The Impact of the Credit Crunch onIslamic Securitization ..............................21

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

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

Meet the Head ..........................................25Mohamad Salihuddin Ahmad, CEO, Prudential

BSN Takaful (PruBSN)

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

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

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

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

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

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

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

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

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

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

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



www.islamic nancenews.comNEWS

© 5 th September 2008

AFRICAThe next hub of Shariahcompliant banking?KENYA: It has been reported that the KenyanIslamic community is planning to turn thecountry into the hub of Islamic banking in theregion once a legislative framework is put inplace.

The community has already begun talkswith the Central Bank of Kenya and otherstakeholders on the basics of Islamic nanceand its implementation in the African nation,said the report. The discussions aim toestablish a Shariah supervisory and auditboard to oversee the growth of Islamic

banking in the country, the report added.

ASIARHB’s moves to become atop threeMALAYSIA: The RHB banking group, whichhas an Islamic bank, aims to be among

the top three nancial institutions in Aseanby 2020, said managing director Michael

Joseph Barrett. One of its moves in thisdirection has been to upgrade its technologyinfrastructure with the IBM System z10.

The group is upgrading its data center tocentralize the banking business system in

the region to a one-stop center in Malaysia,he added, with the z10 having a key rolein this. It will also support the criticalprocessing capacity for RHB clients inMalaysia, Singapore, Brunei and Thailand.

RHB is paying RM50 million (US$15 million)for the system, Barrett said, and it is

currently in the testing stage. IBM Malaysiamanaging director Ou Shian Waei said RHBis the rst local bank to use the system.

Sitara Peroxide’s Sukukcloses successfullyPAKISTAN : The diminishing SukukMusharakah issuance worth PKR1.4billion (US$18.4 million) by SitaraPeroxide has been closed successfully.It received overwhelming response frombanks and nancial institutions and was

oversubscribed. United Bank, Bank Alfalahand AMZ Securities were the mandated leadadvisors and arrangers for the issuance.

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

Still the largest Sukukmarket globallyMALAYSIA: There was a 13.8% increase ingross funds raised in the capital marketsin the rst half of 2008, to RM64.8 billion(US$19 billion), while net funds went up toRM40.2 billion (US$12 billion), according

to the nance ministry. The issuanceof government securities grew by 4.3%

to RM26.8 billion (US$8 billion), withmost of the funds raised used to nancedevelopment projects. The private sector

raised RM33.7 billion (US$10 billion) from the private debt securities (PDS) market.Islamic bond issuance remained healthy,with Islamic medium-term notes andbonds comprising 34% of total PDS issued.Malaysia remains the largest Sukuk marketglobally, with RM223.08 billion (US$65billion) or 62.6% of outstanding Sukukissuance worldwide as at end of June.

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ASIA (continued)

BIBD launches redesignedcredit cardBRUNEI : Bank Islam Brunei Darussalam(BIBD) launched its redesigned BIBDMasterCard Gold and Classic Card. Besidessporting a new look, the Shariah compliantcard offers bene ts such as specialprivileges, discounts from merchants, 24-hour customer service and reward points.

Malaysian IFIs need toventure outMALAYSIA: Malaysian Islamic nancial

institutions (IFIs) have been strongly advised to set up of ces internationally, especiallyin the Gulf Cooperation Council (GCC)countries. The executive director of Islamicnance at the Dubai International FinancialCenter (DIFC), Nik Norishky Thani, told themof the US$600 million worth of infrastructureprojects nancing expected in the region over

the next few years.

He noted that Malaysia is always mentionedas the country with cutting-edge approach

towards Islamic nance; hence Malaysian talent is much sought after. In urging that thebrain drain be reversed, he suggested that

the Malaysia International Islamic FinancialCenter (MIFC) is the perfect platform tocompete internationally.

However, Nik Norishky felt that MalaysianIFIs need to have a strong presence andbranding in order to venture into the GCC,which is why they need to think outside thebox as to compete with big institutions suchas Barclays, HSBC, JPMorgan and UBS.

Bank Islam looks for M&AMALAYSIA: Bank Islam posted a 30.3%higher pre-tax and zakat pro t of RM308.3million (US$90 million) for the nancial yearended the 30 th June 2008 from RM236.7million (US$69 million) the year before.Managing director Zukri Samat said this wasachieved due to a 14% increase in income

to RM1.15 billion (US$335 million) fromRM1.01 billion (US$294 million) previously.Its net nancing went up by 7% to RM9.06billion (US$2.6 billion) from RM8.47 billion(US$2.5 billion), while customer depositsgrew by 18% to RM20.76 billion (US$6

billion) from RM17.61 billion (US$5 billion).

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

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

On a regional level, the bank is interestedin setting foot in Indonesia, with Zukrisaying Bank Islam could either take astrategic stake in or buy an Islamic lender inIndonesia. He described the country as anobvious choice as Malaysia is familiar withIndonesia, and the majority of its populationis Muslim. Opportunities in Thailand andSingapore will be explored later, he noted.

(Also see IFN Report on Page 14)

OCBC targets 20% growthMALAYSIA: OCBC Malaysia aims to grow itsIslamic banking business by 20% a year as itmoves to introduce more Shariah compliant

products, and as more Malaysians switchfrom conventional banking, said CEO JeffreyChew. He estimated that 60% to 70% of itsIslamic banking clients are non-Muslims.

OCBC is targeting to open its rst Islamicbanking branch by December. Currently, itoffers Shariah compliant services throughseparate windows at its bank branches.

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ASIA (continued)

Moody’s: Asian market toremain cautiousHONG KONG : Moody’s Investors Service iscautious on the prospects for the structurednance markets in Asia ex-Japan in thesecond half of 2008, with moderate growthhaving been recorded in the rst half of 2008. In its 2008 First Half Review andSecond Half Outlook, Moody’s said themarket for Asian structured nance is likely

to remain cautious in the second part of theyear, as originators continue to wait for bettermarket conditions.

“Most activity will likely take place inKorea and India, and in addition to the

traditional residential mortgage-backedsecurity (RMBS), auto loan and credit cardreceivables backed transactions, new assetclasses may emerge in Korea, while interestin covered bonds has also been growing,”said Dominique Gribot-Carroz, Moody’sbusiness development executive.

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

securitizations in Singapore. In the regionalderivatives market, we expect new balancesheet transactions with signi cant Asianexposure,” the report said.

New Islamic indexPAKISTAN : The Karachi Stock Exchange(KSE) and Al Meezan InvestmentManagement (AMIM) have launched thenation’s rst co-branded Islamic index,KSE-Meezan Index (KMI). AMIM providesits Shariah expertise, guidelines skillsand stocks screening while KSE providesmaintenance and dissemination support.

The KMI comprises 30 companies whichmeet the KMI Shariah screening criteria

and are weighted by

oat adjusted marketcapitalization, subject to a 12% cap onweights of individual securities. There willbe periodic balancing and adjustments toensure Shariah compliance and benchmarkstability. The index will also provide investorswith a suitable benchmark for comparing thereturns on their Shariah compliant equityinvestments.

(Also see IFN Reports on page 13)

Call for Islamic bankingINDIA: A delegation of bankers hascalled on the country’s nance minister,P Chidambaram to look into the Islamicbanking system. The country is in need of over US$400 billion to nance infrastructureprojects and Islamic banking is the bestoption as its nancial products are withoutinterest payment, said K Rahman Khan,deputy chairman of Rajya Sabha, the upperhouse of the Parliament of India.

The government has been looking at using pension funds and foreign exchange re-serves, among others, to nance infrastruc-

ture projects. Islamic banking is participatorybanking, Rahman said, clarifying that it is notmeant only for Muslims.

Pointing to the UK as an example, he said that although the Muslim population thereis not huge, Islamic banking sees billions of dollars worth of transactions. Rahman added

that the interest-free model would also pro-vide nancial alternatives to Indian Muslims,70% to 75% of whom do not deposit moneyin banks because of religious beliefs.

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

continued...





ASIA (continued)

Non-ringgit Sukuk nowtax-exemptMALAYSIA: Earnings from non-ringgit Sukukdeals outside the country will be exemptedfrom taxes for three years from this year, thenance ministry said. This is applicable tofees and pro ts on arranging, underwriting,distributing and trading the Islamic bonds.

Bursa Malaysia CEO Yusli Mohamed Yusoff saw the move as taking the MalaysianSukuk market into international spaceand reinforcing the country’s position as

the world’s largest Sukuk issuance center.Kuwait Finance House Malaysia managing director Salman Younis called the taxexemption a boost to the local Sukuk market.

OCBC Bank described this as being in linewith the Malaysian Islamic nance sector’snext phase of growth focusing on developing

the non-ringgit Sukuk market. The bank, how-ever, felt that other critical measures for thisdevelopment also need to be taken, such as

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

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

This is to facilitate involvement in agriculturenancing by Islamic banks as well asconventional banks with Islamic banking licenses. The central bank said they candevelop specialized Islamic nancing products to meet the needs of the farming community.

The guidelines broadly cover Islamic modesof nancing such as Murabahah, Ijarah,Salam, Musharakah and Mudarabah thatcan be used to nance farm and non-farmsector activities including livestock, sheries,poultry and orchards. The bank said theguidelines also cover Islamic nancing

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

Increased demand promptsbigger fundMALAYSIA: CIMB-Principal AssetManagement has increased the size of itsIslamic DALI Equity Theme Fund for the third

time to two billion units due to overwhelming demand, said CEO Noripah Kamso. Shesaid that the fund optimizes the country’sresilience in the uncertain global markets.

The fund is suitable for those willing toaccept above-average to high-risk in theirinvestments, Noripah added.

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

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ASIA (continued)

Banks arrange AmreliSteel’s SukukPAKISTAN : Faysal Bank and Meezan Bankhave arranged an Islamic bond for AmreliSteel for PKR1 billion (US$13 million). Alsoparticipating in the consortium are Saudi PakLeasing, Pakistan Kuwait Investment, BankAlfalah, UBL Ameen, Habib MetropolitanBank, Soneri Bank, Dawood Islamic, AskariBank and CresBank.

The seven-year facility Sukuk is the rst for the steel sector in Pakistan and will provideinnovative and diverse funding to supportAmreli’s signi cant growth plans.

Pro t increase forIslamic rmMALAYSIA: The net pro t of BIMB Holdingsgrew by 4.5 times to RM82.11 million(US$24 million) in its fourth quarter from theprevious corresponding period. The companyattributed the growth to lower provisions andimproving income from its Islamic bank andTakaful businesses.

The parent company of Bank Islam andTakaful Malaysia said its full year net pro tamounted to RM231.45 million (US$67.4million) on revenue of RM1.41 billion(US$411 million). Total assets went up by22.9% to RM27.76 billion (US$8.1 billion),with return on assets at 1.57% and return onequity at 35.1%.

Using Sukuk Ijarah tobridge de citPAKISTAN : The sovereign Sukuk planned by

Pakistan will be Ijarah-structured, according to a statement by the State Bank of Pakistan(SBP). It will be used to help bridge a budgetde cit that has widened to a 10-year high.

The Islamic bond is scheduled to be issuedby this week. The central bank did notprovide any details on the sale.

Last month, the special secretary atPakistan’s nance ministry, AshfaqueHassan Khan, said that the Sukuk isexpected to be less than the PKR20 billion(US$260 million) initially projected by severalbankers. The transaction was to be handledby Standard Chartered Bank and DubaiIslamic Bank, he added.

Penetration into newmarkets abroadMALAYSIA: AmIslamic Bank is planning to

tap into Indonesia’s Islamic retail market aswell as expand into Australia, the Philippinesand Vietnam. CEO Ahmad Zaini Othman felt

that it is easier to go into markets outside the GCC and educate the markets whereIslamic banking has yet to take root.

According to him, several Australian energyand resource companies are interested inselling Sukuk but he declined to elaborate.

In the Philippines, AmIslamic is looking at the Islamic retail and commercial businesswhile in Vietnam, the focus is on the Shariah

compliant property market.

AmIslamic, Malaysia’s third largest Islamiclender, is part of AMMB Holdings. Twentypercent of AMMB’s stake is held by theAustralia and New Zealand Banking Group.

EUROPENo obstacles to conductIslamic banking but…SWEDEN : There are no legal obstacles

to conduct Islamic banking operationsin Sweden, said the Swedish FinancialSupervisory Authority, or Finansinspektionen(FI). However, each application forauthorization to conduct banking operations

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LEADERSHIP





MIDDLE EAST(continued)

DIB eyeing majority stakein Jordanian bankJORDAN : Dubai Islamic Bank (DIB) plans toacquire a majority 52% stake in the IndustrialDevelopment Bank of Jordan and convert itinto a Shariah compliant institution. Should

the deal be nalized, the bank will berenamed Jordan Dubai Islamic Bank.

The acquisition will take place through a joint venture with Dubai International Capital(DIC). The value of the deal, however, has notbeen revealed.

DIC has already joined forces with AmlakFinance to set up an Islamic mortgage rm inJordan to penetrate the country’s mortgageindustry, which is still in its infancy.

Clyde goes on Gulfrecruitment driveQATAR/UAE : Clyde & Co has launched arecruitment drive to attract local lawyers toits Abu Dhabi, Dubai and Doha of ces. Thelaw rm has started a two-year English-law

training program for Arabic-speaking lawyers,and has recruited trainees from Lebanon,Saudi Arabia and the UAE.

The venture is part of a Gulf recruitmentdrive that has seen Clyde bring in 138 fee-earners, mostly from the Commonwealthcountries, but the rm believes that it needs

to set its sights closer to the region.

JV for Deloitte’s rmsUAE: Professional services group Deloitteannounced that its UK and Middle East

rms have formed a joint corporate nanceventure, Deloitte Corporate Finance. Thecompany will be registered and authorizedby the Dubai Financial Services Authority(DFSA).

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

The joint venture will create the scale andbreadth of nancial skills needed to providea full range of M&A services to clients fromwithin and outside the region, said JohnConnolly, the global chairman for Deloitte.

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

The subsidiary will offer a full range of nan-cial and corporate nance advisory servicesfrom its new branch, focusing on regional

transactions including debt and equity rais-ing, mergers and acquisitions, project -nance, underwriting and corporate strategy.

The DIFC branch will serve Jasper’s existing and new clients within the GCC, and will also

act as a gateway for its international clientbase to access the Middle East markets. Thenew DFSA license will allow Jasper CorporateFinance to expand its presence in the regionby building on its current relationships,strategic partnerships and long history in theregion, and gives the company a strategicbase and a globally-benchmarked regulatoryframework to provide its clients with world-class services.

Jasper Corporate Finance will be headed byCEO Jason Peers, who has more than 20years’ experience in investment banking,

project nance and corporate advisory in theregion.

ADIC plans internationalsale in ve yearsUAE: Abu Dhabi Investment Company (ADIC)plans to offer its shares to internationalinvestors within the next ve years with

the aim of becoming a global rm andcompete with banks such as Deutsche Bankand Citigroup. An initial public offering isexpected to be completed by 2013, and ADIC

hopes to see its shares listed on a foreignstock exchange.

An international listing will give ADIC a checkmark for corporate transparency, said CEONazem Al Kudsi. This in turn will give thecompany more liquidity and make it easier toacquire stakes in foreign companies.

Amr Abol-Enein, a regional banking analyst atING Bank in Dubai, said that an internationallisting will give ADIC more exposure to inter-national clients and the models they use,adding that this will force the investment arm

to raise its sophistication level and quality of services.

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Takaful Products, Markets &Operations

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QIB branches outQATAR : Qatar Islamic Bank (QIB) has openeda branch in Ras Laffan Industrial City. Thislatest addition marks the rst branch to beopened by a full- edged Islamic bank in thearea.

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

Ajman Bank to startoperations soonUAE: According to a recent report, AjmanBank will start operations in the last quarterof this year. The Islamic lender plans toexpand in Dubai, Abu Dhabi and Sharjah by

the beginning of next year, the report quotedCEO Yousef Khalaf as saying.

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

al khaliji on track to beginUAE operationsQATAR : al khaliji has acquired the UAE-basedassets of France’s BLC Bank in a move toexpand operations outside its domesticmarket.

The acquisition would enable al khaliji toexpand to Abu Dhabi, Dubai, Sharjah andRas Al Khaimah, where BLC has a branchin each of those emirates. The transactionis expected to be completed by December,

said Robin McCall, managing executive of alkhaliji.

Although Qatar’s newest bank declined toreveal the price of the acquisition, marketsources said it paid more than US$300million. McCall said that the UAE operationswill be conducted under the al khaliji name.He added that al khaliji plans to furtherdevelop its portfolio, and is considering moreopportunities.

The bank is also growing domestically byopening six new branches in Qatar and aservice center at its West Bay head of ce. Itplans to launch an Islamic nancing arm thisyear.

Dubai Bank sets up nancing programUAE: Dubai Bank plans to become a majorglobal Islamic lender within the next veyears and has set up a US$5 billion nancing program for its expansion plans, said CEOAhmed El Shall. The group is looking toexpand in Asia and Africa through acquisitionand organic growth, he added, and iscurrently in joint venture talks with certaincountries. However, he declined to elaborate.

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

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

the beginning of 2007.

BLOM Bank Egypt toincrease capitalEGYPT: BLOM Bank Egypt has receivedpreliminary approval from the country’s

Capital Market Authority (CMA) to raiseits capital from EGP500 million (US$93million) to EGP750 million (US$139 million),revealed the stock exchange. It added that

the bank would offer 25 million new shares to existing shareholders at a par value of EGP10 (US$1.86) each. The bank currentlyhas 50 million shares.

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

ADCB launches Islamicbanking divisionUAE: Abu Dhabi Commercial Bank (ADCB)has launched ADCB Meethaq, an Islamicbanking division offering Shariah compliantproducts and services. Eirvin Knox, CEOof ADCB, said a comprehensive range of products has been developed to meet theneeds of all types of customers.

Deputy CEO Ala’a Eraiqat explained that the

bank’s proposition rests on three principles:Shariah compliance, exibility of choiceand maximum convenience. Customers

can select the combination of products thatworks for them and access those servicesfrom any ADCB branch or via the Internet,SMS or contact center.

DIB hires NorkomUAE: Dubai Islamic Bank (DIB) has chosenNorkom Technologies’ integrated anti-money laundering and compliance solutionfor its operations in the UAE and Pakistan.The software will allow DIB to monitorand analyze transactions and customerinteractions across its entire customer basein order to identify and investigate suspiciousand criminal behavior.

Norkom, the nancial crime and compliance

solutions provider, was chosen based onits proven technological and internationalcapability, excellent insight and approach tocultivating close customer relationships, saidDIB’s head of group compliance, WaheedRathore.

GIH launches education nancing programKUWAIT : Global Investment House (GIH)has launched the rst education nancing program in Kuwait as well as the GCC in

collaboration with Al Ahli Bank, for Al RayanHolding.

Al Rayan is a Shariah compliant education-speci c holding company that focuses onacquiring educational institutions.

The aim of the educational nancing programis to help parents cover their children’s

tuition fees in convenient installments, giving them the opportunity to enrol their childrenin Kuwait’s leading schools, said ShaileshDash, GIH’s senior vice president.

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

NRE also hopes to expand into Syria,Djibouti, Algeria and South Africa within

the next four years, he said, adding that inKuwait, big investment opportunities donot exist. It currently invests in real estate

projects in the UAE, Egypt, Libya, Jordan,Lebanon, Iraq and Pakistan.

continued...






DIFC enacts arbitration lawUAE: Dubai enacted an arbitration law onMonday, which seeks to enable the recentlyestablished Dubai International FinancialCenter-London Court of InternationalArbitration (DIFC-LCIA) Center to provideneutral, ef cient and reliable disputeresolution services to companies throughout

the world, and to position DIFC as a world-class center for arbitration.

The law was drafted by an industry focusgroup, led by the DIFC Authority, followed bya period of consultation during which thepublic were invited to give their comments on

the legislation.

It covers all stages of the arbitral process,from the arbitration agreement to therecognition and enforcement, and isuniversally applicable and compatible withboth civil and common law systems. Thelaw offers a comprehensive and modernset of rules enabling effective settlement of arbitration cases.

Omar Sulaiman, governor of DIFC, said that by offering arbitration, the DIFC is

af rming its commitment to creating a legaland regulatory environment of the higheststandard that is above the requirements of leading nancial institutions.

Sukuk market slumps afterAAOIFI decreeUAE: HSBC Holdings index data shows thatsales of Shariah compliant debt fell 50% thisyear and prices dropped an average 1.51%.The Sukuk market, which has doubled eachyear since 2004 and grown to over US$90

billion, has declined since the Accounting and Auditing Organization for IslamicFinancial Institutions’ (AAOIFI) decree inFebruary this year that most of the bonds donot comply with Shariah rules.

Bahrain-based AAOIFI’s Islamic scholars hadruled then that bonds do not meet religiousrequirements if they have not transferredownership of collateral to holders. The boardestimated that 85% of Sukuk failed this test.

Under the new rules, a Sukuk issuer passesownership of an underlying asset, such as abuilding, to the investor for the bond’s dura-

tion. Should the asset price rise or fall, thechange will be re ected in the bond’s value.

“The Sukuk market is clouded byconsiderable uncertainty and nervousness,”said Chavan Bhogaita, head of creditresearch at HSBC’s Middle East unit.“Spreads have been widening, Sukuk have

been underperforming conventional bondsand investors have been shying away.”

ABG’s income surges by81% in rst halfBAHRAIN: Albaraka Banking Group’s (ABG)net operating income in the rst half of 2008 increased by 81% to US$175 million,compared to US$96.6 million for theprevious corresponding period.

The surge is the result of signi cantincreases in the income from Islamic nanceand investment operations. Customerdeposits, other accounts and unrestrictedinvestment accounts registered a noticeableincrease of 32% to reach US$9.1 billion in

total as at end-June 2008. As a result of thisimprovement, net income increased by 62%

to US$108 million in the rst half of 2008,vis-à-vis US$67 million for the previouscorresponding period.

Dar Al Arkan considers

issuing SukukSAUDI ARABIA : The board of Dar Al ArkanReal Estate Development has proposedasking shareholders to approve a plan toissue local or international Sukuk, but gaveno nancial details. The Saudi Arabiandeveloper sold US$1 billion worth of ve-yearIslamic bonds last year.

The board also proposed to issue one-for- three bonus shares to existing stockholders.The issue of 180 million shares worthSAR1.8 billion (US$480 million) would raiseDar Al Arkan’s capital by 33.3% to SAR7.2billion (US$2 billion), the company said.

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

The bank already set up a branch in Kuwaitand an of ce in Dubai, in addition to of cesin Mumbai and Hyderabad in India. It islooking into strengthening its footing in that

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

According to him, BBK has set up NaseejHolding as part of its move to actively

participate in direct equity investment,and will take equity stakes in companies,especially in real estate. BBK is also working with the social affairs ministry to set up AlOsra, a family bank that will provide funding for very small companies.

Thirty-two percent of BBK is owned by theSocial Insurance Organization, with theremaining stakes held by Ithmaar Bank(26%), Global Investment House (19%),Bahraini individuals (17%) and Kuwaitiinterests (6%).



www.islamic nancenews.com


ASIATakaful assets see agrowth of 25%MALAYSIA: The nance ministry saidTakaful assets grew by 25.1% to RM9.6billion (US$2.8 billion) as at the 30 th Juneand accounted for 6.9% of the total assetsof the insurance industry. The industry grewby 23% in the rst half of this year in termsof combined Takaful contribution income,

to RM1.4 billion (US$408 million) againstRM1.1 billion (US$320 million) in the sameperiod of last year.

New business contributions in the familyTakaful sector increased by 98.1% toRM1 billion (US$292 million) due to newproduct launches earlier this year and highgrowth in endowment products recordedby new Takaful operators. The generalTakaful contribution, however, fell by 6.7%on account of the 34.2% decline in reinsurance to RM97.6 million (US$28.5million) and 46% drop in marine, aviationand transport insurance to RM13.8 million(US$4 million).

The ministry said total assets of Islamicbanking expanded by 12.6% to RM177billion (US$52 billion) as at the 30 th June,compared with RM157.2 billion (US$46billion) reported at the end of 2007.Deposits increased 17% to RM142.7 billion(US$42 billion) while nancing went up by8.5% to RM97.5 billion (US$28.5 billion).

Lending concentrated on the householdsector, which amounted to RM58.5billion (US$17 billion) or 60% of the totaloutstanding loans.

Maybank calls off planson Panin tie-upMALAYSIA: In a statement to Bursa Malay-sia on the 3 rd September, Malayan Bank-ing (Maybank) said it had canceled plans

to collaborate with Indonesia’s Panin Life to venture into the Takaful and insurance

market in the republic. The approval from the Indonesian ministry of nance for thepartnership lapsed on the 4 th August.

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

In the statement, the bank said that bothparties were unable to formalize theproposed partnership due to unavoidablecircumstances. Maybank also said Paninand Anugrah had since been noti ed thatall arrangements relating to the acquisitionwere to be terminated.

Maybank has marked Indonesia as a keymarket in its expansion plans, but is facing

tough challenges in its efforts to buildup a presence there. Plans to acquireBank Internasional Indonesia also stalledfollowing Bank Negara Malaysia’s decision

to revoke its approval.

MAS launches onlinetravel insuranceMALAYSIA: Takaful operator EtiqaInsurance and Mondial Assistance, a globalleader in travel assistance, have teamed upwith Malaysia Airlines (MAS) to offer online

travel insurance, MHinsure. The product isexpected to rake in RM20 million (US$5.8million) in gross premium for the nancialyear ending June 2009, said Etiqa CEOHugo Van Vledder.

The product covers medical expenses,cancellations, baggage losses, delays andother travel disruptions, said MAS executive

director and CEO Tengku Azmil ZahruddinRaja Abdul Aziz.

MHinsure offers affordable premiumswith the basic plan rate — RM20(US$5.90) for Malaysian domestic travel,RM29 (US$8.50) for travel from Malaysia

to Asian countries, RM40 (US$11.70)for travel to international destinationsbeyond Asia and RM50 (US$14.60) forinternational travel including to NorthAmerica.

The travel insurance can be purchased

through MAS’ website together with the ight tickets.

MIDDLE EASTFinding Solidarity in EgyptBAHRAIN: Solidarity Group is set to launchSolidarity Family Takaful Egypt, which has asubscribed capital of EGP60 million (US$11million). The subsidiary will operate fromCairo and offer innovative family Takafulproducts and services in tandem with the

country’s growing population and thriving economy. Operations should commence in

the fourth quarter.

Sameer Al Wazzan, CEO of Solidarity Group,said the move into Egypt, and its recentannouncement to penetrate the SaudiArabian market, marked an importantmilestone in its expansion strategy. Thegroup is also planning to enter the UAEmarket soon, and is working towardentering Pakistan and Indonesia, saiddeputy CEO Ashraf Bseisu.

Last week, Solidarity Group receivedpreliminary approval from the Saudi ArabiaMonetary Agency to set up its subsidiary in

the kingdom, Solidarity Saudi Takaful.

StanChart, Alico in ban-cassurance partnershipBAHRAIN: Standard Chartered Bank(StanChart) and American Life Insurance(Alico) in Bahrain have entered into anarrangement to launch bancassuranceproducts from the latter that will beavailable at StanChart branches.

The products to be issued relate toretirement plans, child education,wealth creation and savings that includeinvestment options designed to assistcustomers in planning for speci c lifetimeevents. The plans offer various options withboth regular and single premium paymentmodes.

StanChart will soon offer a wider range of insurance and saving solutions, including

variable universal life products, medicaland personal accident products, group life,pensions and annuities.

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





ASIA

Stable outlook for SunwayCity’s ratingsMALAYSIA: The ratings on Sunway City’sRM500 million (US$146 million) Murabahahcommercial papers/medium-term notes(CP/MTN) program and its RM250 million(US$73 million) CP/MTN program have beenaf rmed at ‘A2/P2’ by RAM Ratings, carrying a stable outlook.

Sunway City is one of the few establishedproperty developers in Malaysia. Aided byits strong branding and commendable trackrecord, the group has been able to positionitself in the upper-middle to higher endof the property market. Besides propertydevelopment, it is also involved in propertyinvestment, leisure and hospitality, as well ashealthcare.

RAM reaf rms KLK’sSukuk IjarahMALAYSIA: RAM Ratings has reaf rmed thelong-term and short-term ratings of KualaLumpur Kepong’s (KLK) RM500 million(US$146 million) Sukuk Ijarah commercialpaper/medium-term notes program at ‘AA2’and ‘P1’ respectively. The outlook on thelong-term rating is stable.

The ratings are supported by its sturdybalance sheet, strong cash ow generating ability and solid liquidity pro le, said theagency. It added that, moving ahead, the rm’s performance will be supported byhealthy demand for crude palm oil (CPO)from developing economies and structuralchanges within the industry.

However, RAM said the ratings aremoderated by an increased risk appetiteas re ected in its increasing debt load

to nance capital expenditure for itsoleochemical manufacturing businesses, aswell as by the inherent cyclicality of the palmoil plantation sector, as CPO is a tradablecommodity.

KLK is one of the larger and moreestablished plantation players in Malaysia,and boasts of a competitive cost structurecompared to other RAM Ratings-ratedplantation companies.

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

The upgrades are re ective of the highprobability of support Ahli Bank wouldreceive from the Qatari authorities, should

the bank need any.

The af rmation of its individual rating, on the other hand, is based on the bank’sstrengthened franchise, performance andrisk management processes following theacquisition of a 40% stake in Ahli Bankby the Bahrain-based Ahli United Bank in

2004. It also recognized Ahli Bank’s rapidloan growth, declining but adequate capitalratios, concentrations in loans and deposits,

and reliance on a small and undiversi

edeconomy.

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

Fitch views QNB’sacquisition favorablyQATAR : Fitch Ratings has commented

positively on Qatar National Bank’s (QNB)acquisition of a 23.8% stake in UAE-basedCommercial Bank International (CBI). MahinDissanayake, associate director in Fitch’snancial institutions team, said the agencyviewed the acquisition favorably as it isin line with QNB’s strategy of building afranchise covering the MENA region.

The price QNB paid for the stake is 2.7 times higher than book value, at US$302million, and is nanced entirely from internalresources. Fitch feels that this will not affect

the Qatari bank’s credit pro le.

QNB is the largest bank in Qatar and isactive in retail, corporate and investmentbanking, treasury, wealth management,and Islamic banking. It is 50% owned by theQatar Investment Authority. Its current long-

term and short-term issuer default ratingsstand at ‘A+’ and ‘F1’ respectively, while itsindividual rating is at ‘B/C’, support rating at‘1’, and support rating oor at ‘A+’.

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

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www.islamic nancenews.comIFN REPORTS


PAKISTAN

Timely launch of KSE-Meezan IndexThe launch of Pakistan’s rst co-branded Islamic Index, KSE-MeezanIndex (KMI), is timely as the move could increase the investor baseneeded for the growth of the country’s capital markets, nancialanalysts said. The Karachi Stock Exchange (KSE) and Al-MeezanInvestment Management launched the Index this week.

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

Besides that, the total debt of the company should not exceed40% of the total assets while total illiquid assets, such as plant,equipment and land, should be at least 20% of the total assets of

the company.

Other criteria include excluding investments in activities andincome from investments that are not Shariah compliant. Aneligible company should not have more than 33% of its total assetsin business that is non-Shariah compliant and the income fromsuch a business should not exceed 5% of the gross revenue (totalof net sales and other income) of the company. Apart from that,

the company’s net liquid assets per share should be less than themarket price of the share. Oil and gas exploration and fertilizerstocks dominate the index, with about 55% weight in the index.

According to the agreement signed by KSE and Al MeezanInvestments, the latter provides its Shariah expertise, guidelinesskills and stock screening towards the activities with regard tolaunching and continuation process of the Index, while KSE providesmaintenance and dissemination support for the index.

The KMI comprises 30 companies which are weighted by oatadjusted market capitalization subject to a 12% capitalization onweights of individual securities.

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

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

By Dalila Abu Bakar

BAHRAIN

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

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

Dilmunia entails the creation of international standard health andwellness facilities in a resort-styleenvironment.

It will be constructed on a 125-hectare man-made island off thenorth-east coast of Bahrain. It islearnt that work will begin with

the reclamation of area and theentire project is scheduled to becompleted in 2011.

Ithmaar Bank co-CEO Mohamed AR Hussain ( pic ) told Islamic Finance news : “We want to make this abrand. Dilmunia is taken from Dilmun, the ancient name of Bahrain4,000 years ago. We have used the ancient name and we willreplicate Dilmun.”

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

The development will also include three ve-star boutique hotelswith French, Chinese and Thai-inspired themes, as well as a four-starluxury hotel with a Middle East design that will also be equipped

to take care of patients still undergoing treatment at the island’smedical and wellness facilities.

Residential units will consist of villas, condominium and residential

units, quayside residences and several serviced apartments.

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

IDC CEO & board member as well as chairman of the Health Islandcompany, Mohammed Khalil Alsayed, sees Dilmunia turning Bahraininto a center of wellness and specialist treatments which will thenallow investors to tap into the growing international demand forhealth tourism.

By Raphael Wong



www.islamic nancenews.comIFN REPORTS


Bank Islam Malaysia is looking at merger and acquisitionopportunities in neighbouring Indonesia and even within Malaysia

to increase its market share in the region. According to managing director Zukri Samat, the bank has held talks with some nancialinstitutions but these are still in the early stages. The bank seesIndonesia as its prime target for immediate expansion and will thenexplore growth opportunities in Thailand and Singapore.

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

“Bank Islam is prepared to merge with the right partner. We arelooking for partners. Anyone who has a proposal, who wants to talk

to Bank Islam, we are open to that,” he said. Bank Islam, Malaysia’soldest Shariah compliant lender which began business in 1983, is asubsidiary of nancial group BIMB Holdings and is the second biggestIslamic bank in Malaysia in terms of assets.

The Shariah banks in Indonesia are reported to have less than 5%of domestic banks’ total assets. The Indonesian central bank targets

the Shariah banking industry to have a 10%-15% share of nationalbanking assets by 2015. Indonesia issued its rst Sukuk last month

to provide a vital funding source for the government’s burgeoning budget de cit and this should also spur other borrowers to tap the

Islamic market there more aggressively.

Islamic banking accounts for about 13% of total banking assets inMalaysia and are expected to be one of the leading growth driversfor the country’s economy as the government drives efforts to makeMalaysia a global Islamic nance hub. Zukri however describedMalaysia’s Islamic banking industry as being overcrowded with 14full-edged Islamic banks and some banks having Islamic windowsor limited operations, although he conceded that there is still amplespace to grow.

“Islamic banking is growing at a much faster rate than conventionalbanking, at close to 20% a year. In certain areas there is still a lot of potential that has not been tapped,” he said, pointing to wealth and

fund management as well as venture capital as some of the growthareas in the Islamic banking sector.

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

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

innovative Shariah compliant nancing, deposit and investmentproducts for the consumer and the corporations,” he added.

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

He reported that all business divisions performed well, with theconsumer banking division remaining the largest contributor at 62%of the total gross nancing assets. Non-fund based income rose fromRM75.9 million (US$22 million) to RM93.8 million (US$27 million) toaccount for 8.1% of the total income of the bank.

Bank Islam’s return on equity improved to 26.5% compared with23.3% previously. The return on assets was 1.5% for the bank and

the group. With the improved performance, the Bank’s risk weightedcapital ratio improved further to 12.9% from 12% in the nancial year2007. Bank Islam’s other nancial indicators improved in tandem,with total assets growing 23.4% or RM4.5 billion (US$1.3 billion)

to RM23.6 billion (US$7 billion) while total customer deposit roseRM3.1 billion (US$904 million) or 17.9% to RM20.8 billion (US$6billion).

By Islamic Finance news

MALAYSIA

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www.islamic nancenews.comCOUNTRY REPORT


As mentioned in our article on Islamic nancial services in Italypublished in the Islamic Finance news 2008 Guide at the beginningof the year, the ‘Bel Paese’ (‘Beautiful Country’) was home in 2007 toaround 1.4 million Muslims. They represented 32% of the 3.7 millionforeigners residing in Italy or 2.3% of Italy’s population and evenlydistributed, with 55% living in the north, 25% in the central regionand 20% in the southern part of the country.

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

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

Detailed market studies that analyze regions, cities, trends, owsand the purchasing power of different groups and nationalities of immigrants are beginning to be available. This untapped marketrepresents an opportunity for a standalone retail bank that wishes

to offer Islamic nancial services or for the rolling out of the UK’sIslamic nance experience through the establishment of branches and

operations in Italy.

Although the debate is still open on the compatibility of Islamicactivities with the current Italian banking regulatory system andwhether it is necessary to identify other norms that actually permit

the legal regulation of the Islamic model, the use of the so called ‘EUpassporting’ — where an institution authorized in a EU country mayoffer products throughout the EU without the need to have separateauthorization — offers a viable way for such an institution to startoperations in Italy.

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

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

largest European banks. With global banking players such as JPMorgan, Credit Suisse, HSBC, Barclays Capital, Deutsche Bank andBNP Paribas throwing their weight fully behind the Islamic nanceindustry, there is an extraordinary business opportunity to ll theIslamic investment banking gap in Italy.

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

It should therefore come as no surprise that since the beginning of theyear the debate on Islamic nance has picked up with the unfolding of a series of events on a topic that is becoming at the same time popularand controversial. These events, sponsored by different organizations,have taken place across the peninsula and have helped the nationalbusiness community and the media to come to term with the valueproposition represented by Islamic nance: a nance that is naturallyaverse to products involving alcohol, gambling and pornography and

that abhors interest and speculation while encouraging the productiveuse of assets and funds for the greater bene t of society as a whole.

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

At the end of October, ABI (the Italian Banking Association), togetherwith Con ndustria (the Italian Entrepreneurial Association) and ICE(the Italian Institute for Foreign Trade), will host in Rome a two-dayforum on the integration between the Italian and the GCC banking

industries. A full day workshop will deal with Islamic

nance whereas the closing session will discuss the role that the sovereign funds of theGCC can possibly play in Italy.

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

On the news side, the nancial press, including a quarterly on Islamicbanking and nance, regularly publishes articles on various aspect of Islamic nance. The number of university theses and PhD dissertations

on different aspects of Islamic nance ranging from retail banking toSukuk is on the rise. ABI, the Union of Arab Banks and University of

Islamic Finance Services In Italy — an UpdateBy Alberto Brugnoni

continued...

“On the capital market andinvestment banking side as

well, the market remains totallyuntapped in spite of Italy being home to two of the largestEuropean banks”



www.islamicfnancenews.comCOUNTRY REPORT


Islamic Finance Services In Italy — an Update (continued)

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

This aims to integrate Islamic nance within the international nancecommunity and create a new professional pro le with the skillsnecessary to contribute to the integration of the MENA (Middle Eastand Northern Africa) and EU economies. The number of universitydepartments working on “migrant marketing,” which focuses on theethnicity of the migrant population and their speci c requirements, isalso increasing.

So with all this positive momentum, what are the main challenges forIslamic institutions wishing to set up in Italy? The main one revolves,without any doubt, around the fact that the Italian banking system is,for the rst time in its modern history, confronted with the emergence

of models of credit brokerage based on principles that are religious innature.

The nancial products and concepts behind Islamic nance arebasically unfamiliar to the regulators and the business communityand the lack of precedents raises very practical issues in accounting,

scal and regulatory matters. These issues in turn are hampering thedevelopment of Islamic nance in Italy.

Although Islamic nancial products have equivalents in conventionalbanks, the theory behind them raises complex accounting issues onhow to treat them, such as, whether products should appear on thebalance sheet; whether a product should be classi ed as a nancing product or a leasing product; and whether an investment should be

classi ed as an equity investment or a loan.

One of the biggest issues is the tax treatment of Islamic customerdeposits and whether the expense paid out on these deposits shouldbe tax deductible. The double stamp duty or registration tax is an issueshared with all continental Europe whereas with regard to indirect

taxation that must conform with EU legislation, progress on the extraVAT (value added tax) for Murabahah transactions is still to be made.

On the regulatory side, the issue of whether customer deposits under the Mudarabah model should be on or off the balance sheet — which,in other words, is the issue of the difference in the level of risk that

the depositor assumes in the Islamic verses the conventional system— has clear implications for the deposit protection scheme.

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

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

Italy with its century-old network of cooperative banks, small territorialnancial institutions and the strongest movement of ethical nance in

the whole EU is a natural candidate for Islamic nance in Europe. Once the issues mentioned are resolved it shall play a pivotal role in south -

ern Europe and could easily see the acquisition and conversion of asmall domestic bank by a Middle East Islamic nancial institution.

.I l micFin nc C n ultin .c m

.I l micFin nc E nt .c m

. I l m i cF i n n c . c m

.I l micFin nc r inin .c m

. IFf rum.c m

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. E m n . c m

Challenges to Islamic Finance

CHALLENGES Arabic Terminology

Trained and skilledIslamic Financeprofessionals

Liquidity marketbetween conventional

and Islamic Banks

Islamic Banking understanding by

clients

Islamic-ComplianceSupervision: Shariah

National Board

Competition withconventional banks

Accounting, Fiscaland Regulatory

issues

Basic understanding of Islamic contracts

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

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Islamic nance began in the 1970s and aimed to develop bankingservices based on the Shariah. Historically based in the Middle Eastand Southeast Asia, it now bene ts from increasing interest at theinternational level. Being the European pioneer, London seeks toattain the worldwide leading position and Paris intends to followclose behind.

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

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

As for the retail business, conventional banks have opened Islamicwindows next to their traditional business and sometimes evendedicated subsidiaries. French banks such as BNP Paribas, SociétéGénérale as well as Calyon have invested heavily in the region.

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

This deal was quickly followed by the EUR80 million (US$116 million)

acquisition from Velizy Developpement of a ve-building 25,000 sqm of ce development in the Velizy area southwest of Paris, leased toPeugeot Citroen Automobiles.

The two acquisitions by GFH were the rst in France to utilize anIslamically compliant structure and constituted GFH’s entry into theFrench market with its EUR400 million (US$580 million) GAF propertyfund. EuroHypo AG provided the funding of the Islamically structurednancing of the deal for the Alstom Transport HQ in Saint-Ouen, whileSociété Générale provided the funding for the acquisition in Velizy.

Today’s European market represents signi cant potential, thanks to its emerging Muslim middle and upper classes. About 15 millionMuslims are eager to buy homes. London seeks to be the global leaderin Islamic nance. Its goal is to attract investments from the MiddleEast and to provide banking services compliant with the ethics of thelocal Muslim community.

This is one of the most important strategic moves of British banksin recent years. In 2004, the Financial Services Authority approved

the rst Islamic retail bank in the UK, the Islamic Bank of Britain.Since then four investment banks have been established whileconventional banks have opened “Islamic windows” and legal andscal arrangements have been made in the UK in order to boost thisindustry.

France would like to catch upCompared to the UK, France seems rather restrained. According tonancial magazine Revue Banque, 5% to 10% of investments madein the real estate come from Middle Eastern funds, even though all

are not necessarily Shariah funds. However, there is no sign yet of an Islamic bank materializing, although France has the most Muslimresidents in Europe ( ve million people versus two million in the UK).

This is due to the different origins of the British and the French Muslimpopulations. The British Muslims come mainly from the Middle Eastand Asia, where Islamic nance is well established. French Muslimshowever come from North Africa, where Islamic nance has just beenlaunched. However, real and increasing interest in Islamic nance inFrance is becoming more apparent.

In July 2007, France’s Financial Markets Authority (FMA) issued a noteauthorizing the creation of collective investment schemes that declare

themselves to be Shariah compliant, as well as authorizing criteria

speci c to Islamic funds.

Among others, it provides for securities selection criteria adopted byboth the index supplier and the fund which ensure compliance withIslamic law. They pertain to sectors of activity and apply to certainnancial ratios.

For example, companies which rely on the alcohol and tobaccoindustries or pork-related products, for example, for their businessand income are excluded. Other exclusions, still by way of example,concern companies with total balance sheet debt that exceeds 33% of

their average market capitalization over the previous 12 months.

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

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

The Senate’s Finance Commission meanwhile organized a conferenceon the 14 th May 2008 to discuss the further development of Islamicnance in France and possible scal and legal adjustments. It emerged

that stronger commitment from dedicated professionals was neededso that the development of Islamic nance becomes more than just a“nice to have” option.

More Than Just a Hope for FranceBy Zoubeir Ben Terdeyet

continued...

“Today’s European market

represents signi cant potential, thanks to its emerging Muslimmiddle and upper classes”





More Than Just a Hope for France (continued)

French banking authorities are not opposed to a Shariah compliantnancial institution. During the Paris Europlace forum on the 2 nd and 3 rd July 2008, French economy minister Christine Lagarde highlighted theinitiatives inspired by Paris Europlace committees, particularly thoseconcerning the development of Islamic nance services in the Parisnancial marketplace. French law already offers the best exibility andadaptability to welcome Islamic nance operations.

Nevertheless, new measures are in the pipeline, including setting up a new framework for Shariah compatible asset managementinstruments by FMA. Some measures including tax incentives are on

track, aimed at facilitating Islamic banking and Takaful products aswell as Sukuk issuance, which will make Paris an attractive center forIslamic nance.

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

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

Setting up a retail offerIn Europe, Islamic nance targets the wealthy Gulf investors and theircash over ow. Although the conventional nancial system is meant for

the real economy, it is hard for consumers and small- and medium-sized enterprises to nd banking services complying with their religiousprinciples. This is therefore a real business opportunity. The EuropeanIslamic nance retail demand is beginning to make itself known:

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

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

• The French Muslim community has become very keen onIslamic nance, especially since the Islamic Bank of Britainbegan its business in the UK.

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

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

• Shariah compliant insurance and reinsurance could also havebig stakes.

• The French nationals of Northern African origin outnumberother ethnic groups in starting new businesses in France.• The halal food industry in France amounts to EUR8 billion

(US$12 billion).• The Hajj is a big industry amounting to EUR150 million (US$218

million).

The May conference was told that providing Islamic nance services canalso become a signi cant integration factor for the Muslim communityin France. France’s nancial community needs to be prepared for thesnowball effect that can result when Islamic nance takes root.

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

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The issue of Islamic banking and nance becoming more international,if not global, is important. In particular, Moody’s recently commentedon the industry’s strong prospects in France, where the Frenchminister of economy and nance has just announced support forIslamic nance.

Is this the emergence of Islamic nance in this country?Denitely. The fact that the French political and governmentalauthorities have at last endorsed the value of the Islamic nancialconcept à la française (in the French style) constitutes by itself anecessary condition for this Shariah compliant nancial industry to

deploy itself more comprehensively on the French territory.

The French minister has been supported by the conclusions of thework carried out by the commission put in place by Paris Europlace, aFrench nancial think tank. This commission has conducted an in-depthstudy on the necessary technical adjustments in the French regulatoryand legal arsenal capable of reducing the tax, legal and regulatoryimpediments which are currently constraining the emergence of Islamic nancial solutions in France.

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

In almost all the countries where Islamic nance has successfullybecome part of mainstream business, the State has always providedclear and manifest support to that industry, not only by creating theoptimal infrastructural conditions but also by taking visible economicand symbolic initiatives, for instance by itself issuing sovereignSukuk.

France could be the second issuer of ‘Aaa’-rated Sukuk, af ter the IslamicDevelopment Bank, and the rst sovereign issuer of ‘Aaa’ Sukuk, anasset class that does not exist at this point in time. Ultimately, althoughgovernment support — in word or fact — is an absolute necessity, it isnot suf cient per se to allow the emergence of a French-style Islamicnancial industry of material size and reach.

How long will it take, and with what amount of effort, for Paris tocatch up with London’s achievements so far in Islamic nance?We are still wondering whether this is truly France’s ambition, and if

this is really the case, whether such a plan makes sense. Paris indeedaims at competing with London as a European hub for Islamic nance,and through this making Paris is more attractive to internationalnance, including its more alternative, if not exotic, compartments,like Islamic nance.

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

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

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

Reducing legal and tax constraints will need a nance law, followedby signi cant efforts in terms of communication with those Islamiccountries France intends to economically and nancially seduce

through its speci c offering, that is essentially the Gulf petro-monarchies and large economies of Muslim Asia. Then, heavy workis expected before at least one onshore Islamic bank is launched inFrance, which could contribute to serve the six million French Muslimswhile making it attractive to the rest of the community.

Islam and Shariah are words that do not immediately have positiveconnotations in France today; when the word “ nance” is added to“Islamic”, in the midst of one of the most damaging nancial crises of

the past three decades, one can easily understand why many Frenchcitizens may rightfully question its overall concept, credibility, andviability. This is why a large amount of patient pedagogy is needed ina country where “communitarism” is not considered a realistic option,and where the principle of secularity is sacred. Therefore, Islamicnanciers attracted by France will have to prove that Islamic nance isnot a community thing and will not endanger the dogma of the strictestreligious neutrality.

Islamic nance will need to be perceived as an ethical alternative tomodern conventional nance. The year 2010 appears as a crediblehorizon for Sukuk to be issued out of France, as well as for theinauguration of the rst French Islamic nancial institution. Frenchdemand for Islamic banking and nance is being quanti ed as wespeak, and the rst results of such studies are expected to be madepublic, at least partially, probably by the end of 2008. The speed withwhich Islamic nance in France will move from a latent phenomenon toa visible market will largely depend on the conclusions of such reports,which have been ordered by Middle Eastern institutional investors.

How do Islamic investors and nanciers perceive the Frenchmarket?

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

Frequently Asked Questions: Notable Trendsin Islamic Finance in France

By Moody’s Investors Service

“Islam and Shariah are words that do not immediately havepositive connotations in France

today”





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

historical platforms of Malaysia and the Persian Gulf. Such a processis incremental from one geographical location to another throughan interesting phenomenon of “capillarization”, which appearsas spontaneous and natural: the Muslim populations living in thecountries neighboring the areas where Islamic nance is already wellentrenched tend to get more interested in the products, then taste

them, and nally tend to easily adopt them, when this is allowed bylocal regulators. This is exactly what happened in the Gulf countries,with the noticeable exception of Oman, still reluctant to see its nancialinstitutions offer Shariah compliant nancial services.

North and then Sub-Saharan Africa, Turkey, Muslim Caucasiancountries and the Islamic periphery of Malaysia constituted the rstcircle in which Islamic nance started to shine beyond the bordersof its core markets. Next comes the second ring, that of the so called

“mature” or “developed” countries: Islamic bankers and investors nownaturally eye those places in the Western hemisphere where Muslimcommunities are important and visible, including obviously France.The French economy is well diversi ed and home to industrial andservices sectors considered lawful by the Islamic ethics.

For instance, French companies are well established in clean andrenewable energies, a sector that is very attractive to Islamic investors.Furthermore, 10% of the French population belongs to the Muslimfaith, which by itself makes France the largest potential market forIslamic nance in the West, capable of durably entrenching theShariah compliant value proposition in a more stable, predictable andmature environment.

Finally, France shares a long, shared history with the Muslim and Arabworld, in most cases full of friendship and common interests despite afew gloomy episodes. Consequently, there are large common groundsbetween France and its Islamic economic partners, which are far frombeing limited to the oil trade. France still conveys a very positive imagein the Muslim universe.

However, on the other hand are many of France’s existing or potentialpartners across the world’s Muslim community who hardly understandwhy French Muslims, ve times more numerous than in the UK, donot yet have access to nancial solutions in line with their religiousprinciples. In addition, France’s excessive emphasis on its sacredprinciple of secularity, supposed to be prevailing only in the publicdomain and not in private transactions, is still subject to a large amountof misunderstanding and confusion in the world of Islam, which alsonds it dif cult to conceive why Islam and Muslims form a subject thatis so passionately debated in France.

A consequence of this is that a relationship of mutual trust can hardlybe built: one side fears new forms of disguised proselytism whereas

the other is tempted to consider that Islamic nance would beinstrumental in recycling part of the oil wealth in France at a time whenwestern economies face a serious liquidity issue. If the dialogue is setin such terms in France, then France would face the bitter evidence of

the gap that puts it apart from Britain.

On the contrary, if useless prejudgments are left aside, France maybe in a position to welcome an alternative nancial model capableof providing renewed fresh dynamics to a profession that has been

through some turbulence over the past year or so.

What is the outlook for retail and wholesale Islamic banking in Francein the short term?In the next 12 months, a number of initiatives are expected in Islamicbanking and nance in France. After a subsidiary of Societe Generalelaunched a Shariah compliant investment fund in the Reunion Islanda few months ago, it is probable that capturing French Muslims’savings in a Shariah compliant manner will constitute a more visibleniche market, through speci cally designed lawful investment andplacement vehicles.

Furthermore, an increasing number of French companies are looking for alternative funding sources at more attractive rates than thoseapplicable on their traditional, conventional nancing mechanisms:one of the impacts of the subprime crises was an obvious liquiditydrought in debt capital markets, and consequently a widening of

spreads, or funding costs. One of the very few places where liquidityis still widely available today is in the group of oil-exporting countries,where a large number of Islamic investors are located.

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

the increasing interest of Islamic investors in French properties.

In retail banking, the process by which an Islamic bank could see thelight of day in France is expected to be slow. At the Second FrenchForum of Islamic Finance, which is expected to occur in late November2008 in Paris, some conclusions of the rst market studies on thepotential for Islamic retail banking in the country are expected to bemade public, providing very valuable information about the size andattractiveness of French demand.

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

The academic world is also investing time and effort to contribute toinform students and professionals in particular, as well as the publicat large. Publications and books written in French are now morenumerous, and many others are to be released in the next few months.Education programs and courses are being designed and will be mademore widely available in French universities and professional circlesin the very near future. This will further contribute to enlighten thedebate of accepting Islamic nance in France as an ethical alternativeand a bridge between worlds that would undoubtedly and mutuallybene t from more active economic and intellectual interaction.

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



www.islamic nancenews.comSECTOR REPORT


Perhaps the biggest innovation in the capital markets in recent yearshas been the growth of Islamic nance through the issue of Sukukand, more recently, Shariah compliant securitizations, mainly fromissuers based in the Gulf and Malaysia. It is estimated that overUS$100 billion Sukuk are currently outstanding.

Sukuk are usually described as asset-backed securities and take theform of notes or certi cates that represent ownership of an underlying pool of assets. This suggests that Sukuk investors should be entitled

to the ongoing cash ows and proceeds of sales from those assetsbut in reality, in the event of an insolvency or a default, a purchaseundertaking is usually triggered and the assets are transferred to theprovider of the purchase undertaking, leaving the Sukuk holders with an

unsecured claim against the provider of the purchase undertaking.

As a result, when these issues have received ratings in the past, ithas typically been the same as the corporate rating of the provider of

the purchase undertaking. A Shariah compliant securitization whichre ects the economic structure of a conventional securitization wouldallow investors to participate in the pro ts and losses generated by theassets placed in the securitization pool rather than the creditworthinessof the originator and would therefore mitigate some of the concernsexpressed by some Shariah scholars about the balance of risk andrewards enjoyed by Sukuk investors.

There has been some discussion about whether the capital marketsin the Middle East, supported by petrodollars, are robust enough towithstand the effects of the credit crunch which have affected theglobal markets generally. This seems an odd argument since a largeproportion of Shariah compliant deals are placed with conventionalinvestors outside the region, who have found them a useful way of gaining exposure to the high growth markets of the Gulf which areotherwise dif cult for international investors to access.

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

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

the Gulf region.

In addition, the debate triggered by Sheikh Taqi Usmani’s commentsin November 2007 and the Accounting and Auditing Organization forIslamic Financial Institutions’ (AAOIFI) statement issued in February2008 — that Musharakah and Mudarabah-based Sukuk should notuse purchase undertakings with predetermined exercise prices inorder to guarantee the return at the commencement of the transaction— affected a large number of Sukuk and has resulted in the need

for issuers to either nd assets which can be used in Ijarah-basedstructures or, where such assets are not easily available, to consideralternative structures, resulting in a slowdown in the growth of theindustry.

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

The dual-SPV structure was required because a local SPV would nothave been bankruptcy remote while, under Saudi commercial law, anoffshore SPV is barred from buying or leasing vehicles directly. Thedeal was structured so that, in the event of default, investors haverecourse to the underlying assets and can force the sale of the cashow-generating assets. Caravan 1, however, failed to secure an of cialrating and had only a single class of notes.

EnsecCaravan I was followed in 2005 by the Emirates National SecuritizationCorporation (Ensec), a Dubai-based specialist securitization rm set

up in 2004 to facilitate securitization in the region, issuing a ratedsecuritization of mortgage assets originated by Tamweel and calledEnsec Home Finance Pool 1.

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

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

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

The Impact of the Credit Crunch on Islamic SecuritizationBy Farmida Bi

continued...

“It is estimated that overUS$100 billion Sukuk arecurrently outstanding”



www.islamic nancenews.comSECTOR REPORT


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

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

The underlying portfolio comprises 829 Islamic mortgages onapartments and villas in Dubai’s various free zones, the areas inwhich non-UAE residents are allowed to buy freehold property. The

transaction is rated by Fitch and Moody’s and consists of four classesof notes — under Moody’s classi cation, ‘Aa2’, ‘Baa1’ and ‘Ba3’

tranches, plus a non-rated equity tranche. It is the rst global Islamicresidential mortgage-backed securities (RMBS) deal to be ratedinvestment grade. Fitch gave the senior notes an ‘AA’ rating.

The transaction uses a dual SPV structure, whereby Tamweel passes the legal title and assigns the lease rentals and all the associated rights

and receivables on the properties to an SPV incorporated in the DubaiInternational Financial Center. The rights and lease rental receivablesare then assigned to a separate, Cayman Islands-registered, SPV. Thismeans that the contractual terms of the structure are not affectedby local laws, while overcoming any legal risk associated with therecognition of true-sale under Islamic law.

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

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

The transaction uses a Mudarabah structure where the issuer is theinvestor (Raab ul Maal) and the PropCo (as de ned below) is the assetmanager (Mudarib). Capital is invested in accordance with a RestrictedMudarabah agreement (investment plan) to purchase the assets (asde ned below).

The Raab ul Maal has a security interest over all the assets of theMudarib in the case of an event of default. Income from the assets isdistributed as pro t to the Raab ul Maal (and then onto the investors)with separate amounts being used to pay the monthly pro t due and

to repurchase a share of the Raab ul Maal’s interest in the assets inorder to achieve amortization of the principal.

The transaction is an Islamic securitization of the land and associatedrights to payment (Assets) from a pool of GCC obligors. The 62 obligorsare primarily GCC real estate developers who pay in scheduledinstallments to purchase undeveloped land concentrated within tworeal estate developments — Shams and Saraya (Developments) in AbuDhabi (rated Aa2). The purchase contracts were originated by Sorouh

Real Estate (Sorouh), one of the three key real estate developers inAbu Dhabi which have been granted land on preferential terms by thegovernment.

The transaction involves a dual SPV structure whereby Sorouh will transfer the land and assign the plot sale and purchase agreements(PSPAs) installments and all the associated rights under the contracts

to Sorouh Abu Dhabi Real Estate (PropCo), a company incorporatedin Abu Dhabi, so as to isolate the assets from Sorouh. The issuerwill extend an inter-company loan to PropCo, which will then createsecurity interests over all of its assets in favor of the local SecurityTrustee acting on behalf of the issuer.

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

The futureThe future of Islamic securitizations cannot be separated fromdevelopments in the securitization market generally, despite thedemand for funding for infrastructure projects in the Gulf and theimpressive increases in property prices in the region.

It is hoped that the market will recover by the middle of next year anda number of potential issuers are currently warehousing their assets in

the expectation that they will be able to securitize in 2009.

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

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

• The UK Government'sPosition

• How HM Treasury areEncouraging Islamic FinanceGrowth

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being the European IslamicFinancial Centre

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• The Profit for Non-MuslimsInvesting in Sukuk

• Can Shari’ah ScholarsAchieve Consensus?

• Looking at Private EquityThrough the Islamic Lens

• Retail Islamic Finance AcrossEurope - Will the UK Lead theWay?

• Structuring Shari'ahCompliant Funds

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www.islamic nancenews.comTAKAFUL REPORT


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

Stressing that having a sound approach towards Shariah grounds for developing new and innovative products is one of

the company’s competitive edges in achallenging market, he said MunichRe Retakaful offers its expertise

in developing new or tailor-madeproducts which are consistent with theShariah, the demand of Muslims and

the requirements of their economiesand societies.

“We compete using our worldwideexpertise and combining it with Shariah

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

Regarding facultative business, he explained: “We would like to nd

a pooling solution for facultative business together with the industry.Although we have already written some facultative risks outside

the region, we think the best solution would be on a pooling basisamong the reTakaful industry and we would like to support this via theindustry’s association”.

Munich Re Retakaful, which started its operations in Malaysia in2007, is the rst foreign reinsurer to be awarded a license to conductreTakaful business in Malaysia. Stiftl sees stiff competition in thereTakaful business in Malaysia but said the company will use certainapproaches to handle it.

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

According to Stiftl, apart from Malaysia, the company has customersin Pakistan and the Middle East and is working on penetrating othermarkets as well. The group sees Takaful as a longstanding part of theworldwide industry. “We are convinced that Takaful will, like Islamicbanking 20 years earlier, establish itself on a long-term basis parallel

to the conventional insurance industry. Its special advantage is theability to enlarge the still underdeveloped penetration among thebroad population in Muslim countries.”

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

establishment of the reTakaful companies will also promote Malaysiaas the center for international currency reTakaful business, which isone of the measures taken to promote Malaysia as an internationalIslamic nancial center.

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

He believes that conventional reinsurance still has the larger marketshare than reTakaful as Muslims, not only in Malaysia but elsewhere

too, predominantly buy conventional products. In addition, many Mus-lims do not have cover at all. However, he said, Takaful may become

the main arena in creating a broader customer base, higher penetra-

tion and capital accumulation to strengthen the industry as a whole.

According to Stiftl, Munich Re Retakaful is monitoring the developmentand has no immediate plans to open branches in other markets. “Weexpect to contribute to the Munich Re Group. We want to strengthen ourappearance in this region and outside, and help the industry increasepenetration and insurance awareness. We are service-orientated andwe provide tailor-made products.”

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

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

He added that Munich Re Retakaful has completed its set up for themoment, but with increasing business, the company will also increaseits manpower in Malaysia from the current ve staff. The Retakaful

team is supported by other experts within the Munich Re Group whichhas almost 43,000 employees worldwide.

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

Munich Re Retakaful Focuses on InnovationBy Dalila Abu Bakar

“We are convinced that Takafulwill, like Islamic banking 20years earlier, establish itself ona long-term basis parallel to theconventional insurance industry”





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

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

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

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

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

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

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

BLAKE GOUD: Principal, SharingRisk.Org, US

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

purpose of growing the industry and enhancing transparency.

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

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

OMAR KALAIR: President and CEO, UM Financial, Canada

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

Next Forum Question

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

can the Shariah version buck the trend and be a best seller?If you would like to air your views on the next Islamic Finance Forum Question, please email your response of between 50 and 300

words to Christina Morgan, Forum Editor, at: [email protected] before Wednesday, 17 th September 2008.



www.islamic nancenews.comMEET THE HEAD


Islamic Finance news talks to leading players in the industry

Could you provide a brief journey of how you arrivedwhere you are today?

I began my career in the insurance industry in 1988 and having been involved in general insurance during the rst eight years, I thenventured into Life insurance in 1996. About two years ago, I was hired

to set up PruBSN, which was launched on the 8 th August 2006.

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

What is your greatest achievement to date?My greatest achievement to date is leading and establishing PrudentialBSN Takaful as the number one Takaful company (in terms of newbusiness regular contribution) in Malaysia in less than two years afterits launch.

Which of your products/services deliver the bestresults?

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

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

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

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

than 9,800 agents nationwide.

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

August 2006, we have now a strong, innovative and vibrant

team of 188 staff. We would not be where we are today without their whole-hearted commitment and for that, I am thankful.

What are the factors contributing to the success ofyour company?

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

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

journey to success will be more satisfying and meaningful.

What are the obstacles faced in running yourbusiness today?

The key obstacle is the mindset of people. Malaysians still do not treat Takaful/insurance as an important part of their nancialmanagement. And the authorities could assist the industry by giving

attractive incentives (standalone tax incentives) for people to take up the Takaful/insurance policies. Another obstacle is the perception of Takaful itself. Generally, Takaful is perceived as uncompetitive, slow torespond to market needs and that it is only for the Muslims.

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

Personally, I see the Islamic nance industry rising to be at par with oreven better than its conventional rivals in the next ve years. More andmore discerning customers are looking at ethical nancial instruments

to manage their wealth and being an ethical system, Islamic nanceshould be at the forefront of attracting this new breed of consumers.However, we need to position ourselves differently than how we are

doing today. We must embrace a new approach in order to attractnon-Muslim customers and investors to appreciate and invest in theIslamic nancial system.

Name one thing you would like to see change in theworld of Islamic nance.

I might stir a hornet’s nest here… but one thing that I would like to seein the world of Islamic nance is dropping of the word ‘Islamic’. Weplace too much emphasis on the word ‘Islamic’ that it loses the realappeal to the non-Muslims to learn, understand and appreciate ourShariah compliant system.

The Shariah compliant system and framework is a beautiful system

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

Name:

Position:

Company:

Based:

Age:

Nationality:

Mohamad SalihuddinAhmad

CEO

Prudential BSN Takaful(PruBSN)

Kuala Lumpur

45

Malaysian



www.islamic nancenews.comTERMSHEET


STRUCTURE Restricted Mudarabah Investment Account (RIA)

CURRENCY Emirate Dirhams (AED)

COMMENCEMENT OFRIA

15 th August 2008

MUDAREB (FUNDMANAGER)

Emirates Islamic Bank

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

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

UNDERLYINGINVESTMENT

Acquisition of 85% equity interest in Global Logistix RIA Company, Cayman Islands, set up to indirectly acquireabout 400 acres to develop an integrated logistics park in Navi Mumbai. The pro t will be generated through

the sale of undeveloped land parcels as well as developed housing units within the project over the course of the investment term.

EXPECTEDINVESTMENT TERM

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

PROFIT SHARINGRATIO

Applicant — 75%, Bank — 25%

EXPECTED GROSSPROFIT ON THEUNDERLYINGINVESTMENT

80.16%

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

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

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

EXPECTEDDISTRIBUTION TIMING

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

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

Emirates Islamic Bank’sGlobal Logistix RIA Fund

For more termsheets, visit www.islamicfinancenews.com



www.islamic nancenews.comMOVES


CREDIT SUISSEUK: The bank has appointed Garrett Curranas its managing director and co-head of securities sale for Europe, effective from the

1st

September and based in London. Curran joins the bank from Dresdner Kleinwortwhere he was a member of the DresdnerKleinwort executive committee. He haseight years experience in capital marketsdistribution and has worked in a variety of roles.

DLA PIPERUK/US : Jeffrey Steiner and seven partnersfrom Thelen Reid Brown Raysman & Steinerhave moved to DLA Piper.

Steiner will become co-chairman of DLAPiper’s US nance group and will be basedin New York. He was Thelen Reid’s chairmanof real estate practice and co-chairman of itsbusiness and nance practice.

Joining Steiner in New York are JasonGoldstein, R Kenneth MacCallum, RandPeppas, Robert Unger and Scott Weinberg.Another two of Thelen Reid’s partners,Marc Friedman and Robert Mower, will bepracticing in DLA’s London of ce.

ING PRIVATE BANKINGCHINA: Mark Chan has been appointed as

the bank’s managing director and head of marketing for China.

He has three decades of experience, andwas most recently the managing directorof private wealth management for China inDeutsche Bank. He had held the post for sixyears.

LINKLATERSUAE: The law rm will move two of itspartners from London to its Dubai of ce.Capital markets partner Richard O’Callaghanand banking partner James Martin will be

joining Dubai managing partner SaroshMewawalla, Jonathan Inman and LumaSaqqaf, increasing the rm’s Middle Eastnance practice to ve partners.

Martin specializes in bank nance andparticularly leverage and acquisition nancewhile O’Callaghan specializes in debt andequity capital markets work on high pro le

transactions.

ADIC-UBSINFRASTRUCTUREUAE: Vincent Giles is the new chief investment of cer for ADIC-UBSInfrastructure, a new joint venture betweenAbu Dhabi Investment Company (ADIC) andUBS Asset Management that focuses oninfrastructure investments within the MENAregion and Turkey.

Giles has been with UBS for 10 years andwas most recently UBS Infrastructure AssetManagement’s (IAM) head of the Europeanand Middle East practice. Prior to joining IAMin 2007, he headed the UBS Equity ResearchEuropean Infrastructure and Utilities teamfrom 2001. He also worked for JPMorgan andSociété Générale.

BARCLAYSHONG KONG: The wealth management unitof Barclays has appointed Nitin Birla as headof South Asia and Hong Kong as part of itslatest strategy to tap the potential of the highnet worth community in the region.

Birla was previously attached to RBS Couttsfor seven years. His most recent positionbefore leaving was as its executive vice

president in Hong Kong.

NATIONAL BONDSUAE: The Shariah compliant national savingsscheme for the emirates has announced theappointment of Jacques Bernard as its chief investment of cer. He will be responsible foroverseeing the company’s investment policyas well as managing and diversifying itscurrent portfolio of investments.

He has 23 years experience and was previ-

ously the head of investment funds at Ku-wait’s Global Investment House. He had alsoserved as chief investment of cer at BanqueFerrier Lullin & Cie Geneva, managing direc-

tor at Prudential Financial and head of Citi-bank Asset Management Group.

RBIINDIA: Finance secretary Duvvuri Subbaraowill be appointed as the governor of theReserve Bank of India (RBI), the country’scentral bank, replacing Yaga VenugopalReddy whose term ends on the 5 th September. Subbarao will hold the positionfor three years.

DMEUAE: Thomas Leaver has been promoted

to the role of CEO of the Dubai MercantileExchange (DME), effective from the 1 st

September. He was previously DME’s chief operating of cer, a role he had held since the1 st May 2006.

Leaver is an energy industry veteran andhas more than 30 years experience. He willbe replacing Gary King, who has completeda phased handover of his responsibilities toLeaver.

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

Ross is a recognized leader in nancing transactions involving entities in the MiddleEast and is a highly regarded banking andnance specialist.

PRUDENTIAL ASSURANCEMALAYSIA: Abishek Bhatia is the newchief of cer for general insurance andpartnerships distribution at PrudentialAssurance Malaysia. He will report to

the CEO and will be responsible fordeveloping and implementing strategiesof the company’s general insurance andpartnerships distribution businesses.Partnership distribution includesbancassurance, worksite marketing, grouplife, mortgage reducing term assurance anddirect/telemarketing.

UBSUS: UBS Investment Bank announced thatJon Jodka will join the rm as managing director and head of US prime brokeragesales within its equities division. He will bebased in New York.

He was most recently the president andfounding partner of Copper Arch Capital,a New York-based hedge fund whichsuccessfully grew its assets, client base andproduct array prior to voluntarily returning capital to its investors earlier this year. Prior

to that, he was attached to Morgan Stanleyfor 13 years and had held several seniorpositions including head of US sales from2000 to 2002.



www.islamic nancenews.comDEAL TRACKER


Islamic Finance news

Advisory Board:

Mr Daud Abdullah (David Vicary)Chief Operating Of cer

Asian Finance Bank

Dr Mohd Daud BakarChief Executive Of cer

International Institute of Islamic Finance

Prof Dr Mohd Masum BillahGroup Executive ChairmanMiddle Eastern Business

World Group of Companies

Dr Humayon DarChief Executive Of cer

BMB Islamic

Mr Badlisyah Abdul GhaniChief Executive Of cer

CIMB Islamic

Ms Baljeet Kaur GrewalGroup Chief EconomistHead, Global ResearchKFH Research Limited

Mr Sohail JafferPartner

International Business DevelopmentFWU International

Dr Monzer KahfConsultant/Trainer/Lecturer

Private Practice

Mr Mohamed Ridza AbdullahManaging Partner

Mohamed Ridza & Co

Prof Bala ShanmugamDirector of Banking & FinanceMonash University Malaysia

Mr Muhammad Nejatullah SiddiqiAuthor, Scholar, Speaker, Trainer

Mr Rushdi SiddiquiGlobal Director

Dow Jones Islamic Indexes

Mr Dawood TaylorHead of Takaful Taawuni Division

Bank Aljazira

Mr Abdulkader ThomasPresident & CEO

SHAPE – Financial Corp

Mr Paul WoutersPartnerBener

Prof Rodney WilsonDirector of Postgraduate Studies

Durham University

Mr Sohail ZubairiVice President & Head Shariah

CoordinationDubai Islamic Bank

Another Islamic Finance news exclusiveISSUER SIZE (million) INSTRUMENT

Pakistan Up to US$261.78 Sukuk

City Development US$708.32 Sukuk

Malaysian Debt Ventures Up to US$449.07 Sukuk

Bumiputra-CommerceHoldings

US$1.84 billionIslamic and conventional CP/MTNprogram

Islamic Bank of Thailand US$178.77 IjarahETA Star PropertyDevelopers

Up to US$150 Sukuk

Abu Dhabi Commercial Bank US$1.07 billion Islamic MTN

Dewa Minimum US$500 Sukuk

Philippines Up to US$1 billion Sukuk

BTA Bank Up to US$150 Sukuk

Bahrain Central Bank US$500 Sukuk

Qatar Islamic Bank US$300 Sukuk

Barwa Real Estate US$800 Sukuk

Doha Bank US$1 billion Sukuk Ijarah

Tabreed Up to US$500 Sukuk

Dubai InternationalFinancial Center

US$200 Sukuk

Amlak Finance US$260 Sukuk

Al-Rajhi Cement Investment US$595 Sukuk

Muhibbah Engineering US$125.41 Mudarabah

Indonesia up to US$2 billion Ijarah

Orient Technology Indonesia US$120 Islamic and conventional

Glomac US$18.83 Murabahah MTN

Prolintas US$187US$93.5 million seniorIjarah, US$93.5 million juniorMusharakah

Monetary Authority of Singapore

TBA Sukuk

Islamic Development Bank US$122.75 Ijarah

For more details and the full list of deals visit


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




ISLAMIC FUNDS TABLES


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

1 KASB Islamic Income Fund KASB Funds 12.06 Pakistan

2 Jadwa Saudi Equity Fund Jadwa Investment 8.54 Saudi Arabia

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

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

5 Jadwa GCC Equity Fund Jadwa Investment 5.38 Saudi Arabia

6 Jadwa Arab Markets Equity Fund Jadwa Investment 4.70 Saudi Arabia

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

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

9 Riyad Equity Fund 2 Riyad Bank 3.67 Saudi Arabia

10 Al-Durra Islamic Fund Global Investment House 3.63 Kuwait

Eurekahedge Emerging Markets Islamic Funds Index* -1.98

DisclaimerCopyright Eurekahedge 2007, All Rights Reserved. You, the user, may freely use the data for internal purposes and may reproduce the index data provided that reference to Eurekahedge is provided in yourdissemination 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 , Eurekahedgenor its af liates provide any express or implied warranty or representations as to originality, accuracy, completeness, timeliness, non-infringement, merchantability and tness for any purpose.

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

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

Eurekahedge Asia Paci c Islamic Fund Index

Monthly returns for Developed Markets funds (as of the 3rd

September 2008)FUND FUND MANAGER PERFORMANCE MEASURE FUND DOMICILE

1Islamic Al Yusr Certi cate on the ABN Amro USOpportunities Fund A

ABN Amro Bank 5.50 Not disclosed

2 Solidarity European Real Estate Fund Solidarity Funds Company 0.47 Bahrain

3Islamic Certi cate on European Real EstateAltiplano

ABN Amro Bank -0.17 Not disclosed

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

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

6 The Iman Fund Allied Asset Advisors -4.85 United States

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

8 AlAhli US Trading Equity Fund The National Commercial Bank -4.91 Saudi Arabia9 iShares MSCI USA Islamic Barclays Global Investors -5.05 Ireland

10 Alfanar Europe TT International -5.29British VirginIslands

Eurekahedge Developed Markets Islamic Fund Index* -4.94

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SHARIAH INDEXES


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

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

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

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

S&P Shariah Indices Price Index Levels


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

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

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

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


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

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

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

850

930

1010

1090

1170

1250

1330

1410

1490

1570

1650S&P Pan Asia ShariahS&P GCC CompositeS&P Pan Arab ShariahS&P BRIC Shariah

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

0

120

240

360

480

600

720

840

960

1080

1200S&P Global Property ShariahS&P Global Infrastructure Shariah

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




SHARIAH INDEXES


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

IndexComponent

numberFull

Floatadjusted

Mean Median Largest Smallest Large Small

DJIM World 2393 16724.92 13668.87 5.71 1.12 419.90 0.01 3.07 0.00

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

DJIM Europe 335 4210.10 3184.23 9.51 2.17 169.28 0.22 5.32 0.01

DJIM US 634 7954.17 7465.18 11.77 3.06 419.90 0.13 5.62 0.00

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

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

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

Anthony YeungRegional Director

[email protected]: +852 2831 2580

Learn more about the Dow Jones Islamic Market Indexes

Data as of the 3 rd September 2008

INDEX PRICE RETURN (%)

1 Week 2 Week 3 Week 1 Month 3 Month 6 Month 1 Year YTDDJIM World -3.45 -2.74 -3.44 -4.52 -11.21 -4.12 -10.40 -14.50

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

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

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

PERFORMANCE OF DJ INDEXES

INDEX PRICE RETURN (%)

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

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

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

PERFORMANCE OF DJ TITANS INDEXES

P R I C E R E T U R N ( % )


DJIM World DJIM Asia/Pacif ic DJIM Europe DJIM US

P R I C E R E T U R N ( % )


DJIM Titans 100 DJIM Asia/Pac if ic Titans 25

-25

-20

-15

-10

-5

0

5

-20

-18

-16

-14

-12

-10

-8

-6

-4

-2

0



www.islamic nancenews.comISLAMIC LEAGUE TABLES


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

TOP ISSUERS OF ISLAMIC BONDS SEPTEMBER 2007 – SEPTEMBER 2008

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

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

(Malaysia)

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

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

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

5Projek Lebuhraya UtaraSelatan

Malaysia Sukuk Musharakah 1,160 11 4.5 CIMB

6 Sun Finance UAEMudarabah Sukuk Assetbacked Securities

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

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

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

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

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

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

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

12Perusahaan Penerbit SBSNIndonesia

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

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

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

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

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

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

18 Menara ABS Malaysia

Sukuk Ijarah Asset

backed Securities 307 8 1.2 Citibank

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

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

Total 25,606 279 100.0





ARE YOUR DEALS LISTED HERE?

Catherine ChuEmail: [email protected]

Telephone: +852 2804 1223

If you feel that the information within these tables is inaccurate, youmay contact the following directly:

TOP ISSUERS OF ISLAMIC BONDS JUNE 2008 – SEPTEMBER 2008

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

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

2 Sun Finance UAEMudarabah Sukuk Assetbacked Securities

1,093 3 15.7

Citigroup Global Markets, Abu DhabiCommercial Bank, National Bankof Abu Dhabi, First Gulf Bank, NoorIslamic Bank

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

Abu Dhabi Commercial Bank,Barclays Capital, Credit SuisseSecurities (Europe), Dubai IslamicBank, First Gulf Bank, LehmanBrothers International (Europe),National Bank of Abu Dhabi, NoorIslamic Bank

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

5Perusahaan Penerbit SBSNIndonesia Indonesia Sukuk Ijarah 512 2 7.4

Mandiri Sekuritas, DanareksaSekuritas, Trimegah Securities

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

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

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

9 PLUS SPV Malaysia Musharakah MTN 234 7 3.4 CIMB

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

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

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

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

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

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

16 Horizon Hills Development Malaysia Murabahah MTN 15 2 0.2 AmInvestment

17 Mukah Power Generation MalaysiaMudarabah and IstisnaMTN

14 3 0.2 RHB

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

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

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

Total 6,951 63 100.0





For all enquires regarding the above information, please contact:Catherine Chu

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

ISLAMIC BONDS BY CURRENCY JUNE 2008 – SEPTEMBER 2008

Amt US$ m Iss. %

Malaysian ringgit 3,886 56 49.0

UAE Dirham 4,414 35 5.0

Indonesian rupiah 628 9 7.0

Total 6,951 100 63.0

ISLAMIC BONDS BY CURRENCY SEPTEMBER 2007 – SEPTEMBER 2008

Amt US$ m Iss. %

Malaysian ringgit 15,408 60 239.0

UAE dirham 6,621 26 10.0

Saudi Arabian riyal 1,333 5 1.0

US dollar 1,004 4 5.0

Total 25,606 100 279.0

ISLAMIC BONDS SEPTEMBER 2007 – SEPTEMBER 2008

Manager or Group Amt US$ m Iss. %

1 CIMB Group 4,416 90 17.3

2 Malaysia Government bond 3,757 4 14.7

3 Aseambankers 1,565 47 6.1

4 AmInvestment 1,474 45 5.8

5 HSBC 1,347 44 5.3

6 Dubai Islamic Bank 1,269 6 5.0

7 Calyon 1,016 2 4.0

8 RHB Capital 849 63 3.3

9 Barclays Capital 826 3 3.2

10 Citigroup 713 12 2.8

11 Oversea-Chinese Banking 685 16 2.7

12 Emirates NBD 677 4 2.6

13 Lehman Brothers 638 2 2.5

14 Royal Bank of Scotland 622 8 2.4

15 Deutsche Bank 511 1 2.0

16 Standard Chartered 429 15 1.7

17 Noor Islamic Bank 346 4 1.4

18 National Bank of Abu Dhabi 346 4 1.4

19 First Gulf Bank 346 4 1.4

20 Abu Dhabi Commercial Bank 346 4 1.4

Total 25,606 279 100.0

ISLAMIC BONDS BY COUNTRY SEPTEMBER 2007 – SEPTEMBER 2008

Amt US$ m Iss. %

Malaysia 15,408 60 239.0

UAE 6,783 26 10.0

Saudi Arabia 1,333 5 1.0

Indonesia 711 3 9.0

Pakistan 529 2 15.0

Bahrain 350 1 1.0

Total 25,606 100 279.0

ISLAMIC BONDS JUNE 2008 – SEPTEMBER 2008

Manager or Group Amt US$ m Iss. %

1 Malaysia Government bond 2,127 2 30.6

2 CIMB 851 42 12.2

3 Noor Islamic Bank 346 4 5.0

4 National Bank of Abu Dhabi 346 4 5.0

5 First Gulf Bank 346 4 5.0

6 Abu Dhabi Commercial Bank 346 4 5.0

7 HSBC 313 29 4.5

8 AmInvestment 242 4 3.5

9 Dubai Islamic Bank 227 2 3.3

10 Citigroup 219 3 3.2

11 Aseambankers 211 10 3.0

12 (Persero) Danareksa 181 3 2.6

13 Trimegah Securities 171 2 2.5

14 Royal Bank of Scotland 171 2 2.5

15 Standard Chartered 153 3 2.2

16 Lehman Brothers 128 1 1.8

17 Credit Suisse 128 1 1.8

18 Barclays Capital 128 1 1.8

19 RHB Capital 121 23 1.7

20 Mashreqbank 100 1 1.4

Total 6,951 63 100.0

ISLAMIC BONDS BY COUNTRY JUNE 2008 – SEPTEMBER 2008

Amt US$ m Iss. %

Malaysia 3,886 55.9 49.0

UAE 2,414 34.73 5.0

Indonesia 628 9.03 7.0

Total 6,951 100.00 63.0



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AAOIFI 10ABG 10ACR ReTakaful Holdings 9ADCB 9ADCB Meethaq 9ADIC 8ADIC-UBS Infrastructure 27Ahli Bank 12Ahli United Bank 12Ajman Bank 9Al Ahli Bank 9Al Khaleej Islamic Bank 10al khaliji 9Al Meezan Investment Management 4Al Osra 10Al Rajhi Bank 7

Al Rayan Holding 9Alfardan Automobiles 7Alico 11Amiri Capital 7AmIslamic Bank 6Amlak Finance 8AMMB Holdings 6Amreli Steel 6AMZ Securities 2Anugrah Life Insurance 11ANZ Banking Group 6Askari Bank 6Bank Alfalah 2, 6Bank Islam 6, 9Barclays 27BBK 10

BIBD 3BIMB Holdings 6BLC Bank 9BLOM Bank Egypt 9Bursa Malaysia 5, 11CBB 7CBI 12Central Bank of Kenya 2CIMB-Principal Asset Management 5Citigroup 8Clyde & Co 8CMA 9Commercialbank 7Coronation 7Credit Suisse 27CresBank 6

Dar Al Arkan Real estate Development 10Dawood Islamic 6Deloitte 8Deloitte Corporate Finance 8Deutsche Bank 8DFSA 8DIB 8, 9DIC 8DIFC 3, 8DIFC-LCIA 10DLA Piper 27DME 27Dubai Bank 9Dubai Banking Group 9Dubai Holding 9Emirates NBD 7

Etiqa Insurance 11Faysal Bank 6Fitch 12GIH 9, 10Habib Metropolitan Bank 6HSBC Holdings 10IBM Malaysia 2Industrial Development Bank of Jordan 8ING Bank 8ING Private Banking 27Ithmaar Bank 10Jasper Capital 8Jasper Corporate Finance 8Jordan Dubai Islamic Bank 8Karachi Stock Exchange 4KFH 5, 7

Kuala Lumpur Kepong 12Latham & Watkins 27Lehman Brothers 7Linklaters 27MAS 11Maybank 11Meezan Bank 6MIFC 3Misr Romanian Bank 9Mondial Assistance 11Moody’s 4Naseej Holding 10National Bonds 27National Real Estate 9NBAD 7NBK 7

Norkom Technologies 9OCBC Bank 5OCBC Malaysia 3Pakistan Kuwait Investment 6Panin Life 11Prudential Assurance 27QIB 9QNB 7, 12RAM Ratings 12RBI 27RHB 2Riyadh Bank 7SAMBA Financial Group 7Saudi Arabia Monetary Agency 11Saudi French Bank 7Saudi Pak Leasing 6

SBP 5, 6SHUAA Capital 7Sitara Peroxide 2Social Insurance Organization 10Solidari ty Family Takaful Egypt 11Solidarity Group 11Soneri Bank 6StanChart 6, 11Sunway City 12Swedish Financial Supervisory Authority 6Takaful Malaysia 6UBL Ameen 6UBS 27United Bank 2

Company Index

Company Page Company Page Company Page Company Page

Country Index

Bahrain CBB’s Islamic securities proves successful 7ABG’s income surges by 81% in rst half 10BBK to launch Islamic bank 10Finding Solidarity in Egypt 11StanChart, Alico in bancassurance partnership

11Brunei BIBD launches redesigned credit cards 3Egypt BLOM Bank Egypt to increase capital 9GCC Islamic banks top the list 7Hong Kong Moody’s: Asian market remain cautious 4India Call for Islamic banking 4Jordan DIB eyeing majority stake in Jordanian bank 8Kenya The next hub of Shariah compliant banking?

2Kuwait GIH launches education nancing program 9

NRE Sukuk in the of ng 9Malaysia RHB’s moves to become a top three 2

Still the largest Sukuk marker globally 2Malaysian IFIs need to venture out 3

Malaysia Bank Islam looks for M&A 3OCBC targets 20% growth 3Non-ringgi t Sukuk now tax-exempt 5Increased demand prompts bigger fund 5Pro t increase for Islamic rm 6Penetration into new markets abroad 6Takaful assets see a growth of 25% 11Maybank calls off plans on Panin tie-up 11MAS launches online travel insurance 11Stable outlook for Sunway City’s ratings 12RAM reaf rms KLK’s Sukuk Ijarah 12

Pakistan Sitara Peroxide’s Sukuk closes successful ly 2New Islamic index 4Islamic nancing for agriculture sector 5Banks arrange Amreli Steel’s Sukuk 6Using Sukuk Ijarah to bridge de cit 6

Qatar Have you got the drive for BMW? 7Clyde goes on Gulf recruitment drive 8QIB branches out to Ras Laffan 9

Qatar al khaliji on track to begin UAE operations 9Ahli Bank upgraded, outlook is stable 12Fitch views QNB’s acquisition favorably 12

Saudi Arabia Dar Al Arkan considers issuing Sukuk 10Sweden No obstacles to conduct Islamic banking but…

6UAE Clyde goes on Gulf recruitment drive

JV for Deloitte’s rms 8DFSA approves license for Jasper’s subsidiary

8ADIC plans international sale in ve years 8Ajman Bank to start operations soon 9Dubai Bank sets up nancing program 9ADCB launches Islamic division 9DIB hires Norkom 9DIFC enacts arbitration law 10Sukuk market slumps after AAOIFI decree 10

UK Amiri launches rst Islamic fund 7

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