Alpen Capital rolls out in Oman

Catalyst
for
change?
E
Issue 27
gypt is poised to
launch a sovereign
Sukuk program
within months, The
Islamic Globe has learned.
In a sensational bid to finance
its vast economic reforms, the
Egyptian government is ready
to rekindle its interest in Islamic
finance amid growing pressure
to rebuild the country using
internal financing.
It would be the nation’s virgin
sovereign Sukuk, beating the
likes of Saudi Arabia, Kuwait,
the UAE, Turkey, and Jordan as
well as mature markets like the
UK and France to the punch.
South Africa, Senegal and Kenya
have all expressed interest, but
so far have not acted.
The move would induct Egypt
into the elite club of sovereign
Sukuk issuers, which includes
Qatar, Malaysia, Bahrain and
Pakistan.
The Egyptian regime’s top
brass are now believed to be mulling a timeline for a potential sale.
In extensive talks held in Cairo
recently, officials from prime minister Essam Sharaf’s office told
www.theislamicglobe.com
Looking ahead: What does
the future hold for Egypt?
Islamic finance chiefs the government was exploring Shari’ah
compliant financing options for a
nationwide rebuild program.
Mohamed Beltagi, a member of the Egyptian Islamic
Finance Forum (EIFF), which
met Sharaf ’s men, told The
Islamic Globe that delegates
showcased studies on Egypt’s
future as a thriving centre of
Islamic finance, with Sukuk as a
centerpiece.
The government has remained tight-lipped over its
plans, but it could be on the
cusp of selling Sukuk, according
to Beltagi, who added: “Two or
three months after Ramadan
they might issue something.”
An upsurge of political unrest
in post-Mubarak Egypt forced
the interim government to delay
Islamic corporate bond regulation, fuelling concerns that it is
losing ground to other Middle
East and African nations in attracting Muslim wealth.
Walid Hegazy, a founding
member of EIFF and co-chair
of the committee who met with
state officials, said after years
in the wilderness the idea of an
Egyptian Sukuk is now firmly
“back on the table”, adding it
could reach $500m in size to
fund critical infrastructure
upgrades such as repairs and
Alpen Capital rolls out in Oman
Rohit Walia, executive vice
chairman and CEO of Dubaibased Alpen Capital has told The
Islamic Globe that Oman should
expect “the same level of service
and advice” that Alpen Capital
already provides to its Islamic
clients across the GCC.
He said: “We are going to be
doing exactly the same as what
we have successfully done in the
rest of the region in terms of
helping our clients to structure
Islamic products.”
Alpen Capital, a subsidiary
of Swiss Bank Sarasin & Co.,
has been operating in the Oman
market since 2008. However,
until June Islamic banking was
not authorized in the Sultanate,
as Walia said: “Up until recently
Islamic finance was not actively
discussed in Oman, so we don’t
know the prospects in this
market, but we’re here to test the
water.”
Alpen Capital and SarasinAlpen, the group’s private client
arm, also have offices in Abu
Dhabi, Bahrain, India and Qatar.
August 17, 2011
new-builds of roads, schools and
hospitals.
“It may not be practical to
finance a whole project through
the first Sukuk, but perhaps
part financing of the project [is
how we’d approach it]; that’s
usually how these things start,”
said Hegazy, a seasoned Islamic
finance lawyer and the managing
partner of Hegazy & Associates
in association with Crowell &
Moring in Egypt.
He said it was unlikely there
would be anything signed in
2011, but was confident of a
breakthrough early next year.
In the wake of the revolution
that toppled Hosni Mubarak,
Egypt’s 80m people faced a serious credit crunch and a funding
gap of more than $12bn, the interim government said in April.
Earlier this month, the country accepted $3bn in financial
assistance from the International
Monetary Fund, the first country
Continued on p3
INSIDE
P3 – EMIRATES NBD SHELVES
SUKUK FUND
P5 – LETTER FROM AMERICA:
KEEPING YOUR HEAD DOWN
P6 – EDITORIAL: SCALING THE
GREAT WALL
P8 – DUBAI FIGHTS BACK
P9 – AL BARAKA’S FRENCH FANCY
P10 – ABOUBAKAR:
LIKE SUMMER SUNSHINE
P11 – NIGERIA ON A ROLL
FOUJPOBMCBOLTGVMMZDPOWFSUJOHJOUP*TMBNJD
The Islamic Globe august 17, 2011 3
Sukuk fund
non-starter
A
lthough the
demand for Sukuk
seems to outstrip
supply, the concept
of a dedicated Sukuk fund is a
non-starter according to Gary
Dugan (pictured), CIO of Emirates NBD.
The Dubai-based bank had
had internal discussions about
creating a Sukuk fund for its local HNWI clients, but after testing the water, had drawn back
and opted for a more laborintensive bespoke discretionary
Sukuk service.
After a brainstorming
session with the bank’s asset
management team, Dugan said
it became obvious that launching a new Sukuk fund would not
work, as there was a lack in the
supply of the sort of issues that
the target market demanded
and as such a composite fund
would not be “commercially
viable”.
He even explored the idea
of Sukuk funds with other GCC
asset managers – but these efforts also foundered on the fear
that there wasn’t enough in the
local pick ‘n’ mix basket to build
a well-diversified Islamic bond
portfolio.
“They were unsure about
the demand for such a fund
and whether they could attract
sufficient investors to make it
viable,” said Dugan.
“Also, they felt they would
not be able to get sufficient
liquidity in sufficient Sukuk
for them to create anything
different from the funds already
available.”
Emirates NBD, which
manages just over $1.2bn,
currently has two Sukuk funds
in its stable, the Sukuk Fund
No1 – which closed in November 2009 – and the Emirates
Global Sukuk Fund – which has
returned 8.6% since launch in
April 2010, according to the
firm’s internal figures.
But an internal source at the
firm said the latter is just $17.7m
in size, so “we dismiss that fund
because it has too few assets”,
adding that this was evidence
that launching a new Sukuk
fund would prove fruitless.
Another problem that Dugan
came up against was the GCC
investor’s preference for local,
home-grown product. Although
Malaysia has the world’s most
liquid and active Sukuk market
with issues of different yields,
types, structures, credit ratings
and durations, GCC investors
have never taken on significant
exposure to the market.
Dugan said: “We could diversify into Malaysia Sukuk but
Gulf investors are not always
comfortable with a significant
geographical diversification
of their holdings. They would
prefer to hold a diversified list
of names in the MENA region
that are diversified by industry
and issuer.”
July saw a healthy pick-up in
Sukuk activity in the GCC, with
issues from Saudi International
Petrochemical Company, Saudi
Binladin Group, Qatar’s Almana
Group and from the UAE’s
fourth biggest lender, First Gulf
Bank. RH
Amlak sinks further in the red
It seems that the
‘bouncebackability’ of Dubai
has not automatically passed
onto all of its entities, because
as the emirate as a whole got up
and started to dust itself down,
one of its flag-bearers, Islamic
mortgage provider, Amlak is
still out for the count.
The troubled Shari’ah
compliant home finance firm
posted a AED106m ($29m) loss
in first-half results released
yesterday, as revenues fell 17%
from the same time last year,
due to the continued freeze on
new mortgages that has been in
place since its suspension from
trading.
Provisions for bad
mortgages almost doubled
in the same period, reaching
Dh120m ($32.7m) and with
UAE interest rates slashed,
things look bleak for the firm.
For the quarter, the lender
made a net loss of AED52.2m
($14.2m) compared with a loss
of AED597k ($162.5k) last
year. The UAE government
suspended trading of Amlak
along with rival Tamweel in
November 2008 and tried
to force through a shotgun
wedding of sorts as the
financial crisis took its toll.
However, the arranged
marriage failed and Tamweel
was effectively taken over by
Dubai Islamic Bank last year,
but Amlak remained under
the care of the government, in
many ways to mitigate the risk
of property developer Emaar,
which owns 45% of the firm.
The Islamic Globe was unable
to reach a spokesperson for
Amlak for comment.
Continued from front page
Attractive
option
to receive aid from the fund
in the MENA region since the
beginning of the Arab Spring.
But Hegazy said there is
intense pressure for Egypt to
go it alone and finance projects
locally through vehicles like
Sukuk.
In the last few days, Egypt
sold EG£5bn ($839m) of
short-dated gilts, mainly to
domestic banks, the third sale of
conventional treasury bills since
Mubarak was ousted. The yield
on Egypt’s 5.75% dollar bond
maturing in April 2020 rose
10bps this month to 5.59%, according to Bloomberg. The US
downgrade and contagion from
the European debt crisis has
been blamed for rising borrowing costs.
But bankers said strong
demand from local banks would
help limit any foreign marketinduced increase in Sukuk
pricing.
Karim Helal, a Cairo-based
investment banker, said: “Using
Sukuk would be a very attractive option especially given the
current state of the country and
on the global financial front
with the US downgrading and
eurozone woes.”
There is also expected to be
buoyant demand from GCC
investors, who on the whole prefer to diversify their portfolios
within the region rather than
markets in the Far East.
Neil Miller, global head of
Islamic finance at KPMG, said:
“If Egypt can do something on
this and do it credibly then it
has the potential to be catalytic
in its impact. I’m optimistic that
Egypt will be one of a number of
countries in the region that will
issue sovereign Sukuk within
the next 18 months.
“If they did it would play into
the overall narrative of Middle
East Islamic finance strengthening, versus the might of Malaysia, plus it’s another piece in the
African jigsaw.”
But Miller added that after
years of neglect there could be
a long road ahead for Egypt to
get adequate Shari’ah legal and
regulatory rules in place to protect issuers and investors.
Islamic finance professionals
in Egypt will now be hoping that
post-revolution politics will not
spoil the country’s chances to
outwit its regional rivals. RH
The Islamic Globe august 17, 2011 5
LETTER FROM AMERICA
BLAKE
GOUD
blake@eaglemontmedia.com
Keeping your head
below the parapet
T
he growing controversy over anything
Islamic in the United
States presents a dilemma for many Islamic financial institutions, particularly
the smaller community banks
that provide most of the Islamic
finance in the country.
With accusations flying
across the airwaves that Islam
in general, and Islamic finance
in particular, represents a threat
to America, most Islamic bankers have kept their heads below
the parapet and focused on their
business.
While this provides a good
way to avoid making oneself a
target, it doesn’t do anything
to educate people who are not
familiar with Islamic finance
and who thus might develop a
heightened suspicion of Islamic
finance based on the claims,
despite most of them being
false. What is an Islamic banker
to do?
Over the top: US vilification of IF could see a refocus on brand awareness
Mohammad Fadel, associate
professor of law for the University of Toronto, told The Islamic
Globe that despite facing more
pressure than their money
center banks, community banks
may not have the resources to
Harneys get Hudd
Offshore law firm Harneys
has appointed Simon Hudd to
work in the company’s London
office.
Harneys made the move for
Hudd as his practice and experience
is in the British Virgin Islands
and he has experience in Islamic
finance, including the structuring of
Murabahah facilities and Sukuk.
Harneys was advisor to
Malaysian-based Albar & Partners
through its BVI office, arranging
a $48m Islamic finance deal to
finance a floating production,
storage and offloading vessel in
2008, but has not been active in
Islamic finance recently. Harneys
did not respond to requests for
comment from The Islamic Globe.
counter the accusations about
Islamic finance generally.
Rushdi Siddiqui, global head
of Islamic finance and OIC
countries for Thomson Reuters,
said that Islamic banks should,
“Bite the bullet and focus on
brand awareness” to build
confidence and trust among
consumers of all faiths.
The challenge, according
to David Loundy, corporate
counsel for Chicago-based
Devon Bank, is that Islamic
banks don’t know how many
people won’t deal with a bank
– either wholly Islamic or
conventional banks offering
Islamic finance – because they
offer Islamic finance. Most
customers to whom he has
spoken who raise objections
to the bank’s Islamic finance
activities are easily convinced
that it is benign when they learn
more about it.
The uncertainty about
whether Islamic finance could
harm the business prospects
limits the appeal of offering
these products and keeps the
market small. The key to success
is offering products that stand
on their own, both legally and
for their value proposition.
Al Huda sets up
shop in Canada
Despite having a population one-tenth the size of the
US, Canada is becoming a fast
growing market for Islamic
finance and growth needs
advisory firms with experience
in structuring and certifying
Islamic finance products.
Al Huda Islamic Finance
Consultancy Canada, in association with Dar Al Sharia, has
entered the market. Their advisory services include product
development, business advice,
Shari’ah audits and Shari’ah
supervision. The new firm
boasts significant grass roots
connections through the executive body of Jami’yyat Ulama
Canada with its 107 imams
from across Canada.
6 August 17, 2011 The Islamic Globe The Globe Says
editorial@eaglemontmedia.com
News that the regulators of France, Spain, Belgium and Italy have
joined Greece in calling time – at least until the end of the month –
on the practice of short selling is to be applauded. However, the suspension only applies to the banks; it’s a temporary ban and a cheap
fix to much deeper-rooted problems. On one side of the debate
the traders are predicting apocalypse, claiming a short-selling ban
will just exacerbate the situation. On the other side, regulators and
governments are making a statement that the casino is closed for
the time being and that unscrupulous, unaccountable traders, only
interested in self-aggrandizement should not be permitted to force
economies into recession for a quick buck. Although the symptoms
are more fundamental, one of the aggravating factors in the credit
crunch was the piratical behavior of traders and they should not
be able to wield so much power. Thankfully in Islamic finance the
concept of shorting is anathema – ermmm…ok let me think about
that one!
Letter to the Editor
Putting it in the right perspective
We’d like to clarify a few of the points discussed in your article:
‘MSC Sukuk guidelines raise a few eyebrows’ in Issue 24. First
the Islamic Securities Guidelines are there to regulate the issue of
Sukuk in Malaysia and hence are more relevant to parties acting as
‘the issuer’, rather than to ratings agencies.
Second, we have two national Shari’ah advisory councils in
Malaysia, one operating under the aegis of the Securities Commission Malaysia, the other under Bank Negara Malaysia. Both were
set up as independent organizations, and hence neither is subservient to the other. Nevertheless, as part of their deliberation process,
both SACs would refer to each other’s rulings on Shari’ah issues that
are common to both Islamic banking and Takaful and the Islamic
capital markets.
Finally, the Sukuk Guidelines do not only focus on ex-ante
compliance but on post-issuance compliance as well. The responsibilities of Shari’ah advisor includes, among others, ensuring that
the applicable Shari’ah principles and any relevant resolutions and
rulings endorsed by the SAC are complied with. This is a continuing
obligation on the part of the Shari’ah advisors. In addition, when
there are changes or revisions to the terms and conditions of Sukuk,
which relate to Shari’ah matters, the issuers are required to consult
their Shari’ah advisors and submit such revised proposals for the
consideration of the SAC of the Securities Commission.
We trust the above information puts matters in the right perspective. Thank you.
Yours sincerely,
The Securities Commission Malaysia
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They have a
great wall
H
aving lived in
the Gulf during
the boom years, it
was very easy to get
caught up in the hype of the tallest building, the biggest airport,
By Paul McNamara
the most innovative Sukuk and
so on. The horizon seemed to
stretch as far as King Abdullah Economic City across to the natural
gas fields of Qatar by way of the Bahrain Financial Harbor facing off
against Bahrain’s World Trade Centre with a dollop of The World,
The Palm and Dubailand thrown in.
There was a lot of activity and a lot of people and a lot of headlines,
but the reality is that the whole lot of it combined would probably
have fitted comfortably into a smallish suburb of Beijing. What was
staring Asia in the face was that ‘The Story’ was China. HSBC didn’t
miss this fact, which is why the bank has been facing increasingly east
ever since – and is being copied by every other serious western bank
with an international focus. USA? Forget it – yesterday’s news.
China has lot of people – and as a senior (Indian) investment
banker told me – ‘they have a really great wall’. But they are also
building the world’s biggest railway network, which will be the biggest project the planet has ever seen. Don’t forget the road infrastructure or all other mass projects that China Inc. is undertaking.
You might not love their human rights record – but people in
glasshouses shouldn’t throw stones, as the saying goes. And in any
event we can see the monolithic face of the state being chipped away
at on a daily basis.
But what bankers are agog at are the opportunities in China.
Imagine the Shari’ah compliant PPP projects that could be undertaken in China. Imagine the Sukuk issuance that would be needed to
fund a tiny fraction of the work that needs doing. And the critical test
will be whether the Islamic finance industry can compete for some
of these projects on a cost basis. The Chinese will not be interested
in paying over the odds for funding but they are very interested in
making friends with neighbors in Muslim Asia and the Gulf that have
natural resources aplenty.
The future belongs to Asia and the countries currently getting rich
from the crumbs from China’s table (look at Australia) know how
to position themselves to prosper. Malaysia is nearer to the Chinese
mainland than the Gulf, of course, and has more cultural and ethnic
ties but this will only go so far.
There are trillions of dollars worth of projects that need to be
done in China and that nation is looking at the west withering on the
vine – with riots in the UK, Greece in the basket case basket, Italy
being run by a fast fading gigolo and France about to take a header
into the abyss. The Gulf, by contrast, is emerging from its Arab Spring
and Malaysia is booming like never before. Now is the time to get the
decision-makers of China on board with the notion of Islamic finance.
Now is the time for the road shows to Beijing and Shanghai with the
Islamic finance 101 PowerPoint.
The industry has been waiting for the chance for the real boom to
follow the false start of five years ago – and China is it. All aboard the
China Express: the bullet train is leaving the station.
The Islamic Globe 8 August 17, 2011 Dubai:
The
Sequel
N
ot so long ago the
world’s headlines
were obsessed by
Nakheel’s announcement that it may not
be able to meet some of its
debt obligations. Suddenly the
world came crashing down on
Dubai’s head.
What followed was a good
deal of fire fighting and before
long a much rosier picture
emerged. The immediate debt
crisis was eased somewhat for
the short term but as every
banker knows, a debt follows
you around and at some point it
has to be paid off or refinanced.
The rating downgrade of the
US by Standard & Poor’s caused
some ructions in the world’s
debt markets. While the cost of
insuring Qatar against default
rose 8.5bps and Abu Dhabi rose
9.6bps Dubai’s costs sky-rocketed by 49.6bps providing a sharp
reminder that world market
volatility hurts as well as helps.
So where does Dubai Inc.
stand today on its various debt
obligations, spread across sovereign and semi-sovereign institutions? According to figures from
the IMF, Dubai Inc. still has
$31.2bn of debt maturing this
year and next out of a total debt
By Paul McNamara
load of $113bn spread between
state-owned and governmentrelated bodies. Perhaps in recognition of the unpredictability
of the future direction of the
debt markets the Investment
Corporation of Dubai (ICD),
which owns a chunk of Emirates
airline, has indicated that it will
repay in full the $4bn of debt
that matures this month rather
trying to refinance it. ICD will
repay from its own reserves two
three-year tranches that mature
next week, which include a
$2.5bn conventional loan and a
$1.5bn Shari’ah compliant loan.
Sometimes, however, it is not
all plain sailing, as readers of
The Islamic Globe know. Delays
still abound even 12 months
after Nakheel’s announcement
that it would use Sukuk to pay
creditors. Nakheel is one of
Dubai’s property giants. Trade
creditors were to be paid in fiveyear Shari’ah compliant notes
that would offer an annual prof-
it rate of 10% but ‘paperwork
and market conditions’ are still
are causing delays. Paper with
such a high profit rate, creditors hope, would be as good as
cash in the secondary market
and they would be expected
to liquidate it as soon as they
could. One of the core issues is
how to hive Nakheel off from its
parent, Dubai World, and what
assets will remain with Nakheel
after the split.
Many observers thought that
Nakheel’s long delayed Sukuk
would wait until after Ramadan
or possibly even until after Eid,
but it seems that the wait may
be about to be over. Nakheel
chairman, Ali Rashid Lootah,
has gone public and said that
the Sukuk will be issued by
August 25 and Deutsche Bank
is tipped to be the lead manager
for the issue.
Nakheel itself had $11bn
of loans to contend with and
its parent, Dubai World, had
$25bn. Chris O’Donnell, Nakheel CEO, stepped down after
finishing his five-year contract
in June. The government replaced Sultan bin Sulayem, the
former chairman of Nakheel,
last year.
Readers will also remember
that back in May of this year the
government of Dubai stepped
in to bail out Shari’ah compliant lender Dubai Bank in a symbolic gesture that indicated that
the emirate was on the road to
Hong Leong consolidation coming along
Hong Leong Bank’s Group
MD, Yvonne Chia recently
informed local press that the
merger process of Hong Leong
Islamic Bank and EONCAP
Islamic Bank would be made
public in the coming weeks.
The two Islamic banks
remain separate legal entities
although their banking
products and services have
been integrated following
HLB’s RM5.1bn ($1.7bn)
acquisition in May this year
of EON Bank Group which
comprised EON Bank,
EONCAP Islamic Bank and
MIMB Investment Bank.
While EBB and EIB have
been absorbed into HLB, Chia
said that MIMB Investment
Bank might be sold off. The
expanded HLB is now Malaysia’s fourth largest bank with
an asset size of over RM140bn
($47bn) and a footprint of 329
branches nationwide, second
only to Maybank’s 384.
The Islamic Globe august 17, 2011 9
Al Baraka’s French fancy
Al Baraka has said it will
start operations in France
by 2012 according to Adnan
Ahmed Yousif, the bank’s CEO
and president.
Yousif, talking to reporters
at a conference in Saudi Arabia,
also said the firm was in the
final stages of wrapping up a
Sukuk issued by its subsidiary in Turkey, Albaraka Turk
Participation Bank. He said that
the firm was initially seeking
The beat goes on: Dubai continues its fight with debt
recovery and was dealing with
issues head on rather than being
the Dubai of old and living in
denial.
Dubai Bank’s problems
stemmed mainly from overexposure to sovereign and
semi-sovereign companies particularly Dubai Holding, which
until the bailout owned 70%
of the bank. Nothing much has
been heard from Dubai Bank
since, presumably reflecting the
behind-the-scenes work that is
going on to sort out the balance
sheet and remaining issues.
Port & Free Zone World,
meanwhile, a holding company
for DP World is raising $850m
to refinance debt through a fiveyear loan that has conventional
and Shari’ah compliant portions
and pays a margin of 350bps
over benchmark rates. HSBC,
Standard Chartered, Deutsche
Bank and Citi are said to be
managing the conventional loan.
The picture that is emerging
is one of an emirate that
is happy to utilize Shari’ah
compliant instruments
alongside conventional loans
to overcome the aftershocks
of the global financial crisis
and regional real estate crash.
The instruments that will
be used will be those that
make most sense in a purely
business context. This could be
the perfect case study for the
utilization of Shari’ah finance on
a major scale.
Precious metals ETCs approved
ETF provider Source has
gained Shari’ah approval for its
new platinum and palladium
exchange traded commodity
products.
The ETCs gained approval
from Luxembourg-based
Amanie Advisors, led by
Shari’ah scholar, Daud Bakar.
ETF Securities was the first provider to launch Shari’ah compliant physically backed precious
metal ETCs in 2008. Approval
for the two products follows
approvals for physical gold and
silver ETCs earlier this year.
Neither Source nor Amanie
were available for comment.
$150m, but demand has been
so high that he believes that the
issue could swell to $350m.
Al Baraka Group already
operates in 12 countries, but
this will be its first foray into
Europe. As The Islamic Globe
reported last month Al Baraka
will be following in the footsteps
of Chabbi Bank, a subsidiary
of Banque Populaire du Maroc.
The new bank will have capital
of €100m ($143m).
IB of Thailand
expansion program
The Islamic Bank of Thailand
is due to undertake a branch
expansions program and
is hoping to open 20 more
branches very soon according
to Teerasak Suwanyos,
managing director of the bank.
Thailand’s Muslim
population is estimated to
be around 1m and in a bid to
cater for the population the
new branches will be located
in local communities including
superstores and the new
openings will increase the
number of the Islamic bank’s
branches to 78.
Islamic Bank of Thailand
hopes to have reached a branch
total of 100 by year-end.
Abu Dhabi kicks off
GCC repo trade
National Bank of Abu Dhabi
and Abu Dhabi Islamic Bank
have kicked off the first repo
trade between banks in the
GCC.
The trading of Shari’ahcompliant repurchase agreements between the two Abu
Dhabi banks should help create
liquidity by improving access to
shorter-term funds and boosting Sukuk trading. The first
repo contract was for one-week
and valued at $20m.
The program will allow the
banks to borrow from each
other for periods from one day
to one year. NBAD and ADIB
are acting as torchbearers for
the sector in championing the
repo trade. There is little Islamic
repo trade in Malaysia, and in
other domiciles, like Indonesia
it is not authorized.
The Islamic Globe 10 August 17, 2011 Dear Diary,
I am grinning. I am grinning and chuckling like I have
never grinned and chuckled
before. And yet some people might
wonder what I have to grin and
chuckle about since a few things have
gone wrong this week.
For a start, I sent my mother a photo of
my new trousers. They were meant to give me
‘self-esteem and a nuanced marketing edge’ but
instead she told me that I could not wear them
outside of the house and that they make me
look like an ageing Tahitian cross-dresser. She
reminded me of an old record we used to play
on Saturday mornings when I was growing up
called ‘Donald Where’s Your Troosers’. Troosers
is Scottish language for trousers. But this did not
burst my happiness bubble.
Shortly after this I was introduced to the
new General Manager for the bank. What can I
say? New General Manager is a lady, is German and is both very short and very wide. In
fact if someone were to take a tape measure I
think they would find that she was As Wide As
She Was Tall. It is hard to tell what age she is
because she Wears Such Thick Makeup but I
think she is younger than the former General
Manager who was, of course, very old and has
been Promoted to a Leadership Position in our
burgeoning outpost in Kazakhstan. The other
interesting thing about her is that she used to
work in finance which is generally a bad sign for
people in marketing, according to my new book
‘How to Blag Your Way in Marketing’. It makes it
harder to blind them with numbers and because
People In Finance Have No Sense of Humor. In
fact – according to my book – they are almost as
humorless as in-house legal teams.
But even this shock to the system was not
enough to banish my happiness cloud. So, why
was I so happy? Quite simply I heard a new song
on the radio in the back of a taxi called ‘Sugar
Sugar’ by The Archies and it changed my life. As
soon as I got home I downloaded the song and
put it on my ‘phone and I have been listening
to it ever since. It could have been written for
Kamillah and me: “I just can’t believe the loveliness of loving you” Mr Archie sings. I just caught
myself smiling again even though I have no clear
indication that Kamillah remembers who I am.
I feel that with the help of The Archies and
my new book on marketing things are going to
take a turn for the better for me. I imagine that
the new German General Manager and I will
become Firm Friends and we will share jokes
together as we discuss marketing. She might see
the genius behind the failing Zen Space Café
since she clearly enjoys food. I might even try
to get some special German foods on the menu
in the café, just for her: perhaps some Halal
Bratwurst sausage or Black Forest Gateau.
Life is good and as Mr. Archie says, ‘Like the
summer sunshine, pour your sweetness over me’.
Follow Aboubakar online at www.theislamicglobe.
com where he helps solve readers’ marketing problems
Different stance: Central bank declares moratorium on foreign acquisitions
Indonesia stands
firm on foreign
banking buyouts
L
ast Friday the central bank
of Indonesia suspended the
issue of any new permits
authorizing the purchase of
the country’s local banks.
As reported in The Islamic Globe last
week, Indonesia is considering imposing limits on bank ownership, possibly
lowering the current 99% ownership limit to 50% and the temporary
moratorium that the central bank has
imposed is seen as a way of giving the
government breathing space whilst it
considers its next move.
The central bank and the govern-
ment wants to see Islamic finance grow
in Indonesia, and the local industry
needs to import foreign expertise, but
there are concerns that the local banking sector is being colonized by foreign
institutions.
The central bank hopes to bring in
new regulations for the sector later this
year, but the latest move has thrown
a spanner in the works as far as the
expansion plans of already majorityowned local Islamic banks like CIMB
Niaga and Maybank Syariah Indonesia,
both majority-owned by their respective
Malaysian parents, are concerned. EAA
Sukuk spreads widen on
back of double-dip fears
The spread between the average yields
for global Sukuk and Libor has spiked
in the past two weeks as fears of a
double-dip recession have prompted
institutional investors to dump riskier
exposures.
According to the HSBC/Nasdaq
Dubai US Dollar Sukuk Index, spreads
have jumped from 198.1bps on August
1, to 242.9bps on August 15. Although
the spread has narrowed over the last
few days, the concern has been the sudden spike in the spreads on a basket of
global Sukuk.
Paralysis in the US government over
the renegotiation of the national debt,
and the crumbling of economies across
the eurozone has seen a sell-off in assets
with a lower credit rating. However,
to put this in perspective spreads were
334.9bps on March 15, but they did
adopt a gentler curve to get there.
The Islamic Globe august 17, 2011 11
BisB & Al Salam
in merger talks Worth
B
ahraini retail
powerhouse Bahrain
Islamic Bank (BisB)
has, according to
local press reports, opened up
discussions with domestic rival
Al Salam Bank over a potential
merger.
The marriage would create
Bahrain’s largest Islamic lender
with assets of BHD1.7bn
($4.5bn).
BisB’s chairman, Khalid
Abdulla Al-Bassam has driven
BisB to become one of Bahrain’s
Islamic finance powerbrokers,
but to take on the regional
giants, the bank needs a bit
more juice in the tank. Hence
the opening-up of discussions
with Al Salam Bank, whose
experience in corporate, private
client and investment banking
would complement BisB’s
strength in the retail arena,
seems to be a shrewd move.
Despite the problems earlier
the wait
Power pack: BisB and Al Salam enter merger talks
and a combined BisB/Al Salam
in the year with internal uprisentity could fit the description.
ings, and occupation by Saudi
and Emirati troops, Bahrain is
In March, BisB postponed
a planned $143m rights issue,
still the region’s leading Islamic
finance hub. With its reputation
citing unfavorable market
conditions.
tarnished, the local industry
needs a champion that could
Neither institution responded to requests for comment. JF
take ‘Brand Bahrain’ overseas,
Tawarruq calling
XOX Wallet, a subsidiary of
the Malaysian Mobile Virtual Network Operator XOX,
has agreed to supply at least
rM50m ($16.7m) of telecommunication airtime a day to
iDOTTV’s islamic Banking
Tawarruq Trading System aSSiDQ over the next two years.
The airtime will be traded
like a commodity. AS-SIDQ is a
fully-automated trading system
that connects potential borrowers with the Islamic banks.
IDOTTV’s COO Elhadj Azahari
(pictured) told The Islamic Globe
that RHB Islamic, Affin Islamic
and Al Rajhi Malaysia have
approved of AS-SIDQ while
Maybank, Bank Rakyat, Malaysia Building Society Berhad
and Al Rajhi Saudi Arabia are
still considering its use.
Using mobile airtime as a
commodity is not a new idea as
Etihad Etisalat in Saudi Arabia
used airtime as a commodity
in a $2.9bn Islamic financing
deal.
While that deal made use of
Etihad Etisalat’s own airtime
as the asset being financed,
AS-SIDQ uses airtime as the
underlying asset for personal
financing in the same way
crude palm oil is used to facilitate Tawarruq transactions in
Malaysia.
The contentious organized
and reverse Tawarruq was ultimately barred by the International Islamic Fiqh Academy in
2009. Akram Laldin, executive
director of ISRA and member
of Bank Negara Malaysia’s
Shari’ah Advisory Council told
The Islamic Globe that the SAC
approves of Tawarruq, with the
permissibility of the underlying
asset used left to the discretion
of Shari’ah advisors.
For the SAC Tawarruq permissibility is largely attributed
to the intention of all parties
to avoid riba using Shari’ah
compliant sale transactions.
IDOTTV’s Shari’ah advisor is
Zaharuddin Abd Rahman, a
lecturer at the International
Islamic University Malaysia
and Shari’ah advisor to several
firms.
They say you wait ages for
one bus, then two come along
together. It’s been a bit like that
for Islamic finance in Nigeria.
It’s taken 15 years from when
the Central Bank of Nigeria
first authorized Islamic finance
and the granting of its first
two licenses, one to Stanbic to
operate an Islamic window and
the other to newly-formed Jaiz
Bank to create a full-service
Islamic finance institution.
In the pipeline are dozens of
applications for Islamic banking licenses and Haija Thaibat
Adeniran, MD of Halal Takaful
Nigeria told The Islamic Globe
that despite opposition to
Islamic finance from some quarters, “there is a huge acceptance
of Takaful among the Muslim
community in Nigeria.”
Halal Takaful Nigeria plans
to spin off from its parent
company, Cornerstone Insurance, and create an independent
composite Takaful company.
Nigeria is also a bright spark
for Shari’ah compliant private
equity and venture capital, so
said Kazim Yusuf, director of
Lagos-based Kord Capital, who
has just started operating in the
country. He said: “I see more
investors taking up opportunities in Islamic finance in Nigeria
after the implementation of
these new regulations. We have
just started operations and the
outlook for us is positive.”
To train the next generation
of scholars and bankers, the
Islamic Institute of Accounting and Finance of Nigeria
announced that it has started
conducting regional seminars:
“To develop Islamic financial
experts, so that when Islamic
banking finally takes off, we
don’t have to import expatriates
from outside,” said CEO Busari
Shamsudeen Akande.
Half of Nigeria’s 154m population is Muslim.
Takaful News
Kenya Re’s
search for
scholars
Kenya Re is on the lookout
for Shari’ah scholars to staff its
board and guide the reinsurance firm in its bid to launch
a reTakaful subsidiary in East
Africa later this year.
The board will offer guidance
to Kenya Re on Shari’ah compliance issues as well as help
develop products. “We are also
in the process of installing new
software that will enable our
subsidiary to be a fully compliant reTakaful firm,” Kenya Re’s
MD, Jadiah Mwarania told The
Islamic Globe.
Kenya Re has some experience with reinsuring Takaful
risks, as it has been working
closely with 10 Takaful firms
in Sudan, and Mwarania sees
opportunities springing up all
across the continent.
The company recently announced a venture in West and
North Africa, both regions with
high Muslim populations. Mwarania is also looking to exploit
growing ties between Africa and
the Middle East.
operational
issues could
dampen growth
W
ith the Takaful
industry set
to experience
rapid growth
in the next five years, rating
agency Standard & Poor’s
has raised concerns that the
operational infrastructure of
the industry is not yet ready
to deal with the volume of
business.
Ernst & Young believe that
the industry will grow from
today’s $12bn of contributions
to more than $25bn by 2015,
but S&P credit analyst, Kevin
Willis (pictured right), told The
Islamic Globe that operational
issues remain commonplace
in the sector.
He also commented that
Pru posts positive figures
Charlie Oropeza (pictured right),
CEO of Prudential Assurance Malaysia, sees nothing but growth ahead
after his firm posted a 13% increase
in new business sales for the first six
months of 2011.
During this period new business
grew to RM450m ($151m) from
RM397m ($133m) for the same
period last year, with conventional
insurance contributing 83% and
Takaful 17%.
Oropeza told the media: “The
excellent results were driven by the
successful implementation of our
strategies, high productivity by our
12,900-strong agency force and
expanding bancassurance business.”
the difference in interpretation
of Shari’ah by various schools
has made it difficult to create
a global framework for the
industry, which subsequently
leads to different reporting
standards from domicile to
domicile.
He suggested AAOIFI and
IFIS to collaborate to create
true global standards for the
sector, and also questioned
AAOIFI’s initiative to mandate
that Takaful fund surpluses be
distributed to individual fund
managers, as opposed to the
companies they work for or
members, as it would create a
conflict of interest. JF