Thursday, November 30, 2006

Islamic financial sector responsibility

Islamic financial industry ignoring social & ethical norms?

"Islamic finance at the crossroads", Ethical Corporation, via World Business Council for Sustainable Development, November 14, 2006

A few weeks ago, Ethical Corporation, a publisher and conference organizer with a focus on corporate ethics, published a special report on financial sector responsibility. In the special report (a link to the full story is included at the bottom of the article provided by the World Business Council for Sustainable Development, one article focuses on Islamic finance. A few quotes from the article:
• "As Islamic finance picks up speed in the global mainstream, are Islam's social and environmental concerns getting left behind?"
• "There are also concerns that while Sharia boards are empowered to consider Sharia in the round, in practice they focus on a few narrow prohibitions and contractual concerns."
• "There is even a process in Islam akin to the assessment of impacts on stakeholders and the resolution of conflicts between them so as to maximise the overall public interest, known as maslahah mursalah. Special care is taken to prioritise the interests of the weak and vulnerable."
• "Islam’s environmental and social concerns are echoed in the Equator Principles and the UN Principles for Responsible Investment, yet no Islamic financial institution has signed up to these instruments, leaving secular institutions to lead the way. Adapting the Equator Principles for Islamic purposes might represent a way forward that does not stretch the already overburdened Sharia board system." (italics added)
• "Sharia board members are paid by banks to deliver fatwa (rulings based on the Sharia). Although these may be disclosed to institutional clients, Islamic finance consumers and affected communities are left to accept the ruling of umpires chosen and paid for by the other team."

The issues highlighted in this report show the gap between the rhetoric of Islamic finance and the reality of how Islamic finance is actually occurring across the world. As my post yesterday mentioned, "developing Islamic finance with a focus on ethical investment with oversight by a broad group of Muslim scholars will allow Islamic finance to grow." As the socially responsible & ethical finance industry has grown significantly with the Equator Principles, Extractive Industries Transparency Initiative, UN Human Rights Norms for Business and, more recently, the Dubai Ethics Resource Center (which provides ethical business resources in the United Arab Emirates), it is time for the Islamic financial industry to join in. The industry is based on an code of ethics that is directly concerned with how business is conducted, investments made and personal financial transactions are conducted and should be the first to embrace ethical financial practices.

Wednesday, November 29, 2006

Ethical Shari'ah Finance

Dr. Terry Lacey, founder of the CD Group of Companies, a charity which provides training, skills and capital to NGOs tackling poverty, has an editorial on Shari'ah banking in the Middle East Times today. In addition to dispelling some of the common myths surrounding Shari'ah-compliant banking (e.g., that it is a part of a "creeping political Islamist agenda"), Dr. Lacey reminds us what is largely overlooked in the Islamic financial industry today, the "potential convergence of interest between the positive social targeting of Sharia banking alongside Western ethical funds, environmental funds and international aid."

Will the development of Islamic finance be strengthened by a literalist, rule-based approach as we have now, or by a broader vision of helping the poor and those in need through ethical investing using Shari'ah-compliant methods?

My personal belief is that developing Islamic finance with a focus on ethical investment with oversight by a broad group of Muslim scholars will allow Islamic finance to grow. Many more people are willing to pay slightly higher costs or get slightly lower returns if their investment is ethically-based than simply for products engineered to be strictly Shari'ah-compliant but investing in the same manner as conventional financial products.

Furthermore, more middle-class people and non-Muslims will invest in ethically-based Shari'ah funds than in the current products. This will make these funds more effective in breaking down the myths such as the one cited above, which was the focus of Dr. Lacey's editorial. More importantly, by broadening the appeal of Islamic financial instruments and the pool of money financing them, the liquidity of such products will be increased, which further broadens the pool of potential customers by reducing the size and burden of the investments.

If socially responsible/ethical finance has been able to effectively compete with conventional finance, then it seems clear that an Islamic version of social & ethical finance will be equally well placed to be competitive with conventional finance. The areas in which socially responsible, ethical Shari'ah finance has the greatest potential are also the areas in which it is least represented. Dr. Lacey notes that "Of the Islamic finance institutions in the world, almost one-third are registered in Western counties, half are registered in six key low population upper income countries (and 10 percent of these represent Western banks), while only 11 percent are registered in six high population low income countries where most of the world's Muslims live." An opportunity to help Muslims invest according to their beliefs and also provide assistance to the poor and needy in these countries is available. Will it be taken advantage of or will it continue to be ignored?

Shari'ah banking, Al-Rajhi & China Resources

Shari'ah Banking

"Shari'ah banking, ancient or modern?", Middle East Times, November 29, 2006

Al-Rajhi Investments & China Resources Co.

"China Resources welcomes Islamic investors into Chinese real estate market", AMEinfo, November 29, 2006

Tuesday, November 28, 2006

Halal Industry Development Corp, WIBC 2006, Islamic Development Bank, Corporate governance

Halal Industry Development Corp (HDC)

"HDC Teams Up With OIC-linked ICCI To Tackle World's Halal Mart", Bernama, November 28, 2006

The newly-formed, Malaysian-based Halal Industry Development Corp (HDC) will team up with the Islamic Chamber of Commerce & Industry (ICCI), the private sector representative of the Organization of the Islamic Conference. The HDC and ICCI will oversee a fund that invests in Halal industry. The current president of the ICCI, Sheikh Saleh Kamil (president of the Dallah AlBaraka Group and pioneer of Islamic banking) provided some directional advise, recommending that the fund will be far more effective if it invests across OIC member countries and work to move away from Shari'ah compliant and towards Shari'ah-based financial products.

World Islamic Banking Conference (WIBC)

"International experts to address growth, profitability and the way forward for the global Islamic banking industry", AMEinfo, November 28, 2006

A description of the PowerTable at the 13th Annual WIBC 2006, December 9 - 11, 2006 in Manama, Bahrain.

WIBC is listed in IHI's "Conference Listings".

Islamic Development Bank $10 billion fund to fight poverty

"Islamic bank to raise $10 bln for needy Africans", Reuters Foundation AlertNet, November 28, 2006

The Islamic Development Bank plans to raise an additional $10 billion over the next 10 years to fight extreme poverty in developing countries, with a focus on Africa.

Corporate governance & Islamic financial institutions

"Hawkamah's First Mena Conference Issues Dubai Declaration On Corporate Governance", Dubai City Guide, November 28, 2006

The resulting Declaration on Corporate Governance is summarized in the article. While it focuses on the whole MENA region, it does specifically try to include corporate governance issues for Shari'ah-compliant financial institutions.

Monday, November 27, 2006

Human capital, PT BumiGas Energi sukuk, IIFF

Islamic banking human capital

"Invest to develop human capital in Islamic banking, says deputy minister", The Star, November 27, 2006

A new organization, the Center for Islamic Business Research (CIBR) will work to provide training to Islamic financial professionals in Malaysia. The organization is a joint collaboration of the HELP University College and the Muslim Consumer Association of Malaysia (MCAM)

Sukuk finance of Indonesian geothermal

"Affin Bank: Indon. firm to raise US$308m in bond issue", The Star, November 27, 2006

Indonesian firm PT BumiGas Energi will issue Shari'ah-compliant bonds to finance the construction of two geothermal power plants.

International Islamic Finance Forum, Europe

"Regional Islamic banks urged to consolidate", AMEinfo, November 27, 2006

The primary recommendation made at the International Islamic Finance Forum (IIFF) in Zurich, which recently ended, was for Islamic banks to consolidate. The next IIFF forum will be held in Dubai April 2-5, 2007.

This and many other upcoming conferences are listed on the Institute of Halal Investing website under Conferences.

GCC & Pakistan discuss future of Islamic banking

"Sheikh Tariq Al Qassimi meets Dr Shamshad Akhtar to discuss the potential of Islamic Banking between the GCC and Pakistan", AMEinfo, November 27, 2006

Malaysian Islamic Finance

"Need for more aggressive marketing of Islamic finance", Business Times, November 27, 2006

The Association of Islamic Banking Institutions Malaysia's (AIBIM) president Datuk Abdul Manap Abdul Wahab, said that as the Islamic financial industry expands, further marketing is necessary to make Malaysia a global hub of Islamic finance.

Friday, November 24, 2006

Malaysian Islamic finance, KLIFFEX 2006, Sukuk, IIRA to Rate Takaful Malaysia


"9MP boost for Sukuk issuance", The Edge Daily, November 24, 2006

The Malaysian Rating Corporation Bhd (MARC) projected a confident outlook for the sukuk market in Malaysia. MARC expects that sukuk issuance will grow with the recent non-Ringgit issue regulatory changes and predicts that sukuk could be issued for education, real estate and services. MARC highlighted some unresolved regulatory and legal problems relating to bankruptcy, security enforcement and financial restructuring, according to the vice president of MARC, Hafizan Haron.

"Malaysia Could Become Centre for Sukuk Issuance", Bernama, November 24, 2006

The deputy governor of Bank Negara Malaysia, the Central Bank, Datuk Mohd Razif Abdul Kadir, said that the regulatory framework set up for sukuk issuance in Malaysia could make the country the center of the fast-growing worldwide industry.

Shari'ah Quality Ratings

"Takaful Goes For Syariah Quality Rating", Bernama, November 24, 2006

Takaful Malaysia Bhd, a Malaysian takaful company has asked the Islamic International Rating Agency (IIRA) to carry out a Shari'ah Quality Rating assessment. The rating measures the Shari'ah board's structure and does not assess the actual Shari'ah-compliance nor does it review fatawa.

Islamic financial markets

"Financial markets 'are the main hurdle for Islamic banking'", Gulf Times, November 24, 2006

While the Islamic financial industry has grown rapidly, particularly over the past five years, the lack of markets in which various Shari'ah-compliant instruments can be traded hampers the continued growth of the industry. According to Alexander Theocharides, head of private banking at Swiss-based Faisal Private Bank, "We've reached enough products. We're tapping into all asset classes". Islamic financial products, like sukuk are often held to maturity because there isn't a vibrant secondary market where they can be traded.

Malaysian Islamic banking

"BNM: Islamic banking system to register good profit in 2006", The Edge Daily, November 24, 2006

Bank Negara Malaysia's Deputy Governor Mohd Razif Abdul Kadir, speaking at the Kuala Lumpur International Islamic Finance Expo 2006, announced that BNM expects the Islamic banking industry in Malaysia to exceed RM1 billion (US$274 million) in profits during 2006.

The full text of the speech is available from the BNM website.

Wednesday, November 22, 2006

JBIC sukuk, McKinsey/WBIC Report, Islamic Finance in the UK

JBIC sukuk

"Japan bank plans $100 million of ringgit sukuk", Reuters viaYahoo! Asia News, November 23, 2006

The Japan Bank for International Cooperation (JBIC) has made an announcement regarding the widely known plans to issue sukuk denominated in Malaysian Ringgit. The issue will be US$100 million and will be issued to finance renewable-energy biomass projects in Malaysia, according to JBIC's Senior Executive Director Fumio Hoshi.

Islamic Finance in Britain

"United Kingdom: Introduction to the Principles of Islamic Finance", Mondaq, November 22, 2006

A short overview of Islamic finance.

Derivative standardization

"Bank Islam, Bank Muamalat Sigh Derivative Master Agreement", Bernama, November 22, 2006

Bank Islam Malaysia Bhd & Bank Muamalat Malaysia Bhd agree to standardized documentation for Islamic derivatives.

Takaful exam

"Association, Institute to Introduce Exam for Takaful Agents", Bernama, November 22, 2006

The Malaysian Takaful Association (MTA) and the Islamic Banking and Finance Institute of Malaysia signed a Memorandum of Understanding to develop and introduce an entry qualification exam for takaful agents.

WIBC/McKinsey Report

"McKinsey & WIBC set to release 'World Islamic Banking Competitiveness Report 2006/07", AMEinfo, November 22, 2006

The report will be introduced at the 13th Annual World Islamic Banking Conference in Bahrain on December 9, 2006.

Monday, November 20, 2006

Sri Lankan Islamic finance, sukuk, microfinance & IF professionals needed

Islamic finance in Sri Lanka

"Ceylinco group sets up Islamic Finance faculty in Sri Lanka with Malaysian partner", Lanka Business Online, November 20, 2006

The Ceylinco Sussex Business School will offer a Certified Islamic Finance Program to train Islamic financial professionals. The program is offered in conjunction with the International Centre for Education in Islamic Finance (INCEIF).

World Economic Forum ME in Jordan

"The World Economic Forum returns to Jordan for its Middle East meeting next year", AMEinfo, November 20, 2006

The World Economic Forum will hold its Middle East meeting in Jordan May 18 -20, 2007 in Jordan. Among other issues, Islamic finance will be discussed.

This conference and many others are listed on the Institute of Halal Investing conferences page.

Islamic microfinance

"Creating an Islamic Microfinance Model - The Missing Dimension", Dinar Standard, November 18, 2006

Despite the popularity of microfinance, particularly since Muhammad Yunus was awarded the Nobel Peace Prize, it is surprising that there has not been much of an effort to integrate microfinance into the Islamic financial industry. This article provides an interesting discussion of microcredit and its possible place in Islamic finance.

Expanding the market for Islamic finance

"Canada based Ittihad Capital Positions Islamic Finance for its Universal Appeal", Dinar Standard, November 20, 2006

In Canada, a new company, Ittihad Capital, has created Shari'ah-compliant products without a permanent Shari'ah board and is marketing the products as ethically and socially responsible. The company is working to bring demand for Islamic finance together with ethical investing to create a product that appeals to both Muslims and non-Muslims.

New sukuk issue

"Sharjah sukuk funds utility venture", Gulf News, November 20, 2006

Sharjah will raise Dh12.84 billion (US$350 million) through a sukuk al-ijara issue.

Islamic finance professionals needed

"Citigroup: Malaysia needs talent pool to develop as Islamic finance hub", Business Times (Malaysia), November 20, 2006

The Citigroup Asia head of Islamic banking, Rafe Haneef, believes that in order to develop Malaysia as an Islamic banking hub, there needs to be more Islamic financial professionals, in addition to the existing favorable regulatory environment.

"Mideast 'bulging with cash, needs more scholars'", Gulf Times, November 19, 2006

While the Middle East has large amounts of cash waiting to be invested in Shari'ah-compliant products, there aren't enough scholars, says JP Morgan's head of debt & equity capital markets Viswas Raghavan. Mr. Raghavan is quoted as saying "Basically you cannot get enough Shariah councils. There are about 20 guys; they all know each other". With more scholars, there will be fewer constraints on the industry's growth.

Western companies interested in sukuk

"Islamic bond market provides way for U.S. firms to raise cash", Napa Valley Register (from the Wall Street Journal, November 19, 2006

This article provides a short overview of the expansion of Islamic finance outside of majority-Muslim countries.

Friday, November 17, 2006

Takaful, Infrastructure & IF Qualifications

Islamic Finance Qualifications in Malaysia

"FPAM's Islamic financial planning programme for Middle East", The Edge Daily, November 17, 2006

The Financial Planning Association of Malaysia (FPAM) is expanding its Islamic Financial Planner qualification to the Middle East. The course is for retail professionals in the Islamic financial & takaful industries and is awaiting certification by Bank Negara Malaysia, the Malaysian Central Bank.

"RM7.2bil takaful industry by year-end", The Star (Malaysia), November 17, 2006

The Malaysian takaful industry is expected to reach RM7.2 billion (US$1.97 billion) as compared to RM6 billion (US$1.64 billion) in 2005.

Mid-East Infrastructure Financing

"Mideast infrastructure boom may help boost Islamic banks", Gulf Times, November 17, 2006

The boom in infrastructure projects in the Middle East may provide a boost to the Islamic banking industry. However, the lack of large Islamic banks could hamper their ability to be competitive with conventional banks and may even exclude them completely from the largest infrastructure projects. Given the low liquidity of sukuk investors may be open to investing in infrastructure funds.

Thursday, November 16, 2006

Malaysian takaful industry

"Takaful industry on track to achieve 20% growth this year", The Edge Daily, November 16, 2006

According to the Malaysian Takaful Association chairman Md Azmi Abu Bakar, the takaful and retakaful (Shari'ah-compliant insurance) industries in Malaysia are on track to grow by 20 percent in 2006. The takaful and retakaful industries had a 5.4 percent share of the market in 2005 and are aiming to meet the central bank's, Bank Negara Malaysia, target of 20 percent of the market by 2010. The announcement was made at a media briefing relating to the upcoming 2nd International Convention on Takaful and Retakaful being held November 22-23, 2006 in Kuala Lumpur, Malaysia. A link to the conference website is available from the IHI's Conference listing.

Islamic finance in Turkey

"Islamic Finance Transactions in Turkey", Mondaq, November 16, 2006

A brief description of Islamic finance and the Turkish Islamic financial industry.

Citigroup arranging $1bn musharaka loan

"UPDATE 1-Citigroup arranging UAE Emaar's $1 bln Islamic loan", Reuters, November 16, 2006

The $1 billion loan will be structured as a musharaka (profit-and-loss sharing) deal. Emaar Properties, is a Dubai-based real estate company.

IIFF, Europe

"Sanad Sukuk Fund launched in Zurich", AMEinfo, November 16, 2006

As had been announced previously, Sanad Sukuk Fund, a GCC oriented sukuk fund was launched today at the International Islamic Finance Forum, Europe in Zurich, Switzerland.

Muslim Community Co-operative (Australia) Ltd

"Muslim Community Co-operative (Australia) Ltd Honoured in the 2006 Australian Business Awards", PR Newswire, November 16, 2006

The Muslim Community Co-operative (Australia) Ltd. received SME awards in the categories of Enterprise and Community Contribution. The company offers Islamic financial products including mortgages, ijara and qard hassan.

Wednesday, November 15, 2006

IIFF, WIBC, MUSIAD conferences & IIRA workshop, DIB sukuk

"Islamic Countries' Davos' Begins Nov. 22", Zaman, November 15, 2006

The Independent Industrialists & Businessmen's Association (MUSIAD) will be hosting the 11th MUSIAD International Trade Fair from November 23-26, 2006 in Istanbul, Turkey. The trade fair is informally known as the 'Davos of the Islamic world' and is sponsored by the Organization of Islamic Conference (OIC) and the Islamic Development Bank (IDB). The conference has been added to the IHI Calendar of Conferences

WIBC 2006

"CBB Governor to lead discussions at 13th annual WIBC", AMEinfo, November 15, 2006

The Governor of the Bahrainian Central Bank, Rasheed M. Al Maraj, will lead the conference discussions at the 2006 World Islamic Banking Conference (WIBC).

International Islamic Finance Forum, Europe

"Investment in Islamic finance key to future growth", AMEinfo, November 15, 2006

The Chairman of the Faisal Private Bank (Switzerland), Khalid Abdulla Janahi spoke on the final day of the IIFF, Europe yesterday and highlighted the importance of investing in human resources to continue the growth of the Islamic financial industry.

Dubai Islamic Bank sukuk

"$10bn in sukuk poised for issue", Financial Times, November 15, 2006

The Dubai Islamic Bank said that it is in the advanced stages of negotiation for $10bn in sukuk and 60 percent of that is for non-Islamic companies based in the Americas, Europe and Asia looking to tap the Gulf region for finance.

Islamic International Rating Agency

"Islamic International Rating Agency organizes Shari'a Quality Rating Workshop", AMEinfo, November 15, 2006

The Islamic International Rating Agency held a workshop on Shari'ah Quality Ratings on November 12, 2006 in Bahrain.

Tuesday, November 14, 2006

Islamic private equity & banking, IIFF, Europe

International Islamic Finance Forum, Europe

"National Bonds highlights the significance of Islamic 'Sukuks' to European investors", AMEinfo, November 14, 2006

The Vice Chairman & CEO of National Bonds Corporation, Nasser Bin Hassan Al-Shaikh, spoke at the International Islamic Finance Forum in Zurich being held November 13-16. The National Bonds Corporation is a UAE-based company that issued liquid sukuk in small denominations to attract smaller investors into a market that usually attracts primarily large investors due to the lack of secondary markets for sukuk. Al Shaikh emphasized the need for innovation in Islamic finance to meet the needs of Muslim communities.

Islamic Banking

"Three Challenges To Islamic Banking, Says Banker", Bernama, November 14, 2006

The Chairman of RHB Islamic Bank Bhd, Datuk Vaseehar Abdul Razack, believes that although the Malaysian government and Central Bank have laid the regulatory framework well, there are still significant challenges facing the Malaysian Islamic banking industry. The challenges he highlighted were the lack of long-term involvement, truly Islamic banking products and adequately qualified people.

Islamic private equity

"Dubai Islamic Bank $1 bln fund eyes oil assets", Reuters via Yahoo! Asia News, November 15, 2006

Dubai Islamic Bank is launching seven private equity funds through its subsidiary Millenium Finance Corp. The funds will focus on buying unlisted firms, with 75 percent of the firms in the Gulf region.

Monday, November 13, 2006

Malaysian private equity, RHB Islamic & Dallah al-Baraka

Private equity in Malaysia

"Minister: Tremendous opportunities from Islamic private investments", The Star, November 13, 2006

The minister, Datu Seri Mohd Effendi Norwawi highlighted the growth in investment opportunities for private equity. The deepening of the Islamic capital market could be achieved by increasing the use of Islamic private equity and venture capital funds.

Foreign firms in Malaysian

"RHB Islamic says Dallah talks ended", The Edge Daily, November 13, 2006

The talks between Malaysia-based RHB Islamic Bank Bhd and Saudi-based Dallah al-Baraka group have ended despite the Malaysian government's efforts to encourage GCC region cooperation with Malaysian Islamic financial firms. The government has been working recently to encourage foreign Islamic banks to enter the Malaysian market in order to help Malaysia become a worldwide hub of Islamic finance.

IIFF-Europe, Amlak Investment Co., sukuk

International Islamic Finance Forum - Europe

"Europe's private banks pursue Sharia'a wealth", AMEinfo, November 11, 2006

The International Islamic Finance Forum, Europe will open on Monday, November 13th and run until November 16th in Zurich and will focus on sustaining the rapid growth in the Islamic financial industry, with a focus on how to encourage rapid growth in Europe and the recent growth in Islamic private banking.

"Khalid Abdulla Janahi will be a keynote speaker at the International Islamic Finance Forum in Zurich", , November 11, 2006

Mr. Janahi is the chairman of the Ithmaar Bank. This article presents a short biography of him. The bank is based in Bahrain and focuses on Shari'ah-compliant investment banking.

Amlak Investment Company

"Amlak, $266.6m Saudi venture", AMEinfo, November 11, 2006

Dubai-based Amlak Finance and Saudi-based Dallah Al Baraka are combining in a joint venture to start a new Islamic financial company, Amlak Investment Company. The new firm has approval from the Saudi Arabian Monetary Authority (SAMA) and will open in Q3 2007.

New sukuk

"MMC's RM7.9b Islamic financing for Malakoff bid", The Edge Daily, November 11, 2006

MMC Corporation Bhd will use the sukuk to finance the purchase of Malakoff Bhd.

Wednesday, November 08, 2006

"Current Issues in Islamic Finance & Economics" at Western Washington University

The Center for International Business at Western Washington University, in Bellingham, Washington, USA is holding a conference tomorrow on entitled "Current Issues in Islamic Finance & Economics" (co-sponsored by Saturna Capital, the company that offers the Shari'ah-compliant Amana Funds) and I will be attending. Dr. Mahmoud Amin El-Gamal, a prominent scholar in Islamic finance and professor of economics and statistics at Rice University will be a member. He will be joined by Dr. Clement M. Henry, Dr. Sam Hakim, and Dr. Tarik Yousef (the conference brochure is available as a pdf file). Dr. Henry is a professor at the University of Texas at Austin in the Middle Eastern Studies department who researches financial institutions. Dr. Hakim is an adjunct professor at Pepperdine University and a principal at risk-management firm Energetix LLP. Dr. Yousef is a professor at Georgetown University's School of Foreign Service and specializes in Economic Development & Economic History with a focus on the Middle East.
I look forward to hearing these scholars speak and hope to include some thoughts on the ihiBlog.

Ed Balls on Islamic finance, Gulf region IFI assets

Ed Balls speaks on Islamic finance in the UAE

"Statement by the Economic Secretary to the Treasury, Ed Balls MP, on his visit to Dubai and Abu Dhabi", HM Treasury, November 8, 2006

Ed Balls was speaking in Dubai about increasing the links between the U.K. and the U.A.E. The part of the speech relating to Islamic finance is below.

"One area highlighted by the High Level Group is Islamic Finance. There are currently in the region of £250 billion of funds within the Islamic finance system, forecast to grow at 15% annually. And London is well placed to play a leading role in this market. That is why I announced to the High Level Group meeting last month that visiting Dubai was my first priority following the first meeting of the group.

One area where we can work more closely together is on Islamic Finance. London is increasingly a centre for international Islamic finance. We have the only independent Islamic investment bank operating in Europe – the European Islamic Investment Bank - as well as conventional investment banks such as Deutsche Bank with strong Islamic advisory arms. I am proud that the largest Sukuk issued to date was written out of the London office of Barclays Capital.

At the same time banks in Britain are pioneering Islamic banking - London now has more banks supplying services under Islamic principles than any other Western financial centre, including the Islamic Bank of Britain - the first independent Islamic bank in Europe.

My first task as a Minister was last May to ensure that we passed legislation in the Finance Act to enable borrowing by Islamic business. In 2003 we removed the barriers to murabaha and ijara mortgages, and diminishing musharaka in 2005. This has enabled the expansion of the UK Islamic mortgage market to over half a billion pounds - growing by almost 50 per cent in the last year alone. And I am working with industry to address the problems relating to Sukuk and other investment products, and to ensure that the regulatory and tax treatment is fair for consumers of Sharia compliant products.

British professional services firms are also leading the way in Islamic business services - with English commercial law now the law of choice. For example Allen & Overy advised the investment banks on the Dubai Ports World Sukuk.

All these developments are vital to increasing trade with the UAE and countries across the region. We want to make London the partner of choice for Islamic investment and that is a key theme of my visit and meetings today."

World Islamic Banking Conference

"European Islamic Investment Bank to host Corporate & Investment Banking Summit at the 13th Annual WIBC", AMEinfo, November 8, 2006

The European Islamic Investment Bank, the first independent Shari'ah-compliant Islamic investment bank authorized by the FSA, will be the Corporate & Investment Banking Partner of the World Islamic Banking Conference in Bahrain from December 9 - 11.

Shari'ah harmonization

"Harmonisation Of Syariah Laws In Islamic Banking Vital", Bernama, November 8, 2006

The deputy governor of the Malaysia Central Bank, Bank Negara Malaysia, speaking at the International Syariah Scholars Dialogue was quoted, "there is no harmonisation among players in the Islamic banking business. Some of the products are not acceptable in certain countries". The deputy governor advocated the growth in the number of scholars and harmonization of Shari'ah standards.

$210 billion in Islamic financial assets in the Gulf region by 2010

"'Gulf Islamic bank assets to hit $210bn by 2010", Gulf Times, November 8, 2006

A top executive at the Qatar Islamic Bank has projected that all Islamic financial institutions (banking, finance & insurance) will have assets totalling $210 billion in the Gulf region by 2010.

Tuesday, November 07, 2006

WIIFC, IIRA, New sukuk issues & Sanad sukuk Fund

World Islamic Infrastructure Finance Conference (WIIFC)

"Islamic banks' financing way behind, thanks to pricing", The Peninsula (Qatar), November 7, 2006

Islamic banks are losing out on project financing to conventional banks because their costs are higher. The speaker, Andrew P S Hart, a partner at London-based Freshfields Bruckhaus Derringer, was addressing the World Islamic Infrastructure Finance Conference (WIIFC)

Rasameel, Islamic International Rating Agency

"Rasameel signs agreement with Islamic International Rating Agency", AMEinfo, November 7, 2006

Rasameel Structured Finance Company, Kuwait, recently incorporated company specializing in Shari'ah-compliant securitization, has asked the Islamic International Ratings Agency (IIRA) to rate its credit, corporate governance and Shari'ah quality.

Sanad Sukuk Fund, International Islamic Finance Forum (IIFF Europe)

"Sanad Sukuk Fund to be launched at International Islamic Finance Forum in Zurich", AMEinfo, November 7, 2006

The Sanad Sukuk Fund, the first Gulf Cooperation Council (GCC)-focused sukuk fund will be officially launched in Zurich at the IIFF Europe. The fund will invest in sukuk and allow Muslim investors to invest more easily in sukuk as well as increasing the liquidity of the secondary markets for sukuk issued in the GCC Region. The secondary market for sukuk is estimated at $60 million while there is estimated to be $15 billion in sukuk outstanding.

Aldar Properties

"Aldar to issue Islamic bonds", TradeArabia, November 7, 2006

Aldar Properties, an Abu Dhabi-based company plans to issue up to $1.5 billion in sukuk and may issue sukuk exchangeable into shares of the company's stock. The issue is waiting on approval by the UAE Ministry of Economy.

Nakheel Group

"Property firms plan $4bn Islamic bond sales", TradeArabia, November 7, 2006

Nakheel Group is awaiting approval by the UAE Ministry of Economy to issue $2.5bn in sukuk.

Halal mortgages in the Netherlands

"Dutch bank to offer 'halal' mortgage'", Radio Netherlands, November 7, 2006

Rabobank offers a Shari'ah-compliant mortgage product in the Netherlands, as does the company Bilaa Riba. Currently they are trying to change the laws in the country to make the tax treatment of Shari'ah-compliant mortgages equivalent to what is charged on conventional mortgages.

Monday, November 06, 2006

WIIFC, WIEF, Profit rate swaps, $1bn sukuk, QIIB to expand in Asia

World Islamic Infrastructure Finance Conference (WIIFC)

"Investments in sukuk show spectacular rise in H1 2006", Gulf Times, November 6, 2006

Saleh Mohamed al-Jaidah, the head of the Qatar Islamic Bank announced that 81 percent of the new bond issues in the Gulf region were sukuk. He was speaking at the World Islamic Infrastructure Conference in Doha, Qatar yesterday.

"Islamic capital market 'inevitable' in time", Gulf Times, November 6, 2006

The head of the Qatari Central Bank, Sheikh Abdullah bin Saud al-Thani, described the 'inevitability' of an Islamic capital market as the demand for sukuk and other Shari'ah-compliant products grows. He said:
“We recognise the difficulty for Islamic banks to participate in long-term financing due to the nature of their liquidity constraints and asset management.

“However, we encourage them to continue developing Shariah-compliant products in order they may expand their financing to public and private infrastructure and industrial projects.

While many Islamic products are currently illiquid, there is potential for a much larger secondary market in Shari'ah-compliant investment products.

"200 international participants attend 1st Annual World Infrastructure Finance Conference (WIIFC)", AMEinfo, November 6, 2006

A brief overview of the WIIFC.

Bank Islam Malaysia Bhd

"BIMB sets up corporate investment banking division", The Edge Daily, November 6, 2006

Bank Islam Malaysia Bhd (BIMB) is expanding its operations into Islamic investment banking and has appointed a director, Mashitah Othman, who has worked on the development of the Islamic capital market and Islamic securities.

Saudi Aramco & ConocoPhillips

"Saudi Aramco, Conoco plan $1 bln sukuk -Riyad Bank", Reuters, November 5, 2006

According to the Riyad Bank, Saudi Aramco and ConocoPhillips are planning to offer a US$1 billion sukuk to finance part of the $6 billion cost of a 400,000 bpd refinery in Jubail on the Gulf Coast. The launch date has not been set and the companies have not yet decided on the asset on which to base the sukuk.

Qatar Islamic Bank

"Qatar Islamic Bank plans expansion in Asia", Yahoo! News Singapore, November 6, 2006

Qatar Islamic Bank, the fifth-largest Islamic Bank in the Gulf area has expanded its plans to open branches in Asia. The bank had already begun to set up the Asian Finance Bank in Malaysia, but will now also open offices in Indonesia, Singapore and Brunei.

Islamic derivatives

"Standard Chartered executes Profit Rate Swap deal with Aref Investment", AMEinfo, November 4, 2006

Standard Chartered, a trade finance company, has executed a deal with Aref Investment on a Shari'ah-compliant derivative product. Details on how the product was structured or how it is meets the standards of Shari'ah-compliance were not included. The profit rate swap "allows both parties to exchange a series of payments in the same currency".

World Islamic Economic Forum Conferences 2006

"Pakistan proposes creation of Islamic Economic Union", Business Recorder (Pakistan), November 6, 2006

Pakistani Prime Minister Shaukat Aziz in his keynote address proposed an Islamic Economic Union with free mobility for capital, labor and goods and services. The proposed Islamic Economic Union would cover the member states of the Organization of the Islamic conferences (OIC)

Friday, November 03, 2006

A Brief History of Islamic Finance in Labuan

"From port of refuge to financial hub", Business Times (Malaysia), November 3, 2006

An article describing the remarkable growth of Islamic finance in the offshore region of Labuan located offshore of Malaysian Borneo.

Thursday, November 02, 2006

Brunei sukuk, Injazat moves to DIFC, Islamic wealth management in Malaysia & end to double-taxation in Bahrain

"Brunei sells $77mln in Islamic bonnds", Reuters via Yahoo! News Asia, November 2, 2006

Brunei issued B$120 million (US$77 million) in sukuk al-ijara (leasing bonds) with maturities of 91 days with a yield of 3.375 percent. The sukuk were issued to develop the Islamic capital markets within the country. The assets backing the ijara sukuk were not mentioned.

"Injazat Capital Limited announces official launch as it relocates to DIFC", AMEinfo, November 2, 2006

Injazat Capital, a Shari'ah-compliant investment bank has relocated to the Dubai International Financial Centre (DIFC) to take advantage of its role as a hub of Islamic finance. The company manages two funds, a US$50 million venture capital Injazat Technology Fund and a US$100 million Shefa Healthcare Fund.

"Potential in Islamic wealth management", The Star (Malaysia), November 2, 2006

At the launch of the Pheim Unit Trusts Bhd, Dr. Mohd Daud Bakar, member of the Central Syariah Advisory Council for the Malaysian Central Bank, Bank Negara Malaysia, said the country's Islamic financial industry should focus on wealth management. He said that the Shari'ah-compliant wealth managment products would increase the attractiveness to high net-worth individuals from the Middle East.

"Duty exemption for Islamic banks hailed", Gulf Daily News, November 2, 2006

Bahrain will no longer double-tax Shari'ah-compliant mortgage products. Until the edict issued by Prime Minister Shaikh Khalifa bin Salman Al Khalifa, a stamp duty was charged when the Islamic financial institution (IFI) purchased the property on behalf of its customer and again when the IFI transfered the title to the buyer. From now on, only the transfer from the IFI to the buyer will be taxed. This is an area where Shari'ah-compliant mortgages have been at a disadvantage vis-a-vis conventional mortgages.

Wednesday, November 01, 2006

Ameen Housing Co-op, WIEF, IIFF Europe, IFSB conference in Japan, Foreign currency sukuk in Malaysia

"A means to a home: Islamic co-ops create happy homecomings", San Francisco Chronicle, November 1, 2006

An article in today's SF Chronicle provides an in depth look at how co-operatives like the Ameen Housing Co-operative offer Muslim homebuyers Shari'ah-compliant financing. Ameen works using a system similar to ijara-wa-iqtina (lease ending with a sale) where the buyer puts a down payment on the house and then pays a market-based rent. The share of the rent corresponding to the down payment is used to purchase a share of Ameen's ownership of the house. The co-op has also seen conservative Christians (although most users of their product are Muslim) who strictly interpret the Bible's prohibition of usury.

"IFSB Organizing Islamic Finance Challenges Seminar in Tokyo - Islamic Finance Wave Hits the Far East", IFSB Press Release, November 1, 2006

The Islamic Financial Standards Board (IFSB) will be holding a conference on January 22-23, 2007 entitled "Islamic Finance: Challenges and Opportunities for Japan". The seminar is supported by the Japan Bank for International Cooperation, which has been planning the issue of Islamic bonds (sukuk) for early 2007. The conference is listed on the Institute of Halal Investing website under "Conferences".

"Malaysia to allow foreign currency Islamic bonds", Middle East Times, November 1, 2006

The Malaysian Central Bank, Bank Negara Malaysia, will allow foreign currency issues of sukuk by both foreign and domestic issuers. The move is designed to increase the size of Malaysia as an international hub in Islamic finance. The policy was announced in a speech by the head of the central bank, Zeti Akhtar Aziz at the Islamic International Financial Center.

"WIEF to generate investment for economic well-being of Muslim Ummah", Financial Express (Bangladesh), November 1, 2006

An article about the World Islamic Economic Forum (WIEF), which will be held from November 2-5, 2006 in Islamabad, Pakistan.

"Faisal Private Bank invests in IIFF Europe", AMEinfo, November 1, 2006

The Faisal Private Bank, which just recently opened in Switzerland has announced it will support the first International Islamic Finance Forum (IIFF) Europe in Zurich from November 13-16, 2006.