Islamic Finance Gateway Daily Briefing

The Islamic Finance Gateway (IFG) Briefing, published from Sunday to Thursday, carries the latest market-moving news and data for institutions offering Islamic financial services. You can view the full IFG briefing http://tmsnrt.rs/1QxVs0o under IFG Briefings Subject. TOP STORIES CEO of Turkey's largest Islamic bank quits as competition grows - RTRS

Turkiye Finans, the largest Islamic bank in Turkey, told regulators that its chief executive Derya Gurerk had resigned from his position on Friday, an unexpected move at a time of growing competition in the sector. Saudi's Najran Cement sells 400 mln riyal five-yr sukuk - statement - RTRS - Zawya Islamic

Saudi Arabia's Najran Cement has raised 400 million riyals ($106.7 million) through an Islamic bond of five years duration, it said in a statement on Sunday. 

The Islamic Finance Briefings cover all the latest news, data, quotes and industry announcements you need. They also include Islamic Interbank Benchmark Rates, major FX and equity market movements and indicators for all sharia-compliant asset classes.

(Yahoo News / 15 June 2015)

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Indonesia: should become center of Islamic finance

President Joko "Jokowi" Widodo said on Sunday Indonesia should become the center of the global Islamic, or shariah, finance system due to its huge potential for building this financial system.

"I warmly welcome the proclamation of the Islamic finance campaign and we need to pay close attention to the shariah financial service sector. It has rapidly grown but is not yet optimal if we look at its potential," he said as quoted by Antara.

The President was speaking during the launch of the I Love Shariah Finance program initiated by the Financial Services Authority (OJK) in Senayan, Central Jakarta.

"We are the country with the largest number of micro financial institutions in the world, and the biggest ever Islamic debt paper [sukuk] publisher as well. We are the one and only country that issues retail Islamic debt papers so that they can be widely used and developed," said Jokowi.

"If such huge potential could be developed well, Indonesia could become a center for the development of international shariah finance," he went on.

(The Jakarta Post / 14 June 2015)

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UAE Fatwa Q&As: How much zakat should I pay?

 You should not sever the relationship with your brother. Aside from the command of Allah in this regard, it is always mutually beneficial to keepcontact with him because it would allow you to advise him and potentially change his behaviour. Muslims have a duty to communicate with their blood relatives even if they have been treated badly by them.

Abu Hurayra (may Allah be pleased with him) reported that a person said to the Prophet Mohammed: “O Messenger of Allah, I have relatives with whom I try to have a relationship, but they sever (this relation). I treat them well, but they treat me badly. I am kind to them but they are harsh towards me.”

The Prophet replied: “If the matter is as you have said, then it is as if hot ashes are being thrown in their faces and there will always remain with you on behalf of Allah support with regards to them as long as you adhere to this (path of patience).”

Q: I am confused as to what amount I need to pay as zakat. I recently earned Dh180,000 and invested it in the stock market. I also have about Dh2,500 in a current account and am paying off an interest-free loan of about Dh18,000. I know that zakat is usually 2.5 per cent of a Muslim’s total wealth. So to which amount would this be applied?

A: Zakat is of paramount importance in our religion for, as the name implies, it is a purification of one’s wealth that has many spiritual benefits for giver and recipient.

To ascertain the amount of zakat you pay, calculate the remaining assets after deducting any debts you owe and then determine whether they exceed the nisab threshold of 85 grams of gold, as per its value on that same day. Provided your net worth is more than the nisab threshold, you would then need to pay zakat at a rate of 2.5 per cent on all assets.

To answer your question specifically, on the relevant zakat payment date you would need to add the financial value of your shares and any free cash. Provided you do not own other fixed assets such as property, you may deduct the amount of interest-free debt that you owe from this amount. If the resultant amount is above the financial value of 85 grams of gold then you would need to pay zakat at a rate of 2.5 per cent on all assets.

If the shares were purchased with the intention for resale then the entire holding, as per their market value on the nisab date, would be subject to zakat.

(The National UAE / 11 June 2015)

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Islamic Development Bank increases sukuk programme to $25 bln

The Islamic Development Bank (IDB) has increased the ceiling of its Islamic bonds (sukuk) programme to $25 billion from $10 billion, as it aims to expand its financing across member countries, the Jeddah-based lender said on Tuesday.

An expanded programme would support the AAA-rated bank's aim to issue one sukuk publicly every year with a minimum size of $1 billion, while keeping pace with growing investor requests for private placements.

IDB sukuk are highly sought after by banks since the lender is designated a zero risk-weighted institution by the Basel Committee, the international banking supervisory body. This means its paper can be used to manage capital adequacy on bank balance sheets.

The programme has now been expanded three times since it was set up in 2005 - the IDB raised $4.4 billion in 2014 and last tapped the market in March with a $1 billion deal.

Most IDB sukuk have been issued with maturities of 5 to 7 years, but the lender wants to build a wider yield curve. This would help price longer-dated infrastructure transactions which the IDB wants to promote.

The bank, which operates to promote economic development in Muslim communities, has 56 member countries including Saudi Arabia, Libya and Iran as its largest shareholders.

The IDB also approved development projects worth a combined $450 million, including a $200 million energy project in Mozambique and $70 million to finance the import of agricultural equipment in Kazakhstan, it said in a statement.

In 2013, the IDB more than tripled its authorised capital to $150 billion. It provides financing, loans and technical assistance for development schemes which follow Islamic principles, such as bans on interest payments and pure monetary speculation.

(Reuters / 10 June 2015)

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Islamic trade finance underpins FGB strategy

The Abu Dhabi-based lender FGB says its Islamic trade finance businessis booming as the government shrugs off the drop in oil price and continues spending on infrastructure.

That has kept imports for materials flowing into the country and created work for banks keen to get other sources of income apart from their traditional mainstay of vanilla-flavoured loans and deposits.

“Trade finance is very much a growing segment for banks in the UAE, whether conventional or Islamic, but Islamic trade finance is becomingmore and more popular with clients in the UAE,” said Shamzani Hussain, the global head of Islamic banking at FGB’s wholesale banking group.

“Most of these companies are companies that import materials from outside, companies that have clients outside the UAE.”

Mr Hussain declined to give specific figures for the size of FGB’s Islamic banking assets or the size of its business in trade finance but said that its Sharia-compliant assets had grown more than 80 per cent since 2013 as clients warmed to doing business the Islamic way.

Almost a quarter of all banking assets in the UAE do not bear interest, which is proscribed under Islam, but instead come with a pre-agreed profit rate, compared to about 11 per cent in 2006, he noted.

“There are clients that are interested in Islamic banking but do not have enough information,” he said. “They are not well educated as yet. This is an interesting group because what we are doing today is going out and educating our potential clients that would like to know more about Islamic banking.”

Like most banks in the UAE, FGB realises that it cannot survive on loans alone and has consequently beefed up its fee income business from underwriting bonds and securities, displacing HSBC to become the nation’s top arranger of syndicated loans. It has also expanded its footprint abroad in recent years, and since 2013 has grown its Islamic banking footprint. That helped make the bank the most profitable in the UAE last year.

“One of our key strategies apart from focusing on the UAE as our main market is to market our Islamic banking products across our seven international offices,” said Mr Hussain. “This is part of our strategy to diversify our revenue stream and be where are clients are.”

FGB has representative offices in London, Seoul and Hong Kong, and branches in Singapore and Qatar. Its representative office in India is being upgraded to a branch, and it is planning to operate a representative office in China by the end of the year.

(The National Business / 11 June 2015)

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Islamic finance the focus of Turkey's G20 presidency

Islamic financial services are one of the top priorities for Turkey's presidency of the G20, a senior Turkish finance official said on Wednesday.

Speaking at a meeting of the Islamic Development Bank (IDB) in Mozambique's capital Maputo, Deputy Undersecretary of the Turkish Treasury Burhanettin Aktas said Turkey believed strongly in the vital role the Islamic finance industry had to play in infrastructure and small-medium-enterprise (SME) financing.

"The Turkish presidency aims to increase the awareness for Islamic finance among G20 members," Aktas said.

"We try to support the integration of Islamic finance with the rest of the global financial system. Certainly, there are various policy and regulatory implications of this new finance structure.

"The Turkish presidency is currently working on this and we have asked the IMF and the World Bank to prepare reports for us.

"In order to utilize this high potential, many countries are setting up an enabling environment for Islamic finance products after the 2008 global financial crisis," he said. "Some of the non-Muslim countries around the world are trying to position themselves as Islamic financial hubs. In addition, the IMF and the World Bank have a real interest in Islamic finance".

According to Aktas, Turkey has one of the highest growth potentials for Islamic financial services among the Organization of Islamic Cooperation countries and has an "ambitious strategic Islamic finance program with the aim of increasing the share of the Islamic financial assets in the banking sector".

Turkey has developed new products, established a state-owned Islamic bank and plans to open two more state-owned Islamic banks.

"I would like to express our sincere appreciation to the IDB for their significant support in promoting Islamic financial institutions and products in Turkey," Aktas said.

"The IDB has become a pioneer institution in promoting Islamic financial services and has a key role in further expansion," he added.

(Daily Sabah Economy / 11 June 2015)

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IDB raises sukuk issuance programme ceiling from $10 billion to $25 billion

Muscat: A decision to raise the current limit of the Islamic Development Bank's (IDB) medium-term sukuk issuance programme from $10 billion to $25 billion has been approved. 

The board of executive directors (BOED) of IDB approved the decision at its 305th session which began on Sunday in Maputo, capital of the Republic of Mozambique, under the chairmanship of Dr Ahmad Mohamed Ali, chairman of the Islamic Development Bank Group. 

On this occasion, the BOED commended the huge success of programme in all its previous issuances since it began in 2003. 

This is a reflection of the high status and confidence the bank continues to enjoy in the international financial arena. The IDB is regarded as one of the few multilateralfinancing institutions that have been rated for more than 12 consecutive years with "AAA" , the highest international credit rating available, by the three major international credit rating agencies – Standard & Poor's, Fitch and Moody's.  This is in addition to the designation of the IDB as 'Zero-Risk Weighted' Multilateral Development Bank by the Basel Committee on Banking Supervision in 2004 and by the European Commission in 2007.  

The bank has decided to reintroduce its medium-term sukuk issuance programme.

 which is in line with the provisions and principles of the Islamic Sharia, with the aim of mobilising and injecting new financial resources from the international money market to meet the growing development needs in member countries. 

The $10 billion raised so far as part of the IDB's sukuk programme have been used to finance various development projects in member countries, particularly in the infrastructure sector. 

This is at a cost that is much lower than what it would have been if they were financed through regular financing institutions.  

The board also approved participation in several development projects in member countries amounting to nearly $450 million.

Approvals included $200 million for an energy project in Mozambique,$70 million for the import of agricultural equipment to Kazakhstan,$71.5 million for twopower projects in Senegal,and $30 million to support the integrated micro-financing programmes in Benin, in addition to $28.5 million towards the Mont Mbapite rural development project in Cameroon, $20.7 million for a road project in Togo, $16.3 million for two projects in Bangladesh, and $12 million for the reconstruction of road project in Kyrgyzstan.

(Times Of Oman / 10 June 2015)

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