IFN Best Banks Poll 2018: Innovation, Creation and Tradition

The World’s Leading Islamic Finance News Provider

(All Cap) 1250 Iran Sovereign Indonesia Algerian agricultural -2.45% 1200 accommodates Sukuk: beefs up bank leverages new 1,140.28 fund of funds Issuances Sukuk issuance Islamic banking 1150 to support its reach program to framework to bolster 1100 1,113 economy under US$772.96 ﬁ nance national Shariah compliant 1050 W T F S S M T US sanctions...7 billion in infrastructure oﬀ erings...12 Powered by: IdealRatings® 2018...8 projects...9 COVER STORY 9th January 2019 (Volume 16 Issue 01) IFN Best Banks Poll 2018: Innovation, creation and tradition

recognition of industry excellence increasingly competitive environment is — which this year saw rewards for manifesting itself in tougher conditions, both tradition and innovation, as new tighter margins and improved faces jockeyed for position among old performances, and banks batt le to come favorites. out on top.

Despite the global turbulence, So who took home the laurels in 2018? 2018 proved to be one of the most Out of one of our widest ever fi eld BEST BANKS exciting years yet for Islamic banking of competitors, a highlight this year performance. Latest fi gures suggest that was the number of new faces in the 2018 global Islamic fi nancing increased by crowd. Out of 38 categories, a massive 14.6% over the year to reach US$32.5 38% comprise fi rst-time winners The past 12 months may have been billion — even as global Sukuk volumes — emphasizing the importance of characterized by their volatility, but declined amid challenging economic innovation as a path to success. Yet the ongoing strength and positive conditions. S&P has predicted the there are plenty of familiar faces as well, overall performance of the Islamic industry growth rate to stabilize at as returning champions reclaim their fi nance sector across almost all regions around 5%, although it warned that: glory. and sectors stand fi rm as a testament to “We see banks becoming more cautious the industry’s enduring stability even and selective in their lending activities, Without further ado, we are delighted to in the midst of market turbulence., triggering stiff er competition.” introduce to you the winners of the IFN Here, we are delighted to continue our Best Banks Poll 2018. celebration of industry excellence with This growing competition is already the release of the hotly anticipated IFN being refl ected in the growing wave Giants of governance Best Banks Poll 2018: representing the of consolidations occurring across the very best of global Shariah compliant The industry would be nowhere without industry — from the 2018 agreement state support, and regulators play a banking performance as voted for by between Bahrain’s Al-Ahli Bank and you. pivotal role in developing, encouraging Kuwait Finance House; to the proposed and identifying potential growth across merger between Abu Dhabi Commercial Now in its 14th year and covering 38 all markets — from new entrants to Bank, Union National Bank and Al Hilal established pioneers. The role of the categories, the IFN Best Banks Poll is Bank in the UAE; to the possible tie-up one of the most prestigious accolades central bank is vital to Islamic fi nance, of Malaysia’s MIDF with the local arm and can make all the diff erence in the in the Islamic fi nance industry. With of Al Rajhi Bank. By the end of this year, annual votes extending well into fi ve development of the sector. The category the global landscape for Islamic banking of Best Central Bank in Promoting fi gures, we are proud to act as curators could look very diff erent — and the for this long-standing and unique continued on page 3 UK UAE JAPAN SUDAN TURKEY KUWAIT KUWAIT JORDAN JORDAN MALAYSIA AMERICAS www.REDmoneyevents.com MOROCCO INDONESIA AUSTRALIA SINGAPORE SOUTH AFRICA IFN RAPIDS

Volume 16 Issue 01 Algeria fi nance minister Financing Company as DEALS says current regulation investment agent for fund IFN Rapids ...... 2 suffi cient; no reforms Bruneian government Dubai Financial Services IFN Reports: needed for corporate Sukuk releases 2019 Sukuk Ijarah Authority enhances its • Iran accommodates fund of funds to support issuance its economy under US sanctions • IFFIm to issuance calendar; targets funds regime stage Islamic capital market comeback in 2019 BN$1 billion (US$733.2 IDB plans to support Derayah REIT acquires with third vaccine Sukuk • Sovereign Sukuk: million)-worth of off erings second phase of the Plan logistic real estate asset Issuances reach US$772.96 billion in 2018 • for an Emerging Senegal First Abu Dhabi Bank, via worth SAR18 million Wifak Bank to implement blockchain commodity through US$1.25 billion trade facilitation platform • Indonesia beefs up FAB Sukuk Company, rolls (US$4.8 million) fi nancing Sukuk issuance program to fi nance national out US$2.5 billion Islamic Securities and infrastructure projects • Fund Focus: Teheran trust certifi cate issuance Banque Zitouna signs Commodities Authority University VC fund • IFN Monthly Review: program agreement with Universite issues two draft regulations December — Equity markets tank, but Sukuk Paris-Dauphine | Tunis markets sustain fourth quarter surge • Algerian Maldives Monetary on Sukuk and Islamic funds agricultural bank leverages new Islamic banking Authority sells MVR14 IDB to provide EUR27.34 framework to bolster Shariah compliant off erings million (US$889,723) million (US$9.12 million) • PODCAST: Islamic investors seeking portfolio reverse dual currency for the construction of two TAKAFUL diversifi cation through gold ...... 7 Mudarabah certifi cate hospitals in Tunisia Capital Market Authority imposes fi ne on Al Alamiya IFN Analyses: Indonesian government Kenyan regulators accept for Cooperative Insurance Singapore: Work in progress ...... 14 conducts fi rst Sukuk KCB Bank Kenya’s bid to Company for inaccurate Education: A diverse and expanding asset auction of the year on the acquire Imperial Bank (in th disclosure class ...... 15 8 January; targeting IDR8 receivership) Case Study: trillion (US$554.21 million) Goldilocks Investment Morocco’s maiden Sukuk: Years in the Niger’s National Assembly Company acquires 29.49% making ...... 16 Pakistan plans to sell accepts IDB fi nancings to stake in Takaful Emarat Back To Basics: PKR200 billion (US$1.43 strengthen its health system Market rates and Islamic banks ...... 17 billion) Sukuk Musharakah Buruj Cooperative Column: A lett er from Amin Otoritas Jasa Keuangan by mid-January to support Insurance Company seeks Making money in UK Islamic banking is releases new regulation on Power Holding shareholders’ approval on tough ...... 18 revaluation for managers of capital increase plan Column: Shaping up Islamic fi nance Wifak Bank to issue fi nancial institutions Financial inclusion: Part 2 — IFSB technical Tunisia’s fi rst corporate note ...... 19 Sukuk RATINGS IFN Country Correspondents: RESULTS Ivory Coast; Kazakhstan; Pakistan; Kuwait; Nigerian federal RAM reaffi rms ‘AAA/Stable/ Employees Provident Fund Russia; Italy; Japan ...... 20 government receives P1’ ratings on Suria KLCC’s records RM1.33 billion IFN Sector Correspondents: overwhelming response for Sukuk Murabahah program Real Estate; Shariah & Corporate Governance; sophomore Sukuk off ering; (US$317.88 million) income Takaful & re-Takaful (Europe); Microfi nance; raises NGN100 billion from Islamic investments RAM reaffi rms Saudi’s Crowdfunding; SRI ethical & green ...... 23 (US$274.45 million) for ratings on the back Event Report: infrastructure projects of stronger economic The Algerian Symposium on Takaful and ASSET performance and decreased Islamic fi nance ...... 28 GFM Services issues central government defi cit, Special Reports: inaugural Islamic medium- MANAGEMENT among others S&P Dow Jones Quarterly Islamic Market term notes via subsidiary Review ...... 29 Ento Capital establishes The fi ve big challenges for Islamic fi nance in Shariah compliant Ento MOVES 2019 ...... 30 Wonderland Fund to Country Feature: fi nance multicomponent Securities Commission Islamic fi nance for reconstruction in Syria: NEWS development project Malaysia names CIMB Opportunities and challenges ...... 31 Bank’s former managing IDB supports Cameroonian Al Mashaar REIT declares Sector Feature: director as its executive campaign against HIV/ distribution of cash Islamic fi nance and innovation: Ratings ...... 32 director in the Chairman’s Asset Management Feature: AIDS with a XOF12.1 dividend for second half of Offi ce Bank treasury and investment management billion (US$20.94 million) 2018 solutions in an Islamic perspective ...... 34 line of credit Bahrain Islamic Bank Equitativa acquires three names CFO and fi rst female International Islamic real estate assets for its News Brief ...... 36 head of central operations Deal Tracker ...... 50 Trade Finance Corporation Shariah compliant Emirates REDmoney Shariah Indexes ...... 51 to sign EUR98 million REIT National Development Eurekahedge Funds Tables ...... 53 (US$111.25 million) Planning Agency appoints Saudi Kuwaiti Finance Dealogic League Tables ...... 55 fi nancing agreement with directors of National House Company appoints REDmoney Events ...... 59 Cameroon Islamic Finance Committ ee Subscription Contact...... 59 Al Yusr Leasing and

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

IFN Best Banks Poll 2018: Innovation, creation and tradition Continued from page 1

Islamic Finance is always one of the price volatility. This included a number incorporates the bank’s wholly-owned most closely fought contests and this of new faces, such as Emirates Islamic, subsidiary formerly known as Abu Dhabi year was no exception, with a strong which took home the award for Most National Islamic Finance. FAB reported shortlist batt ling it out for supremacy Innovative Islamic Bank for the fi rst a group net profi t of AED9.1 billion in a year that saw exceptional advances time — a well-deserved win. Examples (US$2.48 billion) for the fi rst nine months made in the fi eld of regulation and local, of the bank’s proactive strategy in 2018 of 2018, up 12% from the previous year. regional and global standardization. include the deployment of blockchain Malaysia’s MBSB Bank was runner-up in into cheque-based payment processes, this category. The 2018 award goes to the State Bank the introduction of cardless cash of Pakistan (SBP) for the second year withdrawals through its mobile banking Asian heroes running, with Bank Negara Malaysia app, a new value-added tax-based loan From the global to the local, our country coming a close second. The SBP has solution for SME partners and, most categories exist to showcase the headline presided over a strong year for Islamic recently, a partnership with the Dubai act of every signifi cant Islamic fi nance fi nance in Pakistan, with Islamic Land Department to boost the growth of jurisdiction — the top performers, banking assets reaching a 12.9% market the Emirates’s real estate sector through the changemakers, the drivers of share and deposits accounting for a a public-private sector collaboration. development and progress. In some cases total of 14.8% (as of June 2018) with Runner-up for this award was the 2017 these are the big boys — the brightest the profi tability of the Islamic banking winner, Dubai Islamic Bank. stars and the biggest players boosting industry increasing by an impressive market performance — but in others they 25% over 2017. The central bank Abu Dhabi Islamic Bank (ADIB) also can be newcomers, ground-breakers and has continued its dedication toward came up trumps this year, retaining its innovators, shaking up the market and building and boosting the country’s 2017 crown for Best Islamic Private Bank ringing the bells of revolution. Islamic banking sector — including (runner-up, ADCB Islamic Banking) the introduction of enhanced training while Dubai Islamic Bank took home Starting off with one of the world’s and capacity measures, new and the prize for Best Islamic Retail Bank, biggest Islamic fi nance markets, more eff ective liquidity management pipping Malaysia’s Maybank Islamic to Malaysia saw no surprises with the measures, the adoption of AAOIFI the post. election of CIMB Islamic once again standards and innovative new as the country’s Best Islamic Bank, initiatives such as a partnership with Standard Chartered once again won Best with Bank Islam Malaysia its closest the Islamic banking sector to execute Islamic Trustee/Custodian, followed competitor. Taking home the prize the government’s new low-cost housing closely by runner up HSBC Corporate for the third year in a row, CIMB had program. Trustees; while Sri Lanka’s LOLC Al- an interesting year in 2018: with a Falaah was voted as Best Islamic Leasing commitment from CEO Rafe Haneef to Global progress Provider, with the UAE’s Islamic Finance focus on customer-centric propositions The support of Pakistan’s central bank House coming a close second. (including digital) going forward in is driving progress in the wider Islamic order to step up growth. The bank has banking sector, and the country’s Finally, in the last of our global also confi rmed that it is seeking new Shariah compliant institutions are categories, we are delighted to announce partnerships to strengthen its Islamic posting impressive results. This year, a brand-new award for 2018. In the business, especially in the areas of leading Pakistani institution Meezan light of the evolving Islamic banking Takaful and asset management, raising Bank took the crown for Best Islamic outlook and the growing trend toward the interesting possibility of further Treasury Management (runner-up: mergers and consolidations, this year we acquisition activity in the year ahead. Al Baraka Banking Group), aft er introduced a new category designed to For now, its dominance in the fi eld of announcing a 30% growth in profi ts reward the Islamic bank that has most Islamic fi nance remains unchallenged: for the fi rst half of 2018 and a 19% successfully achieved a new market particularly as the top global Sukuk growth in banking deposits over the entry. This year, the inaugural award for arranger, accounting for US$3.6 billion same period, maintaining its position Best New Islamic Bank was swept away in 2018. Going forward, the bank has as the largest Islamic bank and seventh- by FAB Siraj, the Islamic banking arm of identifi ed the Chinese Halal market and largest overall bank in the country. The First Abu Dhabi Bank (FAB), created in SME banking as key areas of focus. bank also issued Tier 1 capital of PKR7 2017 from the merger of First Gulf Bank billion (US$50.06 million) in August and the National Bank of Abu Dhabi. The In Indonesia, Bank Danamon snatched 2018, further strengthening its capital bank offi cially launched its rebranded the crown from 2017 winner CIMB Niaga adequacy ratio and supporting its future FAB Islamic identity in November 2018, — a debut win for the bank — with growth strategy. with CEO Fahad Al Shaer commenting: Bank Muamalat in second place. Bank “We have established a solid presence Danamon has expanded its presence Looking outwards, GCC banks also for ourselves within the UAE’s rapidly in the Indonesian market over the past put in a strong showing this year, growing Islamic fi nance market, year, in particular through its trade refl ecting their consistently positive building a strong branch network, fi nance and SME portfolios, which grew performance despite global economic a comprehensive suite of Shariah by 8% and 14% respectively. Consumer headwinds, a strong US dollar, rising compliant fi nancial solutions and an mortgages also provided a shot in the Federal Reserve rates and spiralling oil extensive customer base.” The new entity continued on page 4

IFN Best Banks Poll 2018: Innovation, creation and tradition Continued from page 3 arm, growing by 40% in 2018. The bank MUFG Bank in April 2018. Its Islamic to cover all markets, notable African should receive a boost this year from new arm has been active over the past year, hotspots include Sudan, where Best owner Mitsubishi UFJ Financial Group especially in the Middle East — in Islamic Bank 2018 was won by Al Baraka (MUFG), which completed the second November 2018 the bank opened its Bank Sudan (taking the top spot from phase of its acquisition of a 40% stake in fi rst branch in Saudi Arabia, the fi rst 2017 winner Faisal Islamic Bank); and August 2018 and plans to further increase Japanese bank to off er a full range of South Africa, where Al Baraka Bank this to 73.8% in 2019. MUFG is expected fi nancial services in the Kingdom. South Africa won the award following its to merge Danamon with Bank Nusantara debut Tier 2 Sukuk issuance in December Parahyangan, which the Japanese entity Moving south, in Pakistan the top spot 2018. Dubai Islamic Bank took the crown also controls, with completion by the end was taken by dominant player Meezan in Kenya for the fi rst time, knocking 2017 of the year. Bank (runner-up: Dubai Islamic Bank winner Gulf African Bank into second Pakistan), while the Bangladeshi crown place and pushing Barclays Kenya out of In Brunei, it will come as no surprise was once again awarded to Islami Bank the picture. that Bank Islam Brunei Darussalam Bangladesh (with Al-Arafah Islami Bank once again took top honors, with CIMB and Premier Bank in second place). Best Moving north, Bank Assafaa once again Brunei coming second. In Thailand, Islamic Bank in Sri Lanka went to 2017 won the day in Morocco; while 2017 the Islamic Bank of Thailand came winner LOLC Al-Falaah, with Amana runner-up ADIB Egypt moved in to take top again, with CIMB Thai following Bank as the runner-up. the top Egyptian spot (for the fi rst time behind. ever) from previous winner Al Baraka Egypt. In Australia, Best Islamic Financial African activity Institution went to Amanah Islamic The African continent is one of the most exciting regions for Islamic fi nance Gulf glory Finance for the second year in a row. A In 2017 the majority of Middle East pioneering mortgage manager headed growth, and has become increasingly prominent in recent years with new awards went to repeat winners, but by CEO Asad Ansari, Amanah works the situation reversed this year with a markets and regions jockeying for hard to fi ll the gap for Shariah compliant substantial proportion of new faces taking position and growth. 2018 saw a new home fi nancings in Australia. National the crown away from its incumbent. Bank of Australia took second place. sovereign issuance from Nigeria, the fi rst corporate Sukuk from South Africa, In the GCC, Dubai Islamic Bank and growth in markets as diverse as In Japan, MUFG Bank won the top retained its title as Best Islamic Bank Tanzania, Burundi and Somalia. prize. Japan’s largest bank and the in the UAE (runner-up: ADIB) aft er a eighth-largest in the world, the bank sterling year that saw profi ts increase was rebranded from Bank of Tokyo While Islamic banking systems are not Mitsubishi UFJ (the 2017 winner) to yet advanced enough on the continent continued on page 5

TAWARRUQ & BEYOND TAWARRUQ: Application, Documentation, Shariah Non-Compliance Risk & Alternatives

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IFN Best Banks Poll 2018: Innovation, creation and tradition Continued from page 4 by over 14% in the fi rst half while net For the third year in a row, Jordan term savings charts, and in October fi nancing assets rose 6%, total Sukuk Islamic Bank was voted Best returned over 10% more than expected investments increased by a substantial Islamic Bank in Jordan with Islamic on its 90 Day Young Persons Notice 18% and overall, total assets rose 4% International Arab Bank coming second; Savings Account. With around one to reach AED215.6 billion (US$58.7 while in Iran Bank Melli came in at in three new customers non-Muslim, billion). In Saudi Arabia, Al Rajhi Bank number one with 2017 winner Ansar the bank is making waves in terms also clung to the top spot, with Alinma Bank taking runner-up. of increasing the universal appeal of Bank coming a close second; while Shariah compliant fi nance in one of the Kuwait Finance House claimed the win Western wins most competitive banking markets in in Kuwait once again, with Kuwait Moving west, and in Turkey last year’s the world. International Bank the runner-up. winner (Kuveyt Turk) was knocked out of the ring by newcomer Turkiye Drumroll please… In Qatar, however, a surprise result Finans, which had an impressive run Our congratulations to all Best Bank saw Qatar International Islamic Bank over 2018 despite the turbulence in winners, both new and old — a close (QIIB) knock Best Banks stalwart Qatar Turkey’s markets, which saw bank fi ght, an exciting batt le and a well- Islamic Bank off its perch, following a shares plummet their furthest in fi ve deserved win on all counts. strong year that saw profi t for the fi rst years. 2017 runner-up Al Baraka Turk half increase by 4% and total revenues once again took the second spot. But of course, only one bank can take by 15%. In Oman, Bank Nizwa took the the crucial crown, the fi nal title, the prize, relegating 2017 winner National In the US, the title of Best Islamic Bank ultimate glory. It is the moment you Bank of Oman (Muzn) to second place — was awarded to UIF Corporation, 2017 have all been waiting for … the winner aft er a year that saw net profi ts surge by winner and the parent of 2016 winner of the IFN Best Overall Islamic Bank an exceptional 97% in the third quarter to University Islamic Financial (UIF), while for 2018. reach OMR4.6 million (US$11.92 million) Lariba came in second. The banking while total revenues also increased by market in North America might be With a spectacular shortlist comprising 26%. Finally Bahrain Islamic Bank, one of small compared to its inward fi nancing fi ve of the industry’s leading players the largest and oldest institutions in the opportunities, but these pioneering (Abu Dhabi Islamic Bank, Al Rajhi Kingdom, took the prize for Best Islamic institutions continue to provide Bank, CIMB Islamic, Dubai Islamic Bank Bank in Bahrain in 2018, knocking 2017 invaluable services to the country’s and Meezan Bank), the competition winner Al Baraka Islamic Bank down a resident Muslim population. was fi erce — and the suspense must notch for the year. continue a litt le longer! The fi nal winner Finally in the UK, retail pioneer and will be announced at the IFN Awards In the wider Middle East, Syrian 2017 winner Al Rayan Bank continued Ceremony to be held in Dubai on the International Islamic Bank won Best its winning streak, with Bank of London 10th March 2019. Islamic Bank in Syria while in Yemen and The Middle East coming second. the prize was won by the Islamic Bank Al Rayan had an exceptional year, of Yemen. In the Palestine Territories, starting with the launch of its fi rst-ever We thank all nominees, voters and Arab Islamic Bank once again took the corporate Sukuk (and the largest-ever participants for your commitment, your top spot and in Lebanon Al Baraka sterling Sukuk) in February. The bank dedication and your achievements. Lebanon continued its winning streak. has consistently topped the UK’s fi xed Congratulations to all!

Best Islamic Bank by Sector BEST CENTRAL BANK IN PROMOTING ISLAMIC FINANCE 1st: State Bank of Pakistan 2nd: Bank Negara Malaysia BEST ISLAMIC BANK FOR TREASURY MANAGEMENT 1st: Meezan Bank 2nd: Al Baraka Banking Group MOST INNOVATIVE ISLAMIC BANK 1st: Emirates Islamic 2nd: Dubai Islamic Bank BEST ISLAMIC PRIVATE BANK 1st: Abu Dhabi Islamic Bank 2nd: ADCB Islamic Banking BEST ISLAMIC RETAIL BANK 1st: Dubai Islamic Bank 2nd: Maybank Islamic BEST ISLAMIC TRUSTEE/CUSTODIAN 1st: Standard Chartered 2nd: HSBC Corporate Trustees BEST ISLAMIC LEASING PROVIDER 1st: LOLC Al-Falaah 2nd: Islamic Finance House BEST NEW ISLAMIC BANK 1st: FAB Siraj 2nd: MBSB Bank

Best Islamic Bank by Country

INDIAN SUBCONTINENT EUROPE PAKISTAN TURKEY Meezan Bank Turkiye Finans Dubai Islamic Bank Pakistan Al Baraka Turk BANGLADESH UK Islami Bank Bangladesh Al Rayan Bank Al-Arafah Islami Bank and Premier Bank Bank of London and The Middle East SRI LANKA LOLC Al-Falaah Amana Bank

THE AMERICAS US UIF Corporation Lariba

MIDDLE EAST UAE AFRICA Dubai Islamic Bank SUDAN Abu Dhabi Islamic Bank (ADIB) Al Baraka Bank Sudan SAUDI ARABIA SOUTH AFRICA Al Rajhi Bank Al Baraka Bank South Africa Alinma Bank KENYA KUWAIT Dubai Islamic Bank Kuwait Finance House Gulf African Bank Kuwait International Bank MOROCCO QATAR Bank Assafaa Qatar International Islamic EGYPT Bank ADIB Egypt OMAN Bank Nizwa National Bank of Oman (Muzn) BAHRAIN Bahrain Islamic Bank SOUTHEAST ASIA Al Baraka Islamic Bank MALAYSIA SYRIA CIMB Islamic Syrian International Islamic Bank Islam Malaysia Bank INDONESIA YEMEN Bank Danamon Islamic Bank of Yemen Bank Muamalat PALESTINE BRUNEI ASIA PACIFIC Arab Islamic Bank Bank Islam Brunei Darussalam AUSTRALIA LEBANON CIMB Brunei Amanah Islamic Finance Al Baraka Lebanon THAILAND National Bank of Australia JORDAN Islamic Bank of Thailand JAPAN Jordan Islamic Bank CIMB Thai MUFG Bank Islamic International Arab Bank IRAN Bank Melli Note: Red: winner; Black: Runner-up Ansar Bank

Iran accommodates fund of funds to support its economy under US sanctions

The Securities and Exchange out fund of funds in 2019 and Mofi d Organization of Iran (SEO) recently Entekhab is one of them. accommodated fund of funds, a new investment solution designed to further “We are generally eager to use any utilize excess liquidity and support new investment vehicle supporting the domestic economy targeted by US our goals and strategies and providing sanctions reinstated in August 2018. bett er products for customers. Now MARC ROUSSOT has more. we are working on fund of funds and deciding to launch such [a] fund, but the Hopes of a bett er future raised by the details have yet to be decided,” Abbas 2015 nuclear deal have vanished in Iran. Mirhosseini, a fi nance specialist at Mofi d Instead, they have been replaced by Securities, tells IFN. worry and anger. Under US sanctions, the “toughest ever” as President Donald Sabadgardan Aseman also recently Trump likes to describe them, the Islamic entered into negotiations with an Republic’s economy has abruptly slowed insurance company interested in fund of down with a GDP growth rate plunging funds. If things go right, the vehicle will from 13.4% in 2016-17 to an expected economic sectors in need of fi nancial be launched in 2019. -1.5% in 2018-19. Even worse, the World support. Bank predicts Iran’s economy to be “Most asset management companies are contracting annually by 1.4% on average “By launching new products, capital not big enough to launch a fund of funds over the next three years. market policymakers hope to att ract new on their own as the SEO requires investors while off ering new investment minimum assets under management of To limit the impact of the sanctions on solutions that asset managers can tap. IRR500 billion (US$11.87 million). Hence, the Iranian economy, the SEO has been Overall, the goal is to dry up excess they will have to partner with accommodating a number of investment liquidity and deepen the capital market institutional organizations such as solutions. Regulations on private equity through the potential listing of funds,” insurance and pension funds to raise the funds, crowdfunding and fund of funds explains Majid Pireh, the head of the initial capital. In the end, asset have been published since May last Islamic fi nance group at the SEO. management companies will only be year and are expected to help channel managing the fund,”comments Mohsen some of the excess liquidity, valued by In the pipeline Motmaen, a development market advisor the Central Bank of Iran at IRR15.83 At least two asset management at Sabadgardan Aseman. quadrillion (US$375.96 billion), toward companies are already looking at rolling

IFFIm to stage Islamic capital market comeback in 2019 with third vaccine Sukuk

The International Finance Facility for “Gavi’s tremendous impact, especially Heavily subscribed by investors Immunisation (IFFIm) will return to the in OIC countries, fi ts naturally with the from the Middle East, it turned to the Sukuk market early this year to raise IDB’s strong priority on public health Sukuk market again over the next funding for its children vaccination investments,” said Dr Bandar Hajjar, the nine months, raising US$200 million initiatives, ending a three-year hiatus president of the IDB. “That’s why we are in September 2015. The sophomore from the Islamic capital market, pleased to support IFFIm’s upcoming off ering att racted fi rst-time Sukuk VINEETA TAN writes. Sukuk, which will extend our already- investors following the success of the fruitful relationship with Gavi.” The IDB preceding paper which was hailed by Details of the Islamic paper have yet to is a development partner of Gavi, the the international community as the fi rst be fi nalized, but the IFFIm has confi rmed Vaccine Alliance. socially responsible Sukuk designed for that the facility will be off ered on a vaccination purposes. private placement basis, with the IDB This will be the third Sukuk to be issued purchasing the paper. Proceeds from by the IFFIm, having fi rst tapped that IFFIm’s fi rst vaccine Sukuk sparked a the off ering will be channelled toward market in 2014 with a US$500 million number of SRI Sukuk including that Gavi, the Vaccine Alliance, to strengthen Murabahah instrument, which at that from Malaysian sovereign wealth fund, its vaccine and health system programs. time, was the largest debut Sukuk by a Khazanah Nasional, in June 2015 and The Sukuk, being arranged by First Abu supranational, an achievement further more recently by Malaysian corporates Dhabi Bank, will be supported by legally- underscored by the fact that the IFFIm as well as the Indonesian government, binding , long-term grant payments, was one of the newest and smallest looking to appeal to a broader pool of currently worth some US$6.55 billion, supranationals around. investors. from 10 sovereign donors.

Sovereign Sukuk: Issuances reach US$772.96 billion in 2018

The year has been inundated with month BGIIB amounting to BDT185.21 Sukuk Musharakah for the total amount Shariah issuances with a total of 17 billion (US$2.19 billion). of IDR423.3 trillion (US$10.04 billion). countries from Asia, Africa, the Middle East and Europe tapping the Islamic The Maldives Iraq capital market, oft en on a regular basis Having sold Mudarabah facilities on a The Central Bank of Iraq fl oated IQD1.4 due to domestic programs. Overall, regular basis, as well as one Sukuk Ijarah trillion (US$1.17 billion)-worth of Islamic US$772.96 billion-worth of short, and an innovative reverse dual currency certifi cates in 2018 but only raised medium and long-term sovereign US$/MVR Mudarabah facility, the IQD383.9 billion (US$319.88 million). Shariah securities were sold throughout Maldives was quite active in 2018 selling 2018, based on data collected by IFN. Islamic papers worth the total amount of Africa MARC ROUSSOT has more. MVR2.28 billion (US$145.13 million). Morocco Selling a maiden Sukuk Ijarah facility Asia The Middle East worth MAD1 billion (US$104.41 million) Malaysia Bahrain in October, Morocco made its debut in With issuances amounting to RM2.88 A monthly issuer of Sukuk Ijarah and the sovereign Sukuk space in 2018. trillion (US$699.43 billion), Malaysia was Sukuk Salam, Bahrain raised a total of the largest issuer of Islamic securities in BHD828 million (US$2.18 billion) in Nigeria 2018. Throughout the year, Bank Negara 2018 as well as US$1 billion through an Worth NGN100 billion (US$273.88 Malaysia off ered a range of facilities to international issuance. million), Nigeria sold a sophomore market players, providing them with Sukuk facility in December 2018. useful liquidity management tools. Kuwait In 2018, Kuwait sold conventional Sudan Indonesia bonds and related Tawarruq facilities In October, Sudan sold a maiden ‘gold With a total of 52 issuances, including for the total amount of KWD9.1 billion Sukuk’ facility worth SDG1.5 billion a landmark green Sukuk facility, (US$29.94 billion). (US$31.45 million) with proceeds aimed Indonesia was a big player in the Islamic at helping the country ease its liquidity capital market in 2018. Over the past Saudi Arabia crunch. 12 months, the Republic auctioned As part of its riyal-denominated Sukuk rupiah-denominated securities worth program, Saudi Arabia raised SAR54.26 Gambia IDR175.17 trillion (US$12.42 billion) and billion (US$14.46 billion) and US$2 The Central Bank of Gambia sold Sukuk two international Sukuk amounting to billion through an international issuance. Salam with three, six and 12-month US$1.85 billion. tenors on a weekly basis. Overall, the Qatar apex bank raised GMD1.42 billion Brunei Under intense pressure from its (US$28.59 million). Although it is on a much smaller scale, in neighbors which have imposed a strict comparison with its two aforementioned blockade for more than a year, Qatar Europe regional neighbors, Brunei is a regular tapped the Islamic capital market six Turkey issuer of Shariah papers with one Sukuk times raising a total of QAR8.8 billion The only European issuer of 2018 was Ijarah auctioned per month. Overall, (US$2.4 billion). Turkey which sold four Turkish lira- the Sultanate issued Islamic securities denominated lease certifi cates for worth the combined amount of BN$947.5 Oman TRY7.25 billion (US$1.35 billion) and one million (US$698.32 million) in 2018. In October, Oman sold a US$1.5 billion euro-denominated paper amounting to Sukuk facility. EUR555.08 million (US$635.34 million). Bangladesh Bangladesh Bank was a massive Iran The report is based on publicly-available contributor to the Islamic capital Although it is diffi cult to accurately track information and data. IFN does not market with 50 issuances of six-month sovereign issuances in Iran, IFN collected guarantee the completeness and accuracy of Bangladesh Government Islami data on 28 diff erent auctions of Islamic the data set. Investment Bond (BGIIB) and eight three- treasury bills, Sukuk Manfa’ah and

Upcoming sovereign Sukuk Country Amount Expected issuance date Date of announcement Pakistan • PKR200 billion • By mid-January • 4th January 2019 • US$3 billion (from Sukuk and • Fiscal year 2019 (starting the 1st October) • 16th April 2018 eurobonds) Indonesia TBA (Sukuk Waqf) January 2019 5th December 2018 The Philippines TBA TBA 19th November 2018 Turkey Lease certiﬁ cates • TBA (domestic) • 12th February, June, August and • 2nd November 2018 November 2019 • Gold indexed lease certiﬁ cates • 2019

Wifak Bank to implement blockchain commodity trade facilitation platform

The youngest Islamic bank in Tunisia could become one of the ﬁ rst Shariah banks in the region to adopt blockchain technology as it prepares to implement a proof-of-concept (POC) expected to launch in March 2019, a pilot project which could potentially trigger wider adoption of distributed ledger technology for Islamic ﬁ nancial services in Africa and other OIC countries. VINEETA TAN brings you the story.

Wifak Bank, previously a conventional leasing company which converted into Suq Al Sila,” I-Fintech CEO and founder, of fi nancial transactions,” explained a fully-fl edged Islamic bank in 2017, Mohamed Anouar Gadhoum, told IFN. Mohamed. has agreed to implement the i-Trade Mohamed, who began his Islamic fi nance platform, a real-time platform facilitating career in Malaysia with stints in BNP In a country which only formally began the transaction of real commodities to Paribas Najmah and ISRA Consultancy, regulating Shariah banking services three assist Islamic banks manage liquidity noted that the absence of an effi cient years ago, fi ntech could play key role in using smart contracts. The Murabahah- Islamic capital market in Tunisia is a growing the industry. based platform is being developed by major hurdle for local Shariah banks, Tunisia-based I-Fintech Solutions; and preventing them from fully serving their According to Mohamed, who sits on the if successful, it would be rolled out clients’ liquidity needs. Shariah boards of Zitouna Tamkeen and in Islamic banks across IDB member Amana Takaful Company, the i-Trade countries, as part of an agreement “The use of blockchain in this product platform can also be utilized to structure with the Islamic Corporation for the will reduce both the overall execution other Islamic fi nancial instruments Development of the Private Sector (ICD). time and the cost of the fi nancial and including Sukuk and I-Fintech is also commercial transaction. It also addresses working on a number of other Islamic “This solution has been inspired by the the issues and challenges related to fi ntech solutions including one for Malaysian experience, specifi cally Bursa the transparency and the traceability Takaful.

Indonesia beefs up Sukuk issuance program to ϐinance national infrastructure projects

Indonesia intends to keep its pole issued every week by DJPPR via planning, implementation and position in the sovereign Sukuk private placements, and are frequently monitoring,” Finance Minister Sri landscape by bolstering its State oversubscribed, garnering huge demand Mulyani Indrawati said. Shariah Securities (SBSN) program in from investors. 2019, maintaining its aggressive Sukuk Despite a fall in global Sukuk volume in momentum built over the last few years In a span of fi ve years, the value of 2018, domestically, Indonesia recorded a even as global Sukuk volumes tapered the projects funded under the SBSN year-to-date increase of 17.2% in the net over 2018. DURGAHYENI MOHGANA program has grown drastically from asset value of state Sukuk as at the 18th SELVAM writes. IDR800 billion (US$55.32 million) in 2013 December 2018, according to latest data to IDR22.53 trillion (US$1.56 billion) in by Otoritas Jasa Keuangan. On a larger In a recent forum, the Ministry of 2018. Last year, a total of 587 projects scale, the nation raised funds worth Finance’s Directorate General of Budget across 34 provinces were funded via the IDR162.3 trillion (US$11.22 billion) via its Financing and Risk Management initiative. The projects are also regarded capital market industry — conventional (DJPPR) announced that it will be as successful with DJPPR closing sales and Islamic — in 2018. fi nancing projects worth a whopping earlier than intended as it meets its IDR28.43 trillion (US$1.97 billion) via target every year. In 2018, the fi nal two The forum also saw the launch of the SBSN in 2019, an increase of IDR5.9 scheduled sales of SBSN instruments e-Monev SBSN Project application, the trillion (US$408 million), or 26.19% from were canceled due to this. submission of the SBSN Project the projects fi nanced last year. Implementation Readiness Statement by “Currently, state Sukuk are increasingly the echelon unit leaders of SBSN projects The Southeast Asian nation has been in demand by ministries and institutions, as well as the submission of the SBSN tapping the Islamic debt capital market but keep in mind also that we must Project Catalog book by DJPPR to SBSN to fi nance its infrastructure development continue to maintain that this Sukuk Project Initiators for this year. since 2013. SBSN papers are typically fi nancing is carried out with good

Fund Focus: Teheran University VC fund

With the ambition of becoming an standing at IRR350 trillion (US$8.31 implementation of the ICT Strategic Plan entrepreneurial university by 2020, billion). and its pipeline of investments worth an Teheran University has launched a estimated US$405.4 million. venture capital (VC) fund to capture The industry has even att racted foreign the expansion of Iran’s information investors like Enterprise Ireland, an Irish The opinions and viewpoints expressed and communications technology (ICT) economic development agency, which in the Fund Focus do not constitute as a industry. MARC ROUSSOT delves expressed in 2017 its interest to tap the recommendation for any funds highlighted. deeper. sector. More opportunities are expected The information presented is not investment to emerge by 2021 with the advice and should not be treated as such. Designed to boost the growth of ICT companies in their early stage of Table 1: Key features of the fund development, Teheran University in June 2018 rolled out a IRR150 billion (US$3.56 Name of the fund Teheran University VC fund million) VC fund with assets under Funders of the fund Teheran University, Parsian Lotus Investment Bank, Tamadon management expected to be reaching Investment Bank and Sepehr Investment Bank IRR1.5 trillion (US$35.61 million) within Launch date June 2018 a year. Fund category Venture capital fund The 167-year old university joined Fund domicile Iran forces with Parsian Lotus Investment Bank, Tamadon Investment Bank and Size IRR150 billion (US$3.56 million) Sepehr Investment Bank to establish Investment objective To boost the growth of ICT companies in their early stage of this new vehicle listed on the Iran Fara development. Bourse. Asset allocation The fund targets ICT companies and start-ups in the region of Teheran. Open to sophisticated investors, with each unit worth IRR1 million Geographical exposure Iran (US$23.74), the Teheran University Base currency Iranian rial (IRR) VC fund is managed by University of Tehran Investment and Development Company.

The fund manager has yet to close its ﬁ rst investment but it will primarily be targeting start-ups in the region of Teheran, as the university intends to create a regional business community, a conducive business environment and an entrepreneurial ecosystem in accordance with its third ﬁ ve-year strategic plan 2016-20.

“In the current period, universities and economics are moving toward innovation. Consequently, completing the business cycle as a new generation of businesses is a major issue in Iran and the world. Disruptive businesses have created diverse businesses and ﬂ ooded economic currents that create a huge boost to a country’s growth. In this entrepreneurial cycle, one of the main topics is the gap between investors and ideas,” details Mohammed Ansari, a market analyst of VC engagement at Tehran University.

Although the ﬁ nancing needs of Iran’s ICT companies are diﬃ cult to evaluate, the industry is both growing and promising with annual market turnover

IFN Monthly Review: December — Equity markets tank, but Sukuk markets sustain fourth quarter surge

In IFN’s monthly analysis, LAUREN its maiden Sukuk of JOD34 million MCAUGHTRY brings you a (US$47.95 million) with a tenor of comprehensive review of global Islamic fi ve years; and the Turkish Treasury markets. The markets might have confi rmed plans to off er US dollar and been winding down for the holiday euro-denominated Sukuk to individual season, but the last month of 2018 investors from January 2019. still saw a sustained level of activity: with multiple corporate and sovereign Banking Sukuk issuances, new fund launches, Despite the wind-down to the end of the ambitious banking achievements and a year, the Islamic banking sector remained rush of regulatory updates. active globally over the past month. Some highlights include the Malaysian Deals Industrial Development Finance (MIDF, The Sukuk market may have quietened which is controlled by Permodalan down somewhat aft er the fl urry of Nasional) reportedly considering a activity in November, but short-term merger with Al Rajhi Bank Malaysia issuances continued apace — including as it seeks to transform into a Shariah Middle East markets suff ered slightly corporate papers from Malaysia’s compliant universal bank. Indonesia’s less, with the S&P GCC Composite Gamuda, Edaran, Touch Mobile, Sunway central bank, Bank Shariah losing just -0.29% compared to Treasury and Progressus. a gain of -1.42% in November; while Indonesia (BI), confi rmed plans to grow the Pan Arab Composite Shariah also The UAE’s SENAAT also listed a seven- the country’s Shariah fi nance market remained static with a loss of -0.36% year US$300 million tranche of its US$3 share to 20% by 2023, from its current compared to a gain of 1.36% the billion trust certifi cate program on the share of 8%. BI Governor Perry Warjiyo previous month. The S&P Pan Arab Abu Dhabi and London Stock Exchanges said that the target could be achieved Investable Shariah Index however, at a profi t rate of 4.76%; Saudi’s Jabal through diversifying Islamic fi nancing which is designed for international Omar Development Company privately instruments in the banking sector, the investors and refl ects the fl oat available placed a fi ve-year Sukuk facility worth stock market and also the social religious to non-GCC residents, gained an US$135 million with a profi t rate of sector such as Zakat and Waqf. infi nitesimal 0.01%. 9.85%; Malaysia’s Cagamas issued three- year RM500 million (US$120.3 million) And in the UK, Gatehouse Bank told The S&P Pan Africa Shariah Index lost Islamic medium-term notes (IMTNs); IFN that it had closed GBP100 million -0.21% while the S&P Africa Frontier Aeon Credit Service issued a 96-year (US$125.7 million) in commercial Shariah (which tracks the sub-Saharan Sukuk Musharakah facility for RM100 property fi nance over the course of 2018, region and excludes South Africa) million (US$23.96 million) with a profi t the fi rst time it has hit the milestone since performed even worse with a decline of rate of 6.65%; Gas Malaysia sold two the conception of the bank’s real estate -3.96%. separate IMTNs worth a combined RM51 team four years ago. In December, the million (US$12.19 million); and Malaysia bank also launched its home purchase Overall, the S&P Emerging BMI Shariah, Steel Works (KL) received an irrevocable plan aft er receiving regulatory approval, which returned an optimistic 5.05% in and unconditional Kafalah guarantee with an initial rental rate of 3.19%. November, fell by -3.88%, more than from state credit guarantor Danajamin a percentage point worse than the for its fi ve-year RM130 million (US$31.09 conventional index, which lost -2.80%. Performance The Frontier BMI Shariah lost even more million) Sukuk Ijarah program. In terms Sadly although December is oft en a of corporate fi nancing, major deals for with a loss of -5.67%; while the S&P month of optimism and recovery as the Developed BMI Shariah did the worst December included Emirates Steel, which markets draw a line under the events partially refi nanced a US$650 million of all, plummeting by -7.53% over the of the past 12 months and start to look course of December. debt with a four-year US$400 million ahead to the new year, 2018 saw its Islamic fi nancing facility. fi nal days slump to a depressing close. The S&P Global Property Shariah lost From a slight recovery in November, -3.02%, the Global REIT Shariah (USD) On the sovereign side, regular issuances December saw the S&P Global BMI continued to emerge from the central Index lost -4.34%, while the S&P Global Shariah Index lose a substantial -7.25% Shariah Infrastructure off ered a solitary banks of Malaysia, Gambia, Bahrain, — a close equivalent to the benchmark Kuwait, Iraq, Brunei and Bangladesh. bright spot with a conservative gain of conventional index, which lost -7.36%. 0.98%. Nigeria marketed its debut seven-year Asia did litt le bett er, with the S&P Pan Sukuk Ijarah worth NGN100 billion Asia Shariah falling by -4.56% while the Regulation (US$274.07 million) and carrying a rental S&P GIVI Pan Asia Ex. Japan Shariah The markets may have performed poorly, rate of 15.74%; Indonesia raised IDR1.5 Index (US Dollar) lost -4.96%, losing all but December did see some advances trillion (US$104.1 million) through a the ground made up in the previous — including a number of updates and privately placed Sukuk; Jordan issued month. advances in the area of Islamic fi nance

regulation. AAOIFI translated its Shariah Undertakings; IFSB-21 — Core Principles off ering of the Al Rajhi MSCI Saudi Multi standards into Urdu in collaboration for Islamic Finance Regulation; and IFSB- Factor Index Fund from Al Rajhi Capital, with the Pakistani Islamic banking 22 — Revised Standard on Disclosures one of the fi rst funds in the Kingdom to industry and Muft i Muhammad Taqi. to Promote Transparency and Market capitalize on the June 2018 upgrade of Discipline for Institutions Off ering Saudi Arabia to coveted MSCI Emerging The Dubai Financial Market published Islamic Financial Services), and the Market status, starting June 2019. amended versions of its Shariah admission of four new members (the standards: including the standard on Nigeria Deposit Insurance Corporation In Iran, the Securities and Exchange shares issued in 2007, the standard on and the Central Bank of Kenya as Organization approved the regulations Sukuk issued in 2014 and the draft of the associate members and the Financial for private equity funds, which will be standard on investment funds circulated Services Commission of Mauritius and allowed to invest a minimum of IRR1 for consultation earlier in 2018. Bahrain-based Islamic International billion (US$23,809.50) in privately owned Rating Agency as observer members). companies and SMEs. In Malaysia, The Central Bank of Bahrain issued the UOB Asset Management applied to the fi nal rules on open banking, which will Securities Commission for the expedited facilitate the provision of a variety of Asset management Following on from a month of hectic approval of its Shariah compliant innovative services for bank customers in United-i Global Balanced Fund, which the Kingdom. real estate activity in November, Islamic REITs kept the momentum going. In will invest in both Islamic equities and Sukuk. The Turkish Banking Regulation and Saudi Arabia, Al Maathar REIT signed an agreement to acquire 16 new real Supervision Agency published a draft Finally, in the UAE, Al Mal Capital revision to regulations on the fi nancing estate assets for a total of SAR552 million (US$147.07 million), fi nanced entered into a partnership with MENA methods of Islamic banks, including Capital to bolster their combined MENA details on methods of selling, leasing and via a Shariah compliant bank facility of equity off erings for investors, with partnership; and the International Islamic SAR234 million (US$62.35 million) and Khaled Abdel Majeed acting as the lead Financial Market announced plans to the issuance of 32.6 million new shares; portfolio manager for all MENA equity issue standards on trade fi nance, gold, Alkhabeer Capital successfully closed the products including the long/short MENA Sukuk Ijarah and Sukuk Mudarabah in IPO of its Shariah compliant Alkhabeer hedge fund and the long-only MENA 2019. It will also translate its standards REIT, with 104% oversubscription from UCITS fund. In the same month, the into French, Bahasa Indonesia and over 25,000 individual and institutional UAE’s Securities and Commodities Turkish. subscribers; and Derayah REIT signed a seven-year SAR1 billion (US$266.45 Commission continued its regulatory Finally, the IFSB approved its Strategic million) Shariah compliant facility upgrade of the Islamic markets with the Performance Plan for 2019-21, agreement with Al Rajhi Bank. issuance of a new rule requiring all including three new standards (IFSB- issuers of Islamic funds to appoint a 20 — Key Elements in the Supervisory Saudi’s Capital Market Authority in Shariah supervisory committ ee to advise Review Process of Takaful/ReTakaful December also approved the public on all Shariah matt ers.

Algerian agricultural bank leverages new Islamic banking framework to bolster Shariah compliant offerings

Following the introduction of a BADR, who did not disclose the structure Mudarabah, Ijarah, Istisnah and Salam. long-awaited Islamic banking legal of the products to be marketed. The regulations also mandate banks framework in December, Algeria’s wishing to open a window to establish a Banque de l’Agriculture et du “We will be fi nancing projects regardless dedicated department for that purpose Developpement Rural (BADR) will of the age of the investor, whether young and guarantee a full separation between amp up its portfolio of Shariah or otherwise. What is important to us is Islamic and conventional businesses. compliant products with the launch of the fi nancing of cost-eff ective projects,” real estate and agriculture fi nancing Boualem stated. Having evolved in a gray area thus far, solutions in early 2019. MARC Shariah compliant Al Baraka Bank Algeria ROUSSOT writes. With its new portfolio of Islamic solutions, and Al Salam Bank are expected to benefi t BADR is positioning itself to capture a from the development of the industry BADR, which already off ers Islamic share of Algeria’s Islamic banking market, that successive governments have been savings accounts, will roll out funding which has remained at a nascent stage for mulling to accommodate since 2016. facilities for the self-construction of almost 30 years due to the absence of a houses, the purchase of two diff erent dedicated legal framework. The authorities have long been types of public housing and the considering Islamic fi nance as a tool to acquisition of agricultural equipment. However, there is light at the end of utilize excess liquidity reaching DZD1.38 the tunnel as new Islamic banking trillion (US$11.54 billion) in November, The bank will cover up to 80% of the cost regulations have been gazett ed in and plug the country’s budget defi cits of farm machineries and raw materials December, accommodating the following the sudden plunge in the price for the self-construction of houses, most common fi nancing products, of the barrel in 2014, depriving Algeria according to Boualem Jabbar, CEO of including Murabahah, Musharakah, from its main source of income.

PODCAST: Islamic investors seeking portfolio diversiϐication through gold

Two years aft er the release of the Shariah gold standard, allowing Islamic investors to tap the gold market worth an estimated US$2.4 trillion, asset managers have been developing a range of gold investment products, oﬀ ering new opportunities to investors looking for greater diversiﬁ cation. MARC ROUSSOT explores.

“The investment class of gold, especially for the Islamic investment community, is much more driven by the potential of asset diversiﬁ cation and wealth protection than a search for additional yield,” shares Gerhard Schubert, a member of the advisory board of the Physical Gold Fund, which secured a Fatwa in 2018.

An expert with 40 years of experience gold-backed funds to exchange-traded under his belt in the precious metals The funds and gold cryptocurrencies. market, Schubert also explains that gold is negatively correlated to all other investment “I would, to some extent, warn against asset classes, hence, there is no bett er gold-backed cryptocurrencies because diversifying instrument to be invested in class of gold, cryptocurrencies are not regulated yet by than gold. any central bank or country and especially for the regulatory standards do not exist. “The gold price is moving on everything. However, a gold-backed cryptocurrency For example, oil prices move on oil- Islamic investment should be much safer than these related news, a currency moves on cryptocurrencies that are backed by currency-related news and economic community, is much absolutely nothing. But I would still take development, etc. Gold moves on a step back and wait until regulators everything taken into consideration in more driven by the have found the interest and the time to the fi nancial world and that makes it a study this fully, completely and issue very good barometer and transmitt er, potential of asset their own regulations,” says Schubert when it comes to wealth protection,” who believes that the International Schubert details. diversiϔication and Islamic Financial Market is also working on potentially developing documentation The added value off ered by gold has wealth protection for gold swaps and gold forwards. att racted a number of Islamic players from many jurisdictions including the than a search for This is an excerpt of an interview with UAE, Saudi Arabia, Kuwait, Iran, Turkey, Gerhard Schubert, a member of the advisory Malaysia, Singapore, Australia, the UK additional board of the Physical Gold Fund. For more and the US, and at least 10 diff erent types on the development of the Islamic gold asset of instruments have been rolled out from yield class, listen to the IFN Podcast. LATEST PODCAST Gold helps Islamic investors achieve investment portfolio diversification Gerhard Schubert DOWNLOAD NOW Member of the advisory board of Physical Gold Fundund

Singapore: Work in progress

For years, Singapore’s Islamic ﬁ nance industry has been overshadowed by that of its neighbors. DURGAHYENI MOHGANA SELVAM writes that nevertheless the island nation persisted and in the past 12 months, positive changes have taken form.

Regulatory environment Other prominent Islamic banking service Asia to develop a strong Islamic asset Singapore’s Islamic fi nance industry providers include Maybank, CIMB and management repertoire. The country is not incentivized like its neighbors; Standard Chartered. Interest is also is home to one of the world’s largest instead it is given non-preferential picking up as 2017 saw RHB Bank and Islamic real estate investment trusts, treatment as a matt er of being fair to Qatar National Bank sett ing up Islamic Sabana REIT. Despite expectations that the conventional fi nance sector. Islamic fi nance desks and Al Rajhi Malaysia it will bring development to the nation’s fi nance and banking is governed under expressing interest to expand to the Lion Islamic fi nance industry, the REIT met a the same regulation, the Banking Act, City. series of major setbacks in the past few which treats Shariah compliant fi nance years. Recently, under new management, within a secular legal structure, with no In 2018, RHB Bank Singapore made things seemed to be picking up, which reference to Arabic names. headlines with its landmark SG$300 is expected to bring in renewed interest million (US$221.1 million) fi nancing from the market. Like other jurisdictions att empting to to Royal Group. It was Singapore’s enhance their Islamic fi nance industry, fi rst Islamic bilateral hotel fi nancing In June 2018, Gulf Asia Shariah Singapore introduced new rules between transaction, and fi rst Islamic real estate Compliant Investments Association’s 2005 and 2009 legislating Shariah fi nancing in Singapore’s core central secretary, Raj Mohammad, traveled to banking and fi nancing instruments as business district. Saudi Arabia to expand bilateral relations well as amendments to tax regulations with the Kingdom and discuss potential which removed additional tax obligations Capital markets partnerships. arising from the asset-based nature of In general, Singapore has a relatively Shariah transactions. In 2010, guidelines lackluster Sukuk market: government Fintech on the application of banking regulation agencies have been active bond issuers The city-state is home to at least two to Islamic banking were introduced. in order to develop the nation’s capital Islamic fi ntech start-ups: Club Ethis markets. Since 2001, there have been and Kapital Boost. Hoolah, a fi ntech On the 8th April 2015, a conditional four international issuances and 12 start-up, despite not certifi ed as Shariah provision for the remission of stamp duty domestic ones, according to International compliant, follows an interest-free on Islamic fi nancial contracts was made Islamic Financial Market data for 2018. model and has plans to tap the Muslim via the Stamp Duties (Islamic Finance The lack of Sukuk activities has been market in the near future. In 2017, Arrangements) (Remission) Rules 2015. att ributed to the familiarity of issuers Singapore’s Alpha Fintech collaborated with conventional facilities and the lack with Bahrain’s Islamic fi ntech venture In June 2015, Jacqueline Loh, the deputy of incentives to pursue Islamic debt. builder Finocracy to bring its end-to-end managing director of the Monetary payment solution to the GCC region’s Authority of Singapore (MAS), confi rmed Last year, Sinarmas Land, a Singapore- e-commerce market participants. that the central bank was working in based investment holding company, collaboration with industry participants proposed a 20-year Sukuk Musharakah In December 2017, the Singapore and other government institutions to program for the amount of RM2 billion Exchange had its gold futures contract, provide greater clarity in the regulatory (US$485.71 million), but later withdrew the Singapore Kilobar Gold contract, and tax treatment for Sukuk including the plan. launched in partnership with the World a potential preapproved standardized Gold Council and the Singapore Bullion template for common Sukuk structures. The Singapore Exchange hosts two Market Association, certifi ed as Islamic Islamic indices. The FTSE SGX Asia according to AAOIFI standards, making Banking and ϐinance Shariah Index tracks the performance of it the world’s fi rst Shariah compliant Singapore used to have one fully-fl edged the 50 largest Japanese companies and gold futures contract. Islamic bank: Islamic Bank of Asia (IB the 50 largest companies from Singapore, Asia). But the country’s Islamic banking Taiwan, Korea and Hong Kong. During In 2018, the Central Bank of Bahrain and industry, which had high aspirations for IFN Singapore Forum 2018, which was the MAS inked an MoU to develop a IB Asia, met with disappointment as IB organized in partnership with SGX, FTSE common framework to help fi ntech Asia ceased operations in 2015 due to its Russell launched the FTSE ST Singapore companies prepare for regulatory failure to generate economies of scale. Shariah Index, the fi rst index tracking requirements in both countries. The This is despite Shariah banking assets in Shariah compliant companies listed on Dubai International Financial Centre’s Singapore growing 73% since 2010 and the Singapore Exchange. Fintech Hive has signed more than 10 the number of banks involved in Islamic separate agreements with global fi ntech banking doubling to 15 over the fi ve-year Asset management centers, including with Singapore’s period since then. IB Asia’s parent DBS Singapore is well positioned to leverage LATTICE80, to share knowledge and Group Holdings, however, has said that its sophisticated wealth management explore opportunities to facilitate global it will maintain an Islamic portfolio. expertise and the burgeoning wealth of fi ntech development.

Education: A diverse and expanding asset class

From banks off ering education fi nancing to REITs investing in schools and student accommodations, the education segment is att racting a growing number of players leveraging new fi nancing solutions like Waqf and Sukuk. MARC ROUSSOT brings you an overview of the evolution of this expanding segment.

IDB Burkina Faso, Cameroon, Indonesia, institution is then appointed to provide The IDB is a signifi cant fi nancial Jordan, Lebanon, Mozambique, Sudan, educational services to the customer for contributor in the development of Senegal, Sierra Leone, Chad, Togo, a service cost paid by the bank upfront. educational structures in its member Uganda and Uzbekistan. Subsequently, the Islamic bank leases and non-member countries. However, the services for a price to be paid in education represents only 3.2% of its IDB’s investments in supporting installments by the customer to the bank. approvals by sector since inception back education projects are expected to increase Oman’s Muzn Islamic Banking has rolled in 1976, according to the IDB’s latest data. in the near future following the launch out such a solution in October last year. last year of Engage, a new digital platform Over the past 42 years, 1,678 projects which will promote technological and Also in the Gulf region, Kuwait Finance obtained fi nancing from the IDB for the scientifi c solutions to accelerate progress House rolled out several long-term total amount of US$4.98 billion. Overall, toward the UN Sustainable Development Shariah compliant investment plans 277 projects worth US$1.24 billion Goals, particularly six of them including including the ‘Jameati’ plan for education. were approved for African and Latin equitable education. American member countries, 244 projects Asset management amounting to US$1.22 billion for MENA The IDB is also working on fi nalizing Education is an asset class of its own. and European member countries and a four-year partnership strategy plan Over the years, the appetite of investment 116 projects valued at US$1.5 billion for with Turkey, with the aim of investing banks, asset managers and REITs Asian member countries, as of June 2018. in various sectors that will fuel for schools, universities and student growth, such as infrastructure, energy accommodations has been growing. Indonesia, Nigeria and Niger, with 50, 35 transportation and education. and 27 projects respectively, are the top Alpha REIT, a Malaysia-based Shariah three countries that have benefi ted the Financing compliant vehicle focusing on education most from IDB’s fi nancial aid. Sukuk assets, is currently undergoing due Although the education sector is not one diligence for the acquisition of two Data has yet to be published for 2018 but of the largest Sukuk issuers, players like schools and is considering investing in in 2017, the IDB approved four education GEMS Education have tapped the Islamic two university campuses by 2020. projects totaling US$388 million to debt market in the past. support the construction of over 210 GFH Capital has sold its 70% stake in classrooms across fi ve member countries In Iran, higher education organizations Dubai-based Philadelphia Private School (benefi ting nearly 800,000 students) and science and technology parks along to Nashat Sahawaneh, the school’s and the provision of required teacher with other organizations have been existing 30% shareholder. Acquired in training courses for nearly 530 teachers. allowed to issue up to IRR70 trillion October 2014, the school has delivered a In addition, the multilateral fi nancier (US$1.89 billion)-worth of Sukuk during return of over 33% during GFH Capital’s approved 16 technical assistance the current Iranian fi scal year. three-year investment period. initiatives in the fi eld of education, amounting to approximately US$1.2 Products Waqf million. The Ijarah structure fi ts well with Leveraging Waqf funds is another way education fi nancing needs. For instance, a to fi nance education infrastructures and A total of 17 projects were completed last bank acquires a service from educational projects. Out of fashion for a few decades, year in 13 member countries, namely, institutions, schools or universities. The Waqf is now under the spotlight in several countries including Senegal where President Macky Sall promised to boost Chart 1: IDB approvals by sector since inception the development and implementation of Energy a Waqf-based mechanism to fi nance the 33.5% refurbishment of Daaras, the colloquial Finance Education name for Quranic schools. 11.9% 3.2% Agriculture Over in Southeast Asia, Finterra has Health 8.6% developed a crowdfunding platform by 2.9% leveraging on blockchain technology to Industry and mining Others create smart contracts that would be tied 4.4% ICT 19.7% to specifi c Waqf projects. The company is 0.7% already studying a potential Waqf project Real estate Transportation WATSAN that involves the redevelopment of a 0.3% school in Jakarta into commercially viable Source: IDB 9.3% 5.4% property.

Morocco’s maiden Sukuk: Years in the making

Morocco joined the likes of Nigeria in certifi cates through securitization issuing its inaugural sovereign Sukuk vehicles,” the law fi rm tells IFN. Debut sovereign Sukuk by the Kingdom paper in October last year. The Sukuk of Morocco Ijarah facility, issued for MAD1 billion Garnering healthy demand, the Sukuk (US$104.07 million), is guaranteed by issuance was oversubscribed by 3.6 MAD1 billion the Moroccan government. Speaking times. The certifi cate, carrying a 2.66% to Cliff ord Chance, the legal advisor annual coupon rate, was exclusively to the transaction, DURGAHYENI off ered to domestic investors and MOHGANA SELVAM has the details. received demand amounting to MAD3.6 billion (US$374.64 million). Morocco has had Sukuk under its Sophisticated investors, including radar for more than a year now, trying conventional and Islamic banks, 15th October 2018 unsuccessfully to issue its maiden paper. insurance companies, pension funds Expected to issue the paper by the 15th and Undertakings for the Collective September 2017, the central bank missed Investment in Transferable Securities Issuer Kingdom of Morocco the date. The Sukuk sale was previously — mutual funds regulated by the through a special slated for before the summer of the EU — invested in the issuance with purpose securitization same year, but in June 2017, Finance Shariah compliant fi nancial institutions fund (FT Imperium) Minister Mohammed Boussaid decided representing 35% of Sukukholders. to postpone the auction so that it can Obligor Maghreb Titrisation be executed in coordination with other Despite its success, Cliff ord Chance tells Size of issue MAD1 billion Islamic fi nance measures. Last year, IFN that the arranging of the transaction (US$104.07 million) Morocco was looking to fl oat four Sukuk was not an easy one. “There were a lot papers, but only one saw daylight, as of structuring points to be addressed Mode of issue Private placement the country was yet again hit by a series due to the nature and legal status of the Purpose N/A of delays. underlying assets owned by the state,” the fi rm says. Tenor Five years The inaugural fi ve-year paper was Issuance price MAD1 billion placed via the Shariah principles of Nevertheless, the fi rm is optimistic the Ijarah. Cliff ord Chance indicates that issuance could change the Moroccan Profi t rate 2.66% the structure was chosen in line with the Sukuk landscape. “This operation will Payment Annually amended law on securitization. “The pave the way for the development of the structure was used in compliance with Islamic fi nance market in Morocco with Currency Moroccan dirham the reform of the law on securitization the off ering of new investment products in 2013 which provides for a new to participative banks recently created in Bookrunner(s) Banque Centrale Populaire, BMCE Bank framework for the issuance of Sukuk Morocco,” Cliff ord Chance expounds. of Africa, Att ĳ ariwafa Bank, Media Finance, CDG Capital, Banque Marocaine pour le Commerce et l'Industrie and Crédit du Maroc

Governing law Moroccan laws

Legal Cliﬀ ord Chance advisor(s)/ counsel

Listing None

Underlying Usufruct assets

Shariah Conseil supérieur des advisor(s) Ouléma (National Shariah Board)

Structure Ijarah

Tradability Yes

Face value/ MAD100,000 minimum (US$10,406.8) per investment certiﬁ cate

Market rates and Islamic banks

offi cial interest rate so as to ensure strict been able to retain the customer deposits compliance of monetary policy and in the process. practices with Islamic Shariah principles. However, without any compulsion from Another reason why Islamic banks the central bank, Sudanese banks use the needed to be wary of the market rate is profi t rate applied by the central bank customers’ predominantly conventional on the Murabahah transactions it enters frame of mind. I remember an instance into with the licensed banks for liquidity where I visited the treasurer of a large management purposes as the notional business group based in Dubai to benchmark rate for the market. commence a business relationship. Aft er Sohail Zubairi is the projects advisor with the patiently hearing my sermon on the Dubai Islamic Economy Development Centre. Reverting to our subject of discussion Islamic banking model and the products, He can be contacted at sazubairi1979@gmail. on market rate exposure and how it he took out a pile of papers from his com. is mitigated by Islamic banks, Islamic drawer and dumped them in front of banks utilize depositors’ funds to earn me. Those were the facility off ering Before the festive break, article 40 profi t and distribute the same among the lett ers from conventional banks with concluded that the Islamic banks use shareholders and depositors based on a very att ractive terms and the best interest Murabahah fi nancing for shorter term pre-agreed distribution ratio. rates without even making any formal transactions due to Murabahah being a demand on the group. I was told that he fi xed price sale contract where the profi t receives such unsolicited off ers almost element is immovable. Explaining this Islamic banks every other day. point further, if an Islamic bank enters into a Murabahah transaction for longer ought to The treasurer then smiled at me and said: term fi nancing, say 10-15 years, it will “Thank you for increasing my knowledge be exposed to market rate risk. remain concerned on Islamic banking and its products; however, please tell me whether your Ideally, Islamic banks should not be with the ϔluctuating bank can match or improve the terms concerned with the rate prevalent in and pricing you just saw in order to start the market since it is the interest rate. market rates and the relationship.” However, it is important to note that the Islamic banks do not operate in isolation keep adjusting their I left with a strange discovery that the old from the market and are part and parcel adage of “the higher the risk, the higher of a country’s economy, and are governed ϔinancing the return” is not always correct and has by the same regulatory authority in the certainly failed me with the group since shape of the central bank that supervises portfolio the Islamic banking products required the conventional banks and which by the group were high in risk in also controls the country’s interest rate comparison to the conventional facilities mechanism. Let us assume that an Islamic bank the group enjoyed yet the treasurer provided a Murabahah facility to its demanded a profi t rate which was even In other words, Islamic banks operate in clients for 15-20 years and several higher than the conventional banking a mixed environment where conventional transactions with the same tenor were facilities. banking is practiced in an overwhelming entered into when the market rate was manner, and the public is att uned to low. A few years down the line, the In view of the foregoing, Islamic banks measuring Islamic banks’ off erings in market rate started to pick up and the ought to remain concerned with the comparison with conventional banks, Islamic bank found it diffi cult to cope up fl uctuating market rates and keep particularly when it comes to paying a with customers’ expectations to provide adjusting their fi nancing portfolio to be return on their savings or levying profi t higher deposit rates, compatible to the as relevant to the market as possible. on their fi nancing needs. market, since it had locked itself into long-term Murabahah transactions with The views and opinions expressed in this For an Islamic bank to exhibit the traits low profi t amounts. article are those of the author and do not that are a natural outcome of its business necessarily refl ect the opinions of the Dubai model, it will need the environment As a result, the Islamic bank’s customers Islamic Economy Development Centre, devoid of conventional banks and a may consider switching to other banks nor the offi cial policy or position of the regulatory rate regime. A case in point (Islamic or conventional) that are in a government of the UAE or any of its entities. is Sudan where conventional banking position to provide a superior return The purpose of this article is not to hurt any licenses are barred and all banks on their deposits. Had the Islamic religious sentiments either consciously or operating in the country are based on bank chosen the shorter term for its even unwitt ingly. Islamic banking principles. Murabahah portfolio, it would have been in a position to rightsize the profi t rate on This is the reason why the Central a recurring basis through entering into Next Week: Explanation of the Bank of Sudan does not quote any the new Murabahah transactions, and Murabahah contract to continue.

Making money in UK Islamic banking is tough

Mohammed Amin, an Islamic fi nance Table 1: History of calendar year results of BLME consultant and former tax partner at PwC in the UK. Year Profi t/(loss) aft er tax Shareholders funds (GBP Return on equity % (GBP million) million) This month, I have done something 2007 0.2 179.4 0.1 anyone could do for themselves. The Bank of London and the Middle East 2008 2.4 252.4 1 (BLME) is the largest dedicated Islamic 2009 (13.2) 243.5 (5.4) bank in the UK. I downloaded BLME’s 2010 3.5 247 1.4 annual reports and summarized them. 2011 (8.9) 238.6 (3.7) They results are horrible. BLME did 2012 3.8 239.6 1.6 make profi ts in seven out of the 11 years, but the best result, a profi t 2013 4.3 242.8 1.8 of GBP4.3 million in 2013, was only 2014 1 243.8 0.4 1.8% of shareholders’ funds. Banks typically aspire to have a return on 2015 (6.8) 237.8 (2.9) equity exceeding 10%. In the other four 2016 (21.4) 217.1 (9.9) years, the bank made large losses. Since 2017 3.5 220.5 1.6 starting, BLME has lost its shareholders a cumulative GBP31.6 million (US$40.2 Cumulative (31.6) million). Source: BLME (summary by author)

There are many reasons why BLME has Barclays has a much larger base over fi nancing activities suffi ciently to earn a found life so diffi cult. which to spread its overhead costs. reasonable rate of return on its equity. Firstly, the decade since the As well as the ineffi ciencies global fi nancial crisis has from being small, being been hard for most Banks make a new player in the banks. Regulators market is always hard. have imposed many money by Banks make money additional risk by using their own using their own management costs capital plus money upon banks such from customers capital plus money as increased anti- (deposits) to fi nance money-laundering other customers. from customers compliance among Most of the fi nance others. is provided using (deposits) to ϔinance customers’ money. These additional other customers. costs come on top For example, Barclays of the unavoidable Most of the ϔinance had assets (mainly operating costs of customer fi nancings plus any bank such as is provided using cash and investments having an internal held for prudential audit department, customers’ purposes) of GBP1.13 trillion fi nancial accounting (US$1.44 trillion), which is systems, a board of money 17 times its capital of GBP66 directors, etc. billion. In comparison, at the Finally, there is another problem from end of 2017, BLME’s total being a new bank. It is harder to fi nd All costs of this kind bear assets of GBP1.03 billion reputable customers to fi nance at an much more heavily on a (US$1.31 billion) were only acceptable rate of profi t return. BLME has small bank such as BLME 4.6 times its shareholders’ clearly suff ered from this problem. The than they do on much larger funds of GBP220.5 million accounts show that in the years when conventional banks. For (US$280.49 million). The lower there were big losses, they arose from example, at the end of 2017 Barclays that ratio, the harder it is for a impairments. That is accounting had shareholders’ funds of GBP66 bank to make money. BLME has terminology for the losses you suff er from billion (US$83.95 billion), making simply not managed to scale providing fi nance to businesses which are it 300 times larger than BLME. up its deposit-taking and no longer likely to pay you back.

Financial inclusion: Part 2 — IFSB technical note

Abdulkader Thomas is CEO of SHAPE Financial. He can be contacted at ast@ consultshape.com.

Your inbox might have a link to the IFSB technical note (TN), ‘ED TN-3: Technical Note on Financial Inclusion and Islamic Finance’. The 122-page document is an interesting start. But let’s discuss two questions:

1. Does the IFSB get it? 2. Does the IFSB understand the issue of appropriately meet their needs; and solidarity instruments in an Islamic collateral? that are delivered by formal fi nancial economic system are intended service providers in a transparent and specifi cally to safeguard the rights When we think of the IFSB’s mission, simple manner, enabling informed of the less able through the income fi nancial inclusion seems to be a stretch: understanding and decision-making and wealth of the more able, thus by the customer’.” ensuring social protection and “It serves as an international poverty alleviation, leading to wider standard-sett ing body of regulatory The TN raises awareness that there social and fi nancial inclusion.” and supervisory agencies that have is oft en a reason why people are not vested interest in ensuring the banked or excluded and it is not always In a nutshell, the IFSB gets it. I might soundness and stability of the Islamic easy or straightforward to achieve have hoped that they went further into fi nancial services industry, which is inclusion. Thus, the IFSB brings up the defi ning how fi nancial inclusion goes defi ned broadly to include banking, importance of social fi nance beyond mere access to building wealth. capital markets and insurance. and the existing tools In advancing this mission, embedded in Shariah to In my view, the TN fails to understand the IFSB promotes help society: the question of collateral and how to the development manage its frequent absence. Most low- of a prudent and “The Islamic income business operators and most low- transparent Islamic fi nancial income individuals have no meaningful fi nancial services system’s collateral. If they own dwellings, these industry through endorsement are oft en unregistered. If they own introducing new or of justice and inventory, it is oft en diffi cult to evaluate adapting existing risk-sharing and impossible to seize. If they are owed international provides for the money, their receivables are informal. standards consistent establishment with Shariah of a clear link As a result, organizations like the Swedish principles, and between the International Development Agency recommending them Islamic concept support credit guarantee schemes (CGS). for adoption.” of development The TN fl ies a mile high over CGS and and the notion of does not address in-depth how these The draft standard spends fi nancial inclusion, should aff ect the risk weightings for goods a good amount of time in view of their Murabahah, which is the most common dwelling on the prudential holding a common product covered by CGS. regulatory element of goal of enabling fi nancial inclusion. Before the development The IFSB has made a good start but it has gett ing there, the IFSB notes of marginalized missed some obvious points. You may that: “There is no universally individuals and visit the aforementioned link, review the agreed-upon defi nition of communities. TN and share your comments with the ‘fi nancial inclusion’” and Islamic fi nancial IFSB. continues: contracts, particularly risk- In my next two installments, I wish to “For the purposes of sharing fi nancing look at a number of developments in this TN, conventional instruments and Somalia, Detroit and Malaysia that are ‘fi nancial inclusion’ refers social solidarity meant to bring ‘fi nancial inclusion’ to the to ‘a state where individuals instruments such as Sadaqah, next level. These discussion points ask and businesses in a society have Waqf, Qard and Zakat, can how the concept of ‘fi nancial inclusion’ access to, and usage of, a range of be utilized for fi nancial may progress from ‘access’ to ‘wealth aff ordable and quality fi nancial inclusion. The social creation’. products and services that

First generation of Shariah auditors in IFN Country Correspondents AFGHANISTAN: Manezha Sukhanyar former head of Islamic banking, Maiwand Bank WAEMU ALGERIA: Dr Ahmed Tahiri Jouti COO, Al Maali Consultancy Group IVORY COAST (WAEMU) region was held from the 12th- AUSTRALIA: Christopher Aylward 16th November 2018 at the Chamber of partner, Finance and Major Transactions, Madison Marcus By Abbas Cherif Law Firm Commerce and Industry in Abidjan. BAHRAIN: Dr Hatim El-Tahir director of Islamic Finance Knowledge Center, Deloitt e & Aft er a few training sessions focused Touche This seminar brought together 17 Islamic BRAZIL: Fábio Amaral Figueira on the initiation to Islamic fi nance fi nance specialists from the Ivory Coast, partner, Veirano Advogados in the region, the African Network CANADA: Rehan Huda Senegal, Niger, Togo, Benin, France and for the Promotion of Islamic Finance managing director, Amana Canada Holdings Burkina Faso. The fi rst three days were CHINA: Wafee Yeung (RAPFI) organized the fi rst seminar dedicated to the principles of Shariah managing director, Allalah Consulting titled ‘Shariah Auditing Qualifi cation’. EGYPT: Dr Walid Hegazy and practice, governance and process of This seminar is the anticipated answer managing partner, Hegazy & Associates Shariah auditing, covered by M Khalid GERMANY: Ahmet Kudsi Arslan to the market needs according to recent Targhi from the Al Maali Institute in CEO, KT Bank developments. HONG KONG: Wafee Yeung Morocco. managing director, Allalah Consulting INDIA: Ali M Shervani In the context of sett ing up the Islamic In the last two days, Maria Fassi Fihri, partner, Consigliori Consultants fi nancial market in the country, the INDONESIA: Irwan Abdalloh also from the Al Maali Institute, covered demand in terms of Shariah compliant head of Islamic Capital Market, Indonesia Stock Exchange the Shariah standards of AAOIFI and IRAN: Majid Pireh products and processes will defi nitely CSO for Islamic fi nancial products. Table head of Islamic fi nance group at the Securities and increase in the Ivory Coast. To deal Exchange Organization of Iran 1 shows the participants who took a fi nal ITALY: Stefano Padovani effi ciently with this situation, it was exam in order to validate their certifi cate partner & head of banking and fi nance, NCTM Studio important for RAPFI to build capacity in Legale Associato under the supervision of the trainer. IVORY COAST: Abbas Cherif Shariah auditing. head of Islamic fi nance, An Nour Consulting Abbas Cherif is the head of Islamic fi nance at JAPAN: Dr Etsuaki Yoshida The very fi rst certifi cation of Shariah project associate professor, Kyoto University An Nour Consulting. He can be contacted at auditing qualifi cation in the West KENYA: Mohamed Abdi [email protected]. Shariah manager Islamic Banking- Barclays Kenya African Economic and Monetary Union KAZAKHSTAN: Shaimerden Chikanayev partner, Grata Law Firm KUWAIT: Issam Al Tawari Table 1: Participants who took fi nal exam for certifi cation of Shariah auditing qualifi cation managing partner, Newbury Economic Consultancy KYRGYZSTAN: Daniyar Mamyrov Name Company Sector Country CEO, Kompanion Islamic Microfi nance MALAYSIA: Ruslena Ramli Irahim Kamagate Halal Ci Halal certifi cation Ivory Coast head, Islamic fi nance, RAM Rating MALDIVES: Aishath Muneeza Abbas Cherif An Nour Consulting Islamic fi nance Ivory Coast chairman, Maldives Center for Islamic Finance consultancy MALTA: Reuben Butt igieg president, Malta Institute of Management Abdoulaye Guede Cafi m Islamic fi nance Niger MOROCCO: Dr Ahmed Tahiri Jouti COO, Al Maali Consultancy Group consultancy NIGERIA: Hajara Adeola managing director and CEO, Lotus Capital Aboubacar Bakayoko Nour Auto Shipping Ivory Coast OFFSHORE CENTERS: Manuela Belmontes partner, Maples & Calder (Dubai) Adama Drabo Anikrub Consulting fi rm Burkina Faso OMAN: Dhana Pillai head of real estate, tax and project fi nance, Al Hashmi Law Firm Aguibou Toure Imam Religion Ivory Coast PAKISTAN: Muhammad Shoaib Ibrahim managing director & CEO, First Habib Modaraba Aïssatou Diallo Atlantique Insurance Life insurance Senegal/Ivory PHILIPPINES: Rafael A Morales Coast managing partner, Morales & Lumagui QATAR: Amjad Hussain Akim Hoduloye Journalist Media Ivory Coast partner, K&L Gates RUSSIA: Dr Ilyas Zaripov Ali Abdel-Halim Toure Novation Conseil Training, project, human Togo member, Partnership Banking Working Group, Central resources (HR) Bank of the Russian Federation SAUDI ARABIA: Nabil Issa Cisse Khadidja Cbi-Ci Coris Baraka Islamic windows Ivory Coast partner, King & Spalding SENEGAL: Abdoulaye Lam Hassan Fare Mecit Islamic microfi nance Togo president & CEO, Global Islamic Finance & Transactions SRI LANKA: Suresh R I Perera Idrissou Mama Rapfi Islamic fi nance Benin principal, Tax & Regulatory, KPMG promotion TUNISIA: Mohamed Araar General directorate of External Financing and Sett lements, Moussa Sy Public Service Administration France deputy director of Private Financing and International Relations Department, Central Bank of Tunisia UAE: Anita Yadav Moustapha Sylla Raouda Finance Islamic microfi nance Ivory Coast senior director, head of fi xed income research, Emirates NBD Saïdou Moumouni University Education Niger UK: Suhail Ahmad founder of the Financial Network and partner, Gateway Soumahoro Ali Ben Ccge Accounting, HR, taxation Ivory Coast Islamic Advisory IFN Correspondents are experts in their respective fi elds and Bamoussa are selected by Islamic Finance news to contribute designated short country reports. For more information about becoming Yaya Toure Ccge Accounting, HR, taxation Ivory Coast an IFN Correspondent please contact sasikala.thiagaraja@ redmoneygroup.com

Almaty Light Rail Transit project in Kazakhstan

KAZAKHSTAN of Almaty city, but not the state budget - Strong political will to support PPPs of Kazakhstan. Almaty city is ready (KPIs for regions — Five projects per By Shaimerden Chikanayev to give a grant to cover 50% of the year as a minimum); capital cost and retain ridership and, On the 29th November 2018, Almaty, the apparently, foreign exchange risks, but - Kazakhstan climbed the World former capital and the largest city in expects to receive all ticket revenue. Bank’s Ease of Doing Business Index Kazakhstan, received responses from The future private partner would be and is now ranked 36th; nine international consortia, consisting of companies from Japan, France, paid an availability payment to cover its Russia, Turkey, Spain, China and investment and operating costs. - Strong support of Kazakhstan by Kazakhstan, to participate in the fi rst multilateral development banks stage of the open tender of the Almaty Being one of the most developed Central (European Bank for Reconstruction Light Rail Transit (LRT) public-private Asian states, Kazakhstan is increasingly and Development, Asian partnership (PPP) project. reliant on PPP for its infrastructure Development Bank, International development. And there are a number Finance Corporation, the IDB, Asian The mayor of Almaty is seeking a private of advantages that Kazakhstan has, Infrastructure Investment Bank) and partner to design, develop, construct, that shall undergird PPP investments att racting private and international commission, fi nance, operate and maintain and att ract foreign direct investment, fi nancial investment. the infrastructure, rolling stock and namely: services for a new LRT that will consist It is well known that the global Islamic of 37 stations along a 22.7 km double - Kazakhstan’s oil, gas, coal and fi nance market size is estimated to exceed track. It is expected to carry up to 112,000 uranium and others commodities US$2 trillion in 2018. Given the potential of passengers a day and the total estimated reserves are among the 10 biggest in Islamic fi nance to support infrastructure construction cost is US$250.7 million. the world; development in Kazakhstan, there is a need to unlock the potential of the Islamic In accordance with the PPP Law it is - Strategic geographical location of fi nance market to mobilize resources for the Almaty city itself, rather than the Kazakhstan (eg China’s Belt and infrastructure development projects in Republic of Kazakhstan, which would Road initiative; a door to the Eurasian Kazakhstan using PPP and the proposed act as a public partner and counterparty Economic Union; a single market of Almaty LRT can serve as a pilot project. under the PPP agreement and, therefore, 183 million people); a future private partner would have Shaimerden Chikanayev is a partner at legal recourse under the PPP agreement - Good legal framework (special PPP Grata Law Firm. He can be contacted at only against the local municipal budget Law and Concession Law); [email protected].

AAOIFI standards — Urdu language version launched

PAKISTAN problems in terms of comparability, of any culture and the most eff ective understanding and reliability. mode of communication within the By Muhammad Shoaib Ibrahim masses of the country. The translation Currently, these standards are followed of global standards into the national The Islamic banking industry of as part of the mandatory regulatory language is an important breakthrough Pakistan, in collaboration with AAOIFI, requirement or as internal guidelines and would remove language barriers to has launched the AAOIFI Shariah of Islamic fi nancial institutions in understanding Shariah standards for its standards book in Urdu, the national jurisdictions across the world that true adoption and implementation. language of Pakistan, titled ‘Sharaie off er Islamic fi nance. The standards Mayaarat’ in a ceremony held in give support for standardization and Pakistan is one of the key partners of Karachi. The governor of the State Bank greater harmonization of Islamic fi nance AAOIFI and has always been an integral of Pakistan was the chief guest of the practices in all major Islamic fi nance part in AAOIFI’s plans. Sheikh ceremony which was widely att ended markets throughout the world. Muhammad Taqi Usmani has been by heads of national and multinational leading the Shariah board of AAOIFI banks operating in Pakistan, senior Among the challenges faced by the since its establishment. Similarly, bankers and government offi cials. Islamic banking and fi nance industry AAOIFI’s board of trustees, as well as the in Pakistan, awareness is one of the technical boards, has always benefi ted The AAOIFI standards serve as a key issues. The Urdu version of the from the presence of prominent Pakistani guideline and are a useful tool to meet Shariah standards will be instrumental professionals either directly selected the various needs of the global Islamic in improving awareness about Islamic from Pakistan or serving in diff erent fi nancial industry. One of the major fi nance especially among Shariah parts of the world. challenges facing Islamic fi nancial scholars, academia, practitioners and institutions is in the preparation of other stakeholders of Islamic fi nancial Muhammad Shoaib Ibrahim is CEO of First fi nancial statements under diff erent institutions in Pakistan. The national Habib Modaraba. He can be contacted at accounting standards, which may create language is an important ingredient [email protected].

Banks ruling the market scene

KUWAIT billion senior debt facilities comprise the subscription share price was 180 fi ls seven agreements including (i) a US$1.43 (59.13 US cents), including 100 fi ls (32.85 By Issam Altawari billion international commercial facility, US cents) par value and 80 fi ls (26.28 (ii) a US$490 million onshore commercial US cents) share premium. This capital As 2018 drew to a close, Islamic facility, (iii) an US$890 million Islamic increase will be used to fuel the bank’s fi nancial institutions in Kuwait were facility, (iv) a US$700 million UKEF activities and expansions with two new busy doing their closings with a fl urry covered facility, (v) a US$500 million major shareholders, Al Sayer Group and of activities. CESCE covered facility, and (vi) US$600 Alshalfan, approved by the Central Bank million K-EXIM covered and K-EXIM of Kuwait to own up to 15% each. Kuwait Finance House (KFH) and Ahli direct facilities. United Bank (AUB) are drawing closer in Early this month, Alghanim Industries their merger talks. It has been reported Regional banks played a big role in this bought just over 1% of First Investment that KFH has agreed on a share swap deal with funding from Kuwaiti and Company at 40 fi ls (13.14 US cents) per ratio of 2.4 shares of AUB for one KFH Omani banks representing 43% of the share. The company’s major shareholders share. There is still no confi rmation on total debt. This is considered the largest include Alkhorafi Group with 13.8%, the agreement — which will create one Shariah compliant facility awarded to Alhosani with 10% and Alhomadhi with of the largest Islamic banks in the Gulf — a greenfi eld project in Oman provided 8.6%. Aref Investment Company’s as the Social Insurance Organization of by a consortium of Islamic fi nancing licenses have been revoked by the Capital Bahrain that owns just over 10% of AUB institutions. Markets Authority with the exception of insists on a cash deal. custody services. Aref has been Warba Bank has closed its capital struggling aft er the fi nancial crisis and Boubyan Bank participated with US$200 increase which was oversubscribed KFH, as a major shareholder, has been million in a syndicated fi nance deal of by more than twice the total shares’ looking to salvage the situation. US$4.6 billion for the Duqom Refi nery value of KWD90 million (US$295.66 project in Oman, a joint venture of million) (KWD50 million (US$164.25 Issam Altawari is the managing partner of state-owned Oman Oil Co and Kuwait million) par value and KWD40 million Newbury Economic Consulting. He can be Petroleum Corp, a subsidiary of Kuwait (US$131.41 million) share premium); contacted at [email protected]. Petroleum International. The US$4.6

Sberbank reacts to demand of growing Islamic population in Russia

RUSSIA banking corporation, announced its pilot and total amount of Islamic assets reach project using Islamic banking instruments a signifi cant level. Until then, Islamic By Dr Ilyas Zaripov and standards in three regions of the fi nance will struggle without any legal Russian Federation: Tatarstan, Chechnya priorities. Since the 7th century, the number and Bashkiria. According to Behnam of Muslims in Russia has increased Gurbanzade, the advisor to the deputy Meanwhile, Russia is on its way to steadily to 25 million people, about 20% of the total population, according chairman of Sberbank, the bank is becoming the platform for development of to Ravil Gaynutdin, the supreme Muft i planning to open Islamic windows Islamic banking very soon because its of Russia. The number of Muslims in off ering fi rst retail deposits and plastic important advantages have led to the Russia is growing due to the high birth cards alongside Shariah compliant stability of the fi nancial sector. But the rate among Muslim families and the consumer fi nancings. At the beginning growing Islamic population should insist migration of Muslims from Central of 2018, Sberbank closed a deal in the on important reforms that will assist in the Asia. Most Muslims live in Moscow and corporate sector in Tatarstan using Ijarah. promotion of Islamic fi nance in Russia. other large cities such as St Petersburg First of all, guarantees of contracts are an Yekaterinburg. The Central Bank of Russia, the Russian required. To enable full confi dence in banking regulator, supports the eff orts Islamic fi nancial products, it is also Activities of the Muslim community of Sberbank using the platform of the necessary to correct the tax policy and to in Russia are supervised by several Participating Banking Working Group set standards of regulation for this religious organizations in key Russian of the Central Bank of the Russian industry in Russia. The current annual cities. The Council of Muft is of Russia Federation. . growth of the Islamic fi nancial operations is based in Moscow while the Religious volume in Russia is about 9.5%. Administration of Muslims is in Ufa, Islamic banking in Russia has the Kazan and three cities of the Republic of following obstacles: double taxation and Dr Ilyas Zaripov is a member of the North Caucasus. the absence of standards and Islamic Participating Banking Working Group of the fi nancial infrastructure. We should not Central Bank of the Russian Federation and Russian banks need to meet the growing wait for a fast solution to the obstacles. the head of the Islamic Finance Educational demand of the increasing population for The central bank and parliament will Program of the Plekhanov Russian Shariah compliant fi nancial products. only be involved in this process when the University of Economics. He can be contacted Thus, Sberbank, the biggest Russian volume of Islamic fi nancial transactions at [email protected].

The prohibition of Riba under Italian law

ITALY are poor, you shall not be to him as a a crime. Interest applied by banks and creditor, neither shall you require interest fi nancial intermediaries exceeding a By Stefano Padovani from him.” certain threshold provided for according to Article 2 of Law n. 108 of 1996 and As known the prohibition of Riba Under Roman law, which is the base of set, on a quarterly basis, by a ministerial is central to Islamic fi nance. All Italian law, only excessive interest rates decree, based on interest applied on the transactions and contracts must be free were considered usurious and therefore market, is always usurious. from elements of Riba. The word Riba prohibited. The threshold was later literally means increase. However, in determined in the amount of 6% per year From a civil law perspective, pursuant debt transactions the word ‘interest’ by Emperor Justinian. to article 1815 of the Italian Civil Code, is generally understood as Riba. when usurious interest is applied, Interest is the excess amount which During the Middle Ages, the application no interest shall be due and the a creditor receives from a debtor in of interest as such was strictly forbidden. borrower shall be entitled to claim the consideration of giving time to the Saint Augustine and Saint Ambrose reimbursement of all interest amounts latt er for repayment of the loan. It is an considered interest to be in contrast with already paid to the lender. application of the principle on which a passage in the Gospel of Luke: “Give modern fi nance is based of time value away to everyone who begs of you, and The matt er has been addressed October for money. of him who takes away from your goods, last by a decision by the Italian Court of do not demand them back again.” Cassation (n. 27442/2018), which shed Shariah prohibits interest irrespective light on the distinction between capital of the amount. However, in the western In the 12th century, scholars of the fi rst interest (‘interessi corrispett ivi’) which is world, it has been debated over centuries law faculties of the universities found the remuneration of money lent, and whether interest must be prohibited as ways to circumvent the ban on interest default interest (‘interessi di mora') such or only when a certain threshold and during the 16th and 17th century they which is the compensation for the is exceed, ie when the amount which asserted the importance of qualifying damage suff ered by the lender for delay the debtor has to pay to the creditor disproportionate interest as usurious, payment, and clarifi ed that usury law in addition to the principal becomes and therefore prohibited, as the creditor applies also to default interest. usurious. may otherwise legally exploit the debtor. Stefano Padovani is a partner and the head of Judaism, prior to Islam, had also banking and fi nance at Nctm Studio Legale. prohibited interest as such. In the Old Today Italian law does not provide for He can be contacted at stefano.padovani@ Testament we read: “If you lend money a prohibition of Riba but Article 644 of nctm.it. to any of my people with you who the Italian Criminal Code qualifi es usury

Aussie opportunities

REAL ESTATE Put simply, such population growth is Complementing the well-established putt ing pressure on accommodation of mining and agriculture sectors, By Philip Churchill all types, although recent exuberance in education and medical are rapidly the construction of apartments in some growing industries. Whilst university A recent visit to our current and city centers provides the exception to the accommodation provides a natural pipeline properties in Australia opportunity, we are currently assessing a accentuated to me what a great rule. However, to Australia’s credit they are spending considerable amounts on new (limited service) hotel opportunity in opportunity Australia off ers Islamic the medical district of a major city, where real estate investors, with the extremes new train lines, stations and rolling stock to relieve the pressure on city centers and medical tourism either domestically of forest fi res in the north and fl ash (remember Australia is bigger than ease commutes from those in the more fl ooding in Sydney to the south Europe!) or internationally is big business. emphasising the vast scale of the aff ordable suburbs. country. As we’ve now proven, the local Shariah 90 North’s acquisition with Sidra Capital expertise is most defi nitely there and The opportunity is largely driven by of a Quest-branded serviced apartment with a wide range of opportunities across population growth, which is rising property was in a completely new city of a vast country I sincerely hope that an at a remarkable 1,000 people a day. Springfi eld, outside of but linked by road increasing number of Islamic investors That and the robust economy, which and rail to Brisbane. Only the second seize them. The Economist recently described as master-planned city in Australia, aft er “arguably the most successful in the their capital city of Canberra, the scale Philip Churchill is the founder and managing rich world.” Adding that, “It has been and speed of the development there is partner of 90 North Real Estate Partners. He growing for 27 years without a recession mindboggling and must be seen to be can be contacted at pchurchill@90northgroup. — a record for a developed country.” believed. com.

Japan’s economic minister agrees with Malaysia on Halal business promotion

JAPAN Tokyo Olympic and Paralympic Games Although the MoC itself does not mention in 2020. Islamic fi nance directly, it will be a good By Dr Etsuaki Yoshida trigger to increase Islamic fi nance deals, Malaysia’s Ministry of Entrepreneur as trade transactions of Halal products On the 26th November 2018, Japan’s Development was established in July should be fi nanced Islamically. minister of economy, trade and 2018 under the strong leadership industry, Hiroshige Seko, signed in of Prime Minister Tun Dr Mahathir As widely known, all Japanese mega Tokyo a memorandum of cooperation Mohamad. It is supposed to promote banks, ie Mizuho, MUFG and SMBC, (MoC) in the Halal business with SME businesses, entrepreneurs and have Malaysian subsidiaries that off er Malaysia’s minister of entrepreneur increase the welfare of Bumiputras. Islamic fi nancial services. They will development, Mohd Redzuan Md be good promoters of those business Yusof. The cooperation of the two countries enhancements under the MoC from the looks to be mutually benefi cial. For fi nancial aspect. This MoC was intended for the two Japan, it can import Halal business countries to collaborate in promoting the expertise for foreign Muslim tourists to Originally, the purpose of a fi nancial Halal business. It was achieved aft er a come to the Olympic and Paralympic transaction should be tied to a business request from Malaysia to Japan’s prime Games, while Malaysia can export its activity according to the teachings of minister, Shinzo Abe. The MoC is to goods, services and know-how to Japan. Islam. I strongly believe that there will be promote exchanges of human resources, more Halal business transactions as well products and services between Malaysia For Malaysia, Japan is the third-biggest as Islamic fi nancial transactions between and Japan. According to the press export destination for Halal products, the two countries. release by the Ministry of Economy, aft er Singapore and China, amounting Trade and Industry, more concretely, the to RM2.8 billion (US$677.01 million) (for Dr Etsuaki Yoshida is the project associate two parties will cooperate in capacity- 2017). This MoC is expected to increase professor at Kyoto University. He can be building, technical cooperation and more exports to Japan. contacted at [email protected]. assisting trade and investment for the Dealing with Shariah non-compliance risk (Part I)

SHARIAH & CORPORATE in legal documentation as it is the main product if the sequences of the contract are GOVERNANCE reference and evidence in relation to the not properly observed, such as a property transaction, particularly in the event of sale agreement in a Murabahah contract By Prof Dr Mohamad Akram Laldin default. There are two categories of defect that is concluded before the property that may lead to Shariah non-compliance: purchase agreement. Likewise, excessive Shariah compliance, as discussed in the a serious defect which cannot be rectifi ed uncertainty, such as ambiguity of price (eg previous articles, is very broad in scope, covering every operational angle of an and a minor defect which is rectifi able. the contract contains two prices, which Islamic fi nancial institution’s activities. This article will focus on serious defects leads to dispute and the invalidation of An Islamic fi nancial institution’s and their consequences. the contract) is deemed a violation of the failure to comply with Shariah in its pillars. operations will expose it to Shariah A serious defect in a contract arises non-compliance risk. from violation of the contract’s pillars In addition, a product is considered to and conditions. In jurisprudential violate a pillar when the underlying The occurrence of Shariah non-compliance terminology, violation of a pillar will business activity contains a prohibited risk may be linked to Islamic fi nancial render the entire contract void (Batil). element such as interest-based institution products when a court rules Since it cannot be rectifi ed, a new investment activities, gambling-based that the underlying contract employed contract needs to be drawn up. activities or other non-Halal activities. is invalid due to inconsistency between the Shariah requirements and the legal The violation of a pillar in a particular Based on the aforementioned, the documentation. Alternatively, it can occur product may be in the product’s structure violation of a pillar or a condition in a as a result of overlooking the compliance or in its terms and conditions. For instance, particular contract will render it void; the requirements or negligence by the staff of in a Murabahah home fi nance contract, fulfi llment of the contract’s pillars and the fi nancial institutions. As a result, two a critical defect could be due to the conditions is vital in determining its aspects of an Islamic fi nancial institution’s nonexistence of the subject matt er when validity. practices should be carefully examined, the contract is concluded, or to the Islamic namely the concept of the contract and the fi nancial institution’s sale of an asset that Prof Dr Mohamad Akram Laldin is the legal documentation. is not in its possession, or lack of a real executive director of the International transfer of ownership. It is also deemed Shari’ah Research Academy for Islamic In practice, Shariah non-compliance risk a violation of the pillars in the legal Finance. He can be contacted at akram@isra. commonly occurs as a result of a defect documentation of a Murabahah-based my.

Management of liquidity and investments IFN Sector Correspondents

CROWDFUNDING: Craig Moore for Takaful institutions in Europe CEO, Beehive

TAKAFUL & RE- DEBT CAPITAL MARKETS: Imran Muft i TAKAFUL (EUROPE) partner, Hogan Lovells EDUCATION: Dr Kamola Bayram, project director for By Ezzedine Ghlamallah training and research at the International Council of Islamic Finance Educators In risk management policy, Takaful ISLAMIC LEASING: Shoeb Sharieff covers the following on liquidity risks: president, ĳ ara CDC, ĳ ara Community Development Corp • the procedure for determining the level of asymmetry between LAW: Paul McViety partner, head of Islamic fi nance, DLA Piper Middle East the infl ows and outfl ows of assets and liabilities, including expected MERGERS & ACQUISITIONS: Burak Gencoglu cash fl ows from direct Takaful partner, Gencoglu & Ergun Law Firm Takaful operators are encouraged to operations and re-Takaful such as MICROFINANCE: Mohammed R Kroessin claims, reductions or redemptions consider investment opportunities in head of Islamic microfi nance, Islamic Relief Worldwide • the assessment of total liquidity alternative asset classes such as private equity and commodities in order to PRIVATE EQUITY & VENTURE CAPITAL: needs in the short and medium James R Stull, partner, King & Spalding term, including an appropriate achieve bett er diversifi cation. Securities include fi xed income securities and REAL ESTATE: Philip Churchill reserve of liquidity to guard against founder partner, 90 North Real Estate Partners a shortage of liquidity variable income securities in relation to capital. For fi xed income securities, RETAIL ASSET MANAGEMENT: Muzzammil Dhedhy, • the review of the level and chief operating offi cer, Hejaz Financial Services monitoring of liquid assets, such as investments in bonds, warrants, including the calculation of treasury bills and other negotiable debt RISK MANAGEMENT: Dr Ken Baldwin senior lecturer in fi nance, Coventry University potential costs or fi nancial losses securities, such as commercial papers, they are formally prohibited. These due to forced completion SHARIAH & CORPORATE GOVERNANCE: • the identifi cation and costs of operations are tantamount to lending Prof Dr Mohamad Akram Laldin money for interest, which is formally executive director, International Shariah Research Academy alternative fi nancing tools, and for Islamic Finance • the assessment of consequences prohibited by Muslim law. SRI ETHICAL & GREEN: Dr Mohamed Wail Aaminou, of planned new activities on the general manager, Al Maali Consulting Group liquidity of a company's portfolio. As a result, all fi xed income securities are illegal. Investors can only make TAKAFUL & RE-TAKAFUL (ASIA): Marcel Omar Papp head of Retakaful, Swiss Re Retakaful A Takaful company has procedures a profi t if they share the risks. If the requiring that where the investment borrower guarantees the repayment, TAKAFUL & RE-TAKAFUL (EUROPE): Ezzedine the product must come back to him; Ghlamallah involves signifi cant risk or a material director, Solutions Insurance and Islamic Finance (SAAFI) change in the risk profi le, the audit the alternative acceptable for a Takaful and control function of the company operator is investment in Sukuk, TAKAFUL & RE-TAKAFUL (MIDDLE EAST): securitized fi nancial products closer to Dr Sutan Emir Hidayat discloses that risk or change in the assistant professor, head of Business Administration and risk profi le to the board of directors, shares than bonds whose performance Humanities Department, University College of Bahrain administration or supervisory board. is linked to the performance of an underlying asset. Sukuk can be seen IFN Correspondents are experts in their respective fi elds and are selected by Islamic Finance news to contribute A Takaful company regularly reviews to behave as a bond with returns that designated short sector reports. For more information about can be known in advance and in cases becoming an IFN Correspondent, please contact sasikala. and monitors the security, quality, [email protected] liquidity and profi tability of the of default similar to shares where the portfolio as a whole by reviewing at investor shares the risk of capital loss. least: • there cannot be any preferred shares • any commitment constraint and For variable income securities relative to or ‘super dividends’ because the any known policies regarding capital, these are primarily equities and rights of all shareholders are equal in future discretionary benefi ts and, if mutual fund units. Shares are inherently the capital. applicable, reasonable expectations lawful from the point of view of Islamic of members law because the common property is There are also conditions for the legality • the level and nature of the risks that acceptable and the income they provide of mutual fund units since the fund’s the company is willing to accept varies. liquid assets and surpluses must be • the degree of diversifi cation of the invested in legal assets and investments portfolio as a whole There are, however, conditions of made in shares must comply with the • the characteristics of the assets conformity to Shariah law: rules. • events likely to change the • the social object must be lawful characteristics of the investments, • the assets of the company must Ezzedine Ghlamallah is the executive including any guarantees, or to aff ect consist mainly of physical assets and director of SAAFI which specializes in the value of the assets, and not of claims Islamic fi nance and Takaful solutions. He • questions relating to the location and • the company must not contract loans can be contacted at ezzedine.ghlamallah@ availability of assets. or interest loans, and saafi .fr.

Governance, compliance and regtech in ϐinancial inclusion

MICROFINANCE operations. 360factors will implement in a more effi cient and practical and confi gure fi ve modules being approach.” By Dr Mohammed Kroessin off ered on their fl agship solutions platform, Predict360. These include risk Based in Austin, Texas, 360factors has Governance, risk and compliance management, compliance management, been developing and implementing (GRC) is a relatively new discipline document management, audit compliance and risk management that aims to synchronize organizational management and regulatory change soft ware solutions using artifi cial governance and compliance to support management. intelligence since 2012 and has provided managerial effi ciency. There are a solutions to companies and organizations number of diff erent approaches but 360factors is working closely with worldwide. GRC typically encompasses activities the NGO’s microfi nance team which such as corporate governance, currently uses a manual process to “We welcome the opportunity to provide enterprise risk management (ERM) support their global teams covering up to a single solution that takes their current and organizational compliance with 14 countries across six continents. complexities and creates a solution for applicable laws and regulations. management and executives to have “We chose 360factors’s Predict360’s visibility into all their compliance and The underlying concept is to keep an GRC solution for the ease of use and risk programs in real time,” says Carl organization on track on interconnected broad risk and compliance functionality McCauley, CEO of 360factors. “Our activities conducted in departments such enabling the microfi nance team to solutions are ideal for banks and other as internal audit, compliance, risk, legal, have eff ective central oversight and fi nancial services companies, including fi nance, information technology, human support capability to remotely manage microfi nance organizations.” resources as well as the lines of business, its group-wide compliance and risk executive suite and the board itself. environment,” says Rahal Ahmed, the There is a range of diff erent GRC global microfi nance manager at IRW. products in the market but whether the Given the growing regulation around “With the development of new fi nancial Islamic microfi nance sector will adopt fi nancial inclusion and microfi nance, products and technological innovations, such GRC solutions wholesale, only time GRC is also likely to play a more the microfi nance industry continues will tell. Yet given that regulators are important role in ensuring microfi nance to observe a growing regulatory focus constantly increasing requirements, small institutions can effi ciently and cost given the risks are oft en similar to that and medium-sized Islamic microfi nance eff ectively deal with a range of internal of mainstream banking. As an early institutions are particularly set to benefi t and external stakeholder demands. adopter of a GRC management solution also from regtech solutions that provide like 360factors, we hope that the success automated support for regulatory change Going full circle with 360factors of its soft ware application will not only management that usually only large As one of the fi rsts in the Islamic strengthen our internal compliance and fi nancial institutions can aff ord. microfi nance sector, 360factors, a risk management arrangements, giving leading cloud-based enterprise risk us more data at our fi ngertips, but [also] Dr Mohammed Kroessin is the head of the and compliance management platform, encourage others in the industry to Islamic Microfi nance Business Unit of the has been selected by IRW, a UK- consider smart innovative solutions in International Programs Division at Islamic based international non-governmental a world where regulatory technology is Relief Worldwide. He can be contacted at organization (NGO) to provide a GRC helping address internal vulnerabilities [email protected]. solution for its Islamic microfi nance

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2019: A new horizon for Islamic ϐintech?

CROWDFUNDING new customers, particularly those in more established fi nancial institutions the ‘unbanked’ sector of the market. have seized the opportunity for growth By Craig Moore It is clear that a digital focus, be it by working with smaller, more agile using existing internal competencies players to deliver innovative, digitally- The opportunity for collaboration or achieved through collaboration, will based products and services and gaining between Islamic fi nancial institutions drive future growth opportunities in the a competitive advantage over slower and fi ntech companies has been long term. competitors. greatly discussed in recent years. There is certainly a sizeable market The most forward-thinking Islamic With the march of increasingly of consumers who could benefi t from fi nancial institutions understand that sophisticated technology, the evolution increased accessibility to newer Islamic the service providers that successfully of small and medium-sized fi ntech fi ntech products such as peer-to-peer incorporate fi ntech solutions into their service providers and the relentless lending, robo-advisory and services off erings will reap the greatest rewards. demand from consumers in the digital using artifi cial intelligence. But while nobody could doubt the age, 2019 could well be the year that talks advantages that fi ntech can bring to turn to action. Many Islamic banks have indeed been the market, the pace of change and vocal in expressing their interest in subsequent delivery of such fi ntech Craig Moore is the founder and CEO of introducing new digital initiatives. This services have been relatively limited. Beehive. He can be contacted at craig@ is hardly surprising since this approach beehive.ae. is a surefi re way to broaden their target Collaboration has been seen to be highly audience and eff ectively engage with eff ective in other markets, whereby

Embedding sustainability into the business model of Islamic ϐinancial institutions: Fintech ϐirst

SRI ETHICAL & GREEN Fintech is emerging as a core disruptor eff ective and effi cient fi nancial markets of every aspect of today’s fi nancial with a level-playing fi eld and market Dr Mohamed Wail Aaminou system. Fintech covers everything from integrity for long-term impact investors. mobile payment platforms to robo- Now that COP24 held in Poland advisors, and from crowdfunding and Most Islamic fi nancial institutions are is over, it is clear that the world is virtual currencies to blockchain. In relatively young and as such more struggling more than ever to address combination, such forceful innovations agile in adopting fi ntech innovations not only the impact of climate change will threaten the viability of today’s and bett er prepared to successfully but also growing inequalities and fi nancial sector business models, and implement fi ntech initiatives. To do so, widespread deterioration in the natural indeed the eff ectiveness of current Islamic fi nancial institutions will need wealth that sustains communities policies, regulations and norms that to overcome regulatory requirements, and underpins the global economy. have shaped modern fi nance. In a recent as innovations in fi nancial markets Unfortunately, the scale of funding survey by PwC, 88% of incumbent typically require the explicit approval and technical support required to fi nancial institutions are increasingly of regulators ex ante. Islamic fi nancial achieve the ambitious Sustainable concerned about losing revenue to institutions will also be challenged on Development Goals 2030 agenda innovators and 82% expect to increase the following fronts: cybersecurity, are still far beyond the scope of fi ntech partnerships in the next three to privacy and resilience to cyberatt acks. governments’ budgets and traditional fi ve years. funding mechanisms. Lastly, Islamic fi nancial institutions Fintech can address sustainability will need to ensure that fi ntech As for Islamic fi nance, there is clearly challenges in many wonderful ways. solutions are not only scalable but a timely opportunity to contribute to For instance, mobile and crowdfunding also built around robust and reliable bridging the sustainability fi nancing innovations can unlock fi nancial technologies. It is true that embarking gap. Such an involvement will allow inclusion by signifi cantly reducing the on the fi ntech journey goes hand in the industry to clarify its genuine value costs for payments and provide suitable hand with taking risk and making proposition based on its core values, access to capital domestically and bold and uncomfortable decisions. serve customers’ expectations and internationally for the unbanked, the However, in light of the swift changes channel funds to address social and underbanked and for SMEs. in international fi nancial markets and environmental challenges especially in sustainability, embracing fi ntech may no OIC countries. Data technologies can facilitate longer be a luxury. collecting, analyzing and distributing For Islamic fi nancial institutions seeking sustainability and impact indicators for Dr Mohamed Wail Aaminou is the general to genuinely embed sustainability bett er economic decision-making, bett er manager of Al Maali Consulting Group. into their business model, investment regulation and bett er risk management. He can be contacted at w.aaminou@ in fi ntech should be a top priority. Finally, blockchain can empower almaaligroup.com.

The Algerian Symposium on Takaful and Islamic ϐinance

The Algerian Symposium on Takaful and Islamic Finance was held on the 24th–25th November 2018 at the Moufdi Zakaria Culture Palace in Algiers. Under the patronage of the Algerian Islamic High Council, event and tourism agency MedVoyeges organized the symposium in partnership with SAAFI, a consulting fi rm specializing in the distribution and design of Takaful solutions and Islamic fi nance. MILOUD BENADJEMIA elaborates on the Islamic fi nance discussions that took place during the event.

Miloud Benadjemia is Regulation number 18/02 defi nes the optimization tools for the collection and the legal advisor at Cross rules applicable to so-called participatory distribution of Zakat. Border Associates. He can products not giving rise to the collection be contacted at or payment of interest and these According to Professor Mohamed [email protected]. products are the following: Murabahah, Boudjellal, the introduction of Islamic Musharakah, Mudarabah, Ijarah, Istisnah, fi nance in the Algerian banking system The symposium turned out to be an Salam as well as account deposits. As for will capture huge amounts, estimated exchange platform between the delegates the objectives of this regulation governing at more than DZD3.7 trillion (US$30.95 who are mostly players in the Algerian this specifi c activity of universal billion), not including the US$20 billion fi nancial system like stock exchanges, conventional banks, they aim to take that circulated in the parallel market, due banks, fi nancial institutions, insurance charge of the peculiarities of this method to the performance of a banking system companies, academicians, consulting of fi nancing and collection of resources, measured by its ability to utilize money fi rms and training centers. Offi cials and in order to best meet the current and circulating out of the bank, because specialists from Morocco, Tunisia, France, future expectations of economic operators Algerians shun banks due to religious Senegal and the UAE participated in and to strengthen fi nancial capacity. As beliefs. the panel discussions to present their regards the certifi cation of the conformity experiences in the Takaful and Islamic of these banking products with the rules Among the recommendations of this fi nance industry. of Shariah law, the regulation refers symposium was that banks and fi nancial the banks and the fi nancial institutions institutions should train and produce This symposium, under the scientifi c concerned to the assessment of the qualifi ed human capital exclusively direction of Professor Mohamed national body duly authorized in the dedicated to this segment of fi nance, as Boudjellal, a professor of economics at matt er, aft er obtaining the notifi cation well as sett ing up counters dedicated to the University of M'sila-Algeria, aimed to cum approval from the Bank of Algeria participative fi nance and sett ing up an facilitate the eff orts of public authorities regarding the product placement in the organizational framework, with fi rm to integrate Islamic fi nance products in market. decisions on the part of the Algerian accordance with the precepts of Islam in state, which oblige the banks to apply the Algerian fi nancial system, with a view Research papers were presented at the this system of fi nancing, and to utilize to broadening the banking system and the symposium focusing mainly on two parts: international experience in this sector, such inclusion of available fi nancial resources. (1) The birth and development of Islamic as from Malaysia, the UK and Dubai. fi nance in Algeria, and (2) The stakes and Algeria, which participated in the creation opportunities of Islamic fi nance. Politicians in Algeria take seriously the of AAOIFI in Algiers in 1992 – AAOIFI ideas debated in this space to develop later moved to Bahrain – must, in this case, Yazid Benmouhoub, the director-general Islamic fi nance, particularly to utilize put in place the standards of this type of of the Stock Exchange of Algiers, spoke dormant capital invested off the formal fi nance by encouraging transactions and on the topic of ‘Stock Exchange of circuit, like other Muslim countries such as fi nancial products in accordance with Algiers and Sukuk: State of Premises Malaysia, Kuwait, the UAE and Pakistan. the Muslim law. This fi nancing system and Prospects’ as well as other themes It is estimated that the use of Sukuk, is based on fi ve pillars: the prohibition of such as Sukuk to diversify sources of in the fi rst place, will allow Algeria to interest; the prohibition of random and fi nancing in capital markets; banking diversify external sources of fi nancing uncertain investments; risky speculation; products and participatory instruments and contribute to the fi nancing of national the obligation to share profi ts and losses; to utilize new resources and help fi nance companies, mainly through the Algiers and the obligation to invest exclusively in the productive apparatus; Islamic fi nance Stock Exchange, thus it is a good idea the real and tangible economy. and fi nancial inclusion; study of the to create a compartment for this type of experiences of Islamic fi nance around fi nancing. The event took place as soon as the the world; training in Islamic fi nance in Algerian Council of Money and Credit Algeria; state of Islamic banking, Takaful When it comes to off ering consumer examined and approved regulation insurance and philanthropic fi nance in banking products, it will have the fi rst number 18/02 on the 4th November 2018 Algeria such as Zakat and Waqf; legal, tax eff ect of supporting the real estate and that relates to the conditions of exercise by and fi nancial aspects; the conditions for construction market through the granting banks and fi nancial institutions as well as success and the challenges to be met for of new loans, with the creation of savings banking operations of Shariah compliant bett er implementation; the conditions for accounts without interest and/or fi nancial products. implementation of Takaful in Algeria; and participatory.

S&P Dow Jones Quarterly Islamic Market Review

Global S&P and Dow Jones Shariah compliant benchmarks outperformed their conventional counterparts in 2018 as fi nancials – which are underrepresented in Islamic indices – lost a signifi cant 17.3% – lagging the overall market while healthcare and information technology – which tend to be overweight in Islamic indices – fi nished the year near the front of the sector leaderboard. The S&P Global BMI and Dow Jones Islamic Market (DJIM) World each fell 8.2% year-to-date, outperforming the conventional S&P Global BMI by more than 350bps.

Michael Orzano is the conventional indices by meaningful performance fell in line with the director of Global Equity margins while Middle East Shariah broader global market during the Indices at S&P Dow compliant benchmarks tracked fourth quarter as concerns over global Jones Indices. He can be conventional indices more closely, as growth, trade issues, geopolitics and contacted at michael. the region has a higher proportion of interest rates weighed on equities [email protected]. Shariah compliant companies. Similarly, globally. The S&P 500 Shariah the lack of exposure to healthcare in concluded 2018 down 4.2%, a 400bps emerging markets contributed to the lead over the S&P Global BMI Shariah US and Europe Shariah underperformance of emerging market for the year. compliant benchmark Shariah compliant benchmarks compared outperformance to conventional counterparts year-to- MENA equities likewise continued to Regionally, US and Europe Shariah date. outpace broader emerging markets compliant benchmarks outperformed throughout 2018, gaining 5.6% year-to- US maintains lead among date, as measured by the S&P Pan Arab Table 1: S&P Global BMI sector performance Composite Shariah. The S&P Qatar BMI (2018 year-to-date) global equities and MENA led the way in the region in 2018, GICS sector Return equity markets show relative gaining a solid 22.4%, followed by the S&P Saudi Arabia BMI and the S&P Healthcare -0.2% strength Aft er a long period of outperformance Kuwait BMI, which gained 10.7% and Utilities -2.1% earlier in the year, US equity 9.1% respectively year-to-date. Information technology -7.2% Table 2: Comparative price returns (2018 year-to-date) Real estate -10.7% Consumer discretionary -12.1% Shariah Conventional Variance Consumer staples -12.5% S&P Global BMI -8.2% -11.8% 3.6% Industrials -16.8% DJIM World -8.2% -11.7% 3.5% Financials -17.3% S&P 500 -4.2% -6.2% 2%

Energy -17.5% DJIM Asia Paciﬁ c -15.4% -15.6% 0.2%

Communication services -17.9% DJIM Europe -12.8% -17.5% 4.7%

Materials -19.2% DJIM Emerging Markets -16.6% -15.7% -0.9% S&P Global BMI -11.8% S&P Pan Arab Composite 5.6% 6.1% -0.4% Source: S&P Dow Jones Indices. Data as at the st 31st December 2018. Calculations are based on Source: S&P Dow Jones Indices. Data as at the 31 December 2018. Calculations are based on price price return index levels in the US dollar. return index levels in the US dollar.

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Over 6,955 individual companies directly involved in the Islamic ﬁ nance industry

The ϐive big challenges for Islamic ϐinance in 2019

Islamic fi nance is at a historical juncture to make the next bold move by accepting the new opportunities available in the marketplace. The tech-savvy millennials are making yet another revolution by innovation. The changes in the banking and technological industry are fast-tracking a paradigm shift from our fi nancial habits to social fi nancial integration. No industry is rich enough to buy the past but every industry has an equal opportunity to understand tomorrow’s demand and prepare for it today. MUATH MUBARAK writes.

Muath Mubarak is a industry should be totally free from (from fi ntech to regtech)-driven qualifi ed chartered the major prohibitions such as Riba, analytics, intelligence, digital management accountant Gharar, Maysir and Qimar and transformation and connectivity by profession and an additionally, it will not entertain using the technologies of artifi cial Islamic banker, trainer any investment or fi nancing facility intelligence, machine learning, big and writer by practice in the fi eld of which will cause harm to people, data, smart contracts, blockchain, Islamic banking and fi nance since animals, the environment and the cloud networks, cryptocurrencies, 2006. He is currently the manager of planet at large, including negative- chatbots, bionic fi nancial consultants knowledge marketing and fi nancial impact industries such as tobacco, (leveraging robotics with a high- inclusion at Amana Bank Sri Lanka. alcohol, pornography, weapons, quality human touch) and smart He can be contacted at muath. casinos, pork-related products and Muft is (in Islamic banks to address [email protected]. such. certain designated issues).

The following fi ve big challenges will Bearing in mind the aforementioned, The Islamic fi nance industry should be key considerations for rapid growth the Islamic fi nance industry should portray the enthusiasm and courage of this industry: seriously consider creating more to consider embracing future room, platforms and level-playing technology at the institutional level 1. Economic wellbeing fi elds for the entrepreneurial today to make things happen and be There are many economic challenges journey of social businesses which the game-changer in the banking and in the world from accessing clean will in turn, make the eff ort to get fi nancial global arena. water to wealth inequality. One of closer to meet the UN Sustainable the top challenges for Islamic fi nance Developments Goals. 5. Design thinking is to seriously consider narrowing It is all about deep thinking or down the gap between the haves and 3. Value-based intermediation (VBI) in-depth research to understand the have-nots. The Islamic fi nance industry should the needs of users (customers) by consider the VBI proposition as analyzing the patt erns produced “82% of the wealth generated last one of the mainstream segments in from innovative solutions that will year went to the richest 1% of the banking like retail, corporate and fulfi ll users’ requirements. De- global population, while the 3.7 private banking with the birth of the banking and a cashless society will billion people who make up the new ‘open-banking’ concept. We enable the Islamic fi nance industry poorest half of the world saw no can either give a fi sh to a hungry to experience a whole new level increase in their wealth,” according man and feed him for a day or teach facilitated by design thinking which to a new Oxfam report titled him to fi sh in order to earn a living will defi nitely improve customer ‘Reward Work, not Wealth’ released in his lifetime. Based on the risk- experience and boost fi nancial in January 2018. sharing principle, the Islamic fi nance inclusion in marginalized and industry can create a sandbox to rural areas. Design thinking can be In capitalism, the invisible hands think and test innovative ideas to applied at all diff erent levels and or market forces created the bring out solutions even in local on all stakeholders of the industry concentration of wealth among communities to make a diff erence. and can be kick-started primarily the few causing wealth imbalance It is worth mentioning that Bank on customers’ fi nancial life-cycle globally. Economic inequality is Negara Malaysia has issued experience and staff ’s learning one of the main roots causing geo- guidelines to accommodate the experience. socio issues in modern society. The practical adoption of VBI to reorient Islamic fi nance industry should the Islamic fi nance business models The Islamic fi nance industry should move quickly to address this issue to meet the objective of creating a harness the changes and by implementing the measures positive and sustainable economy, transformation for a brighter future undertaken as well as lessons community and environment. by creating fi nancial integrity and learned in the past. stability. VBI promises economic and 4. Future technology social wellbeing built on future 2. Social wellbeing The banking and fi nancial ecosystem technology and design thinking. Primarily, the Islamic fi nance is going through major changes due to disruptive technology

Islamic ϐinance for reconstruction in Syria: Opportunities and challenges

With the slowdown of military operations in Syria, the reopening of border crossings with Jordan and the reopening of embassies of many Arab countries in Damascus, the Syrian economy fi nally has a fi ghting chance to start healing. Having lost almost half of its GDP since 2011 according to BMI, Syria needs to capitalize on all possible means to gear up for reconstruction. During the last seven years, fi nancial institutions in the country suff ered from high levels of liquidity with litt le to no investment avenues to generate revenue. Among others, Islamic fi nancial institutions are further hurt by the lack of Shariah compliant investment opportunities. MOHAMMAD GHAITH MAHAINI explores.

Mohammad Ghaith role. The fi rst is in providing insurance of the third quarter of 2018, the total Mahaini is an coverag necessary for fi nance seekers paid-up capital of the three Islamic independent Islamic to get approved by the banks. The banks along with the two Takaful fi nance consultant second is in being actively involved in operators in the country amounted specializing in fi nancing reconstruction through their to only US$54.4 million. Total assets structuring Islamic fi nance products investment activities. of Islamic banks registered around at Salam Consult. He can be US$1.7 billion. To put this number in contacted at ghaithmahaini@gmail. Still, there are many major challenges perspective, modest estimates of the com. that might hinder Islamic fi nancial cost of reconstruction suggest it to institutions from realizing their be no less than US$200 billion. Some Financial reports of the three full potential with regards to Islamic fi nancial institutions are trying operating Islamic banks in Syria show reconstruction. Due to the war, almost to increase their capital by off ering that their cash and cash equivalent are 80% of Syrian people live under the stock dividends instead of cash. This skyrocketing at US$1.3 billion which poverty line according to a UN-backed might be a viable option, but it needs is equivalent to an astonishing 76% of report. This means that there are time to accumulate enough capital to total assets held by Islamic banks as of very limited commercially bankable rise up to the challenge. the 30th September 2018. Nonetheless, corporates and individuals who fulfi ll Islamic fi nance has a tremendous all the feasibility and creditworthiness I am a strong advocate of the role of role to play in the upcoming years in criteria to be eligible for fi nancing. mergers and acquisitions (M&A) in off ering fi nancing solutions through Therefore, Islamic microfi nancing can driving synergy. In fact, M&A might be Islamic banks, Takaful companies, be used as a viable solution for bett er in the best interest of both conventional Islamic fi nancial market (Sukuk fi nancial inclusion. Unfortunately, and Islamic fi nancial institutions in issuance) and Islamic microfi nance. there is yet to be any Islamic Syria in the middle to long run. With 14 microfi nancing institution operating private commercial and Islamic banks, To meet the dire need of individuals, in the country. Syria can benefi t from not to mention many other government corporates and the government for the lessons learned regarding the role banks, along with 13 insurance fi nancial facilities, Islamic banks need of microfi nancing in driving economic companies including two Takaful to be prepared with a wide range of growth in other third world countries operators, the market realities suggest fi nancing products with diff erent risk such as Bangladesh. that it has shrunk to a level too small to structures such as Murabahah, Ijarah allow that many players to be effi cient and even Musharakah or Mudarabah if Further, the country needs its highly and profi table. In a time where survival the right circumstances arise. However, skilled workers who left during the last is only for the fi tt est, M&A might be the probably the most important Islamic seven years. Most are not expected to green card for the future. fi nancial contract for this stage is come back any time soon aft er having Istisnah. Istisnah fi ts in to fi nance all sett led in another country. Corporates 2019 is expected to be very important in forms of reconstruction from homes to and the government should att ract determining how the economic outlook energy infrastructure. these talents and off er them good for the country would be like in the benefi ts in order for them to consider following years. Government support is With the massive destruction to coming back. Using foreign workers essential to allow Islamic fi nancial infrastructure all over the country, local might not be the best solution since the institutions to fully engage in providing Islamic banks along with international money they make is usually remitt ed to liquidity to reconstruction eff orts in the Islamic banks such as the IDB can play their respective countries and not spent near future. Provided that this new surge a very important role in fi nancing major internally. of optimism continues, together with the infrastructure projects. The government much-needed government support, along can also issue Sukuk as an instrument Finally, Islamic banks need to increase with eff orts from fi nancial institutions to to raise funds. Sukuk issuance would their capital to bolster their position fuel reconstruction, it is highly likely that allow the utilization of high liquidity against fi nancial turbulence and to Syria would see some economic growth parked in Islamic fi nancial institutions. become reliable partners in fi nancing in 2020 for the fi rst time in nine years. Takaful on the other hand plays a dual big infrastructure projects. By the end

Islamic ϐinance and innovation: Ratings

In cases where Shariah boards certify products or processes and audit them under the Shariah law on a regular basis, how is the quality of the product measured even though it is Shariah compatible? Firstly, we should not confuse the role of the Shariah board with that of the rating. SHAYKH TARIK BENGARAI ABOU NOUR elaborates.

Shaykh Tarik Bengarai ȱŗǱȱ¢ȱȱęȱȱ ȱ¢ȱȮȱ Abou Nour is the ȱǻȬ ǼǱ chairman of CIFIE & Co ȱȱ and IESIP. He can be ȱȱȱȱȱ contacted at contact@ ȱȃȱȂȱǻǼǰȱȱ ciﬁ e.fr. ȱȱȱǯ

The Shariah board is responsible for the ¡ Financial lawfulness of products in compliance ȱǻǼ Ě with Shariah and does not judge the bank as a whole, nor do they evaluate B one bank over another. They do not judge the bank’s compliance with criteria such as its involvement in the development aid of poor countries or in rents fair trade. The fi nancial and extra-fi nancial rating rsnȱttȱters – as well as the Shariah certifi cate of rȱeȱ conformity – does not constitute an nsrneǵ nesȱresetn investment recommendation. This is an rȱrter objective quality measure of the product against the predefi ned criteria by a rating rȱǻesnǼ ents agency that should be independent-. ner¢ȱertrs

The role of a rating agency is more global Source: CIFIE without being the Shariah board. A rating is an independent opinion about more sensitive to a global ethic – and operational) – Basel II/III the ability and willingness of an issuer environmental protection, human rights ratio adopted: exclusion in the to meet its fi nancial commitments on and assistance to the disadvantaged denominator of the ratio McDonough time. And in the extra-fi nancial fi eld, it population. Islamic fi nance must also be (solvability rate) of the investor constitutes an evaluation (a measure) socially responsible at the risk of losing accounts and a consideration of independent of the degree of conformity all credibility! margin risk and reputation. (Bank’s of the institution's practices with its own funds > 8% of [credit risk (85%) stated principles. In terms of socially responsible + market risk (5%) + operational risk investment, membership in an index, (10%].) The rating is not a recommendation such as the DJSI WORLD or the • Measure of governance problem and to buy, sell, or hold securities. It can FTSE4Good, has become essential. confl ict of interest. help investors make their investment • Values measurement like decisions but should not be used as the Special criteria for analysis and transparency, equity, absence of ‘toxic’ only indicator in the decision-making. measurement specifi c to Islamic or unknown or illusory products, The rating is based on information fi nance can be developed. In addition contribution in the environmental provided by the issuer or from other to the conventional fi nancial ratios protection, social projects, managing sources deemed reliable, such as markets used in the context of Basel II and III charity/Zakat ... These values and the government. For example, and prudential criteria such as debt refl ect the correct application of the rating agency S&P also provides Islamic ratio and liquidity ratio to get a good religion’s noble aims (Maqasid). banks having more than US$20 billion measure of the probability of default • Taking into account innovative outstanding Sukuk with a rating. This and therefore a rating, there are many products and their context such rating includes, in addition to the specifi cities concerning this solidarity as Sukuk, Takaful, derivatives and consideration of conventional criteria, the and participatory ethical fi nance. covers. Nevertheless, the legal Shariah specifi city of these institutions. installation of Sukuk in tax havens, The main specifi c quantitative and the lack of regular audit post- Issues of a new, more reliable qualitative criteria are (see also Appendix certifi cation and the problem of the and fair rating for an example of CIFIE rating): secondary market make this market The world is currently more and • Specifi c risk management very unpopular and not very credible. (Murabahah credit, market

Continued

reȱŘǱȱȱęrstȱnȱrneȱȮȱȱ stsnȱȱenȱrȱteȱrtnȱȱetȱęs not meet the exclusion criteria. 2. And in the case of investments that rȱntȱsse¢ have a percentage of investment in the Haram activities listed in (a)* or that do erȱseeȱȱęnnȱrrneentȱ SIF: Specialized not respect the principles mentioned investment funds in (b), not exceeding 5% of their total 2 6 turnover. strtr en nestrs 3. And in the case of non-Halal fi nancing (example: interest credit) not exceeding 5 1 5% of their total debt. 4. And/or the actions comply with nte Standard 21 as set out in this charter inaȱa££iȱǻaalllǼ: 3 se 4 ntrt et een te (an additional positive or negative te trrtte ntrt inȱn ialinǱȱ evaluation will be considered according et een te iiȱ Ȋaaa tns to the respect of the limits set in c* and ǻaniȂiǼ n ne se ǻȱ inaǼ n ialinȱ+ȱc rer Ȋialinȱiȱȱailȱȱ the result of the analysis of the actions of n te ter ǻnȇǼ ȱin ǻęr¢ possible preference). entǼ 3. Eligible funds level 3 ŗǯȱeȱnestrsȱ¢ȱereȱteȱreȱȱsrȱǻrtnersȱnȱteȱretȱȱtnsȦet¢ȱ Symbol: reȱtȱȱ stsnǼǯȱ These are funds that have been able to ŘǯȱŘŖƖȱȱteȱreȱȱteȱstrtnȱrtsȱǻreȱȱ stsnǼȱsȱneȱ¢ȱteȱstrtrȱ satisfy the exclusion criteria in terms of tȱenȱȱnteȱ seǯȱ the main activity (a) but of which the řǯȱeȱrennȱŞŖƖȱȱteȱ stsnȱreȱsȱęnneȱ¢ȱteȱnestrsȱȱenȱ ȱ percentage of secondary activities that do trnstsȱteȱȱntȱtȱteȱrerȱ ȱ¢sȱteȱreȱȱserȱereȱǻnȱȇǼǯȱ not meet the exclusion criteria (a) is less Śǯȱneȱteȱęȱsȱeteȱrnȱtȱteȱtesȱnȱnȱteȱrereȱteǰȱtȱsȱ than or equal to 5%. eereȱtȱteȱstsnȂǯȱ That is to say, the main activity is not in śǯȱnȱreetȱȱteȱęǰȱteȱstrtrȱetesȱteȱ¢entȱȱteȱreȱǻŞŖƖȱȱteȱ rennȱstrtnȱrtsǼȱtȱenǯȱsȱneȱsȱȱnȱteȱěerentȱet eenȱteȱ the sectors mentioned in (a): reȱȱ stsnȱȱteȱt ȱntrtsǼȱ 1. And only a minority percentage of ŜǯȱĞerȱteȱenȱȱteȱȬȱerǰȱenȱetsȱtsȱneentȱeesǰȱteȱȁsȂȱ ancillary activities not exceeding 5% do nȱtsȱ nȱrenertnȱnȱtenȱrestrtesȱteȱtȱnȱensȱtȱteȱersȱȱ not meet the exclusion criteria. teȱsresȱǻȱ stsnǼǯȱ 2. And in the case of investments that Source: CIFIE have a percentage of investment in the Haram activities listed in (a) or that do The following is an example of two 1. Eligible funds level 1 not respect the principles mentioned Sukuk that have been certifi ed by the Symbol of internal rating: in (b), not exceeding 5% of their total Shariah board of CIFIE: These are funds that have been able turnover. 1. Sukuk Ijarah – the fi rst Sukuk based to fully meet the exclusion criteria on the rental of photovoltaic power (a)* and principles (b)* and (c). This For this level, we tolerate fi nancing with plants is an example that meets means that their main activity and any interest-only bank loans up to a limit of the requirements of environmental ancillary activities are not in the sectors 33% of the debt ratio. protection through the use of clean mentioned in (a)* and whose fi nancing This level of eligibility corresponds to energy (solar). Its triple lunar crescent and investments respect the principles the upper limit set out in criterion c*.The (triple ‘A’ equivalent (see Appendix)) set out in (b)*. The shareholding complies Shariah board of the CIFIE is the only rating will encourage this sector and with AAOIFI Standard 21 (in this respect, authority to evaluate the compliance inspire other players around the an additional positive or negative report and to rule accordingly. world to do the same. assessment will be considered according *as defi ned in the internal charter of the 2. The Sukuk Istisnah of Medialink for to the respect of the limits set in c* and CIFIE the production of ethical fi lms is the the result of the analysis of the actions of second example of the utility to serve possible preference). Important notes society with an alternative of fi lms 1. For all levels of eligibility, we do subject to a moral charter. Its good 2. Eligible funds level 2 not tolerate any funding that does not rating through this criteria of utility Symbol: comply with the laws in force (money and innovation by a known and These funds have been able to satisfy, in laundering and terrorism fi nancing). recognized organization will allow terms of the main activity, the exclusion 2. The offi cial integration of the SME into both Islamic fi nance and innovation criteria (a)* but the percentage of the Shariah compliant circle is subject to to acquire their credentials. secondary activities that do not meet the the award of the CIFIE Shariah label. exclusion criteria (a) is less than or equal 3. Concerning the Fatwa on the respect of APPENDIX to 5%. That is to say, the main activity is the charter and the granting of the label, Examples of fund ratings by CIFIE not in the sectors mentioned in (a): the Shariah board of the CIFIE remains Shariah audit (in view of the market 1. And only a minority percentage of the only power to grant this label with reality, mostly conventional) ancillary activities not exceeding 5% do the level of eligibility 1 or 2.

Bank treasury and investment management solutions in an Islamic perspective

Akash Anand is the ȱŗǱȱ ȱȱ¢ȱȱĞ ȱ chief marketing offi cer and global head of Fixed Income Call Markets Equity strategy and sales at Securities ȱȱȱ ¢ȱǭȱȱ Credence Analytics. He ǰȱǰȱ ¢ can be contacted at akashanand@ credenceanalytics.com. Mutual Funds Forex Derivatives Islamic fi nance is set for more growth ȱȦȱȱǰȱ ȱȱǱȱǰȱ ȱȱȱȱ ¡ȱǰȱ ǰȱ ¢ȱ ǰȱ as the widespread socioeconomic ¢ȱȱ ȱǱȱ¢ǰȱǰȱ ǰȱ ȱǭȱ development globally is expected to continue. The growth is driven by multiple factors such as: ● A growing Muslim population Dealing Position Reporting Decision Support ȱ ȱȱǰȱ ȱȱ ¡ȱȱ¢ȱ standing at around 1.7 billion and ǰȱȱȱ ȱȱ ȱ¢ȱ looking at investment products ȱ¢ catered to their needs. ● The search for ethical investments by Muslim and non-Muslim investors. Ĵ Income and Corporate actions Ĵȱǰȱȱ ǰȱǰȱ ● The need for investment products – ȱȱȱȱ ȱȱȱ where to invest oil revenue surpluses. ● The need for Islamic project fi nancing of infrastructure projects in the region. Reporting Accounting ● A growing number of Islamic and ȱȱ ȱȱ conventional fi nancial institutions ȱȱȱȱȱ ȱȱȱȱ entering the space. ¢ ● A rise in sophistication through greater fundamentals in the contracts Limit Monitoring Risk Reporting allowed under Shariah law and ȱȱȱȱ ȱȱȱȱȱ their appropriate utilization in the ȱȱ¢ȱȱ ȱ development of modern fi nancial instruments. Source: Author’s own

Progress is also being made in the Islamic asset management sector which stands Interbank deposits Agency contracts at US$59 billion in investment surplus. Interbank deposits are a key component Wakalah is an agency contract for The past year has been an exciting one of the Islamic Interbank Money Market. brokerage services when a client seeks for the GCC region. Recently, signifi cant By using the Mudarabah Interbank fi nance for an asset or activity deemed as geopolitical events have kept investors Investment Scheme, Islamic banks ethical under the principles of Shariah. monitoring market performance closely, and fi nancial institutions can lend and especially as oil prices, non-oil GDP borrow among themselves. Leasing agreements growth and corporate earnings have all Ijarah is an alternative transaction steadily improved. It is likely that assets Cheque clearing model, requiring an exchange based on under management will more than double Another key component has been the a specifi ed asset in return for a payment, across the GCC, exceeding US$110 billion creation of a separate cheque clearing but in this case ownership is not by 2020, according to recent estimates. system from the conventional one – as transferred – much like an installment what Bank Negara Malaysia has done. leasing agreement in conventional The increase in assets was driven by strong It requires Islamic banks to have an Al fi nance. growth in all sectors – Islamic banking, Wadiah current account with the bank. Takaful, outstanding Sukuk and net value Al Wadiah is defi ned by Bank Muamalat Foreign exchange products of Islamic funds. A system should have no as: “a concluded contract between the ● Foreign exchange (FX) spot exceptions on the compliance of treasury, owner (the depositor) of the goods or ● Islamic FX forward (Waad) investment or wealth management with money and the custodian (the banks) for Shariah principles and the accounting safekeeping (under which) the depositor Cash management products standards issued by international bodies grants the bank their permission to ● Commodity Murabahah – a Shariah such as the Islamic Fiqh Academy, utilize the money for whatever is compliant product used for investing AAOIFI, IFSB and the Basel Committ ee on permitt ed by Shariah”. excess funds. Banking Supervision. ● Wakalah – a Shariah compliant

Continued

options and swaps. ȱŗǱȱȱ¡ȱȱǻȱǼ ● Islamic proﬁ t rate swap and options. ● Wadiah and Hibah adjustment. ȱ Ȋȱȱ¡ȱȱ ǰȱ¡ȱȱěȱȱ ● Shariah compliant equity and equity Ȋȱȱȱȱ ȱȱȱ¢ȱȱ ȱ basket. Adjustment of proﬁ t – two Ȋȱȱȱȱȱȱȱȱ trades involved. ● Government investments (Qard Ȋȱȱȱȱȱȱȱȱ Hasan, Bai Al Inah, Bai Bithaman Ajil, Ȋȱȱ£ȱȱȱ Bai Al Dayn). Ȋȱȱ£ȱ¢ȱȱ ● Call accounts/Watani accounts – money market products and future Ȋȱȱ¢ȱěȱęȱȱ ȱ products. Ȋȱȱ¢ȱȱȱȱȱȱȱ

ȱ Ȋȱȱ¢ȱȱ Evolution of treasury management Ȧ Ȋȱȱȱȱ systems (TMSs) There is no gett ing away from the fact ȱ Ȋȱȱȱȱȱ¢ȱȱȱ that cash forecasting is a vital, core Ĝȱ Ȋȱȱȱ¢ȱ¡ǰȱȱȱ functionality for treasury operations. No organization, regardless of their size and ȱ Ȋȱȱȱȱ¢ȱȱȱȱ sector, can aff ord to lose sight of their ¡ Ȋȱȱ¢ȱȱȱ¡ȱȱ cash and liquidity positions – yet in an increasingly complex business landscape, Banks’ Requirement this can be easier said than done. ȱȱȱȱ¢ȱȱȱ¢ȱȱȱȱȱ ȱȱȱȱ Key insights from treasurers ȱȱȱ¡ȱ ȱȱȱ¡ȱ ȱȱȱ¡ȱ ● Treasurers are more deeply ȱȱȱ ȱȱȱ ȱȱȱ embedded in their organizations than ever. About 87% of treasurers believe Source: Author’s own that treasury now enjoys a strategic position in their organizations. product used for managing reference index or index strategy. ● Treasury is infl uencing decision- short to medium-term cash fl ow The profi t can be based on stocks, making in the boardroom, requirements. commodities and other combinations particularly around issues such or based on performance. This as capital and liquidity and risk Hedging products product is a combination of a management. ● Profi t rate swap – a market that has commodity Murabahah and a Waad ● While organizations still mainly rely the capability to off er profi t rate to enter in another commodity on conventional funding, treasurers swap products in various currencies Murabahah at the end of the are building awareness of diff erent for medium to long term (within investment period for the profi t sources, such as private placements approved guidelines). amount. and green fi nance. ● Sukuk – a ‘Sakk’ (singular of Sukuk) ● Around the world, recruitment and Islamic cross-currency profi t rate swap represents a document or certifi cate development are top of the agenda Islamic cross-currency profi t rate swap that is based on a company asset or for treasury teams. ACT [Association products allow institutional clients assets. Each Sakk pays a profi t rate of Corporate Treasurers] remains the to take advantage of the diff erence in on a quarterly, semi-annual or annual gold standard qualifi cation. the profi t rates of diff erent currencies basis depending on the structure. ● Capital and liquidity management and hedge potential currency and rate ● Gold. remains the number one priority for exposure. treasurers. As the role evolves, more Other products holistic performance metrics are Investment products ● PRS – a Shariah compliant private emerging. ● Dual currency Murabahah – a short- retirement scheme. term liquidity management product ● Sukuk margin trading. that allows investors to earn a higher ● Equity margin trading. profi t rate on short-term surplus ● Islamic certifi cate of deposits. funds. ● Special fi xed deposit (reverse ● Islamic structured deposit – investors Murabahah).  looking for a longer tenor are off ered ● Tawfeeq transactions. the Islamic structured deposit ● Deposit/loan related to FX market product which is a Shariah compliant (Shariah compliant FX). To read the rest of this article, please investment product. An investor can ● Restricted and non-restricted log on to invest in an index of certain Shariah Wakalah. www.islamicfi nancenews.com compliant asset classes and earn a ● Point-based borrowing and lending. return based on the movement of that ● Shariah compliant cross-currency

securities auction on the 8th January to to raise funds to sett le the circular debt in DEALS raise IDR8 trillion (US$554.21 million) to the power industry, off ering six months meet its 2019 budget needs. A total of KIBOR plus 1%. Brunei releases Sukuk three Sukuk were reopened while two issuance calendar new issuances were off ered, according to Wifak Bank plans Sukuk BRUNEI: The Bruneian government an offi cial statement. Tenors of the papers TUNISIA: Wifak Bank, an Islamic bank, targets to raise approximately BN$1 range between six months to 15 years. during its ordinary general meeting, has billion (US$733.2 million) through 12 approved plans to issue one or more monthly Sukuk Ijarah in 2019. Pakistan plans to sell Sukuk Sukuk papers for a total amount of According to the offi cial issuance TND150 million (US$49.61 million) for a calendar, the off erings comprise eight by mid-January PAKISTAN: Representatives of Islamic tenor of three years. IFN learned that the issuances of three-month BN$100 plans are in line with the bank’s business million (US$73.32 million) papers and banks briefed Finance Minister Asad Umar on the forthcoming PKR200 billion plan which allows the use of external four 12-month BN$50 million (US$36.67 fi nancing lines through the adoption of million) Sukuk. (US$1.43 billion) Sukuk Musharakah issuance aiming to provide funds to the Wakalah Istithmar structure. The Power Holding (PHPL), an assetless and bank expects additional resource FAB to issue Sukuk state-owned shell entity, Dawn reported. requirements for fi nancing its activities to UAE: First Abu Dhabi Bank (FAB) has The auction is expected to occur by mid- reach TND320 million (US$105.83 set up an Islamic trust certifi cate January. million) by 2020. program via its SPV, FAB Sukuk Company, according to the program’s Most of the spadework has already been GFM debuts IMTNs prospectus. The program, which is completed and only some minor irritants MALAYSIA: GFM Services’s wholly- worth US$2.5 billion, will be arranged need to be removed. The syndicate owned subsidiary, Dynasty Harmony, by FAB and Standard Chartered Bank. of Islamic banks also requested the has issued its maiden Islamic medium- The certifi cates issued under the government to create a special desk at the term notes (IMTNs) for RM165 million program, which will be listed on the State Bank of Pakistan for coordinating (US$39.83 million). According to a London Stock Exchange, will have tasks with the banks participating in statement, the issuance, which comes Citigroup Global Markets, Dubai Islamic the transaction, mainly for maintaining with tenors ranging from 10 to 14.5 years, Bank, FAB, HSBC and Standard accounts and ensuring seamless is the fi rst issuance under GFM’s IMTN Chartered Bank as the dealers. repayments. program of RM300 million (US$72.43 million) in nominal value. The paper has MMA sells Mudarabah Earlier in December 2018, it was reported been rated ‘AA3/Stable’ by RAM Ratings certiϐicate that the Pakistani government was and proceeds raised will be utilized to MALDIVES: The Maldives Monetary said to be planning to raise PKR200- fi nance GFM’s investment activities, Authority (MMA) has privately placed 300 billion (US$1.44-2.15 billion) by capital expenditure, working capital as a 361-day reverse dual currency US$/ privately placing a 10-year Sukuk paper. well as general corporate purposes, MVR Mudarabah certifi cate worth a total According to The News quoting sources, including repayment of fi nancing amount of MVR14 million (US$889,723) the government has met with Islamic facilities. which will be maturing on the 23rd banks to discuss the issuance. Six banks December 2019, according to a statement. are expected to arrange the paper with Nigeria’s sophomore Sukuk The total value of outstanding reverse Meezan Bank leading the transaction. oversubscribed dual currency US$/MVR Mudarabah NIGERIA: The Nigerian federal th The issuance will be marketed primarily certifi cate as at the 27 December 2018 is government’s second Sukuk off ering MVR14 million. to qualifi ed investors such as Islamic fi nancial institutions and mutual funds. att racted over NGN132 billion The government-guaranteed Sukuk will (US$362.28 million) from 2,073 investors. Indonesia conducts Sukuk likely be structured under the principles According to the News Agency of auction of diminishing Musharakah or Ijarah. Nigeria, the seven-year NGN100 billion INDONESIA: The Indonesian fi nance Power Holding is reportedly likely to (US$274.45 million) paper, proceeds from ministry has conducted a Shariah price the facility, which is part of a plan which will be used to fi nance

DEAL TRACKER Full Deal Tracker on page 50 EXPECTED DATE COMPANY / COUNTRY SIZE STRUCTURE ANNOUNCEMENT DATE

TBA Dubai Investments Park US$500 million Five-year Sukuk 8th January 2019

TBA Wifak Bank TND150 Sukuk 3rd January 2019 million TBA Jabal Omar Development SAR2 billion Sukuk 19th December 2018 Company TBA Pasukhas Green Assets RM200 million ASEAN Green SRI Sukuk 14th December 2018

TBA Perangsang Capital RM500 million Sukuk Murabahah 11th December 2018 program

infrastructure projects, carries a 15.74% diligence and Gild Capital Partners was (US$60.18 million). The profi t sharing annual return. the fi nancial advisor, arranger and lead ratio of the accepted bids was 90:10. manager. DIP selects banks for Sukuk BNM ϐloats various Islamic UAE: Dubai Investments Park (DIP) has The Sukuk issuance is the second papers appointed HSBC, Citigroup, First Abu structured product of its kind issued in the nation to date. MALAYSIA: Bank Negara Malaysia Dhabi Bank, Emirates NBD and Dubai (BNM), since the 17th December 2018, has Islamic Bank to arrange a fi ve-year Sukuk issued 16 Money Market Tender Qard paper to refi nance its existing Sukuk STSSB issues ICPs and IMTN (MMTQ) instruments for a total amount maturing in February this year. MALAYSIA: Sunway Treasury Sukuk of RM18.65 billion (US$4.5 billion), eight th th th According to Bloomberg citing people (STSSB) has issued its 376 , 377 , 378 , MMTQ-Islamic Range Maturity tools for th th st nd rd with knowledge of the deal, the new 379 , 380 , 381 , 382 and 383 Islamic RM45.69 billion (US$11.1 billion), two instrument could be placed for about commercial papers (ICPs) for the total Bank Negara Interbank Bill-Islamic US$500 million. amount of RM960 million (US$232.93 facilities for RM1.2 billion (US$289.71 million), according to separate million) and one Government Investment Bidaya issues Sukuk announcements. Separately, STSSB also Issue Murabahah paper for RM3.3 billion SAUDI ARABIA: Bidaya Home Finance fl oated one Islamic medum-term note (US$797.9 million), according to separate has raised SAR100 million (US$26.62 (IMTN) for RM200 million (US$48.36 announcements. million) through its Series 2 Sukuk under million). The facilities have tenors its SAR500 million (US$133.11 million) ranging from 31 days to three years. Al Aqar sells IMTNs Sukuk program. The latest off ering, MALAYSIA: Al Aqar Capital has fl oated th closed on the 26 December 2018, was SCC places ICP and IMTN an Islamic medium-term note (IMTN) for arranged by Riyad Capital which also MALAYSIA: Sabah Credit Corporation RM37 million (US$8.95 million). acted as the dealer of the paper, (SCC) has issued a 182-day Islamic According to an offi cial announcement, confi rmed a statement. commercial paper (ICP) worth RM70 the paper has a tenor of four years and million (US$16.93 million), according to carries a profi t rate of 4.98%. Separately, Turkey sells lease certiϐicates data on the Bond and Sukuk Information Al Aqar also sold another four-year TURKEY: The Ministry of Treasury Exchange. The paper, which is rated IMTN for RM75 million (US$18.13 ‘P1’ by RAM Ratings, will mature on and Finance of Turkey has issued th million). The issuance carries a profi t rate euro-denominated fi xed rent rate lease the 19 June 2019 and was arranged by of 4.68%. certifi cates via a direct sale on the AmInvestment Bank. 24th December 2018. According to an SCC also raised RM150 million (US$36.27 CBG sells Sukuk Salam announcement, the certifi cates were million) via an Islamic medium-term GAMBIA: The Central Bank of Gambia fl oated for EUR400 million (US$458.43 nd note (IMTN). The issuance, which was (CBG) on the 2 January 2019 fl oated million) with a tenor of 728 days and fl oated with a profi t rate of 4.41%, will Sukuk Salam instruments with three- have a periodic rent rate of 1.55%. mature on the 18th December 2020. month and six-month tenors for GMD10 million (US$201,025) each, as well as a The ministry also sold gold bonds and Cagamas sells ICP 12-month facility worth GMD20 million lease certifi cates to individual investors (US$402,050). starting from the 17th December 2018. MALAYSIA: Cagamas on the 20th December 2018 fl oated a 182-day Islamic The papers have a two-year tenor and The CBG on the 12th December also sold commercial paper (ICP) for RM100 investors will be paid Turkish lira- a GMD5 million (US$100,225) 91-day million (US$24.18 million), according to denominated 1.2% semi-annual returns Sukuk Salam as well as a 182-day and an announcement on the Bond and indexed to the gold price. a 364-day Sukuk Salam worth GMD10 Sukuk Information Exchange. The paper million each. The 91-day and 182-day has a profi t rate of 3.8% and is rated Turkish newspaper Yenisafak had earlier papers were oversubscribed whereas the ‘MARC-1IS’ by Malaysian Rating reported citing Treasury and Finance 364-day issuance was fully subscribed. Minister Berat Albirek that the Turkish Corporation and ‘P1’ by RAM Ratings. treasury will begin off ering US dollar The CBG on the 19th December 2018 and euro-denominated Sukuk to Bangladesh Bank sells BGIIBs further sold Sukuk Salam instruments individual investors. BANGLADESH: Bangladesh Bank with three-month, six-month and th on the 27 December 2018 auctioned 12-month tenors worth GMD25 Second non-sovereign Sukuk three-month and six-month Bangladesh million (US$502,563), GMD35 million Government Islami Investment Bonds (US$703,588) and GMD50 million for Sri Lanka (BGIIBs). The three-month paper SRI LANKA: Citizen Development (US$1.01 million) respectively. The received one bid worth BDT50 million Business Finance (CDB) has placed its three-month and six-month papers were (US$591,198) whereas the six-month fi rst Sukuk Ijarah for LKR300 million undersubscribed whereas the one-year issuance received six bids worth BDT3.02 (US$1.67 million) under its US$1.75 paper was oversubscribed, according to billion (US$35.71 million), according to million three-year program. According an announcement. an announcement. to the Sunday Observer, Hatt on National Bank was the trustee to the issue, Nithya Separately, the apex bank also issued on Separately, on the 17th December 2018, th Partners was the legal counsel, EY Sri the 27 December 2018 three-month and the bank sold a six-month BGIIB, Lanka was the advisor on fi nancial due six-month Sukuk Salam papers for receiving six bids worth BDT5.09 billion

GMD25 million each and a 12-month Saudi Real Estate Reϐinance paper carries an expected return of 4.45% Sukuk Salam paper for GMD50 million. and will mature on the 13th June 2019, All three papers were undersubscribed. sets up Sukuk program according to an announcement. SAUDI ARABIA: Saudi Real Estate Refi nance Company has engaged HSBC Paramount Capital Resources The CBB’s monthly 91-day Sukuk Salam Saudi Arabia as the sole lead manager issuance worth BHD43 million sets up Sukuk program and bookrunner for a Sukuk program of (US$113.39 million) was also fully MALAYSIA: Engineering services up to SAR11 billion (US$2.93 billion). subscribed. The paper carries an company Paramount Corporation’s According to Reuters, the fi rst issuance expected return of 4.27% and will mature wholly-owned subsidiary, Paramount will be a senior Sukuk off ering under the on the 20th March 2019. Capital Resources, has made a lodgment riyal-denominated program. to the Securities Commission Malaysia to BHB partially redeems Sukuk establish an unrated Sukuk Murabahah Turkiye Finans issues Sukuk program of up to RM800 million MALAYSIA: BIMB Holdings (BHB) has TURKEY: Turkiye Finans Participation made an early partial redemption of its (US$193.43 million) in nominal value. Bank informed IFN that it has fl oated According to a bourse fi ling, Public 10-year RM1.66 billion (US$396.43 an 80-day domestic Sukuk paper worth million) Sukuk Murabahah issued in Investment Bank is the principal advisor, TRY350 million (US$66.01 million). lead arranger, security agent and facility 2013, redeeming RM609.94 million The issuance, fl oated via the bank’s (US$145.66 million). The paper, which agent for the Islamic medium-term note subsidiary, TF Varlik Kiralama Sirketi, program. was issued at discount and fully was structured for qualifi ed investors. subscribed by its parent Lembaga Tabung Haji (LTH), will mature on the CBK sells Tawarruq papers The issuance brings the total amount 12th December 2023. The redemption KUWAIT: The Central Bank of Kuwait of outstanding local currency Sukuk comes amid revelations that the Hajj th (CBK) on the 25 December 2018 sold issuances of the Islamic bank to TRY2.39 pilgrim board has a total defi cit of RM4.1 KWD200 million (US$657.12 million)- billion (US$450.78 million) and total billion (US$979.13 million) as at the end worth of three-month conventional issuances in 2018 to TRY4.3 billion of 2017. It has been proposed for LTH to bonds and related Tawarruq facilities. (US$811.03 million). dispose its underperforming assets in The off erings, which received KWD2.38 order to close the defi cit. billion (US$7.82 billion) in bids, carry In December 2018, Turkiye Finans a profi t rate of 3%, according to an Participation Bank also fl oated a 94-day announcement. domestic Sukuk paper worth TRY230 Brunei sells Sukuk Ijarah million (US$43.25 million), but the BRUNEI: The government of Brunei th The central bank also auctioned three- issuance was upsized to TRY340 million has printed its 164 short-term Sukuk month conventional bonds and related (US$63.93 million) due to high demand, Ijarah for the amount of BN$32.5 million Tawarruq facilities for a total amount of according to a statement. (US$23.67 million), according to an KWD160 million (US$525.7 million) on announcement by Autoriti Monetari the 18th December 2018. The issuance ASE lists Jordan’s sovereign Brunei Darussalam. The one-year paper garnered KWD2.3 billion (US$7.56 has a rental rate of 1.75%. billion) in bids and carries a profi t rate of Sukuk 2.75%. JORDAN: Jordan’s maiden sovereign With the latest series, Brunei has thus far Sukuk worth JOD34 million (US$47.95 issued over BN$12.4 billion (US$9.03 The CBK further sold KWD160 million- million) has been listed on Amman billion)-worth of short-term Sukuk Ijarah th worth of six-month conventional bonds Stock Exchange (ASE), according to a securities since the fi rst off ering on the 6 and related Tawarruq facilities. The statement. April 2006 while the total holdings of the off erings, which received KWD2.21 Brunei government Sukuk outstanding th billion (US$7.25 billion) in bids, carry a The fi ve-year facility was issued in 2016 as at the 6 December 2018 stood at profi t rate of 2.88%. to aid national development initiatives. BN$347.5 million (US$253.13 million).

Saudi reissues Sukuk Gas Malaysia sells two IMTNs Edaran to redeem IMTNs SAUDI ARABIA: The Saudi Ministry of MALAYSIA: Gas Malaysia has sold two MALAYSIA: Edaran SWM will be Finance confi rmed in a statement that it separate Islamic medium-term notes making a mandatory redemption of has concluded a tap issuance of SAR1.29 (IMTNs) worth a combined RM51 million Sukuk Murabahah issued under its billion (US$343.43 million) under the (US$12.19 million). The three-year and Sukuk program of up to RM1 billion th Saudi Arabian Government SAR- fi ve-year papers follow the Murabahah (US$238.81 million) on the 5 April 2019, denominated Sukuk program. As at the structure and are rated ‘AAAIS’ by according to a bourse fi ling. Further end of 2018, the total amount of tap Malaysian Rating Corporation, according details of the redemption will be issuance stood at SAR6.54 billion to separate announcements. announced in due course. (US$1.74 billion) comprising a SAR2.73 billion (US$726.79 million) off ering CBB ϐloats Sukuk Ijarah and Gamuda ϐloats ICP maturing in 2023, a SAR1.44 billion Sukuk Salam MALAYSIA: Gamuda, a Malaysian (US$383.36 million) issuance maturing in BAHRAIN: The Central Bank of Bahrain infrastructure group, has printed a 90-day 2025 and a third tranche worth SAR2.37 (CBB)’s monthly 182-day Sukuk Ijarah Islamic commercial paper (ICP) billion (US$630.95 million) maturing in issuance worth BHD26 million (US$6.85 amounting to RM50 million (US$11.95 2028. million) has been fully subscribed. The million), according to an announcement

on the Bond and Sukuk Information Following the cancelation of the million (US$47.81 million) in nominal Exchange. The paper, which was arranged aforementioned certifi cates, the total value under the Shariah principle of by Maybank Investment Bank, will be outstanding of the 4% Nile Delta Sukuk Wakalah Bi Al-Istithmar together with maturing on the 14th March 2019. Certifi cates would be approximately Tawarruq, according to a bourse fi ling. US$404 million. Ajman mulls debut dollar The proceeds from the issuance of the Sharjah lists Sukuk ASEAN Green SRI Sukuk will be utilized Sukuk/bond to fund the acquisitions of eligible SRI UAE: The Emirate of Ajman is UAE: The 4.226% US$200 million trust certifi cates due 2028 issued by Sharjah projects, capital expenditure, fi nance the considering tapping the international issuer group’s Shariah compliant debt capital market in the fi rst half of Sukuk Program under its trust certifi cate issuance program have been listed on working capital and/or pay fees, next year, either through a US dollar expenses, costs and all other amounts Sukuk or bond, becoming the fi ft h NASDAQ Dubai and admitt ed to the offi cial list of securities of the Dubai payable in relation to the ASEAN SRI emirate (aft er Dubai, Abu Dhabi, Sharjah Sukuk program. and Ras Al Khaimah) to do so, Reuters Financial Services Authority, according to separate bourse fi lings. reported citing a government offi cial. Jabal Omar to privately place The size and the format of the planned The fi nal terms relating to the Sukuk sale have yet to be decided, but Ajman, aforementioned securities state that the SAUDI ARABIA: Jabal Omar which is unrated, is reportedly looking to securities will be consolidated to form a Development Company’s board of secure a credit rating. single series with the existing US$1 directors has approved the private million certifi cates due 2028 issued on the placement of a Sukuk facility worth th Dana Gas buys back US$12 14 March 2018. SAR2 billion (US$533.02 million), according to a bourse fi ling. The proceeds million-worth of Sukuk ASEAN Green SRI Sukuk in the will be used to fi nance the company’s UAE: Dana Gas has announced in a making business and complete the development bourse fi ling a buyback of approximately of Jabal Omar project. US$12 million-worth of 4% Nile Delta MALAYSIA: Pasukhas Green Assets (formerly known as Morning Summit), Sukuk Certifi cates — Reg S in December The developer has picked GIB Capital, 2018. These bought-back Sukuk will a wholly-owned subsidiary of Pasukhas Energy, has proposed to establish a 20- HSBC Saudi Arabia and JPMorgan Saudi be delivered to the Bank of New York Arabia to manage the deal. Mellon in due course for eff ecting year Islamic medium-term note program cancelation. (ASEAN Green SRI Sukuk) worth RM200

the regulation is suffi cient, said Finance The funds will be utilized for the AFRICA Minister Abderrahmane Raouia, construction of two regional hospitals in IDB supports Cameroon’s according to Reporters. Thala and Dahmani. health program IDB plans to support IDB ϐinances Niger’s health CAMEROON: The IDB has opened a line of credit amounting to XOF12.1 billion Senegal’s development plan system (US$20.94 million) for the fi nancing of a SENEGAL: The IDB is planning to NIGER: Niger’s National Assembly has project aiming to eradicate HIV/AIDS in support the second phase of the Plan for passed a law accepting two separate Cameroon, Journal du Cameroun an Emerging Senegal through a fi nancing fi nancings from the IDB amounting to reported. amounting to US$1.25 billion, Mafrique US$12 million and EUR24.42 million reported. (US$27.72 million) respectively, Le Sahel ITFC to support Cameroon’s reported. The funds will be utilized to Banque Zitouna signs strengthen Niger’s health system, in agriculture particular maternal and child health CAMEROON: The International Islamic agreement with UPDT services. Trade Finance Corporation (ITFC) will be TUNISIA: Banque Zitouna and signing in the coming weeks a EUR98 Universite Paris-Dauphine | Tunis KCB to acquire IBLR million (US$111.25 million) Murabahah (UPDT) have signed an agreement to KENYA: The Central Bank of Kenya fi nancing agreement with Cameroon, promote fi nancing solutions for the (CBK) and Kenya Deposit Insurance Investir au Cameroun reported. The payment of tuition fees, according to a Corporation (KDIC) on the 11th December funds will be utilized to purchase statement. announced that it has accepted a binding fertilizers, herbicides and pesticides, as off er from KCB Bank Kenya, which off ers well as soybean seeds and cott onseeds. IDB supports Tunisia’s health Islamic solutions, to acquire Imperial system Bank (IBLR), which had been placed in Algerian law adequate for TUNISIA: Tunisia’s Assembly of the receivership. corporate Sukuk Representatives of the People has passed ALGERIA: Algeria’s current legal a law accepting a EUR27.34 million The binding off er includes granting framework does not need to be amended (US$9.12 million) fi nancing from the IDB, access to 12.7% of eligible depositor to facilitate corporate Sukuk issuance as Web Manager Center reported. balances remaining at IBLR within

14 days of the announcement of original eligible deposits held at the date within the fi rst quarter of 2019, which is acceptance, subject to account and of receivership. expected to result in further recoveries identity verifi cations. Combining this for eligible depositors of IBLR. Further with earlier disbursements will result in The off er also states that KCB will details will be announced upon a total recovery of approximately 35% of conclude the loan verifi cation process completion of the exercise.

in Bangladesh to assist it in sett ing up a CIMB launches holistic SME ASIA sugar refi nery in the Meghna Economic solution New regulation on managers Zone, Narayanganj. The project, which will have a capacity of 4,000 metric MALAYSIA: CIMB Islamic and CIMB of ϐinancial institutions tonnes per day, is also being fi nanced by Bank have introduced the CIMB Sole INDONESIA: Otoritas Jasa Keuangan a club of development fi nancial Proprietor & Partnership proposition to (OJK) has released a new regulation on institutions including KfW-DEG, FMO facilitate the establishment and the revaluation for managers of fi nancial and the Austrian Development Bank. operations of SMEs. The banks have institutions, which includes Islamic and engaged 12 partners (Digi, Exabytes, ARMS, Billplz, NEXT Academy, Dojo, conventional. According to a document BNM discloses list of Islamic released by the authority, the regulation Genius POS, EasyParcel, EasyStore, includes chapters on the scope of principal dealers Exabytes Digital, Nomad and Sandbox) revaluation, procedures for the MALAYSIA: Bank Negara Malaysia to provide exclusive off ers and special revaluation exercise, as well as the (BNM) has disclosed the list of Islamic rates for various business solutions consequences of the revaluation’s results, principal dealers for the period from the covering banking operation account; among others. 1st January 2019 to the 31st December payment, collection and courier services; 2020. The list comprises seven banks, funding and support; work space and FINTERRA inks MoC with namely Affi n Islamic Bank, AmBank connectivity; and digital solutions. Islamic, Bank Islam Malaysia, CIMB ISRA Islamic Bank, Hong Leong Islamic Bank, BSM IPO expected by 2020 MALAYSIA: FINTERRA has signed a Maybank Islamic and RHB Islamic Bank, INDONESIA: Bank Syariah Mandiri memorandum of cooperation (MoC) according to a statement. (BSM) is looking to fl oat an IPO in late with the International Shari’ah Research 2019 or 2020, according to Reuters Academy for Islamic Finance (ISRA) to quoting a bank director. The funding develop research and drive development CIMB allows longer leave for target for the exercise has yet to be in the fi elds of Islamic social fi nancing, ϐirst-time moms decided. Islamic banking, money services, Waqf MALAYSIA: CIMB Group Holdings has development fundraising as well as announced six-month paid maternity blockchain and technology. leave for its employees who become OJK certiϐies shares of Mega fi rst-time mothers, eff ective from the 1st Perintis as Islamic A statement read that the deal will also January 2019 for all employees in INDONESIA: The shares of Mega cover blockchain technology certifi cation Malaysia. According to a statement, Perintis have been classifi ed as Shariah on Waqf, which is a process required to eligible employees will have the compliant by Otoritas Jasa Keuangan specialize in Waqf blockchain that can be fl exibility to take leave as early as 30 days (OJK), according to an offi cial applied to individuals and companies. prior to their estimated delivery date. announcement. The agreement will also address industrial training and internship RHB implements new NSFR placement with regards to blockchain AAOIFI standards now in technologies. module Urdu MALAYSIA: RHB Banking Group, which PAKISTAN: AAOIFI Shariah standards Separately, FINTERRA is looking to operates RHB Islamic, has selected have been translated into Urdu, launch its Waqf chain in the middle of Honolulu-based Kamakura Risk confi rmed a statement. The translation February. Manager to manage its net stable funding work was done in collaboration with the ratio (NSFR) requirements, according to Pakistani Islamic banking industry and Sentra Food Indonesia now a media statement. NSFR is the second Muft i Muhammad Taqi. standard of the Basel III liquidity rules Shariah compliant designed to promote stable long-term INDONESIA: The shares of Sentra Food funding. MIDF and Al Rajhi seek BNM’s Indonesia have been classifi ed as Shariah nod compliant by Otoritas Jasa Keuangan, Intan Baruprana Finance MALAYSIA: Malaysian Industrial according to an offi cial statement. Development Finance (MIDF) and shuts down Shariah unit Al Rajhi Banking and Investment ICD signs ϐinancing with INDONESIA: Intan Baruprana Finance Corporation (M) have writt en to Bank has announced via a bourse fi ling that it Meghna Negara Malaysia to seek its consent has closed its Shariah fi nance unit. As a to commence merger discussions. BANGLADESH: The Islamic result, the fi nancing company will no According to The Edge Markets citing Corporation for the Development of the longer extend Shariah compliant facilities sources, both MIDF and Al Rajhi are Private Sector (ICD) has agreed to extend but will continue with its conventional waiting for the central bank’s approval, US$20 million to Meghna Sugar Refi nery business.

which is expected to be granted in productive asset ratio, among others. The housing units at an estimated cost of January. The merger, if successful, will suspension will be in place for six months PKR15-17 trillion (US$107.79-122.16 create an Islamic bank with combined until the 29th April 2019. billion), The Express Tribune reported. assets of about RM14.09 billion (US$3.41 billion). BI aims for 20% Islamic Zarai Taraqiati Bank launches Bloomberg had earlier reported that market share by 2023 Islamic window MIDF, which is controlled by INDONESIA: Bank Indonesia (BI) is PAKISTAN: Zarai Taraqiati Bank’s Permodalan Nasional, was considering a looking to grow the Republic’s Shariah Islamic window has been launched on th merger with Al Rajhi as it seeks to fi nance market share to 20% by 2023, the 17 December 2018 in the presence of transform into a Shariah compliant from its current share of 8%. BI Mohammad Sarwar, the governor of universal bank. Governor Perry Warjiyo said that the Punjab, according to a press release. target could be achieved through diversifying Islamic fi nancing Maybank Islamic plans to OJK suspends Amanah instruments in the banking sector, the Finance operations stock market and also the social foray into the UAE in 2019 INDONESIA: Otoritas Jasa Keuangan religious sector such as Zakat and Waqf, MALAYSIA: Maybank Islamic expects to (OJK) has announced in a statement that according to the Jakarta Post. get regulatory approvals in the fi rst half it has frozen the business activities of of next year to set up its fi rst overseas Amanah Finance for failing to adhere to Islamic banks urged to aid branch in Dubai, to meet the demand a number of Islamic fi nancing operations for fi nancing in the US$6.4 trillion global rules. affordable housing Halal economy, Bloomberg reported. PAKISTAN: The State Bank of Pakistan Amanah Finance has violated Article 25 has asked the Islamic banking industry to The bank is also looking into boosting its paragraph (1), Article 31 paragraph (1), partner with the Pakistan Tehreek-e-Insaf wealth management business by making and Article 32 as it did not fulfi ll the government in executing its plan of use of its parent Malayan Banking’s capital ratio as well as did not achieve the constructing fi ve million low-cost presence in Singapore.

bank is also on track to close at least 15 included the funding of large buy-to-let EUROPE deals across the year, having considered residential portfolios located in East Gatehouse reaches milestone opportunities worth more than GBP1 London and the south coast of England; billion (US$1.26 billion) in total. private-rented sector schemes in the UK: Gatehouse Bank told IFN that it has southwest of England; a portfolio closed GBP100 million (US$125.7 million) The fi nancings provided in 2018, which fi nancing of offi ces spread throughout in commercial property fi nance in 2018, ranged from GBP2 million (US$2.5 England, Wales and Scotland; as well as the fi rst time it has hit the milestone million) up to GBP20 million (US$25.14 student accommodation in the Midlands since the conception of the bank’s real million) across a variety of asset classes, and Scotland. estate team four years ago. The Islamic

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SHUAA purchases Amwal comprehensive framework for managing GLOBAL GLOBAL: SHUAA Capital has acquired Sukuk issuance as well as management AAOIFI partners with SALIHIN Kuwait-based Amwal International during investment and maturity/ termination phases, according to an GLOBAL: AAOIFI has signed a Investment Company, according to the announcement. collaboration agreement with SALIHIN UAE’s state news agency. In line with Shariah Advisory, engaging the Kuala this, the new lineup for the board of The public hearings for the exposure Lumpur-based advisory as its education directors for Amwal was announced, draft will be held in the upcoming partner in Malaysia, confi rmed an offi cial consisting of Bader Al Reizhan, Fawad months in different parts of the statement. Under the partnership, Tariq Khan, Khaleefa Al Mheiri, Oliver world. SALIHIN will promote AAOIFI’s Lee, Ali Tariq, Adil Mustafa and professional fellowship programs Abdullah Galadari. including the Certifi ed Islamic Qatar, Turkey and Malaysia Professional Accountant qualifi cation KFH launches instant partner and the Certifi ed Shariah Advisor and remittance service GLOBAL: Qatar, Turkey and Malaysia Auditor qualifi cation. GLOBAL: Kuwait Finance House has are working on a new initiative which introduced an instant cross-border will allow fi nancial hubs from the three ICD to assist BSIC to set up remitt ance service in the Saudi riyal via jurisdictions to capture global Islamic Islamic windows Ripple’s blockchain technology. fi nance opportunities. According to GLOBAL: The Islamic Corporation for According to the Islamic bank’s offi cial Yousef Mohamed Al Jaida, CEO of the the Development of the Private Sector Twitt er handle, customers can make Qatar Financial Centre, who spoke to the (ICD), through its Islamic Financial remitt ance transactions to benefi ciaries in media, the initiative comprises Institutions Program, has signed an Saudi-based Al Rajhi Bank. KFH plans to international platforms and technology agreement with BSIC in order to assist expand the service to include various which will see Islamic fi nance needs in BSIC Senegal and BSIC Mali with nations in diff erent currencies. Europe to be met by Istanbul, Middle technical advisory services for the Eastern needs by Doha and Asian establishment of new Islamic banking IDB scholarship programs opportunities to be served by Kuala windows, according to a press release. Lumpur. According to Nikkei Asian opened Review, this project is part of Qatar’s GLOBAL: The IDB has opened its eff orts to overcome the Gulf blockade. NBK Banque Privee increases scholarship programs for the 2019-20 academic year. According to a stake in BLME AAOIFI issues new standards GLOBAL: BLME Holdings, the parent statement, the multilateral bank will be th GLOBAL: AAOIFI has rolled out two company of Shariah compliant Bank of receiving applications until the 28 new fi nancial accounting standards London and the Middle East (BLME), February 2019. has announced in a bourse fi ling that (FAS), bringing the total of standards pursuant to the share repurchase BBI joins forces with DIEDC and pronouncements issued by the organization to 111. The new standards program announced on the 21st GLOBAL: Bosnia and Herzegovina- are FAS 33, which is on investments in November 2018, 2.45 million shares based Bosna Bank International (BBI) has Sukuk, shares and similar instruments; with an average price of 39 US cents inked an agreement with the Dubai and FAS 44, which is on fi nancial per share were purchased by Al Safwa Islamic Economy Development Centre reporting for Sukukholders. Mubasher Financial Services on behalf of (DIEDC) in an aim to develop the Islamic NBK Banque Privee (Suisse) on the 11th economy sectors between the two December 2018. markets, according to a statement. FAS 33 includes improved principles for classifi cation, recognition, measurement, presentation and disclosure of The total number of shares purchased AAOIFI releases draft on was equal to the daily limit of the investment in Sukuk, shares and other number of shares the company were Sukuk governance similar instruments of investments made authorized to purchase. GLOBAL: AAOIFI has issued a draft by Islamic fi nancial institutions; whereas exposure on Sukuk governance. FAS 34 introduces guidelines on the NBK Banque Privee had on the 10th Called the Exposure Draft G2/2018, principles of accounting and fi nancial December 2018 purchased 2.45 million it is to introduce detailed guidelines reporting for assets and businesses shares. on Sukuk governance by providing a underlying the Sukuk.

with knowledge of the matt er. Public Banque Saudi Fransi, Al Rajhi Bank MIDDLE EAST Investment Fund, Saudi’s sovereign and Samba Financial are weighing Saudi to allow more bank wealth fund, which holds stakes in a possible mergers but the discussions mergers number of local banks, is considering are preliminary and may not result in a which banks could be merged to boost transaction, Bloomberg reported. SAUDI ARABIA: Saudi Arabia is keen scale and competition in the industry. to explore more bank mergers aft er Authorities are also encouraging Separately, HSBC Holdings’s unit is the merging exercise of Saudi British Bank and Alawwal Bank is complete, potential mergers among banks outside acquiring a local bank which is partly according to Bloomberg citing people the state’s control. owned by the Royal Bank of Scotland

Group in a US$5 billion deal. HSBC Abraaj Group for stakes in some of the Bahrain Bourse which increased the operates HSBC Amanah. latt er’s funds, according to Bloomberg Islamic bank’s total holding of treasury citing people with knowledge of the shares from 98.57 million shares to 98.87 Al Rajhi to increase capital matt er. million shares, representing an increase SAUDI ARABIA: The board of directors to 9.42% of paid-up capital. of Al Rajhi Bank has decided to increase The Islamic bank will reportedly take the Islamic bank’s capital by 53.8% to ownership of stakes in the funds pledged In mid-December 2018, KHCB also SAR25 billion (US$6.66 billion) from against the fi nancing with approval from bought 400,953 treasury shares on the SAR16.25 billion (US$4.33 billion) a court in the Cayman Islands, where Bahrain Bourse. through the issuance of bonus shares to Abraaj is undergoing a supervised support the bank’s resources. According restructuring. The bank will hold the Tasnee secures Murabahah to a bourse fi ling, the capital-raising stakes with other investors and limited facility to reϐinance Sukuk exercise, which is still subject to the partners. Noor Bank may eventually be able to recover more than it extended to SAUDI ARABIA: The National necessary approvals, will increase the Industrialization Company (Tasnee) number of shares to 2.5 billion from 1.63 Abraaj when the assets in the funds are sold. has announced in a bourse fi ling that million as seven bonus shares will be it has signed a seven-year Murabahah issued for every 13 shares owned. facility agreement worth SAR2 billion Bank Dhofar and Modern (US$532.99 million) with Banque Saudi Al Salam buys more treasury Exhange sign deal Fransi for the purpose of refi nancing its shares OMAN: Bank Dhofar has joined forces Sukuk maturing on the 21st May 2019. BAHRAIN: Al Salam Bank has with Modern Exchange to off er a purchased 52,366 treasury shares on payment gateway for international The facility is repayable in one Bahrain Bourse, bringing the total remitt ance exclusively to customers of installment on the fi nal maturity date at holding of shares from 37.85 million the bank and its Shariah compliant the end of the tenor and includes shares to 37.9 million shares. According operation, Maisarah Islamic Banking conditions precedent for drawing down to a bourse fi ling, this represents 1.77% of Services, according to a statement. the facility. the Islamic bank’s issued share capital. This is the bank’s second purchase of Bank Nizwa rolls out new Al Baraka ramps up training treasury shares this week as earlier, Al home ϐinancing product BAHRAIN: The training arm of Al Salam also bought 35,000 treasury shares OMAN: Bank Nizwa, an Islamic bank, Baraka Banking Group organized 30 on Bahrain Bourse, bringing the total has introduced a new home fi nancing training courses over 2018 reaching 358 holding of shares from 37.81 million product under the diminishing participants. According to a press release, shares to 37.85 million shares. Musharakah structure, according to a Al Baraka Training Academy, launched press release. The new solution off ers in 2016, conducted training programs No conϐlict of interest in KFH- customers complete ownership of their covering a number of topics including AUB merger home with a repayment period of up to soft skills, Islamic fi nancial products, 25 years. Shariah governance and information KUWAIT: There is no confl ict of interest technology security. in the potential merger between Kuwait Finance House (KFH) and Bahrain’s Ahli MSM updates Shariah list United Bank (AUB), according to the OMAN: The Muscat Securities Market ENGIE and GIC reϐinance Kuwait Investment Authority (KIA), (MSM) has confi rmed via a statement project reported Bloomberg quoting Al Qabas two new joiners to its MSM Shariah BAHRAIN: A consortium of natural gas newspaper. KIA holds 24.1% of KFH Index — Asaff a Foods and Oman distribution company ENGIE and Gulf while Kuwait’s Public Institution for Chromite — while two entities have been Investment Corporation (GIC) has Social Security owns 18.7% of AUB with removed from the index — Gulf refi nanced the Al Dur Power and Water the Kuwaiti fi nance minister serving as International Chemicals and Oman Project in Bahrain. The new 10-year the chairman of both KIA and Public Fisheries. A total of 31 companies are dual-tranche US$1.31 billion bank Institution for Social Security. certifi ed as Shariah compliant by MSM refi nancing included over 20 regional based on fi nancial statements from the and international fi nanciers via Islamic OAB launches digital third quarter of 2018. and conventional facilities, confi rmed a innovations statement. The transaction was advised KHCB purchases treasury by Cliff ord Chance with Hassan Radhi & OMAN: Oman Arab Bank (OAB) has Associates acting as the Bahraini law launched a series of digital solutions as shares counsel. part of its digital transformation strategy. KUWAIT: Khaleeji Commercial Bank According to a statement, the solutions (KHCB) has acquired 232,500 treasury include the showcase of its Next Gen shares on the Bahrain Bourse on the 3rd Ajman Bank shareholding ATMs. January, according to a bourse fi ling. This disclosed brings the Islamic bank’s total holding of UAE: According to a bourse fi ling, Noor Bank to swap Abraaj’s treasury shares to 98.57 million shares, Tabarak Investment Group has the full or 9.39% of paid-up capital from 9.37%. rights as the principal shareholder of debt for fund stakes Following this purchase, KHCB acquired 137.44 million shares, or 14.95% of Ajman UAE: Noor Bank has won the right to another 304,000 treasury shares on the Bank’s share capital while Goldilocks swap its US$100 million fi nancing to

Investment Company holds 3.25% of the the Central Bank of Kuwait should be Isfahan Kesht Agriculture Islamic bank’s share capital with 29.84 obtained if ownership exceeds 5% of the million of its shares. bank’s capital. goes public IRAN: Isfahan Kesht Agriculture has been listed on the Iran Fara Bourse’s Oussi Law Firm founder Iran’s Guardian Council second market with 10% of its shares passes away rejects CFT bill off ered, Iran Fara Bourse announced. SYRIA: Gabriel Oussi, the founder of IRAN: Iran’s Guardian Council, an Each share was sold at IRR3,150 (7.48 US Oussi Law Firm, has passed away, the infl uential political chamber of clerics cents). fi rm informed IFN. The fi rm is now and lawyers, has rejected for the second managed by Louay Oussi. Gabriel’s area time, the Combating the Financing of CBK launches CSLP of practice included Islamic fi nance and Terrorism (CFT) bill. KUWAIT: The Central Bank of Kuwait he was a regular contributor to IFN. (CBK) has launched the second Cyber According to Tasnim News Agency, the Security Leaders Program (CSLP), IDB, ICD and SMEPS scale up Guardian Council in a recent lett er to according to a statement. Iranian Parliament Speaker Ali Larĳ ani, SME support conveyed that the majority of the bill’s YEMEN: The IDB, the Islamic This comes within the framework of the items, which are contrary to the Islamic CBK’s strategy aiming to develop Corporation for the Development of the Republic’s constitution and religious Private Sector (ICD) and the Small and national cadres in the fi eld of banking, rules, have not been resolved in the the national economy and technical Micro Enterprise Promotion Service amendments. The CFT is a series of (SMEPS) have launched the second phase capabilities in information technology standards set by the Paris-based Financial and information security. of the Business Resilience Assistance for Action Task Force, which would bring Value-adding Enterprises (BRAVE). Iran’s banking industry closer to According to an offi cial statement, the international standards. Bank Albilad recommends BRAVE program is to enhance the capital increase resilience of SMEs in Yemen in vital SRERC collaborates with SAUDI ARABIA: Bank Albilad’s board sectors against the impact of ongoing of directors has recommended to increase confl ict. Bidaya the company’s capital to SAR7.5 billion SAUDI ARABIA: Saudi Real Estate (US$1.99 billion) from SAR6 billion Tadamon’s funds robbed Refi nance Company (SRERC) has signed (US$1.59 billion), with the aim to YEMEN: Armed men have stolen more a SAR1 billion (US$266.22 million) strengthen the bank’s resources, than YER1 billion (US$3.99 million) agreement with Home Finance Company according to a bourse fi ling. The capital belonging to Tadamon Islamic Bank (Bidaya) to buy a fi nancing portfolio and increase would be achieved through the in Aden. According to the Debriefer, provide refi nancing facilities, according issuance of bonus shares. unknown gunmen on a car intercepted to a press release. one of the private bank’s two vehicles Al Hilal Bank completes Data guarded by a security-manned pickup as NDFI lends US$4.7 billion to the vehicles were transferring cash to the Transformation Program banks UAE: Shariah compliant Al Hilal Bank bank from the Central Bank of Yemen. IRAN: The National Development Fund The gunmen then carjacked the vehicle has announced the completion of its of Iran (NDFI) has lent US$4.7 billion Data Transformation Program, as part along with its valuable load before to banks for them to meet the needs of fl eeing the scene. of the bank’s strategy to enable digital companies seeking fi nancing, Tasnim evolution throughout its entire chain of News Agency reported citing Morteza operations, according to a press release. SIB partners with Sharjah Shahid-Zadeh, the head of the NDFI. Finance Department The Data Transformation Program is a UAE: Sharjah Islamic Bank (SIB) has Half of the amount is to be allocated for progressive undertaking for the bank, inked an agreement with the Sharjah fi nancing working capital of businesses enabling it to address all challenges Finance Department to aid regularity of in the form of loans. The NDFI also related to data and use trusted service operations in all banking allocated US$4 billion in foreign information for decision-making, channels. According to a press statement, exchange loans. utilizing advanced analytics to gain a the deal will allow SIB to accept Tahseel competitive advantage in the payments through cash counters, Emirates Steel reϐinances marketplace by establishing a data cheques and across banking channels debt warehouse for the bank. such as interactive voice response, UAE: Emirates Steel has refi nanced a internet banking and ATMs. US$650 million debt with a four-year Saudi Arabia’s banks settle US$400 million Islamic fi nancing facility Zakat claims with GAZT Kuwait allows foreign and its parent company SENAAT’s latest SAUDI ARABIA: Banque Saudi Fransi, ownership in Kuwaiti banks US$300 million Sukuk issued last month. the Saudi Investment Bank, Alinma Bank, KUWAIT: The Kuwaiti Ministry of Reuters reported citing sources that the Arab National Bank, Bank AlJazira, the Commerce and Industry has issued a credit facility, raised in 2014, initially National Commercial Bank, Riyad Bank, decision allowing foreign investors to amounted to US$1.3 billion and had been Alawwal Bank, Al Rajhi Bank, Samba own and trade in Kuwaiti banks’ shares, halved to US$650 million via scheduled Financial Group, Saudi British Bank and according to a statement. The approval of repayments. Bank Albilad have reached an agreement

with the General Authority of Zakat and mobile banking services to its customers, (NBO)’s shares, has confi rmed in a bourse Tax (GAZT) on the sett lement of Zakat according to a press release. fi ling that it does not support the merger claims for previous fi nancial years up to of NBO, which operates Muzn Islamic the end of the fi scal fi nancial year 2017, Iran launches new hedging Banking, with Bank Dhofar, which according to separate bourse fi lings. tool operates Maisarah Islamic Banking. In total, the banks paid SAR16.76 billion IRAN: Index Basket Futures have been GFH completes share (US$4.47 billion) to sett le the case. launched in Iran, according to a statement. The hedging tool is similar to purchase Index Futures contracts, said Ali Sahraee, BAHRAIN: Fully-fl edged Islamic Sohar Islamic partners with CEO of Tehran Stock Exchange. investment bank GFH has completed the Path Solutions acquisition of an additional 73.39 million OMAN: Sohar Islamic has partnered Commercial Bank against treasury shares and owns in total 257.48 with Path Solutions to upgrade its million shares as of date, according to a iMAL*E-Banking and NBO and Bank Dhofar merger bourse fi ling. iMAL*MobileBanking solutions, in order OMAN: Qatar’s Commercial Bank, which to provide innovative internet and holds 34.9% of National Bank of Oman

of fi ve million new shares, according to a margin and support its fi nancial TAKAFUL bourse fi ling. position. Al Alamiya ϐined for violating The capital increase plan aims to rules SAMA introduces new rules strengthen the company’s capital base, SAUDI ARABIA: The Saudi Arabian SAUDI ARABIA: The Capital Market which would contribute to increased Monetary Authority (SAMA) has Authority (CMA) of Saudi Arabia has rates of growth and expansion of its announced the adoption of new licensing imposed a SAR20,000 (US$5,329.06) fi ne business in the coming years. and supervision rules for foreign on Al Alamiya for Cooperative Insurance insurance and/or re-insurance companies Company. The CMA said in a statement wishing to establish and operate a that the company violated rules by BankIslami collaborates with branch in the Kingdom, according to a disclosing incorrect information Jubilee Life statement. regarding its interim fi nancial results for PAKISTAN: BankIslami Pakistan has the period ending the 30th June 2018, inked an agreement with Jubilee Life’s The new rules are aimed at developing according to an offi cial statement. Takaful window, according to Daily the industry while ensuring the stability Times. Under this deal, Jubilee Life’s and resilience of the fi nancial systems. Takaful products will be made available Goldilocks acquires stake in The rules clarify application of the Takaful Emarat through BankIslami’s branch network. provisions of the Cooperative Insurance UAE: Goldilocks Investment Company, Control Law and the associated which recently raised its stake in Islamic Saudi Enaya’s shareholders Implementing Regulation to the foreign Arab Insurance Company, has acquired a approve capital increase plan branches. 29.49% stake in Takaful Emarat, SAUDI ARABIA: Saudi Enaya according to a statement. Cooperative Insurance’s shareholders Kuwait approves compulsory have approved a proposed capital health insurance Buruj Takaful seeks increase through the off ering and KUWAIT: The National Assembly’s legal shareholders’ approval listing of 20 million new priority shares, and legislative committ ee has approved a SAUDI ARABIA: Buruj Cooperative according to a bourse fi ling. draft law stipulating a mandatory health Insurance Company is seeking insurance scheme for expatriates living shareholders’ approval on its capital The capital increase worth SAR200 and working in the country, Kuwait increase plan worth SAR50 million million (US$53.29 million) aims to Times reported. (US$13.32 million) through the issuance improve the company’s level of solvency

to be around AED702 million (US$191.1 to investors, either by operating or million) in size and comes with a tenor subleasing the project’s components. ASSET of 15 years with the ability to extend for MANAGEMENT additional years. Al Mashaar REIT announces Ento Capital launches Islamic The fund will be used to ﬁ nance the cash dividend SAUDI ARABIA: Al Mashaar REIT, an fund development and operation of the Wonderland project, a multicomponent Islamic REIT, has declared the UAE: Ento Capital has announced in development project, and its investment distribution of its cash dividend for a a statement that it has rolled out an objective is to develop the project entirely total of SAR14.88 million (US$3.96 Islamic property fund called the Ento and generate consistent annual revenues million) for the second half of 2018, Wonderland Fund. The fund is estimated

according to a bourse fi ling. The number companies licensed by the CMA to invest Road. The property consists of two of eligible shares is 57.24 million. funds with fi nancing companies licensed warehouses. The property’s total built-up by the SAMA. area is 10,000 square meters (sqm) and Equitativa closes deal built on a land area of 12,000 sqm. UAE: Equitativa has acquired three DFSA enhances its funds additional fully leased fl oors in Index The property is entirely leased to Jadeer regime Property Management Company, a Tower for its Shariah compliant Emirates UAE: Changes to the Dubai Financial REIT. The deal is worth AED106.5 million related party to the seller, for fi ve years Services Authority (DFSA) Collective (binding) commencing on the property (US$28.99 million), according to a press Investment Funds regime have been transfer date. The tenant shall provide release. introduced along with the enactment of promissory notes covering the lease the Dubai International Financial Centre payments throughout the lease duration. The transaction, which includes a rental Companies Law 2018, according to a Additionally, a guarantor agreement will guarantee from the seller, is expected press release. be in place to enhance the strength of the to generate an estimated internal rate of lease agreement. return of 12%, with a net initial yield of The new provisions strengthen the 10%. DFSA’s commitment to meeting The property is already subleased to international standards, particularly diff erent tenants, and the master tenant Following the acquisition, Emirates those of the International Organization of will be responsible for insurance, REIT’s total portfolio will reach AED3.5 Securities Commissions and the Financial operational expenses and maintenance of billion (US$952.71 million), comprising Stability Board, through measures to the property during the lease term. The 11 properties across Dubai with a net enhance liquidity risk management in annual rent of the property is SAR1.67 leasable area of 2.4 million square feet. open-ended funds. million (US$444,908).

SKFH and Al Yusr ink Wakalah Derayah REIT closes real SCA issues two draft investment deal estate deal regulations SAUDI ARABIA: Saudi Kuwaiti Finance SAUDI ARABIA: Shariah compliant UAE: The Securities and Commodities House Company (SKFH) has appointed Derayah REIT has acquired a logistic real Authority (SCA) has published two Al Yusr Leasing and Financing Company estate asset in Dammam. The purchase draft regulations focusing on Sukuk as an investment agent for its Shariah price was SAR18 million (US$4.8 million) and Islamic funds and comments were compliant Al Yusr Baitak Financing which was funded through the available accepted until the 20th December 2018, Al Fund. According to Trade Arabia, the funds for Derayah REIT, according to a Bayan reported. fund is the ﬁ rst to receive an investment bourse ﬁ ling. license pursuant to the new instructions The draft s mandate issuers of Islamic issued by the Capital Market Authority The property is located in the Al- funds and Sukuk to appoint a Shariah (CMA) and the Saudi Arabian Monetary Khalidiyyah district in Dammam, and supervisory committ ee to advise on all Authority (SAMA); the instructions allow positioned on the east of King Fahad Shariah matt ers, among other measures.

on-year increase of 12.82% from RM12.95 was generated for Simpanan Shariah and RESULTS billion (US$3.1 billion) recorded during RM13.28 billion (US$3.17 billion) for Employees Provident Fund the same period last year, according to a Simpanan Konvensional. Simpanan statement. Shariah derives its income solely from its MALAYSIA: The Employees Provident portion of the Shariah portfolio while Fund (EPF) has reported a total A total of RM1.33 billion (US$317.88 income for Simpanan Konvensional is investment income of RM14.61 billion million) out of the RM14.61 billion generated by its share of both Shariah and (US$3.49 billion) for the third quarter (US$3.49 billion) gross investment income conventional portfolios. ended the 30th September 2018, a year-

RATINGS RAM maintains Saudi’s Despite the decrease of the central Suria KLCC’s Sukuk ratings government defi cit to 4.6% of GDP in ratings 2018, RAM believes that the maintained SAUDI ARABIA: RAM has reaffi rmed government’s expected 4.2% fi scal defi cit MALAYSIA: RAM has reaffi rmed the Saudi Arabia’s ‘gAA3(pi)/Stable/gP1(pi)’ for 2019 will be a challenge due to the ‘AAA/Stable/P1’ ratings on Suria KLCC’s and ‘seaAAA(pi)/Stable/seaP1(pi)’ considerable volatility in global Sukuk Murabahah program of up to ratings on its global and ASEAN scales. hydrocarbon price and output, among RM600 million (US$145.71 million). According to a statement, the rating others. According to a press statement, RAM action is predicated on stronger economic expects Suria KLCC will maintain its performance, improved credit metrics as GIC’s ratings reafϐirmed robust fi nancial profi le on the back of the a result of bett er oil prices and sizeable KUWAIT: Gulf Investment Corporation superior asset quality of its sole asset, sovereign reserve holdings amounting to (GIC)’s ‘AAA/Stable/P1’ fi nancial despite the weak retail industry. 134.6% of GDP as at the end of 2018.

institution ratings have been reaffi rmed Sukuk in 2013. According to a statement, P1’), under a universal banking model. by RAM, which also concurrently the rating, which was assigned a stable The bank is expected to receive ready reaffi rmed the ‘AAA/Stable’ ratings on its outlook, was withdrawn following full group support if required. RM3.5 billion (US$844.97 million) Sukuk repayment. Wakalah Istithmar program (2011/2031) RAM reafϐirms LEKAS’s Sukuk and RM400 million (US$96.57 million) CI afϐirms JIB ratings MALAYSIA: RAM has reaffi rmed the senior unsecured bonds (2008/2023). JORDAN: Capital Intelligence (CI) has ‘C2/Stable’ rating on Lebuhraya Kajang- According to a statement, the affi rmed Jordan Islamic Bank’s (JIB) long Seremban’s (LEKAS) RM633 million reaffi rmations refl ect the rating agency’s and short-term foreign currency ratings (US$151.29 million) junior Sukuk Istisnah view that the corporation will continue to (FCRs) at ‘BB-’ and ‘B’ respectively, with (2007/2025), according to a statement. enjoy strong support from its GCC a negative outlook, according to a shareholders as it fulfi lls a unique statement. The rating takes into consideration the mandate of supporting the region’s low likelihood of repayment of the junior development. PLSUKE’s Sukuk Wakalah Sukuk as well as its deep subordination to the company’s other debt obligations, Lafarge’s Sukuk outlook program afϐirmed namely its Redeemable Convertible downgraded MALAYSIA: MARC has affi rmed Secured Islamic Debt Securities and its ‘A+IS(s)’ rating on single-purpose Syndicated Term Loan. MALAYSIA: The outlook on the long- company Projek Lintasan Sungai Besi- term ‘A1’ rating on Lafarge Cement’s Ulu Klang (PLSUKE)’s Sukuk Wakalah RM500 million (US$120.71 million) program of up to RM2 billion (US$478.07 Tanjung Bin O&M’s Sukuk Sukuk Wakalah program (2017/2024) has million) with a negative outlook, rating afϐirmed been downgraded to negative from stable according to a statement. MALAYSIA: MARC, in a press release, by RAM. The rating agency said in a has affi rmed the ‘AA-IS’ rating on the statement that the outlook revision is Concurrently, the rating agency has RM470 million (US$112.3 million) predicated on the continued deterioration affi rmed its ‘AAAIS(fg)’ rating on Tanjung Bin O&M’s Sukuk Wakalah. The in Lafarge Malaysia’s performance amid PLSUKE’s Danajamin-guaranteed Sukuk rating action is on the back of the credit persistent price wars and weak cement of up to RM500 million (US$119.52 strength of Malakoff Power, the parent of demand, exacerbated by the cancelation million) with a stable outlook. Tanjung Bin O&M, which has provided of mega infrastructure projects aft er an unconditional and irrevocable th Malaysia’s 14 General Elections. PLSUKE is a 100%-owned subsidiary of undertaking in the form of cash Projek Lintasan Kota Holdings defi ciency support to top up any shortfall Bank Islam’s ratings (PROLINTAS) and was established to in the fi nance service reserve account for reafϐirmed construct, fi nance and operate the 24.6 the Sukuk. MALAYSIA: Bank Islam Malaysia’s km Sungai Besi-Ulu Kelang Elevated ‘AA3/Stable/P1 fi nancial institution Expressway under a concession. Purple Boulevard’s Sukuk ratings have been reaffi rmed by RAM, Ijarah reafϐirmed which also reaffi rmed the respective AmBank Islamic’s FIRs MALAYSIA: RAM has reaffi rmed the ‘AA3/Stable’ and ‘A1/Stable’ ratings on reafϐirmed ratings on Purple Boulevard’s RM250 the bank’s senior and subordinated MALAYSIA: RAM has reaffi rmed million (US$59.66 million) Sukuk Ijarah Sukuk Murabahah under its RM10 billion AmBank Islamic’s ‘AA2/Stable/P1’ under its RM450 million (US$107.39 (US$2.41 billion) Sukuk Murabahah fi nancial institution ratings (FIRs), million) asset-backed Sukuk Ijarah program. According to a statement, the alongside the ratings on the bank’s program, according to a statement. ‘A1/Stable’ rating on the bank’s RM1 outstanding debt facilities, according to billion (US$241.42 million) subordinated a statement. The reaffi rmed FIRs refl ect The ratings on the Sukuk Ijarah senior Sukuk Murabahah program (2015/2045) those of AmBank (rated ‘AA2/Stable/P1’), Class A, B and C have been reaffi rmed has also been reaffi rmed. the core banking subsidiary of AMMB at ‘AAA/Stable’, ‘AA3/Stable’ and ‘A3/ Holdings. Stable’ respectively, while the ratings on CI withdraws Tilal’s Sukuk the Sukuk Ijarah guaranteed Class D has rating AmBank Islamic is a highly strategic been reaffi rmed at ‘AAA(fg)/Stable’. The OMAN: Capital Intelligence (CI) has entity given its role as the group’s Sukuk Ijarah subordinated Class E is not withdrawn its Oman National Scale Islamic banking arm. The bank’s rated. ‘omA+’ rating on the OMR50 million operations are strongly linked with that (US$129.56 million) Sukuk issued by Tilal of its sister banks, AmBank and The reaffi rmation of the ratings on the Development Company via Modern AmInvestment Bank (rated ‘AA2/Stable/ Class A, B and C Sukuk is premised

on the rating agency’s expectation that residential communities and commercial Separately, the ‘AAA(s)/Stable’ rating Ampang Point’s sustainable net property shop offi ces. on the group’s RM3.1 billion (US$740.92 income and adjusted valuation will stay million) Islamic medium-term note intact, although its near-term cash fl ow RAM reafϐirms MAHB Sukuk program (2010/2025), issued via wholly- performance will be aff ected during the owned Malaysia Airports Capital transition period of the property’s asset programs (MACB), has also been reaffi rmed. enhancement initiatives. MALAYSIA: RAM has reaffi rmed the respective ‘AAA/Stable’ and ‘AA2/ The reaffi rmation of MAHB’s ratings is The issuer is an SPV sponsored by Nadin Stable’ ratings on Malaysia Airports premised on its generally bett er Holdings and Nadin Management. The Holdings’s (MAHB) RM2.5 billion operating performance and credit metrics SPV was incorporated for the (US$597.52 million) senior Sukuk in December 2017 fi nancial year and the securitization of Ampang Point Shopping program (2013/2033) and RM2.5 billion nine-month December 2018 fi nancial Centre, a suburban neighborhood mall perpetual subordinated Sukuk program year, which came within RAM’s surrounded by well-established (2014/2114), according to a statement. expectations.

Juwaini, Afdhal Aliasar and Sutan Emir Wahab Al Halabi as CFO, replacing MOVES Hidayat were named as the director of Remi Ishak, with immediate eff ect Securities Commission law and Shariah fi nancial management subject to regulatory approval. Abdul standards; director of product Wahab joined Equitativa in 2013 and has Malaysia innovation, market deepening and held various roles in the fi rm including MALAYSIA: Securities Commission Shariah fi nancial system infrastructure the role of CFO. Malaysia has appointed Ong Liang Heng development; director of inclusive as the executive director in the fi nance, religious social funds and ENBD REIT Chairman’s Offi ce eff ective from the 4th Shariah microfi nance; director of UAE: David Jonathan Marshall has January 2019. A statement read that Ong promotion and external relations; and resigned from the board of directors was previously a senior managing director of Islamic fi nancial research and of ENBD REIT, eff ective the 20th director at CIMB Bank. education respectively. December 2018, confi rmed a bourse fi ling. The Shariah compliant REIT Bahrain Islamic Bank AS&H subsequently appointed Ali Rashid BAHRAIN: Ameer Abdul Ghani SAUDI ARABIA: Abuhimed Alsheikh Humaid Al Mazroei to its board Dairi has been appointed as CFO of Alhagbani Law Firm (AS&H) in eff ective immediately and subject to Bahrain Islamic Bank, according to a cooperation with Cliff ord Chance has reappointment at the next annual general press release. Ameer joined the bank’s welcomed Khalid Al-Abdulkareem as a meeting. department of fi nancial supervision in senior partner, eff ective the 1st January 2007. 2019, according to a press statement. ENBD REIT also appointed Khalid Khalid was a Cliff ord Chance partner AlFaheem to its board of directors, Bahrain Islamic Bank also appointed its and a member of the AS&H leadership eff ective the 10th December 2018. fi rst female head of central operations, team. Eman Ali Abdulla Ebrahim, according to United Cooperative Insurance Trade Arabia. RAM Consultancy Services SAUDI ARABIA: The United MALAYSIA: RAM Holdings has Cooperative Insurance Company has National Islamic Finance appointed Promod Dass as CEO of RAM announced in a bourse fi ling the Committee Consultancy Services, eff ective the 1st resignation of Abdullah Salem Al-Heiki INDONESIA: The Indonesian January 2019, according to a statement. from his role as a member of the government, via the National RAM Consultancy is a wholly-owned company’s audit committ ee, eff ective the Development Planning Agency, has subsidiary of RAM Group. Dass was 12th December 2018. sworn in fi ve directors for the National formerly deputy CEO of RAM Rating Islamic Finance Committ ee. Services. Al Maather REIT Fund SAUDI ARABIA: Mohammad Ragheb According to Republika.co.id, Ventje Emirates REIT Al Othmani has resigned from his role as Rahardjo Soedigno was appointed as the UAE: Equitativa, the manager of an independent member of Al Maather executive director, whereas Taufi q Emirates REIT, has announced in a REIT Fund’s board of directors on the Hidayat, Ronald Rulindo, Ahmad bourse fi ling that it has appointed Abdul ISLAMICBANKING

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12th December 2018, according to a London and the Middle East (BLME), Amana Bank bourse fi ling. has announced in a bourse fi ling that SRI LANKA: Amana Bank has Joanne Hindle has been appointed as the appointed Syed Muhammed Asim Raza Banque Saudi Fransi chairman of the remuneration committ ee and Khairul Muzamel Perera to the th SAUDI ARABIA: Banque Saudi Fransi, of the company with eff ect from the 13 bank’s board of directors as which off ers Islamic solutions, has December 2018. representatives of its strategic received the necessary approvals to shareholders, the IDB and Bank Islam appoint Mazin A Al Romeih as its board This appointment follows Michael Malaysia respectively, according to a chairman and Talal I Al Maiman as the Williams’s decision to step down from press release. vice-chairman, according to a bourse his role as the chairman of the fi ling. remuneration committ ee. However, he remains a senior independent non- Sadara Wealth Management executive director and continues to chair OMAN: Wessam Al Asfoor has been Gatehouse Bank the nominations committ ee. appointed as the head of the National UK: Gatehouse Bank has appointed Bank of Oman’s privilege and private Georgina Taylor, Sinead Hendrikse and banking division, Sadara Wealth Tyler Sullivan as case managers in its CIMB-Principal Asset Management, which off ers Islamic Home Finance Operations team, the Management Group products. Wessam was previously the Islamic bank informed IFN. GLOBAL: CIMB-Principal Asset head of sales and services at Alizz Islamic Management Group has announced Bank. Al Rajhi REIT in a statement that Juan Ignacio SAUDI ARABIA: Khalid Hamad Al Eyzaguirre Baraona is the new CEO for Central Bank of the UAE Bassam has resigned from his position as ASEAN, replacing Alejandro Echegorri, UAE: The president of the UAE, Sheikh an independent member of Al Rajhi who has been appointed as the new Khalifa Zayed Al Nahyan, has ordered REIT’s board of directors, according to a chief investment offi cer for Principal the restructuring of the board of bourse fi ling. International in Asia eff ective February directors of the Central Bank of the UAE. 2019. According to the state news agency, Bank Sohar Hareb Masoud Hamad Al Darmaki Baraona will oversee businesses across the has been named as the chairman; OMAN: Bank Sohar, which operates region including CIMB-Principal Islamic Sohar Islamic, recently appointed Aziz Abdulrahman Saleh Al Saleh is the Asset Management and CIMB-Principal vice-chairman; and the new members are Al Jahdhami as its new assistant general Asset Management in Malaysia, CIMB- manager and head of wealth Mubarak Rashed Khamis Al Mansoori, Principal Asset Management in Indonesia, the governor of the bank; Younis Haji management, according to a press CIMB-Principal Asset Management release. Al Khoori; Khalid Mohammed Salem Company in Thailand and CIMB- Balama; Khalid Ahmed Altayer; and Ali Principal Asset Management in Singapore. Mohammed Bakheet Al Rumaithi. BLME Holdings His appointment is subject to approvals GLOBAL: BLME Holdings, the parent by Securities Commission Malaysia and The appointments are valid for a company of Shariah compliant Bank of the Immigration Department. four-year term.

GOVERNANCE FOR ISLAMIC FINANCIAL INSTITUTIONS: VBI, Boardroom Bias and Internal Controls 23rd January 2019, KUALA LUMPUR

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Expected date Company/country Size Structure Announcement Date TBA Dubai Investments Park US$500 million Five-year Sukuk 8th January 2019 TBA Wifak Bank TND150 million Sukuk 3rd January 2019 TBA Jabal Omar Development SAR2 billion Sukuk 19th December 2018 Company TBA Pasukhas Green Assets RM200 million ASEAN Green SRI Sukuk 14th December 2018 First half of 2019 Emirate of Ajman TBA US dollar Sukuk/ bonds 14th December 2018 TBA Perangsang Capital RM500 million Sukuk Murabahah program 11th December 2018 TBA Dynasty Harmony RM165 million Sukuk 5th December 2018 12th February 2019 Turkish Treasury TBA Lease certiﬁ cates 3rd December 2018 TBA Malaysia Steel Works (KL) RM130 million Seven-year Sukuk Ijarah 12th November 2018 program TBA Bank of Indonesia TBA Sukuk 5th November 2018 TBA Central Insurance Company of IRR100 trillion Insurance debt securities 24th October 2018 Iran TBA Iran Railway Company TBA Sukuk 23rd October 2018 TBA National Iranian Oil Company TBA Sukuk Manfa'ah 19th October 2018 Fiscal year of 2019- Egypt TBA International Sukuk 18th October 2018 2020 TBA Tenaga Nasional US$1 billion Sukuk 16th October 2018 TBA Pakistan TBA US dollar-denominated Sukuk 15th October 2018 2019 Almarai US$500 million US dollar-denominated Sukuk 11th October 2018 TBA Near East Foundation US$14.94 million Development impact Sukuk 9th October 2018 2019 RAK Properties TBA Sukuk 5th October 2018 TBA AFFIN Islamic Bank TBA Sukuk Murabahah, Tier 4th October 2018 2 Sukuk Murabahah and additional Tier 1 Sukuk Wakalah TBA Iran Mobin Electronic IRR5 trillion Sukuk Ijarah 2nd October 2018 Development Company TBA Islami Bank Bangladesh TBA Redeemable non-convertible 1st October 2018 subordinated Sukuk Mudarabah January 2019 Indonesian Ministry of Finance TBA Retail Sukuk 1st October 2018 TBA Nakheel TBA Sukuk 25th September 2018 TBA Padideh Shimi Gharn IRR500 billion Sukuk Murabahah 19th September 2018 TBA Emaar Properties TBA Perpetual Sukuk 19th September 2018 TBA Hekmat Iranian Leasing IRR200 billion Sukuk Musharakah 18th September 2018 Company TBA Sberbank TBA Sukuk 13th September 2018 TBA Saudi Real Estate Reﬁ nance TBA Sukuk 14th August 2018 Company TBA Road Maintenance and IRR6 trillion Sukuk Musharakah 31st July 2018 Transportation Organization TBA Uzma Integrasi Padu Up to RM1 billion Sukuk Wakalah program 30th July 2018 TBA Turkish Grain Board TRY300 million Sukuk 26th July 2018 TBA Kerman Motors IRR2 trillion Mortgage-backed Sukuk 23rd July 2018 TBA Iran Health Insurance IRR10 trillion Islamic treasury bills 17th July 2018 Organization TBA Bangladesh TBA Sukuk 5th July 2018 TBA Securities and Commodities TBA Sukuk 19th June 2018 Authority TBA Kuwait Finance House US$3 billion Sukuk program 22nd May 2018 TBA Jordan Islamic Bank TBA Sukuk 22nd May 2018 TBA Union Properties AED1 billion Non-convertible and unlisted 21st May 2018 10-year Sukuk

REDmoney Asia ex. Japan 6 Months REDmoney Europe 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 1300 1300

1130 1180

960 1060

790 940

620 820

450 700 Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov Dec

REDmoney GCC 6 Months REDmoney Global 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 850 1600

770 1460

690 1320

610 1180

530 1040

900 450 Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov Dec

REDmoney MENA 6 Months REDmoney US 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 900 2600

840 2340

780 2080

720 1820

660 1560

600 1300 Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov Dec

SAMI Halal Food Participation (All Cap) 6 months

2350

2190

2030

1870

1710

1550 Jul-2018 Aug-2018 Sep-2018 Oct-2018 Nov-2018 Dec-2018

REDmoney Global Shariah Index Series (All Cap) 6 Months REDmoney Global Shariah Index Series (Large Cap) 6 Months

REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA REDmoney GCC REDmoney US REDmoney GCC REDmoney US 1750 1650

1510 1400

1270 1150

1030 900

790 650

550 400 Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov Dec

REDmoney Global Shariah Index Series (Medium Cap) 6 Months REDmoney Global Shariah Index Series (Small Cap) 6 Months

REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA REDmoney GCC REDmoney US REDmoney GCC REDmoney US 2500 2600

2150 2160

1800 1720

1450 1280

1100 840

750 400 Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov Dec

REDmoney Global Shariah

Equities are considered eligible for inclusion Utilities Basis Materials Telecomunication Services 2% 15% into the REDmoney Global Shariah Index 2% Series only if they pass a series of market Consumer Goods Services 15% related guidelines related to minimum market Technology capitalization and liquidity as well as country 14% restrictions. Energy 8% Once the index eligible universe is determined Non-Cyclical the underlying constituents are screened Consumer Goods Services 7% Financials using a set of business and ﬁ nancial Shariah 4% guidelines. Industrials Healthcare 22% 11%

The REDmoney Global Shariah Index Series powered by IdealRatings consists of a rich subset of global listed equities that adhere to clearly deﬁ ned and transparent Shariah guidelines deﬁ ned by Shariyah Review Bureau in Jeddah, Saudi Arabia.

The REDmoney Shariah Indexes provides Islamic investors with an accurate and Shariah-specifi c equity performance benchmark with optimized compliance credibility due to the intensive research conducted to ensure that index constituents do not confl ict with the defi ned Shariah requirements.

IdealRatings™ is the leading provider of Shariah investment decision support tools to investors globally, including asset managers, brokers, index providers, and banks to empower them to develop, manage and monitor Shariah investment products and Shariah compliant funds. IdealRatings is headquartered in San Francisco, California. For more information about IdealRatings visit: www.idealratings.com

For further information regarding REDmoney Indexes contact: REDmoney Global Shariah Index Series Andrew Morgan Managing Director, REDmoney Group

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Eurekahedge Asia Paciﬁ c Islamic Fund Index Eurekahedge Islamic Fund Gold Index

120 140

115 120 100 110 80 105 60

Percentage 100 Percentage 40

95 20

90 0 Jul-18 Jul-18 Jan-16 Jan-16 Jun-16 Jun-16 Oct-14 Feb-18 Sep-17 Oct-14 Feb-18 Sep-17 Dec-13 Dec-18 Dec-13 Dec-18 Apr-17 Apr-17 Mar-15 Aug-15 Aug-15 Nov-16 Mar-15 Nov-16 May-14 May-14

Top 10 Monthly Returns for ALL Islamic Funds Fund Fund Manager Performance Measure Fund Domicile 1 Deutsche Noor Precious Metals Securities - Class A DWS Noor Islamic Funds 10.97 Ireland 2 AlAhli Saudi Trading Equity NCB Capital 1.79 Saudi Arabia 3 FALCOM Saudi Equity FALCOM Financial Services 1.73 Saudi Arabia 4 Al Rajhi Saudi Equity Al Rajhi Bank 1.71 Saudi Arabia 5 Jadwa Saudi Equity - ClassB Jadwa Investment 1.51 Saudi Arabia 6 NBAD Islamic MENA Growth National Bank of Abu Dhabi 1.43 UAE 7 Al-Saﬀ a Saudi Equity Trading Banque Saudi Fransi 1.34 Saudi Arabia 8 AlAhli GCC Growth and Income NCB Capital 1.32 Saudi Arabia 9 AlAhli Saudi Small and Mid-Cap Equity NCB Capital 1.32 Saudi Arabia 10 Faisal Islamic Bank of Egypt Mutual Hermes Fund Management 1.10 Egypt Eurekahedge Islamic Fund Index -1.96 Based on 39.08% of funds which have reported December 2018 returns as at the 7th January 2019 Top 10 Monthly Returns for Global Islamic Funds Fund Fund Manager Performance Measure Fund Domicile 1 Deutsche Noor Precious Metals Securities - Class A DWS Noor Islamic Funds 10.97 Ireland 2 Jadwa Global Sukuk - Class B Jadwa Investment 0.67 Saudi Arabia 3 Amana Participation Institutional Shares Saturna Capital 0.44 US 4 Al Rajhi Commodity Mudarabah - USD Al Rajhi Bank 0.22 Saudi Arabia 5 AlAhli Multi-Asset Conservative NCB Capital -0.48 Saudi Arabia 6 AlAhli Multi-Asset Moderate NCB Capital -1.69 Saudi Arabia 7 AlAhli Multi-Asset Growth NCB Capital -2.69 Saudi Arabia 8 Emirates Islamic Global Balanced - Class A USD Emirates NBD Asset Management -4.21 Jersey 9 AlAhli Global Real Estate Income NCB Capital -6.14 Saudi Arabia 10 Amana Income Investor Saturna Capital -7.02 US Eurekahedge Islamic Fund Index -3.24 Based on 38.46% of funds which have reported December 2018 returns as at the 7th January 2019 Top Annualized Returns for Islamic Gold Funds Fund Fund Manager Performance Measure Fund Domicile 1 Deutsche Noor Precious Metals Securities - Class A DWS Noor Islamic Funds -5.93 Ireland Eurekahedge Islamic Fund Index -1.89 Based on 33.33% of funds which have reported December 2018 returns as at the 7th January 2019

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

Eurekahedge Islamic Fund Equity Index over the last 5 years Eurekahedge Islamic Fund Equity Index over the last 1 year

120 104

115 102

100 110 98 105

Percentage Percentage 96 100 94

95 92

90 90 Jul-18 Jul-18 Jan-18 Jan-16 Jun-18 Jun-16 Oct-18 Feb-18 Sep-18 Oct-14 Feb-18 Sep-17 Dec-17 Dec-18 Dec-13 Dec-18 Apr-18 Apr-17 Mar-18 Aug-18 Nov-18 Aug-15 Mar-15 Nov-16 May-18 May-14

Top 10 Islamic Equity Funds by 3 Months Returns Fund Fund Manager Performance Measure Fund Domicile 1 Atlas Islamic Income Atlas Asset Management 1.95 Pakistan 2 Jadwa Saudi Equity - ClassB Jadwa Investment 1.10 Saudi Arabia 3 FALCOM Saudi Equity FALCOM Financial Services -1.02 Saudi Arabia 4 Al-Saﬀ a Saudi Equity Trading Banque Saudi Fransi -1.20 Saudi Arabia 5 Jadwa Arab Markets Equity Jadwa Investment -1.34 Saudi Arabia 6 Jadwa GCC Equity Jadwa Investment -1.35 Saudi Arabia 7 NBAD Islamic MENA Growth National Bank of Abu Dhabi -1.83 UAE 8 AlAhli GCC Growth and Income NCB Capital -1.90 Saudi Arabia 9 Al Rajhi GCC Equity Al Rajhi Bank -2.46 Saudi Arabia 10 Al Rajhi Saudi Equity Al Rajhi Bank -3.11 Saudi Arabia Eurekahedge Islamic Fund Index -8.70 Based on 36.59% of funds which have reported December 2018 returns as at the 7th January 2019

Top 10 Yield-to-Date Returns for ALL Islamic Funds Fund Fund Manager Performance Measure Fund Domicile 1 Jadwa Saudi Equity - ClassB Jadwa Investment 13.11 Saudi Arabia 2 NBAD Islamic MENA Growth National Bank of Abu Dhabi 11.71 UAE 3 AlAhli GCC Growth and Income NCB Capital 11.45 Saudi Arabia 4 Al Rajhi Saudi Equity Al Rajhi Bank 11.43 Saudi Arabia 5 Al Rajhi GCC Equity Al Rajhi Bank 9.03 Saudi Arabia 6 Al-Saﬀ a Saudi Equity Trading Banque Saudi Fransi 8.24 Saudi Arabia 7 Jadwa GCC Equity Jadwa Investment 7.71 Saudi Arabia 8 AlAhli Saudi Trading Equity NCB Capital 7.35 Saudi Arabia 9 AlAhli GCC Trading Equity NCB Capital 6.25 Saudi Arabia 10 Jadwa Arab Markets Equity Jadwa Investment 5.79 Saudi Arabia Eurekahedge Islamic Fund Index -5.16 Based on 39.08% of funds which have reported December 2018 returns as at the 7th January 2019

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Most Recent Global Sukuk Priced Issuer Nationality Instrument Market US$ (mln) Managers 28-Nov-18 Cagamas Malaysia Sukuk Domestic market 119 RHB Bank public issue 27-Nov-18 General Holding UAE Sukuk Euro market 300 Abu Dhabi Islamic Bank, Citigroup, Dubai public issue Islamic Bank, First Abu Dhabi Bank, Standard Chartered Bank 27-Nov-18 Prasarana Malaysia Malaysia Sukuk Domestic market 477 Affi n Hwang Capital, AmInvestment Bank, public issue CIMB Group, Kenanga Investment Bank, Maybank 15-Nov-18 DanaInfra Nasional Malaysia Sukuk Domestic market 772 Affi n Hwang Capital, AmInvestment Bank, public issue CIMB Group, Maybank, RHB Bank 14-Nov-18 NMC Health UAE Sukuk Euro market 400 Abu Dhabi Commercial Bank, Abu Dhabi public issue Islamic Bank, Arab Banking Corporation, Barclays, Dubai Islamic Bank, Emirates NBD, First Abu Dhabi Bank, HSBC, Noor Bank, Standard Chartered Bank 14-Nov-18 Sarawak Energy Malaysia Sukuk Domestic market 358 AmInvestment Bank, CIMB Group, Kenanga public issue Investment Bank, Maybank, RHB Bank 31-Oct-18 Islamic Development Saudi Sukuk Euro market 739 Credit Agricole, LBBW, Natixis, Standard Bank Arabia public issue Chartered Bank 26-Oct-18 Oman Oman Sukuk Euro market 1,500 Gulf International Bank, HSBC, JPMorgan, public issue Kuwait Finance House, Standard Chartered Bank 26-Oct-18 Telekom Malaysia Malaysia Sukuk Domestic market 192 AmInvestment Bank, Maybank public issue 25-Oct-18 National Central UAE Sukuk Euro market 500 JPMorgan Cooling public issue 24-Oct-18 Khazanah Nasional Malaysia Sukuk Domestic market 168 CIMB Group, HSBC, Maybank public issue 23-Oct-18 Tenaga Nasional Malaysia Sukuk Euro market 750 BNP Paribas, CIMB Group, Citigroup, HSBC public issue 23-Oct-18 Lembaga Pembiayaan Malaysia Sukuk Domestic market 721 Affi n Hwang Capital, AmInvestment Bank, Bank Perumahan Sektor public issue Islam Malaysia, CIMB Group, Maybank, OCBC, Awam RHB Bank 23-Oct-18 Affi n Holdings Malaysia Sukuk Domestic market 192 Affi n Hwang Capital public issue 8-Oct-18 Widjaja Family Indonesia Sukuk Domestic market 369 Sinarmas Sekuritas Master Trust public issue 4-Oct-18 Cagamas Malaysia Sukuk Domestic market 181 RHB Bank public issue 2-Oct-18 HSBC Holdings UK Sukuk Domestic market 121 HSBC, Maybank, RHB Bank public issue 2-Oct-18 AMMB Holdings Malaysia Sukuk Domestic market 121 AmInvestment Bank public issue 24-Sep-18 Aldar Properties UAE Sukuk Euro market 500 Abu Dhabi Islamic Bank, Barclays, Dubai Islamic public issue Bank, Emirates NBD, First Abu Dhabi Bank, HSBC, JPMorgan, Standard Chartered Bank 20-Sep-18 Saudi Electricity Saudi Sukuk Euro market 2,000 Citigroup, First Abu Dhabi Bank, HSBC, Arabia public issue Mizuho, MUFG, Natixis, Standard Chartered Bank, Sumitomo Mitsui Financial Group

Global Sukuk Volume by Month Global Sukuk Volume by Quarter

US$bn US$bn US$bn Volume Average deal value US$bn 14 1.0 20 0.7 Volume 12 0.9 18 0.6 Average deal value 0.8 16 10 0.7 14 0.5 8 0.6 12 0.4 0.5 10 6 0.4 8 0.3 4 0.3 6 0.2 4 0.2 0.1 2 0.1 2 0 0.0 0 0.0 1 2 3 4 5 6 7 8 9 10 1112 1 2 3 4 5 6 7 8 9 10 11 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2017 2018 2013 2014 2015 2016 2017 2018

Top 30 Issuers of Global Sukuk 12 Months Issuer Nationality Market US$ (mln) Tranches Managers Indonesia Indonesia Euro market 3,000 2 Abu Dhabi Islamic Bank, CIMB Group, Citigroup, Dubai Islamic public issue Bank, HSBC Saudi Arabia Saudi Arabia Euro market 2,000 1 BNP Paribas, Citigroup, HSBC, JPMorgan, Mizuho, Samba Capital public issue Saudi Electricity Saudi Arabia Euro market 2,000 2 Citigroup, First Abu Dhabi Bank, HSBC, Mizuho, MUFG, Natixis, public issue Standard Chartered Bank, Sumitomo Mitsui Financial Group Oman Oman Euro market 1,500 1 Gulf International Bank, HSBC, JPMorgan, Kuwait Finance House, public issue Standard Chartered Bank Islamic Development Saudi Arabia Euro market 1,300 1 Dubai Islamic Bank, First Abu Dhabi Bank, Gulf International Bank, Bank public issue HSBC, Maybank, Natixis, Standard Chartered Bank, Warba Bank Islamic Development Saudi Arabia Euro market 1,250 1 CIMB Group, Citigroup, Emirates NBD, Gulf International Bank, Bank public issue HSBC, Natixis, Standard Chartered Bank, Sumitomo Mitsui Financial Group DanaInfra Nasional Malaysia Domestic market 1,022 5 AmInvestment Bank, CIMB Group, HSBC, Maybank, RHB Bank public issue Dubai Islamic Bank UAE Euro market 1,000 1 Arab Banking Corporation, Dubai Islamic Bank, First Abu Dhabi public issue Bank, HSBC, JPMorgan, KFH, Sharjah Islamic Bank, Standard Chartered Bank Sharjah UAE Euro market 1,000 1 Dubai Islamic Bank, HSBC, Sharjah Islamic Bank, Standard public issue Chartered Bank Bahrain Bahrain Euro market 1,000 1 BNP Paribas, Citigroup, Gulf International Bank, National Bank of public issue Bahrain, Standard Chartered Bank Dubai World UAE Euro market 1,000 1 Barclays, Citigroup, Dubai Islamic Bank, Emirates NBD, First Abu Corporation public issue Dhabi Bank, HSBC, JPMorgan, SG Corporate & Investment Banking, Standard Chartered Bank Saudi Arabian Mining - Saudi Arabia Domestic market 933 1 BNP Paribas, HSBC, Saudi National Commercial Bank Ma'aden public issue DanaInfra Nasional Malaysia Domestic market 772 5 Affi n Hwang Capital, AmInvestment Bank, CIMB Group, Maybank, public issue RHB Bank Lembaga Pembiayaan Malaysia Domestic market 769 4 Affi n Hwang Capital, AmInvestment Bank, Bank Islam Malaysia, Perumahan Sektor public issue CIMB Group, Maybank, OCBC, RHB Bank Awam Prasarana Malaysia Malaysia Domestic market 767 5 Affi n Hwang Capital, AmInvestment Bank, CIMB Group, Kenanga public issue Investment Bank, Maybank Abu Dhabi Islamic UAE Euro market 750 1 Abu Dhabi Islamic Bank, Citigroup, Emirates NBD, First Abu Dhabi Bank public issue Bank, HSBC, JPMorgan, Sharjah Islamic Bank, Standard Chartered Bank Tenaga Nasional Malaysia Euro market 750 1 BNP Paribas, CIMB Group, Citigroup, HSBC public issue Islamic Development Saudi Arabia Euro market 739 1 Credit Agricole, LBBW, Natixis, Standard Chartered Bank Bank public issue Tenaga Nasional Malaysia Domestic market 731 2 AmInvestment Bank, CIMB Group, Maybank public issue Lembaga Pembiayaan Malaysia Domestic market 721 5 Affi n Hwang Capital, AmInvestment Bank, Bank Islam Malaysia, Perumahan Sektor public issue CIMB Group, Maybank, OCBC, RHB Bank Awam First Abu Dhabi Bank UAE Euro market 650 1 Citigroup, First Abu Dhabi Bank, KFH, Saudi National Commercial public issue Bank, Standard Chartered Bank DanaInfra Nasional Malaysia Domestic market 643 4 AmInvestment Bank, Bank Islam Malaysia, CIMB Group, Kenanga public issue Investment Bank, Maybank, RHB Bank Emirates Group UAE Euro market 600 1 Abu Dhabi Islamic Bank, BNP Paribas, Citigroup, Dubai Islamic public issue Bank, Emirates NBD, First Abu Dhabi Bank, HSBC, JPMorgan, Noor Bank, Standard Chartered Bank Pengurusan Aset Air Malaysia Domestic market 528 5 AmInvestment Bank, Bank Islam Malaysia, CIMB Group, Maybank, public issue RHB Bank Khazanah Nasional Malaysia Domestic market 512 1 CIMB Group, RHB Bank public issue Dar Al-Arkan Real Saudi Arabia Euro market 500 1 Alkhair Capital (Dubai), Deutsche Bank, Dubai Islamic Bank, Estate Development public issue Emirates NBD, Goldman Sachs, Nomura, Noor Bank, Standard Chartered Bank Sharjah Islamic Bank UAE Euro market 500 1 Arab Banking Corporation, Dubai Islamic Bank, Emirates NBD, First public issue Abu Dhabi Bank, HSBC, Noor Bank, Standard Chartered Bank Noor Bank UAE Euro market 500 1 Citigroup, Deutsche Bank, Dubai Islamic Bank, Emirates NBD, Noor public issue Bank, Sharjah Islamic Bank, Standard Chartered Bank, Warba Bank Al Hilal Bank UAE Euro market 500 1 Al Hilal Bank, Dubai Islamic Bank, Emirates NBD, First Abu Dhabi public issue Bank, HSBC, JPMorgan, Nomura, Standard Chartered Bank Aldar Properties UAE Euro market 500 1 Abu Dhabi Islamic Bank, Barclays, Dubai Islamic Bank, Emirates public issue NBD, First Abu Dhabi Bank, HSBC, JPMorgan, Standard Chartered Bank

Top Global Islamic Bookrunners 12 Months Sukuk Volume by Currency US$ (billion) 12 Months Bookrunner Parents US$ (mln) Iss % 1 CIMB Group 4,475 45 10.94 Great Britain Pound Indonesian Rupiah 2 Maybank 3,828 43 9.36 Saudi Riyal 3 HSBC 3,574 22 8.74 US Dollar

4 Standard Chartered Bank 2,991 25 7.31 Malaysian Ringgit 0 5 10 15 20 25 5 RHB Bank 2,946 38 7.20

6 AmInvestment Bank 2,896 33 7.08 Sukuk Volume by Issuer Nation US$ (billion) 12 Months 7 Citigroup 2,407 13 5.88

8 Dubai Islamic Bank 1,785 14 4.36 Qatar UK Oman 9 JPMorgan 1,647 9 4.03 Pakistan China 10 Aﬃ n Hwang Capital 1,110 17 2.71 Bahrain Indonesia 11 BNP Paribas 1,092 5 2.67 Saudi Arabia UAE 12 First Abu Dhabi Bank 1,065 11 2.60 Malaysia 02468101214161820 13 Abu Dhabi Islamic Bank 916 6 2.24

14 Emirates NBD 879 12 2.15 Global Sukuk Volume by Sector 12 Months 15 Gulf International Bank 819 4 2.00 Finance 16 Natixis 753 4 1.84 Government 17 Sharjah Islamic Bank 588 5 1.44 Others Real Estate / Property 18 Mizuho 583 2 1.43 Utility & Energy 19 Kuwait Finance House 554 3 1.36 Transportation 03691215 20 Kenanga Investment Bank 471 8 1.15

21 Saudi National Commercial Bank 441 2 1.08 Global Sukuk Volume - US$ Analysis 22 Sumitomo Mitsui Financial Group 406 2 0.99 US$bn 23 Sinarmas Sekuritas 369 1 0.90 18 Total 16 24 LBBW 347 2 0.85 14 12 25 Noor Bank 336 6 0.82 10 8 26 Samba Capital 333 1 0.81 4 27 Islamic Development Bank 285 1 0.70 2 0 28 Arab Banking Corporation 277 4 0.68 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2013 2014 2015 2016 2017 2018 29 Barclays 270 4 0.66

30 Bank Islam Malaysia 259 4 0.63 Top Islamic Finance Related Project Finance Mandated Lead Arrangers 12 Months Top Islamic Finance Related Project Financing Legal Advisors Mandated Lead Arranger US$ (million) No % 12 Months 1 Kuwait Finance House 486.81 3 5.91 Legal Advisor US$ (million) No % 2 Arab Petroleum Investments 461.93 2 5.61 1 Allen & Overy 3,573.17 2 27.24 2 National Bank of Kuwait 461.93 2 5.61 2 Latham & Watkins 2,157.57 2 16.45 4 Standard Chartered Bank 430.29 3 5.22 3 Linklaters 2,036.50 1 15.53 5 Industrial & Commercial Bank of China 367.17 2 4.46 4 Salans FMC SNR Denton Group 1,536.67 1 11.72 5 NATIXIS 367.17 2 4.46 7 BNP Paribas 303.27 2 3.68 5 Cliﬀ ord Chance 1,319.94 2 10.06 7 Credit Agricole Corporate & 303.27 2 3.68 6 Goksu Saﬁ Isik Att orney Partnership 699.03 1 5.33 Investment Bank 6 Shearman & Sterling 699.03 1 5.33 7 KfW Bankengruppe 303.27 2 3.68 6 Verdi Avukatlik Ortakligi 699.03 1 5.33 10 Mitsubishi UFJ Financial Group 303.27 2 3.68 9 Ashurst 397 1 3 10 SG Corporate & Investment Banking 303.27 2 3.68

Top Islamic Finance Related Financing Mandated Lead Arrangers Top Islamic Finance Related Financing Bookrunners 12 Months 12 Months Mandated Lead Arranger US$ (mln) No % Bookrunner US$ (mln) No % 1 Mashreqbank 1,684 8 11 1 Standard Chartered Bank 1,500 12 7 2 Standard Chartered Bank 1,470 8 9 2 First Abu Dhabi Bank 1,156 12 5 3 HSBC 1,073 3 7 4 First Abu Dhabi Bank 963 4 6 3 Mashreqbank 1,132 12 5 5 Credit Agricole 890 2 6 5 Mizuho 890 2 6 4 Emirates NBD 1,057 13 5 5 MUFG 890 2 6 5 HSBC 1,054 5 5 8 Citigroup 823 2 5 8 Industrial & Commercial Bank of 823 2 5 6 Mizuho 745 4 3 China 10 Bank of China 765 1 5 7 MUFG 739 3 3

8 Noor Bank 722 9 3 Top Islamic Finance Related Financing Deal List 12 Months

9 SG Corporate & Investment Banking 720 3 3 Credit Date Borrower Nationality US$ (mln) 19-Mar-18 Saudi Arabia Saudi Arabia 7,650 10 Credit Agricole 713 2 3 1-Nov-18 Duqm Reﬁ nery & Oman 4,430 11 Kuwait Finance House 701 6 3 Petrochemical Industries 20-Dec-18 BAPCO Bahrain 3,900 12 Bank of China 676 2 3 16-Mar-18 Canakkale Otoyol Ve Turkey 2,413 Koprusu Insaat Yatirim Ve 13 Citigroup 673 3 3 Isletme Industrial & Commercial Bank of 26-Nov-18 Al Dur Power & Water Bahrain 1,634 14 647 2 3 China 11-Sep-18 Emaar Properties UAE 1,500 28-Mar-18 GEMS Education UAE 1,250 15 Commercial Bank of Dubai 645 5 3 21-Mar-18 ICD UAE 1,200 16 BNP Paribas 614 2 3 18-Dec-18 Atlantis The Palm UAE 1,100 6-Jun-18 Ma'aden Bauxite & Alumina Saudi Arabia 1,073 16 Sumitomo Mitsui Financial Group 614 2 3

18 Goldman Sachs 588 1 3 Top Islamic Finance Related Financing by Sector 12 Months

18 JPMorgan 588 1 3

20 Dubai Islamic Bank 536 7 2 Finance

21 Warba Bank 376 4 2 Construction/Building 22 Abu Dhabi Islamic Bank 375 3 2

23 Ahli United Bank 368 3 2 US$ bln0 0.51.0 1.5 2.0 2.5 3.0 3.5 4.0

24 Arab Petroleum Investments 311 2 1 Global Islamic Financing - Years to Maturity (YTD Comparison) 25 Samba Capital 310 2 1 2014

26 National Bank of Kuwait 309 3 1 2015

27 Riyad Bank 287 2 1 2016

27 Saudi Fransi Capital 287 2 1 2017

29 Saudi National Commercial Bank 286 3 1 2018 0% 20% 40% 60% 80% 100% 30 Arab Banking Corporation 259 6 1 0-2yrs 3-5yrs 6-10yrs 11-15yrs 16-20yrs 20+yrs

Are your deals listed here? If you feel that the information within these tables is inaccurate, you may contact the following directly: Mimi Lee (Media Relations) Email: [email protected] Tel: +852 3698 4715

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