Of Scholars and Standards

The World’s Global Islamic Finance News Provider 11th April 2012 RED (All Cap) Of Scholars and Standards 950 A blueprint for the future of global Shariah 925 1.6% governance in Islamic finance 897.5 900 Following on from our exploration last principle of construction. The strength of week into the current issues surrounding the individual brick is not in question, but 875 883.29 standard sett ing bodies in Islamic fi nance, we need a stronger architectural design to this week Islamic Finance news uses create a fi rm support on which to build the 850 its unique viewpoint and unparalleled future of our industry. W T F S S M T expertise in the industry to explore the Powered by: IdealRatings® future of global Shariah standards, and Key issues provide our blueprint of how we believe Islamic Finance news believes there are Volume 9 Issue 14 the industry can reshape itself in order to fi ve key questions that must be addressed IFN Rapids ...... 2 reach its true potential. before we can build this new structure. Islamic Finance News ...... 7 IFN Reports: An interesting proposition; Scholarly concern 1. Who are the scholars? Indonesia’s Financial Services Authority to A key issue in the development of a What defi nes a Shariah scholar and how catalyze Sukuk boom; Making room for foreign global Shariah governance framework can we be sure that they are qualifi ed fi rms in Saudi Arabia ...... 15 is the fragmentation and opacity in the to advise? There is currently no formal scholars’ arena. This is not a criticism of the qualifi cation and the majority of scholars IFN Correspondents: Afghanistan; Hong Kong scholars themselves, who are universally are self-proclaimed. While their ability & China; Indonesia ...... 17 accepted to be an absolute necessity to the may not be in question, would we accept Case study: operation and future of Islamic fi nance. an unqualifi ed doctor, or lawyer, no matt er Saudi Electricity Company’s US$1.75 billion However, there are serious concerns about how good they were at their job? Sukuk Ijarah ...... 19 the structure of their role, which currently is holding the industry back as much as it It is vital that a formal qualifi cation is Features: contributes to its development. designated and enforced. There should Oman prepares to launch Islamic fi nance ...... 20 be a register of qualifi ed Islamic scholars, Will the development of the Islamic derivatives The Islamic fi nance industry may be small similar to a domestic Medical Register and market facilitate the development of Islamic compared to its conventional counterpart administered by a general council which structured fi nance? ...... 22 but it is no longer a fl edgling sector and defi nes policy. Once qualifi ed, scholars has developed into a signifi cant and should be listed on the approved register Islamic Investor sizeable contributor to global markets. and any scholar found acting against policy The plight of Islamic alternative investments ....24 It has achieved remarkable growth and rules should be struck off . occupies a unique position in the global Fund Focus: TA Islamic Fund ...... 25 fi nancial industry. While a piecemeal continued on page 3 Fund Data ...... 26 advisory service from scholars may have been enough in the early days, now that the Who watches the watchers? Takaful News industry has grown to wield real infl uence in the fi nancial markets it concurrently Marine Takaful in focus over Iranian Editor’s Note requires absolute unity and understanding sanctions ...... 28 from its scholars to support its growth. In last week’s issue of Islamic Finance News ...... 29 news, we brought up the role of the Feature: Takaful in Yemen: Is there a future? ..30 Shariah is the pillar upon which the Islamic fourth estate in helping to police fi nance industry stands, and scholars are authorities and regulators. While Meet the Head: Robert Minnegaliev, chairman the bricks which form this pillar. Yet instead accepting that those in power have a of the board, AK BARS Bank Open Joint Stock of a fi rm foundation built in a logical and crucial role to play in the development orderly manner, they are currently piled in Company ...... 32 of society and industry, in this era. a disorganized heap with no over-arching continued on page 6 Deal Tracker ...... 33 REDmoney Indexes ...... 34 Performance League Tables ...... 36 Events Diary...... 40 Company Index ...... 41 Subscription Form ...... 41 www.islamicfi nancenews.com IFN RAPIDS

Infi nite Card-i for the affl uent governments Fitch assigns fi nal ‘AA-’ NEWS ratings to Saudi Electricity ITFC provides Bangladesh Emirates Airline considers Global Sukuk Company’s Nigeria must not miss out Petroleum Corporation with debt issuance to refi nance US$500 million and US$1.25 on Islamic fi nance, says Jaiz US$855 million in fi nancing to US$550 million Sukuk billion trust certifi cates Bank buy oil Dubai International Capital CI upgrades Qatar Bank of Tanzania to develop Indonesia’s National fi nalizes US$2.5 billion debt International Islamic Bank’s strategies for Islamic banking Shariah Council calls for restructuring fi nancial strength rating the establishment of Islamic ICD signs US$2 million Dar Al-Arkan Real Estate exchange traded funds CI upgrades Kuveyt Turk fi nancing agreement with Development Company Participation Bank’s fi nancial Amrahbank Albaraka Turk reports 19% sett les periodic coupon strength rating Bank Indonesia to seek increase in 2011 net profi t distribution for Daar Sukuk II CI affi rms Investcorp’s long- reciprocal cooperation in Bank Asya to off er US$1.4 Saudi Arabian Mining and short-term ratings meeting with DBS Group billion in SME fi nancing Company receives Bank on Bank Danamon buy shareholder approval for MARC affi rms ‘AAAIS’ Shortage of investment-grade Islamic or conventional bond and ‘AA+IS’ ratings on International Bank of Sukuk seen in Southeast Asia Azerbaĳ an continues with issuance Tradewinds Plantation China’s growing credit market Capital’s Sukuk Ijarah plan to set up subsidiary in Emirates bids to host fi rst to spill over into Islamic Qatar branch of the ITFC deals? National Australia Bank Dubai Duty Free confi rms MOVES HSBC receives multiple bond said to be in talks with local mandates for US$1.1 billion Qatar Financial Center mandates from Gulf region fi nancial regulators on its multi-tranche fi nancing Authority names Jacques proposed US$500 million IDB, Dallah Albaraka Aigrain and Arnab Banerji as Alinma Bank posts US$40 Sukuk and Qatari government to non-executive directors million in net income for fi rst establish US$1 billion Islamic Five corporate Sukuk quarter of 2012 Dubai Holding names Fadel megabank in Qatar issuances expected from Al Ali as its new chairman Capivest Islamic Investment Indonesia this year AAOIFI proposes tighter Bank announces US$32.31 Mirza Qamar Beg standards for real estate Malaysia’s Sukuk market million net profi t for 2011 reappointed as director of the faces stiff competition IDB signs 40 fi nancing State Bank of Pakistan Al Hilal Banking Services agreements with 21 member ICD signs fi nancing proposes the establishment of Al Salam Bank-Bahrain states agreement for two Uzbekistan fi ve Islamic banking branches names Shaikha Hessa banks UAE banks remain on thin ice Khalifa Hamad Al Khalifa as Bank Muamalat Indonesia regarding restructurings and chairperson provisions TAKAFUL to fund up to 13 new energy Ameer Ali Mohamed Industry players see 40% projects Emirates Islamic Bank and appointed as CEO and chief growth in the Egyptian Dubai Bank move closer to investment offi cer of ASM IDB donates US$100,000 in Takaful market within the merger Investment Services aid for storm-hit southern next fi ve years region Gulf banking sector posts 7% Dr Henry Azzam steps down Takaful Malaysia deploys revenue increase in 2011, says as non-executive chairman Thailand’s fi nance ministry to Hyland Soft ware’s OnBase Boston Consulting Group of Deutsche Bank’s MENA amend regulations to simplify solution division home-buying through Islamic Saudi Arabia takes over Bumida Syariah reports net banks UAE’s position as largest Sandy Flockhart to step down profi t of US$590,231 for 2011 Bank Muamalat Malaysia Sukuk issuer in the Gulf as executive director of HSBC Solidarity Group Holding expects lower pre-tax profi t Qatar First Investment Bank explores options for strategic for 2012 fi nancial year seeks listing in the fourth Have you joined the leading expansion Islamic finance Linked-In The Central Bank of the quarter of this year Group yet? UAE calls for laws to control Palestine Islamic Bank posts mortgage lending US$4.03 million in 2011 net RATINGS Bank Rakyat Malaysia profi t Fitch upgrades Tamweel’s long-term IDR to ‘BBB+’ to expand pawn broking Al Jaber Group nears debt business to Brunei and standstill agreement MARC affi rms ‘AAAID’ rating Come and join thousands of Indonesia on Kwantas SPV’s US$19.6 other like-minded industry The Central Bank of the million outstanding Class A practitioners now. Maybank Islamic launches UAE limits lending to local Maybank Islamic Ikhwan Visa Sukuk

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Of Scholars and Standards CLOSING BELL Continued from page 1 First state-owned Islamic 2. What is their role? standards. There have been numerous bank What authority do they have and how examples of this inconsistency: for does this fi t with institutional, national example at SHUAA Asset Management IRAQ: The government has approved and supranational authorities? There in 2006, when a scholar on the SHUAA the establishment of the country’s fi rst is no denying the vital role played by board was reported to have approved a state-owned Islamic bank, the Two Rivers scholars but this must be fi tt ed into an product but at the same time sat on the Islamic Bank, said Mudher Saleh, the overall regulatory structure rather than board of two diff erent banks that had deputy governor of Iraq’s central bank. operating above or outside the law. rejected the same product. The new bank, the 12th Islamic bank in Iraq, will have an initial capital of IQD25 It must be noted that this is not billion (US$21.5 million). Shariah is the necessarily the fault of the scholars. With no agreed limitations or regulations of Maybank gets new CFO pillar upon scholarly practice, they are undoubtedly MALAYSIA: Maybank has appointed doing the best they can. It is the Mohamed Rafi que Merican Mohd which the Islamic industry’s responsibility, not theirs, to Wahiduddin Merican as its new chief provide guidelines in order to ensure fi nancial offi cer (CFO). He will replace finance industry consistent standards. Khairussaleh Ramli, who will become stands, and scholars 5. How should rival schools be president director at Bank International reconciled? Indonesia, the bank’s Indonesian banking are the bricks which The multiple diff erent schools of Islamic subsidiary. Mohamed Rafi que was form this thought and the consequent problems previously the CFO of state-owned utility that can arise regarding application fi rm Tenaga Nasional. pillar of Shariah principles or approval of new products is an issue that must be More youth invest in National addressed before any global consensus Bonds 3. What entry requirements should can be reached. The multiple diff erent there be? schools of thought are not a weakness UAE: National Bonds Corporation has The Islamic fi nance industry needs in Islam, and there can be no question expanded its client base of minors by to appeal to everyone. For consistent of standardizing Shariah thought as a 25%, according to its fi rst quarter fi nancial growth and to avoid limiting its whole. However, their diff erences must be statement. The company now has over own prospects it must look beyond accommodated so that Islamic fi nancial 100,000 customers with under-18s totaling the Muslim community and off er institutions can operate effi ciently and in a 16% of its total customer base. its products and services to a wider transparent environment. How can banks audience. And if the industry wishes to accommodate these diff erences without Record first quarter PDS have universal appeal then it must open hiring multiple scholars from each school issuance in Malaysia its doors to qualifi ed scholars of any race, of thought (and thus paying multiple creed, sex or color. The pace of growth times for diff erent opinions)? Banks are MALAYSIA: Malaysian private means that we already have a serious suff ering from the fragmented approach debt securities (PDS) recorded an shortage of talent, and the demand and lack of structure and it is slowing the unprecedented level in the fi rst quarter of for scholars will only increase. The industry down. this year, with gross issuances amounting availability of a wider range of formally to RM38.97 billion (US$12.71 billion). qualifi ed scholars of multiple races A blueprint for the future The off erings were boosted by Sukuk and backgrounds could go a long way sales, including PLUS’ RM23.35 billion Islamic Finance news has developed a towards preventing another fi asco along (US$7.62 billion) issuance in January and roadmap for the creation of a global the lines of the Goldman Sachs Sukuk. Tanjung Bin Energy Issuer’s RM4.5 billion Shariah Scholars Board. This may not (US$1.47 billion) Sukuk. 4. How much should they be paid? answer all the problems, but we believe it This is a sensitive issue and one which is off ers a real and achievable vision of how opaque to the point of obscurity. There the industry could achieve a measure of Restructuring deal good for are serious concerns over the practice of global standardization. DHCOG payment which are inhibiting some from UAE: The US$2.5 billion deal reached Phase One: Creation entering the market. by Dubai International Capital (DIC) 1. It is in everyone’s interest to have is credit positive for Dubai Holding a unifi ed board servicing the Scholars can sit on multiple boards Commercial Operations Group global Islamic fi nance community. resulting in clear confl icts of interest. (DHCOG), according to Moody’s. The Scholars are off ered high incentives for Governments must come together and agree, for the sake of the agreement reduces the risk of negative their cooperation and without regulation interference connected to DHCOG’s of their remuneration and of the number industry, that no one country or subsidiary, Dubai Holding, which in of boards they are allowed to join, there regulator is more powerful or more turn owns DIC; as well as improving will be inevitable inconsistency and important than another and that they Dubai Holding’s ability to meet its inequality in the application of Shariah continued... commitments towards DHCOG.

Of Scholars and Standards Continued from page 3

all must work together to create a general involvement in the industry 3. Scholars may leave the association to global and neutral body. at large. There will thus be a tangible become independent advisors, but incentive and they will be strongly are then not entitled to issue Fatwas. 2. The governments must agree to set encouraged to join. Approved and globally recognized up a joint committ ee to explore the Fatwas can only be issued by the creation of a comprehensive and fully 3. The respective governments should association. accountable global association. This consequently require all domestic should be completely transparent, fi nancial institutions with Islamic Phase Four: Qualifi cation with publicly available audited capabilities to sign an agreement 1. Formal scholar qualifi cations should accounts published annually. that all their Islamic transactions and be set. All those claiming to be operations must be acknowledged scholars must sit a standard exam 3. The Shariah Scholars Board should and approved by the association, and and pass, before being acknowledged be run as a non-profi t organization failure to comply may result in their and recognized as a scholar by the by an external and unbiased team of Islamic license being withdrawn or association. experienced industry executives with suspended. The absence of approval an elected board that does not include by the association should be similar 2. There should be no limitation on sex, the scholars themselves. to the absence of a rating in western age or creed. Anyone who passes markets, thus severely impacting the examinations and are approved 4. The body should be 100% their ease of doing business. by the examining board should be independent with no government confi rmed as a scholar. Training and interference or undisclosed fi nancial examinations will create a further backing. Any essential fi nancial The absence of revenue stream for the association. backing from external parties should be paid back under pre-agreed terms approval by the 3. Only those who pass the approved at the earliest opportunity. No outside scholar examinations will be awarded forces should play a role in the association should an offi cial title as a Certifi ed Shariah association’s development, location, Scholar. Only those who pass the views or management. be similar to the qualifi cation and choose to join the association will be authorized to issue 5. The Shariah Scholars Board should absence of a rating a recognized Fatwa. Marketing and have one central headquarters, with branding should be undertaken to a number of strategically positioned in western ensure everyone understands this branches positioned to ensure all mem- new accreditation. bers have access to a local representa- markets tive. This system would eliminate the 4. Those passing the qualifi cation will costly requirement for institutions to Phase Three: Coordination have the option of two career paths as maintain their own full Shariah board. 1. The association should employ Shariah Scholars: a team of scholars representing Phase Two: Organization the leading schools of thought; A. Join the Shariah Scholars Board (if 1. The Shariah Scholars Board should preferably with experience in various there is space available). Scholars hold an independent position. Its role sectors. These scholars should be joining the association will be un- should not be to set standards, but fully employed by the association. der direct employment. They will to follow the prescribed regulations Through the association they will be able to issue Fatwas as part of a and guidelines of each market and provide advisory services and team on behalf of the association. ensure an easy fl ow of transactions have the authority to issue Fatwas. They will be able to undertake in a standard format with standard However, scholars employed by the advisory services to institutions rates, standard documentation and association should not be available charged at the standard hourly complete transparency. for external consultation. Any rate set by the Shariah Scholars scholar employed by the association Board. They will be prohibited 2. In order to join, respective and and found moonlighting or taking from external advisory activities prospective governments must sign payment for external consultation not sanctioned by the body. a pact enforcing the rule in their should be struck off . respective country that all Islamic B. Become an independent Certifi ed transactions, funds and products 2. Every major market should be Shariah Scholar, able to charge for are only recognized when passed by represented by a team of scholars independent advisory services but this association, regardless of size with an understanding of that set not authorized to issue Fatwas. and distribution market. This must of regulations and guidelines. This Independent scholars will have the include domestic deals and sovereign should include scholars with expertise option of sett ing their own rates issuances. Countries who do not sign in the local school of thought and a but they will be operating in a the agreement will therefore struggle strong knowledge of local legal, tax competitive market and will not be with cross-border transactions and and regulatory requirements. continued...

Of Scholars and Standards Continued from page 4

able to issue Fatwas independently. lower rates than association advisory there should be a one-time fee for The price for scholars will therefore services. an Islamic fi nancial institution to be be dictated by market demand and accredited by the association (along will quickly even out to provide a 6. However, any Shariah scholars the lines of the Financial Services level playing fi eld. working on behalf of the association Association in the UK) in order to should not be allowed to hold shares be classifi ed as a recognized and 5. Each institution should have the or equity or be in any other way approved fi nancial institution. choice whether to employ the Shariah involved in the organization they are Scholars Board directly using the representing. Any scholar found to be 2. There should be a well documented board’s scholars for their advisory doing so would be struck off . system for dealing with submissions, requirements, or use a private consul- which should be followed in order. tant (independent Certifi ed Shariah Phase Five: Operation Scholar). A private consultant will not 1. There should be no membership fee 3. There should be a maximum of 60 have the authority to issue a Fatwa, to join. There should be no barrier to days for any structure to be cleared. and will thus only be able to assist in being involved in the association or to preparing the necessary documenta- be a member. The association should 4. Set fees should be charged for these tion for submission to the association. make its fees from charging for services depending on a number of It is expected that market rates will Fatwas and advisory / consultation criteria including product type and determine this choice, with inde- services, and from the training and pendent consultants likely to charge qualifi cation of scholars. However, continued... A single standard setting body for Islamic finance?

In our cover story last week we that even the conventional industry has which can aff ord membership. It would discussed the role of the standard not yet achieved. Not only would this be assist small independent practitioners sett ing bodies in Islamic fi nance. One a landmark step for Islamic fi nance, but just as it would support big banks. As suggestion for the development of a it would demonstrate to the world the a non-profi t organization it would be comprehensive governance framework qualities of tolerance, cooperation and egalitarian and even-handed in the for the industry could be to merge unity that Islam as a religion hopes to distribution of its resources, with the all three major current organizations embody. single priority of developing the Islamic (IFSB, IIFM and AAOIFI) into one new fi nance industry to its full potential. standard sett ing authority with ultimate authority over the industry. Implementation (a problem that has Let’s join already been identifi ed by the IFSB as This would be run along the same lines together to a key issue for 2012) would become as the Shariah Scholars Board as out- far easier with comprehensive global lined in our main cover story this week. form a unified coverage, allowing all countries to work One overall body, the Shariah Standards together to develop and implement the Board, incorporating two complemen- industry the global same standards, with lesser developed tary organizations working together countries supported by bigger members. to develop and regulate the industry. financial markets The scholars would form the Shariah We always talk about Islamic fi nance compliance side of the operation, while will recognize, competing with conventional fi nance the standard sett ing authority would but until we stop competing with be tasked with sett ing the standards, understand, ourselves we are not even in the enforcing them, working with regula- running. If we have the courage and tors to implement them and running the accept and the ambition to come together, we overall operation. They would benefi t could surge ahead. A united Shariah from each others’ expertise — scholars participate in Standards Board could revolutionize the and industry practitioners working side Islamic fi nance industry and showcase by side towards the same goal. what Shariah compliance is really about, Industry players would benefi t from providing a patt ern for the struggling This would engender a true united membership of a single non-competing conventional industry to emulate. front: no competition, no rivalry, organization, unilaterally supported no government intervention. The by their governments. The body would Let’s stop competing with ourselves industry would be breaking boundaries provide a forum for working groups and join together to form a unifi ed by creating its own supranational accessible to all industry players, industry the global fi nancial markets regulatory body, backed up by its own improving the quality of research will recognize, understand, accept and standard sett ing authority, in a move without limiting participants to those participate in.

Of Scholars and Standards Continued from page 5

size of deal. Innovation should be safeguard their initial fi rst-mover understanding of the business, speed encouraged. advantage, while still maintaining etc. This will provide potential and an open market and encouraging a future employers with a guide to the 5. Fees should be published and competitive level playing fi eld. scholars available, and encourage accessible to all, ensuring transparency higher standards. It will also increase and a level playing fi eld. These fees Phase Six: Information the number of positions for scholars should go towards the running of the 1. A comprehensive set of guidelines globally, off er them a forum for em- association, rendering itself effi cient should be made available online ployment opportunities and produce and self-suffi cient. Excess funds detailing the criteria demanded by more of a level playing fi eld. should go towards the promotion of association scholars for the issuance the Islamic fi nance industry and to of a Fatwa, along with information on 4. Case studies should also be made worthwhile causes globally, decided what scholars take into consideration publicly available on the website for upon by an open panel. in their interpretations. research and precedent purposes.

6. Fatwas should clearly state the 2. There should also be a comprehensive United we stand countries in which the transaction list of qualifi ed non-board-serving Scholars are vital to the health and is deemed Shariah compliant, with scholars (i.e. qualifi ed independent wealth of our industry. However, the lack relation to each specifi c country’s consultants) on the offi cial website, of structure and competing schools have domestic regulations. A minimum of listing their name, country of led to a confusing system in which the three scholars from within the organi- residence, and areas of expertise. institutions and the customers are the zation should sign off on each Fatwa. They should only be contactable ones who suff er. A radical new system Fatwas should be issued along with through the association to limit is urgently needed — one which is a solid explanation for their under- unsolicited emails. They should borderless, accountable, understandable, standing of the transaction. Similarly, respond to the client directly and can accessible and honest. if a Fatwa is denied, a comprehensive off er independent advisory services explanation should be issued. charged at market rate, external to the The above blueprint may not be perfect, association. However, they may not but it should serve as a springboard and 7. A Fatwa should be kept confi dential for issue Fatwas. a rallying call. The industry must join a period of perhaps six months for any together and stand united to demand a new or innovative product / structure, 3. The website should also off er institu- bett er system to serve its ever growing following which it would be published tions the opportunity to add notes needs. Only then can we truly move on the offi cial website. This should for those scholars they have used, forward. — LM give institutions the opportunity to including comments on usefulness, Who watches the watchers?

Editor’s Note Islamic fi nance, as we seek to propel the Dr Moneer Hasan Saif of Yemen’s CAC industry towards a more unifi ed front to Bank contributes our Takaful feature In last week’s issue of Islamic Finance encourage the further global acceptance on the Islamic insurance industry in news, we brought up the role of the of Islamic fi nance. Yemen; while our IFN Reports cover fourth estate in helping to police the opening up of foreign investment in authorities and regulators. While The standardization of our industry has Saudi Arabia, regulatory developments accepting that those in power have a become especially important as more in the Indonesian Sukuk market and the crucial role to play in the development markets join the Shariah compliant of society and industry, in this era, potential Islamic fi nance could hold for fi nance sector. One such new entrant education funding. where institutions – especially those is Oman; and our issue this week also in the fi nancial industry – are under features an article by Abid Shakeel Our IFN Correspondents write on scrutiny more than ever, we also of Ernst & Young’s Islamic Finance Indonesia’s potential as a center for acknowledge that regulators too should Services Advisory, who writes on the Islamic fi nance; Shariah compliant be kept under close watch to ensure the sultanate’s preparations for introducing eff ectiveness of their functions. Islamic fi nance to its domestic market. microfi nance in Afghanistan; and new developments in Hong Kong’s Sukuk Our cover story this week continues In another example of our industry’s market. our inspection of regulators, in a inability to see eye-to-eye, we also continuation of the previous issue’s look feature a report by Gregory Man of Meet the Head talks to Robert at Shariah standard sett ing bodies. In one Cliff ord Chance Hong Kong on the Minnegaliev, the chairman of Russia’s of our most thought-provoking pieces development of the Islamic derivatives AK BARS Bank, while our Case Study yet, we go one step further by outlining market and its impact on Islamic looks at the Saudi Electricity Company’s a blueprint for Shariah governance in structured fi nance. US$1.75 billion Sukuk.

greater access for Indonesian banks to Malaysia’s Sukuk market AFRICA establish branch offi ces in Singapore. faces stiff competition Islamic finance for Nigeria However, Muliaman noted that the GLOBAL: Malaysia is poised to retain NIGERIA: Alhaji Mohammed Mustapha meeting is standard operating procedure. the lion’s share of the global Sukuk Bintube, CEO of Jaiz Bank, has said that market this year, but could the country Nigeria cannot aff ord to miss out on the “If Bank Danamon is owned by DBS, a see stiff er competition from neighboring global development of Islamic fi nance. banking company which is monitored Asian countries? by a regulator, we can implement He also said that the future for Islamic cross-border supervision. We can share According to Herwin Bustaman, the head fi nance in Nigeria is promising, information with its [Singapore’s] of HSBC Amanah Indonesia, Indonesia is adding that the country can benefi t banking regulator. But fi rst, we want to most likely to see record Sukuk issuance from the industry through fi nancial talk with DBS,” he said. this year with another US$1.5 billion sector diversifi cation, new products, sovereign Sukuk issuance, on top of employment opportunities and access to IBA continues Qatar plan US$1.5 billion already issued in March. foreign direct investment. The second sovereign sale is expected in AZERBAĲ AN: The International Bank of the second half of this year. Azerbaĳ an (IBA) has resumed its plan to Islamic banking rules for expand to Qatar, aft er putt ing the project In addition, he said that: “For the fi rst Tanzania on hold due to the fi nancial crisis, said time, we think Indonesia will see one TANZANIA: The central bank of Emil Mustafayev, its deputy chairman. or two corporates issue the country’s Tanzania is currently collaborating with fi rst US dollar-denominated Sukuk.” He other fi nancial regulators to develop The bank is currently working on the noted that this is now possible following strategies to supervise Islamic banking in legal aspects of its expansion to the the country’s new tax and Sukuk laws, the country. country, where it will likely set up an which allow for the issuance of US Islamic window. dollar-denominated Sukuk by corporates; The bank also said that eff orts are and enables local companies to reach out underway to enhance the regulatory NAB talks to regulators to investors in the Middle East. environment and risk management AUSTRALIA: National Australia Bank to support a safer, more effi cient and (NAB), which is said to be considering Meanwhile, although Malaysia is forecast resilient fi nancial system. selling its fi rst US$500 million Sukuk to issue 60% of the US$44 billion-worth that could mark the debut of Islamic of Sukuk that HSBC expects to be bonds in Australia, is understood to off ered globally this year, other Asian be in discussions with local fi nancial countries are also proactively marketing ASIA regulators on the proposed issuance. themselves to boost their standing in the Islamic financing for lucrative Sukuk market. One notable new Amrahbank Any Sukuk must secure prior approval player is Hong Kong. from regulators, particularly the AZERBAĲ AN: The Islamic Corporation Australian Prudential Regulation “Hong Kong has issued a consultative for the Development of the Private Sector Authority and the Australian Securities paper on Sukuk laws seeking response (ICD), the private sector arm of the IDB, and Investment Commission. from the market whether provisions has signed a US$2 million fi nancing draft ed in the country were adequate to agreement with Azerbaĳ an’s Amrahbank. The regulatory approval process is provide the right platform,” said Rafe expected to take a long time, with NAB’s Haneef, CEO of HSBC Amanah Malaysia. The facility will be used to fi nance small Sukuk possibly emerging in the second and medium-sized enterprise projects half of this year. He also said that while the Malaysian in communication, technology, health, market caters to investors seeking manufacturing, service, retail and Shariah compliant solutions, jurisdictions trade, industrial, agricultural and other 5 Indonesian Sukuk in the such as Hong Kong and Singapore cater developmental sectors in the country. pipeline to investors seeking alternative sources of INDONESIA: The National Shariah fi nancing. Indonesia seeks cross-border Council has said that at least fi ve cooperation corporates will issue Sukuk this year; Furthermore, Malaysia must increase including Bank Muamalat Indonesia the issuance of US dollar-denominated INDONESIA: Muliaman Hadad, the (BMI) and local confectionaries producer Sukuk to achieve its aspiration of deputy governor of the central bank, Mayora Group. becoming a fi nancial hub. Bank Indonesia (BI), has said that he will raise the need of reciprocal cooperation The expected off erings will help boost “The advantage of US dollar Sukuk in a meeting with Singapore’s DBS Group Indonesia’s corporate Sukuk market, issuances in Malaysia will be that the Holdings on its planned acquisition of which only saw two issuances last year credit of companies will be regularly local lender, Bank Danamon. from South and West Sulawesi Bank and monitored by investors abroad and this Bank Nagari, both of which sold papers will enable support from international In addition to querying DBS over its amounting to IDR100 bilion (US$11 investors,” said Rafe. intentions for buying Bank Danamon, BI million). will also raise the issue of the need for continued...

© 7 11th April 2012 NEWS continued... IDB aid to the Philippines Central bank calls for laws to The council did not reveal the remaining PHILIPPINES: The IDB has donated control mortgage lending three companies expected to issue the US$100,000 in aid to the Philippines for UAE: As the UAE’s property market Sukuk. the victims of deadly storms that recently slowly rebounds from the 2008 fi nancial devastated the country’s southern region. crisis, the Central Bank of the UAE is BMI’s planned issuance comprises a mooting legislation to ensure there is IDR1.5 trillion (US$164.56 million) The donation will be used to purchase no repeat of banks’ fallout from heavy off ering targeted for sale by June gadgets and electrical items worth up exposure to real estate. this year. The papers will likely be to US$40,000, while US$30,000 each will denominated in Indonesian rupiah, said be used for school supplies and infant Although data from Dubai’s Land Hendiarto, its fi nance director. necessities. Department shows encouraging fi gures for the revival of the emirate’s real estate The bank is looking at a maturity of Simplifying Islamic home market, with AED143 billion (US$38.93 seven-10 years for the Islamic bonds, billion)-worth of property transactions although it will decide on the currency buying recorded sector last year, banks continue and tenor of the debt following its THAILAND: The fi nance ministry plans to struggle with losses from property bookbuilding in June. to amend regulations for its Shariah deals. compliant banks that would help Proceeds from the issuance will be used overcome tax-related obstacles in home- Sultan Nasser Al Suwaidi, the governor to fund the expansion of the bank’s buying services. of the central bank, has now said that the physical and electronic network. emirates must develop a legal system Under the proposed legal amendment, to control and supervise fi nancing Meanwhile, Mayora is set to launch a tax liability for transactions with the for mortgages; to help manage risks IDR250 billion (US$27.28 million) Sukuk Islamic bank would only occur once. and encourage lending for property as part of a IDR750 billion (US$81.83 transactions. million) debt program. The company is Meanwhile Wirun Techapaiboon, the off ering returns of 7.75-9% for the Sukuk, deputy fi nance minister, has also said “The UAE has several challenges. to be launched on the 3rd May this year. that local banks could be allowed to Among them is the need for banks and collaborate with prospective homebuyers other fi nancial institutions to establish Bookbuilding for the debt program to jointly purchase homes. policies regarding real estate fi nancing began on the 9th April and will conclude risk and oversight. The next one is on the 23rd April. Proceeds from the He noted that Shariah compliant banks developing a legislative system to allow issuance will be used, among others, to such as the Islamic Bank of Thailand, lenders to have eff ective control over procure raw materials and spare parts to as well as state-owned banks like the mortgages and speeding up the process support Mayora’s business. Government Housing Bank, could off er of possessing the mortgage property as such services quite easily. a guarantee in the event of defaulting on Danareksa Sekuritas and Mandiri the payment,” he said. Sekuritas have been appointed Slower profit growth underwriters for the issuances, while Guidelines on real estate transactions Bank CIMB Niaga is the trustee. MALAYSIA: Bank Muamalat Malaysia is expecting to report lower pre-tax profi t for fi nancial institutions have come to for the fi nancial year ending the 31st the fore recently; as fi nancial industry ICD in Uzbek deals March 2012 compared to the previous regulators seek to tighten rules to avoid UZBEKISTAN: The Islamic Corporation year, said Mohd Redza Shah Abdul past mistakes of the past. AAOIFI has for the Development of the Private Sector Wahid, its director and CEO. proposed new accounting standards (ICD), the private sector arm of the IDB, for real estate transactions; focusing has signed a line of fi nancing agreement However, he stressed that the bank is on real estate investments of fi nancial for US$11 million with two Uzbekistan- being more conservative as it builds its institutions. based banks. asset base for stronger growth going forward. The new standards have been put forth The two banks are Ipak Yuli Bank and for public hearing and could come into Uzbek Industrial-Construction Bank, The bank recorded a pre-tax profi t of eff ect from the 1st July this year. which will receive US$5 million and RM204.3 million (US$67 million) for the US$6 million in fi nancing, respectively. fi nancial year ended the 31st March 2011.

BMI funds energy projects Meanwhile, Mohd Redza said that the Are you reading bank will be aff ected by the Malaysian INDONESIA: Bank Muamalat Indonesia central bank’s recent regulations on retail (BMI) will disburse IDR782.9 billion us on your fi nancing. (US$86.08 million) in funding for 13 renewable energy projects. iPad / However, Bank Muamalat could accept a 5-10% slowdown in its retail business, as The bank’s fi nancing portfolio for the it favors sustainability, he said. iPhone? energy sector amounts to IDR2.25 trillion (US$245.48 million). continued...

© 8 11th April 2012 NEWS continued... Bangladesh Petroleum Corporation China’s growing credit market “We don’t want to be in a situation like (BPC) to pay for the purchase of oil from January to June 2012. to spill over into Islamic Europe where you have tremendous deals? growth and profi tability, and then suddenly the whole thing collapses,” he The facility is part of US$2 billion in CHINA: The recent move by the Hong explained. fi nancing the IDB earlier agreed to Kong government to proceed with draft extend to the BPC to meet its fuel import amendments ultimately aimed at creating costs this year. Expanding Ar-Rahnu business a fairer market between Sukuk and conventional bonds may prove astute as MALAYSIA: Bank Kerjasama Rakyat Islamic ETFs for Indonesia China sees further interest from Muslim Malaysia (Bank Rakyat) is exploring markets as a source of funding. options of expanding its Ar-Rahnu INDONESIA: The National Shariah pawn broking business to Brunei and Council has called for the establishment of Islamic exchange traded funds (ETFs). Emirates NBD (ENBD), which issued a Indonesia, said Ismail Sabri Abdul US$500 million Sukuk in January this Yaakob, the minister of domestic trade, This is to provide investors with more year, has come to the market as the cooperatives and consumerism of Middle East’s fi rst issuer of Chinese Malaysia. options for investing in Indonesia’s capital market, Syariah Indonesia (ISSI). yuan-denominated debt, dubbed dim sum bonds. He added that Bank Rakyat is in the process of obtaining approval from the On the 21st March, the bank issued Malaysian central bank toexpand the EUROPE CNY750 million (US$119 million) three- service in the countries. year conventional notes, priced at 4.88%, Albaraka Turk’s profits grow followed by a CNY250 million (US39.54 Earlier on, Ismail said that Bank TURKEY: Albaraka Turk has reported a million) tranche on the 24th March. Rakyat should reduce its dependency 19% year-on-year increase in its net profi t on its personal fi nancing business by to TRL160.5 million (US$90 million) in The issuance came on the heels of expanding its Islamic pawn business for 2011, as total operating income rose 25% Malaysian sovereign wealth fund bett er returns. to TRL530.9 million (US$298.46 million). Khazanah Nasional’s US$357.8 million exchangeable Sukuk issuance on the 15th The Ar-Rahnu business contributed 10% Total assets reached TRL10.5 billion March. The Sukuk is convertible into to Bank Rakyat’s operations in 2010, (US$5.5 billion), compared to TRL8.4 shares of Khazanah’s Hong Kong-listed which were previously dominated by its billion (US$4.78 billion) in 2010. Parkson Retail Group. personal fi nancing segment. SME funds from Bank Asya Apart from Hong Kong’s draft Ismail noted that Bank Rakyat must amendments for Sukuk, China has also TURKEY: Bank Asya has announced that expand its other services, such as Ar- implemented a slew of measures aimed it will off er up to TRL2.5 billion (US$1.4 Rahnu, as its dominance in the personal at gradually liberalizing its currency. fi nancing segment faces competition billion)-worth of fi nancing for the small and medium-sized enterprise (SME) from other non-bank fi nancial Its latest move involves the expansion sector this year. institutions and commercial banks. of quotas for US dollar and Chinese yuan qualifi ed foreign institutional SME fi nancing makes up 34% of the Up until February 2012, Bank Rakyat investor schemes; and also includes a bank’s fi nancing portfolio, comprising channeled RM1.9 billion (US$620 million) pilot program allowing off shore funds to 170,000 customers from the construction, in fi nancing to its cooperatives and raise Chinese yuan funding onshore for manufacturing, health and food sectors. RM276 million (US$90 million) from the off shore investment. “If implemented, Ar-Rahnu business. [this] would open up a new onshore- to-off shore cross-border investment Visa for the affluent GLOBAL channel,” said HSBC in a report on the 5th April. MALAYSIA: Maybank Islamic Investment-grade Sukuk has launched the Maybank Islamic Ikhwan Visa Infi nite Card-I, targeted shortage As China loosens its grip on its currency towards affl uent customers earning a GLOBAL: Pension fund managers the and sees continued and growing foreign minimum annual income of RM240,000 Employees Provident Fund (EPF) and interest for funding and investments, (US$78,302). Kumpulan Wang Persaraan (KWAP) it could just be a matt er of time before from Malaysia and Jaminan Sosial Tenaga the country entices more Islamic The card off ers privileges for fl ight Kerja (Jamsostek) of Indonesia have said transactions; especially as entities seek tickets, dining and golf. that their plans to increase investment in more diversifi ed funding in the wake of Sukuk are being hampered by a shortage slowing credit from the west. ITFC fulfills deal with BPC of investment-grade Sukuk. BANGLADESH: The International The pension funds are seeking more Islamic Trade Finance Corporation high-grade Sukuk in a bid to diversify (ITFC), a member of the IDB Group, their investments, which must hold has signed a US$855 million fi nancing agreement with the state-owned continued...

© 9 11th April 2012 NEWS continued... with a paid-up capital of US$1 billion, UAE banks remain on thin ice confi rming a report by Islamic Finance investment-grade debt. UAE: Although almost four years have news on the 23rd March 2012 (Volume 9, passed since the last fi nancial crisis, Issue 12). Ahmad Norhisham Hassan, the fi xed banks in the UAE remain on thin ice due income director at KWAP, which runs to ongoing restructurings and continued The three founders have subscribed to Malaysia’s civil service scheme, has said asset quality issues. that the company, which plans to raise its US$500 million of the bank’s capital. holdings of Islamic securities, needs to “We expect the level of restructured Dallah Albaraka is a conglomerate look off shore for Sukuk because of local loans to rise as restructuring negotiations founded by Saudi businessman Sheikh scarcity. continue on some government-related Saleh Kamel, who also founded the Al entities. Based on publicly available Baraka Banking Group. This is despite Malaysia’s standing information on the six major UAE as among the few investment-grade commercial banks [which include Ahmad Mohamed Ali Al-Madani, the sovereign issuers; alongside Bahrain, Abu Dhabi Islamic Bank], which president of the IDB, said that the new Indonesia, Qatar, and the UAE. are responsible for about 54% of the bank, which will have a worldwide industry’s loan book, their total gross branch network, will facilitate the Badlisyah Abdul Ghani, CEO of CIMB impaired loans constituted a high 8% of establishment of a fi nancial market by Islamic, noted that this is because the their combined gross loans as at the end Islamic banks and provide solutions for pension funds are growing faster than sales of September 2011,” said RAM Ratings in liquidity management. of Sukuk, adding that despite large Sukuk a report on the 6th April. issuances from Malaysia, the Islamic debt It will also fi nance infrastructure projects, market remains small compared to the The slew of Dubai government-related added Ahmad Mohamed. value of investable funds. entities’ restructuring plans this year includes Dubai Holdings-owned Dubai Jamsostek also plans to increase its Stricter standards from Group’s US$6 billion-worth of bank debt; Sukuk holdings going forward; with AAOIFI and a US$2.5 billion deal reached by Islamic securities currently accounting GLOBAL: The AAOIFI has proposed Dubai International Capital, also owned for around 3% of its IDR105 trillion more thorough accounting standards for by Dubai Holdings. Drydocks World, (US$11.5 billion) portfolio. real estate transactions while increasing also a state-linked company, has fi led for the transparency of Islamic banks’ insolvency protection as it att empts to Busy year for Gulf bonds investment accounts. restructure around US$2.2 billion-worth of debt. GLOBAL: HSBC Holdings, which has arranged US$7.5 billion in conventional The new property standards focus on Meanwhile, a US$1.25 billion Sukuk and Islamic bond sales in the fi rst quarter valuation methodology, clarifying the owed by the Dubai International of this year, has received “dozens” of diff erences between mark-to-market Financial Center maturing in June this bond mandates from the Gulf region this and book values and specifying the year and a US$2 billion Sukuk from Jebel year, said Georges Elhedery, its head of accounting treatment of buildings still Ali Free Zone due in November are also global markets for the MENA region. under construction. being closely watched by the market for any sign of repayment vulnerabilities. Strong demand for debt sales is being Once approved, the proposals could driven by liquidity in the market; with become eff ective as early as July this year Although the companies have actively around six deals managed by HSBC ready and will be applied retroactively. sought to manage their debt, banks are to be off ered “immediately”, he said. expected to continue to suff er as they IDB signs financing receive longer repayments. RAM noted The banking group, which arranged the that: “Loan maturities have been ex- US$4 billion Sukuk by Saudi’s General agreements tended to medium-term tenors following Authority for Civil Aviation and Saudi GLOBAL: The IDB has signed 40 restructuring, with bullet repayments. Electricity Company’s US$1.75 billion fi nancing agreements totaling US$1.9 Given borrowers’ still-weak credit pro- Islamic debt program, also expects billion with 21 of its member countries. fi les, however, the possibility of further another US dollar-denominated issuance The signings took place at its recently th provisioning remains high, especially if from the kingdom this year. concluded 37 annual meeting. the economic recovery falters.” Elhedery added that Saudi banks are also The fi nancing will be used to carry out According to a recent report by Global expected to tap the market in 2012 due development projects in the countries Investment House, GCC banks under its to a need for US dollars, despite being and includes a US$200 million agreement coverage saw their provisions expense liquid with Saudi riyals. for Azerbaĳ an, a US$394 million deal for Bangladesh, US$124 million for Sudan balloon 59% quarter-on-quarter and 51% year-on-year in the last quarter of Islamic megabank finally a and a US$551 million line of fi nancing for Turkey. 2011; with provisions from the UAE reality representing the second largest in the GLOBAL: The IDB, Saudi-based Dallah Meanwhile, the bank will also fi nance the region; growing 47% year-on-year and Albaraka and the Qatar government Iran-Central Asia railroad, according to 20% quarter-on-quarter. have signed an MoU in Doha, Qatar Dr Ahmad Mohamed Ali, the president to establish an Islamic megabank continued...

Emirates Islamic Bank and 16 th - 17th April 2012 Dubai Bank move closer to Grand Ballroom, merger Hotel Mulia Senayan, Jakarta UAE: Emirates Islamic Bank (EIB) and Dubai Bank, the two Shariah compliant subsidiaries of Emirates NBD (ENBD), The two-day event will feature an Issuers Day, Investors Day, and Takaful and re-Takaful Day have announced the appointment of a and see the movers and shakers of the Islamic finance industry gather to discuss the most current and relevant issues within the Indonesian Islamic financial markets. Covering all uniﬁ ed top management team and the sectors from retail to capital markets, the IFN Indonesia Forum aims to highlight key establishment of an executive committ ee developments in tax and regulations, investment opportunities in Indonesia, liquidity and that will manage both banks. corporate governance, as well as the growth potential for Takaful in Indonesia's thriving retail banking sector. The committ ee is said to be made up of representatives from the three banks. REGISTER ONLINE NOW The announcement comes on the back www.REDmoneyevents.com of speculation of a possible merger between the two banks; seen as the next Attendance, while FREE, is by invitation only and open to those who register necessary step since ENBD took over the and have an active interest in this fast growing industry. debt-laden Dubai Bank from the Dubai government in October last year. SPONSORS & PARTNERS While ENBD has remained tight-lipped Lead Partners on a possible merger, the consolidation has reportedly already been agreed upon by EIB and Dubai Bank; and is said to have been endorsed by the Central Bank of the UAE.

According to reports, ENBD is currently fi ne-tuning the legalities of the merger. Associate Partners The bank now needs offi cial approvals from the UAE central bank and the fi nance ministry, as well as the Dubai government, if it wishes to go ahead with the merger. Executive Partners The appointment of the integrated management team for EIB and Dubai Bank also follows the recent appointment of Jamal Ghalaita, already CEO of EIB, as CEO of Dubai Bank. Jamal is now said also to have been appointed head of the merged entity. Lunch Sponsors The latest available fi nancial reports show both Islamic banks to be loss- making. However, the merger of the two will create a stronger balance sheet; seen Takaful & re-Takaful Day Endorser Exclusice Knowledge Partner as especially crucial in turning around Dubai Bank.

EIB’s total assets amounted to AED21.48 billion (US$5.85 billion) at the end of Advertisement Sponsor Partner Lead Media Partner 2011, while Dubai Bank last ﬁ nancial statement at the end of 2009 reported the bank’s total assets at AED17.4 billion (US$4.75 billion).

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© 11 11th April 2012 NEWS continued... sovereign General Authority of Civil RATINGS of the IDB Group. Aviation’s maiden US$4 billion Sukuk, which sparked off a wave of corporate Tamweel makes strong Sukuk sales, including local food The bank has also approved the progress execution of the Sarni Minab Dam producer Almarai Company’s Saudi project, in which it will invest EUR87 riyal-denominated Sukuk worth SAR1 UAE: Fitch has upgraded Tamweel’s long- million (US$114.01 million). The project billion (US$267 million), state-owned term issuer default rating (IDR) to ‘BBB+’ is located in the southern Hormuzgan utility fi rm Saudi Electricity Company’s from ‘BBB-’ with a stable outlook. province of Iran. US$1.75 billion global Sukuk and Saudi British Bank’s SAR1.5 billion (US$500 Sturdy ratings million) debut Sukuk. MidEast banks recovering MALAYSIA: MARC has affi rmed GLOBAL: The banking industry in the In total, Sukuk issuances in the fi rst its ‘AAAID’ rating on Kwantas SPV’s Middle East recorded a revenue growth quarter of 2012 doubled to reach a record outstanding RM60 million (US$19.6 of 7% in 2011, following a decline in $43 billion worldwide — nearly half of million) Class A Sukuk with a stable 2010, according to a study by The Boston the total issued in 2011. outlook. Consulting Group (BCG). Concurrently, MARC affi rmed its ratings The research, which covered 34 banks on Kwantas SPV’s RM65 million (US$21 in the region, representing 80% of GCC MIDDLE EAST million) Murabahah commercial papers/ banking assets, also showed that profi ts QFIB plans listing medium-term notes (CP/MTN) program in 2011 rose by 15% compared with 2010, at ‘MARC-2ID(cg)/A-ID(cg)’. QATAR: Qatar First Investment Bank while loan loss provisions dropped 2%. (QFIB), which will be renamed Qatar SEC’s Sukuk finishes strongly First Bank, is planning to list on the Qatar Dr Reinhold Leichtfuss, a senior Exchange by the fourth quarter of this SAUDI ARABIA: Fitch has assigned a partner and managing director in BCG’s year to spur its growth and acquisition fi nal rating of ‘AA-’ to Saudi Electricity Dubai offi ce and leader of its fi nancial plans, said Abdullah Fahad Ghorab Al Global Sukuk Company’s US$500 million institutions practice in the Middle East, Marri, its chairman. and US$1.25 billion trust certifi cates. said that the performance of Middle East banks in 2011 is testament to the strength He added that the move will also enable of the GCC economies and banking QIIB in better condition the bank’s existing shareholders to systems. QATAR: CI has upgraded Qatar trade their shares on the Qatari bourse. International Islamic Bank’s (QIIB) QFIB has a total of 1,299 individual and Furthermore, Leichtfuss said that this fi nancial strength rating to ‘A-’ from institutional shareholders, of which 58% performance is set against the backdrop ‘BBB+’ based on the overall improvement are local with the remaining 42% spread of lower revenue and profi t index levels in QIIB’s credit metrics and the across the Gulf region. amongst international banks. Hence, outlook for its fi nancial condition and the GCC’s leading banks can leverage performance. the partial withdrawal of international Strong profit growth banks to gain market share and expand PALESTINE: Palestine Islamic Bank Better standing their footprint, despite some continuing has reported a growth in net profi t to TURKEY: CI has upgraded Kuveyt Turk challenges. US$4.03 million for the 2011 fi nancial Participation Bank’s fi nancial strength year, a 153% increase compared to rating to ‘bb+’ from ‘bb’. The upgrade is The study also urged for a need for 2010. Total assets rose 9.9% to US$392.7 based on the bank’s strong asset quality, higher competitiveness in the banking million. good capital profi le and continued industry, saying that although the 2011 profi tability. upturn was quite strong, returning to Al Jaber nears debt deal pre-crisis levels of growth is unlikely in the foreseeable future. UAE: Abu Dhabi conglomerate Al Jaber Good position Group is reportedly close to a standstill BAHRAIN: CI has affi rmed Investcorp’s This is even more so given that the agreement on its debt believed to be worth long- and short-term ratings at ‘BBB+’ region’s regulatory bodies are becoming more than US$1 billion, with more than and ‘A2’, respectively. more cautious with regard to bank 90% of creditors agreeing to the move. lending and fee policies. It also maintained the bank’s fi nancial A total of AED1.39 billion (US$378 strength rating at ‘BBB+’. million)-worth of the group’s loans were Saudi is top Gulf Sukuk issuer due in 2011; with a further AED1.61 GLOBAL: Saudi Arabia has overtaken billion (US$438 million) maturing over Firm foundation the UAE to become the largest Sukuk the next two years. MALAYSIA: MARC has affi rmed issuer in the Gulf, raising US$6.4 billion- its ‘AAAIS’ and ‘AA+IS’ ratings on worth of Islamic bonds in the fi rst quarter Its Islamic facilities include a US$300 Tradewinds Plantation Capital’s (TPC) of 2012, compared US$1.9 billion from million 16-month fi nancing from Abu asset-backed RM180 million (US$59 the UAE. Dhabi Islamic Bank signed in August million) Class A and RM30 million 2010 and a US$400 million syndicated (US$9.76 million) Class B Sukuk Ijarah Saudi’s standing was boosted by the respectively, with a stable outlook. continued...

© 12 11th April 2012 NEWS continued... Aircraft Sukuk considered MOVES Ijarah facility from 11 banks expiring in UAE: Emirates Airline is considering the April next year. issuance of conventional or Islamic debt QATAR FINANCIAL CENTER as options to refi nance US$550 million AUTHORITY The standstill agreement was initially Sukuk maturing in June this year. slated for completion by early March QATAR: The Qatar Financial Center this year. However, it was postponed as Gary Chapman, the president of the Authority has appointed Jacques creditors disagreed with terms off ered by airline’s travel service unit Dnata, said Aigrain and Arnab Banerji as non- Al Jaber. that the credit market now appears executive directors. att ractive, with the availability of Its banks’ committ ee is chaired by the competitively priced funds. DUBAI HOLDING National Bank of Abu Dhabi and also UAE: Dubai Holding has named includes Abu Dhabi Commercial Bank, DIC in debt agreement Fadel Al Ali as its new chairman.The HSBC, The Royal Bank of Scotland and company also announced its intention Union National Bank. UAE: Dubai International Capital (DIC), the private equity arm of Dubai Holding, to appoint a new board of directors has received full support from creditors soon. Cap on UAE state loans for its US$2.5 billion debt restructuring. UAE: The Central Bank of the UAE has STATE BANK OF PAKISTAN established new limits for commercial The maturity on the debt has been PAKISTAN: Mirza Qamar Beg has been bank lending to the emirates’ federal and extended to fi ve years, with a 2% coupon reappointed as a director of the central state governments and their entities. on restructuring facilities. Creditors bank, the State Bank of Pakistan. also agreed to extend the maturity of a This is the fi rst time that the federal US$350 million facility to three years. government has been included in the AL SALAM BANKBAHRAIN central bank’s lending restrictions. The deal is said to have been reached BAHRAIN: Al Salam Bank-Bahrain following Dubai Holding’s agreement to has appointed Shaikha Hessa Khalifa The caps, which did not exist previously, accept a lower repayment on debt owed Hamad Al Khalifa as its chairperson for cover a limit of 100% of the capital base to it by DIC. a three-year term. for all lending by banks to states and governments and their non-commercial Periodic coupon paid The bank has also named Hamad Tariq entities; and 25% to individual Al Humaizi as its vice-chairman. borrowers. SAUDI ARABIA: Dar Al-Arkan Real Estate Development Company ASM INVESTMENT SERVICES It also adjusted a range of other has announced a periodic coupon MALAYSIA: Local investment-based percentage limits, including for distribution amounting to US$7.04 fi rm Pelaburan MARA has appointed commercial government-related million for its fi ve-year US$450 million th Ameer Ali Mohamed as the new CEO entities, where it introduced a cap of Daar Sukuk II, maturing on the 18 and chief investment offi cer of its unit 15% for funded exposure for individual February 2015. trust and fund management arm, ASM borrowers and 100% on aggregate. continued... Investment Services.

DEUTSCHE BANK AUSTRALIA GLOBAL: Dr Henry Azzam has 8th May 2012 resigned as the non-executive chairman of Deutsche Bank’s MENA division. A relatively newcomer to the world of Islamic fi nance, Australia is now making waves with the However, Azzam will remain as the emergence of Shariah compliant funds, Islamic focused fi nancial institutions and strong support bank’s advisor. from the regulators. Supported by the State of Victoria Government, the IFN Roadshow Australia will return to Melbourne. HSBC REGISTER NOW at GLOBAL: Sandy Flockhart will retire as an executive director of HSBC on www.REDmoneyevents.com the 30th April this year, aft er serving the Attendance is FREE, but seats are limited. Register now to ensure your place is confi rmed bank for 37 years.

Lead Sponsor Venue Sponsor Partner However, he will remain as a non- executive director.

He will also retain his positions as the chairman of the group’s principal UK Exclusive Knowledge Partner Lead Media Partner and European subsidiary, HSBC; and of HSBC Latin America Holdings (UK). Flockhart will also continue as a director of HSBC Bank Middle East.

continued... the 31st March 2012, compared to SAR70 The payment is based on a three-month million (US$19 million) in the previous Libor of 0.57%, with a profi t margin of corresponding period. 2.25%. The increase was att ributed to growth in its core banking activities. Yes to Ma’aden debt sale SAUDI ARABIA: The Saudi Arabian Total operating income for the fi rst Mining Company (Ma’aden) has quarter surged 50% to SAR393 million Law obtained its shareholders’ approval to sell (US$105 million), while income from a conventional bond or Sukuk. investing and fi nancing activities rose Poll 2012 51% to SAR330 million (US$88 million). The company’s board has been given the authority to decide on the size and CAPIVEST reports 2011 profit timeline of the proposed issuance. Islamic Finance news invites you BAHRAIN: Capivest Islamic Investment to parti cipate in our 4th annual Established in 1997, Ma’aden was set up Bank (CAPIVEST) has announced a net IFN Law Poll, recognizing the by the Saudi government to facilitate the profi t of BHD12.36 million (US$32.31 leading fi gures and law fi rms million) for the fi nancial year ended the development of the kingdom’s mineral st specializing in the various facets industry. 31 December 2011, against BHD880,763 (US$2.37 million) in 2010. of the Islamic fi nance industry.

UAE eyes ITFC role The bank’s total assets reached BHD49.43 Divided across 16 individual UAE: Offi cials from the UAE’s ministry million (US$133 million) from BHD57.91 categories the IFN Law Poll of fi nance have presented a bid to the million (US$153.94 million) in 2010, while invites you to nominate the board of the IDB as the emirates seeks to shareholders’ equity advanced by 10.6% to noteworthy individual lawyers host the fi rst branch of the International BHD37.26 million (US$100.25 million). and acti ve law fi rms in each Islamic Trade Finance Corporation (ITFC) market category, before asking Five Islamic branches for Khalid Al Bustani, the assistant for your fi nal nominati on as to undersecretary of international fi nancial Al Hilal the Best Overall Law Firm in relations at the ministry of fi nance, said OMAN: Al Hilal Banking Services, the Islamic fi nance for 2012. that the bid aims to integrate the various Islamic fi nance arm of ahlibank, has fi nancial institutions within the IDB. The proposed to establish fi ve branches Voti ng in each category is not Islamic Corporation for the Insurance of dedicated to providing Islamic banking mandatory and you do have Investment and Export Credit, another services in the sultanate. the opti on to skip through each IDB unit, has already set up its regional fi eld. offi ce in the UAE. Hamdan Ali Nasser Al Hinai, the chairman of ahlibank, said that the bank Khalid explained that this integration pro- will consider opening more Islamic To simplify the procedure vides a strong Islamic fi nancing structure branches if necessary. a shortlist of 40 previously for projects supported by the IDB. nominated fi rms has been Coming up... given under each category with Dubai Duty Free mandates the opti on to enter your own banks Volume 9 Issue 15 – 18th April 2012 individual selecti on should you chose to do so. This poll will only UAE: Dubai Duty Free has confi rmed Meet the Head take approximate 4-5 minutes. reports that Citibank, Dubai Islamic Fahrett in Yahsi, general manager Bank, Emirates NBD and HSBC Holdings and board member of Albaraka Turk have been mandated to arrange and Participation Bank coordinate a US$1.1 billion multi-tranche Please visit Islamic and conventional fi nancing. Features www.islamicfi nancenews.com Initiatives in the Islamic fi nance space to parti cipate in this poll! In addition, Abu Dhabi Commercial of Canada; By Rehan Huda, director of Bank has committ ed to contribute to the Amana Canada Holdings. transaction but will not be involved in arranging the deal. US asset management industry outlook with a focus on Shariah compliant The funds will be used for the expansion investing; By Saeid Hamedanchi, founder of the Dubai International Airport. and CEO of ShariahShares. th The Shariah governance model and its April 2012 Lucrative quarter for Alinma four basic pillars; By Imran Hussein Closing Date: 30 SAUDI ARABIA: Alinma Bank has Minhas, joint director of Islamic fi nancial reported a net income of SAR150 million institutions (Modarabas), Securities and (US$40 million) in its fi rst quarter ended Exchange Commission of Pakistan.

An interesting proposition for education funding

Emerging markets, particularly Asia, recognized global university off ering He mentions a comment that was have become an important hub for academic and professional qualifi cations recently made (although yet to be infrastructure spending due their in Islamic fi nance. INCEIF was set up verifi ed by him), that a Middle East growing population and strong by Bank Negara Malaysia in December institution had made one such deposit economic growth. Standard & Poor’s 2005 with an endowment of RM500 for the sum of US$15 billion due to this in a recent report noted that Islamic million (US$162.76 million) as part of situation. fi nance, particularly via Sukuk, has the the Malaysian government’s initiative ability to play a key role in fi nancing to further strengthen its position as an An element of the professional Asia’s funding gap in the infrastructure international Islamic fi nancial center. community, Saadat continues, are space, especially as infrastructure also eager to implement the simple projects are usually long-term which fi ts This brings about an interesting transparent manner of conducting well with many Sukuk structures. hypothetical idea that has yet to surface business in a truly Shariah compliant in the industry. Why not marry the joint framework. “Therefore a project such as Some of this year’s largest issuances have themes of infrastructure, Islamic fi nance this one [issuing a Sukuk to build and been to fund infrastructure projects: such and education to issue a Sukuk from fund a university] would fi t their needs as Saudi Arabia’s General Authority for which the proceeds could be used to perfectly in more ways than one. Civil Aviation’s US$4 billion guaranteed construct and run a university dedicated senior Sukuk, Saudi Electricity Company to Islamic fi nance? “We must get together and work within US$1.75 billion dual tranche global a system that has historically already Sukuk and Malaysia’s Tanjung Bin Saadat Khan, the founder and CEO demonstrated it works and would bring Energy Issuer’s RM6.5 billion (US$2.12 of Ethical Asset Management, is one much-needed relief to the current and billion) fi nancing deal involving a supporter, confi rming that the idea otherwise forthcoming situation.” RM3.3 billion (US$1.09 billion) Sukuk of an education infrastructure Sukuk Murabahah issuance. to build universities and education Ethical Asset Management under hubs for the industry is an “excellent Saadat’s helm recently launched what it Why not suggestion” and one which he would claims to be the world’s fi rst investment be honored to support. As a Muslim, he Sukuk which aims to resolve a major says it is his duty to do so. area of controversy in Islamic fi nance, marry the by regarding the instrument as equity instead of debt. joint themes of However, he places a caveat to that support, saying he would only get This is done by investing the money infrastructure, involved if the project delivered facilities raised by the Sukuk into income- that would teach Islamic fi nance in a generating student accommodation in Islamic finance and “back to basics” manner. He feels that Britain that has projected annual net there is a need to review the entire returns of between 4-6%. Investors will education to issue Islamic fi nance industry and evaluate also have direct ownership and recourse where it is at this present moment in time to the asset, besides the risk/reward a Sukuk from which and where is it going before embarking element including the capital gain of on the provision of any education the assets held by the investment Sukuk the proceeds could infrastructure. be used to construct structure. “To teach more of the same that is largely “The term ‘Sukuk’ is closely associated and run a university being practiced today is not where we with an investment, not a debt. Current need to be,” he says. actions and therefore global perceptions dedicated to Islamic associated with the word ‘Sukuk’ are Saadat is of the opinion that the current intrinsically linked with debt, which I finance? practice of Islamic fi nance has been feel is wrong and should not be the case. reduced to being widely regarded as The reason for calling it an ‘investment essentially interest-based transactions Sukuk’ was to make a point to the global with a diff erent name, and those who industry that we would like to refer to Education is another essential aspect, are responsible for this should begin and represent products in accordance with an urgent need to invest in human rectifying the situation. with what we understand and believe capital to encourage the advancement they actually are,” he asserts. of Islamic fi nance. The realization of the He is not alone in this view, he notes, growing demand for Islamic fi nance adding that there is huge growing The proposition of an investment Sukuk education has resulted in universities demand from institutional investors, to build and manage an Islamic fi nance across the world from the UK to many of whom are happy to leave their university is promising. However, as Australia off ering such courses. money in zero percent deposit accounts Saadat and likeminded practitioners due to their lack of trust in and the demand, perhaps our house needs to be The International Center for Education limited availablity of suitable products put in order before we embark on a new in Islamic Finance (INCEIF) is one such that are curently available. journey. — RW

Indonesia’s Financial Services Authority to catalyze Sukuk

The republic’s recently established optimistic that these steps will encourage The laws governing Indonesia’s fi nancial fi nancial services authority, Otoritas Jasa corporates to issue Sukuk to diversify services authority specifi cally state the Keuangan (OJK), which is responsible their investor base. In the meantime, regulator’s role in supervising the Islamic for supervising national assets of up Sukuk arrangers should help explain banking and fi nance industry, on par to IDR7.78 trillion (US$848.37 million) these positive changes to potential with its conventional banking industry. has confi rmed that it will be reducing issuers and maybe even arrange non-deal Other sectors include non-banking listing fees for corporate Sukuk roadshows to raise understanding and institutions, housing and pension funds. issuances by the end of 2012. familiarity of Sukuk for corporates in Indonesia.” Indonesian corporate Sukuk issuances Herwin Bustaman, the head of HSBC have been lackluster and sometimes non- Amanah in Indonesia, projects a existent over the last few years, standing positive outlook for the republic’s 2011 was a at US$110 million in 2011, and between Sukuk issuances, particularly in the US$100-150 million in 2012 for local corporate sector, with the upcoming tax dead year for corporate Sukuk, and US$150-350 million amendments. “The outlook for Sukuk for global corporate Sukuk. in Indonesia is promising because there global corporate are supportive regulatory initiatives However, 2011 was a dead year for global to promote Sukuk. The Securities Sukuk, with zero corporate Sukuk, with zero issuances. Commission is planning to reduce listing “For the fi rst time, we think Indonesia fees for corporate Sukuk issuances by issuances will see one or two corporates issue the the end of this year. It has also confi rmed country’s fi rst US dollar Sukuk. With that the tax treatment for Sukuk is on par the new tax and Sukuk laws, corporates with conventional bonds, and a company in Indonesia can now issue US dollar only needs one prospectus when issuing The Indonesian government has so far Sukuk,” Herwin said, adding that the both local bonds and local Sukuk. been supportive of the developments in implementation of the new laws will its Islamic fi nancial services industry, and be crucial in att racting Middle Eastern He also urged corporate issuers to it is expected that with the establishment investors into Indonesia, particularly take advantage of the upcoming tax of the OJK, a more transparent and since the country’s investment rating changes, and to get ahead in line for regulated industry will develop. upgrade. — NH the anticipated issuance boom: “We are

Making room for foreign firms in Saudi Arabia

In 2000 Saudi Arabia implemented to undertake such activities. Lawyers in the kingdom. the Foreign Investment Act, which such as myself also face diffi culties in “We have to fi gure out how to deploy liberalized the foreign investment procuring Saudi-based deals, due to Saudi liquidity outside of Saudi, and laws in the kingdom. The Saudi the inability to practice in the kingdom despite a few major Islamic issuances Arabian General Investment Authority without a domestic license. The majority recently, we are still not seeing enough was created under the act, which is of investments in Saudi Arabia have been Saudi issuances. The banks in Saudi are responsible for licensing all new domestically focused.” overly liquid, while banks in some parts foreign businesses in Saudi Arabia. of the GCC are not,” an industry player Despite this, the kingdom has seen The Islamic issuance space in Saudi commented. a lack of foreign participation, Arabia has experienced a refreshing turn particularly on the banking side, since late last year, with major Sukuk He added: “The majority of funding and many believe that it is up to the deals such as the SATORP Sukuk and raised in the Saudi capital markets is regulators to increase the participation GACA Sukuk part of the kingdom’s raised on a conventional basis, and many of an increasingly curious foreign portfolio. With more internationally of the potential investors in the kingdom investor space. acclaimed deals originating from the may not be able to invest in conventional country, many anticipate a growing fi nance. Foreign players are also faced “Aside from mortgage laws and desire to be part of the country’s growing with restrictions on selling securities in increased participation of foreign entities capital markets amongst the international Saudi Arabia. in the stock exchange, there is also need banking and investment community. for Saudi Arabian regulators to address “A more widespread public off ering the issue of licensing in order to truly The protracted issuance of the country’s would require the approval of the open up the market. Banks would need mortgage law has also sparked the Capital Markets Authority, and we to be licensed in order to undertake interest of international banking players believe that this route would realistically marketing activities in the kingdom,” such as Deutsche Bank, looking to gain only be open to domestic issuers. Also, revealed a Dubai-based lawyer. a foothold in the country’s residential at present, there are only a handful of mortgage market once the law is passed. international banks which are licensed He added: “At present, there are only a Up to 1.65 million new homes are to market securities in Saudi Arabia.” handful of international banks licensed expected to be built in the next fi ve years — NH

Islamic microfinance in Afghanistan

AFGHANISTAN Microfi nance institutions (MFIs) in showed that over 65% of microfi nance Afghanistan charge interest on loans, borrowers are women, followed by By Zulfi qar Ali Khan, IFN Correspondent which is not acceptable to the majority microfi nance institution staff and of Afghans, Shariah scholars and religious leaders. Afghanistan currently has the diversity community members in various parts of of both conventional and Islamic Afghanistan. This report is based on the assessment microfi nance. The microfi nance sector of Shariah compliant microfi nance in Afghanistan has reached a milestone, There have been several att empts made fi nancial products and instruments disbursing a combined total of more than US$1 billion to Afghans since its by some MFIs, such as the Foundation in Afghanistan, surveys and group offi cial creation in 2003. This milestone for International Community Assistance meetings which were held with existing was achieved at the end of January (FINCA) and BRAC (the largest NGO and potential borrowers, selected 2011, according to the Microfi nance in the world), to address the need for in discussion with the local MFIs Investment Support Facility for Shariah compliant fi nancial products (particularly BRAC), along with relevant Afghanistan (MISFA). and services. However, there is currently ministries such as the ministry of rural insuffi cient knowledge of the full extent rehabilitation and development, the Microfi nance is the best way to respond of fi nancial products that could be ministry of agriculture, community to the needs of the poor and it can be designed based on Shariah principles and leaders and charitable organizations. a powerful tool in the batt le against the demand for such products. poverty. This is because the primary Zulfi qar Ali Khan is the head of the purpose of the microfi nance programs A research conducted by MISFA in Islamic banking and fi nancial supervision is to provide fi nancing for the poor for some provinces and rural areas to assess department at the central bank, Da investments in productive activities in the demand of potential borrowers for Afghanistan Bank, and he can be contacted at order to increase their livelihood. Shariah compliant fi nancial products [email protected].

Indonesia’s potential as an Islamic finance center

INDONESIA 1999 to 11 fully-ﬂ edged Islamic banks, 24 value. For example, the IT-based Islamic banking windows and 155 Islamic innovative products have a signiﬁ cant By Rizqullah, IFN Correspondent rural banks today. competitive advantage.

The BMB Islamic Finance Index In January 2011, there were 2,202 2. Intensive socialization and survey recently showed that Indonesia Islamic channeling offi ces in the country. education in Islamic fi nance. has strengthened its position in the Islamic banking assets in Indonesia have To promote a bett er understanding of international Islamic fi nance industry: grown by more than 40% per annum: Islamic fi nance among Indonesians ranking fourth aft er Iran, Malaysia and considerably higher than conventional the government, the National Shariah Saudi Arabia. banks which have seen growth of around Board, the central bank, the associa- 15-20% per annum. tions and other related parties must work together to provide compre- Islamic Other Islamic fi nance markets such as hensive training courses in Islamic Takaful and the Islamic capital market fi nance at schools and universities as banking assets have also grown rapidly. The Takaful sec- well as other educational forums. tor in Indonesia grew by more than 50% in Indonesia have in 2011 while the Islamic capital market 3. Suffi cient and capable human also progressed in Sukuk issuances. resources. grown by more than It is not possible to sustain the growth The central bank of Indonesia, the and credibility of the Islamic fi nancial 40% per ministry of fi nance and other related institutions without focusing on parties believe that the Islamic fi nance the very special human resource annum industry will keep on growing requirements of the industry. The signifi cantly over the coming years due priority is for these institutions to Indonesia has a huge Islamic fi nance to the very large market along with make concerted eff orts to build market as it has the largest Muslim improved perception and knowledge capacity and to develop the combined population in the world, at over about Islamic fi nance among the people. competencies of fi nance and Shariah. 85% of the total population. Various However, in order to turn this belief into parties have predicted that the Islamic reality, there are several conditions that These three main conditions are the most banking industry in Indonesia will see need to be met, such as: important factors in developing Indonesia continuous growth in the coming years. as an Islamic fi nance center. Its positive growth is based on the robust 1. Product innovation. performance of the Islamic banking Products of the Islamic fi nance Rizqullah is the president director of BNI industry, which has grown from two institutions in Indonesia are similar to Syariah and he can be contacted at rizqullah@ Islamic banks and one Islamic window in conventional but with a special added bnisyariah.co.id.

New developments for Sukuk

HONG KONG & CHINA The program has been given a Kong. On the 15th March 2012, Khazanah preliminary ‘AA2’ rating by RAM announced that it had successfully issued By Anthony Chan, IFN Correspondent Ratings, which is backed against its seven-year benchmark exchangeable position as a leading player in the Sukuk bonds of US$357.8 million which Hong Kong has been working for years commodities industry. As a company were exchangeable into shares of a Hong to introduce and develop a platform with roots in Hong Kong, Noble may Kong-listed company, Parkson Retail for Islamic fi nance. In 2009, the island pave the way for other Islamic fi nancial Group (one of China’s largest department took a big step forward to tap into the product off erings by similar companies. store operators but originating from markets in the Middle East and other Malaysia). Islamic countries by approving HSBC to For the establishment of the program, sell Sukuk in Hong Kong. This helped Noble’s agricultural and commodity This off ering was unique in allowing to broaden Hong Kong’s capability as a businesses must comply with Shariah Sukukholders to have Khazanah’s credit global fi nancial center. Two further sig- standards. It is always diffi cult for as downside protection, whilst enjoying nifi cant moves were also made recently: companies issuing Sukuk that do not the benefi ts of the favorable Chinese with the launch of the fi rst yuan-denom- have the Islamic background to comply retail consumption growth potential. It inated Sukuk in 2011 and the issuance with Shariah standards. This will remain also shows exciting opportunities for of Islamic medium-term notes by com- a challenge for issuers with operations the use of the Hong Kong stock market modities player Noble Group. in Hong Kong and mainland China backed by a strong China consumer but increasingly the att ractions of the demand to support Islamic fi nance In March 2012, Noble announced that Sukuk should outweigh any doubts products. Hong Kong is in a great it had established a multi-currency on the diffi culty of ensuring Shariah position to develop this niche area. Murabahah Islamic medium-term note compliance. This is especially so if the program of up to RM3 billion (US$983 ratings acceptance threshold is not million) under the laws of Malaysia. Conclusion merely limited to the usual agencies Noble appointed AmInvestment Bank This year has highlighted the Hong but extended to domestic or national and Standard Chartered Saadiq as joint Kong government’s determination to agencies or industry-specifi c agencies. lead managers for the program, with develop the Islamic fi nance market, with Bank of America Merrill Lynch as the the aim of helping to diversify Hong international fi nancial advisor to Noble Sukuk issuances Kong’s fi nancial platform and enhance for the program. Moreover, there is a continuing trend of its competitiveness as an international companies issuing yuan-denominated fi nancial center. Under the program, Noble may issue Sukuk in Hong Kong amid the recent Islamic medium-term notes (Sukuk dim sum bond issue boom. According The Hong Kong government is expecting Murabahah) from time to time in to Dealogic, more than 50 companies to amend the Inland Revenue Ordinance Malaysian ringgit or in other currencies, have raised US$8.6 billion from dim and Stamp Duty Ordinance with a view in various amounts and tenors of more sum bond issues in Hong Kong in 2011, to leveling the playing fi eld for common than a year and up to a maximum tenor up from the 17 deals that raised US$5.3 types of Sukuk vis-à-vis conventional of 20 years. The Securities Commission billion in 2010. Khazanah Nasional, the bonds in terms of tax. All good for the Malaysia granted its approval for the Malaysia government investment arm, Sukuk market. th program on the 12th March 2012. The net announced on the 13 October 2011 that proceeds raised from the issuance of any it had successfully issued a three-year Anthony Chan is a partner at Brandt Chan Sukuk Murabahah under the program benchmark off shore CNY500 million & Partners in association with SNR Denton. will be utilized for the company’s (US$79.17 million) Sukuk in Hong Kong. He can be contacted at anthony.chan@ general corporate purposes and in strict This was the world’s fi rst off shore yuan- snrdenton.com. compliance with Shariah principles. denominated Sukuk launched in Hong briefings Latest Developments in Sukuk Instruments 12th July 2012

Led By: Safdar Alam Former Head of Islamic Structuring, JP MORGAN

This one-day briefing seeks to give bankers, lawyers, product specialists and regulators involved in Islamic capital market transactions crucial information on the latest developments and current trends in structuring Sukuk. The briefing leader will utilize several recent and high profile Sukuk deals to illustrate crucial elements to Sukuk structuring as well as pertinent legal and Shariah issues associated with Sukuk issuances.

For more details, please visit www.islamicﬁnancebrieﬁngs.com or call us at 603 21627800.

Saudi Electricity Company’s US$1.75 billion Sukuk Ijarah

State-owned utility fi rm Saudi Legal and Shariah advisors Electricity Company (SEC) issued a Latham & Watkins and Allen & Overy US$1.75 billion Sukuk Ijarah on the 27th were legal advisors for the transaction, Saudi Electricity Company March 2012. The landmark issuance, while the Shariah advisors comprised which was ten times oversubscribed HSBC Amanah’s central Shariah with an orderbook of US$17.5 billion, committ ee and the scholar Dr Hussein marked several fi rsts for the Saudi Hassan. Sukuk market; including representing the SEC’s fi rst international Sukuk Top ratings US$1.75 billion Sukuk Ijarah off ering and the largest global Islamic The papers’ ratings of ‘AA-’ by S&P and bond sale in the Middle East. Fitch and ‘A1’ by Moody’s refl ect the high probability of support from the Saudi 27th March 2012 The issuance also helped catapult Saudi government, also a top-rated sovereign. Arabia past the UAE as the GCC’s largest issuer of Islamic bonds in the fi rst quarter “SEC is a monopolistic, low-risk of this year, with Saudi issuers raising and regulated electricity generation, Issuer Saudi Electricity Global US$6.4 billion against the UAE’s US$1.9 transmission and distribution business,” SUKUK Company billion. noted Fitch, adding that the fi rm has Obligor Saudi Electricity a dominant presence in the electricity Company Structuring and pricing generation segment in Saudi. Purpose of Working capital purposes The Sukuk was off ered in two tranches issuance of US$500 million and US$1.25 billion, “However, rating concerns include Trustee Saudi Electricity Global priced at 2.67% and 4.21%, respectively. execution risk related to the SEC’s SUKUK Company large capital expenditure program, low Strong demand for the Sukuk, driven by capacity utilization rates in the electricity Payment Semi-annual periodic the shortage of US dollar-denominated generation segment of the business, high distribution payments Sukuk from Saudi state-owned electricity transmission losses, limited Currency US dollar corporates, allowed SEC to off er the visibility in the current cost structure and Maturity date First tranche: 3rd April second tranche at a longer maturity of 10 lack of clarity around the process to sett le 2017 years, while the fi rst tranche matures in future fuel costs with Saudi Aramco,” Second tranche: 3rd April fi ve years. said the rating agency. 2022 Lead HSBC Bank and Deutsche The fi rst tranche is equivalent to a spread Nonetheless, it acknowledged that SEC’s manager(s) Bank, London Branch of 140 basis points (bps) over midswaps, liquidity is strong, with SAR25.9 billion Co-Lead Mitsubishi UFJ Securities tighter than the 160 bps indicated earlier, (US$6.91 billion) in total liquidity at the manager International while the 4.21% tranche represented a end of 2011; including SAR7.3 billion Governing law Saudi and English spread of 195 bps over midswaps, against (US$1.95 billion) in cash. “This compares an expected 210 bps. well with around SAR8.1 billion (US$2.16 Listing London Stock Exchange billion) in debt maturities in 2012, Structure / Ijarah The transaction was backed by the SEC’s including SAR5 billion (US$1.33 billion) instrument power generation assets. in Sukuk,” it said. — EB

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Oman prepares to launch Islamic finance

ABID SHAKEEL discusses the prospects and challenges of Islamic banking in the sultanate as Oman opens its door to Islamic banks and Shariah compliant ﬁ nancing operations.

The Central Bank of Oman issued the ȱŗǱȱȱǰȱǰȱȱȱȱęȱȱȱȱǻŘŖŖŚȱȬȱŘŖŗŖǼ fi rst approval in principle for an Islamic banking license in 2011. This was 18,000 Total assets 300 soon followed by a second approval 16,000 in principal by the regulator and the Total deposits 250 14,000 nation. Total credit 12,000 200 ȱę Market research undertaken in 2011 10,000 150 showed considerable pent-up demand 8,000 and a more recent primary research 6,000 100 exercise undertaken in 2012 suggests that 4,000 this demand has increased considerably 50 over the past 12 months. The increasing 2,000 anticipation of the launch of the fi rst 0 0 Islamic bank has raised curiosity 2004 2005 2006 2007 2008 2009 2010 among consumers and institutions as to the diff erence between Islamic and banks and fi nancial institutions, with This economic growth was primarily conventional banking and why Islamic many wanting to do so in line with their driven by the contribution of petroleum banking should be embraced. religion. activities (including gas) which almost doubled between 2005 - 2010. GDP Consumers have long demanded per capita increased from OMR4,736 the introduction of Islamic banking (US$12,265) in 2005 to OMR8,000 products and services in Oman but The Islamic (US$20,718) in 2010. the regulator resisted permitt ing them for unknown reasons. However, this finance delay has worked in Oman’s favor as it Oman’s banking sector now has the opportunity to learn from landscape in Oman Oman’s banking sector is dominated by the rapid development of the Islamic local banks which make up 88% of the fi nance industry globally over the last could become sector. Commercial banks have continued fi ve years. to grow despite a fall in investor populated by confi dence amidst the turmoil that has struck the region. With the exception Global market size and the presence of of 2009, there has been steady growth growth in total assets, deposits, credit and net The market for Islamic fi nance has many small-sized profi ts of commercial banks of 23%, 23%, grown rapidly over the last few years. 22% and 15%, respectively, between 2005- Global Shariah compliant assets are institutions or 2010. estimated to have reached US$1 trillion in 2010. Geographically, the largest window operations Strong economic growth, diversifi cation proportion of this has been in the GCC of the economy, infl ow of foreign direct and by 2015, the GCC itself is expected with small investment and favorable demographics to achieve Shariah compliant assets of were the main drivers for growth in close to US$1 trillion. capital bases Oman’s banks during 2005-2010. The key indicators of banking growth The main driver of the growth of Shariah support the idea of the introduction of assets is retail banking. Muslims across Omani economy overview Islamic banking in Oman, along with the the globe have shown an increasing Oman occupies an important strategic launch of new products and services to propensity to adopt Islamic banking position with control over the Straits of match the increasing sophistication of as their preferred mode of fi nancing Hormuz, through which pass 40% of consumers in Oman’s market. as religious att itudes reinforce greater the world’s oil exports. Despite global adherence to Shariah in economic economic uncertainty over the past Among Oman’s six publicly traded matt ers. few years, Oman’s GDP has continued local banks, Bank Muscat is the largest to grow, rising at a compound annual in terms of assets and loan book. Bank While Islamic fi nance represents just 1% growth rate (CAGR) of 13% over 2005- Muscat had total assets of OMR5.8 billion of the global fi nancial system by assets, 2010. Nominal GDP has doubled in (US$15 billion) in 2010, constituting the Muslim world accounts for 7.6% of fi ve years to OMR22.2 (US$57.5 billion) approximately 37% of total banking nominal GDP. As Muslims become more compared to OMR11.9 billion (US$30.8 sophisticated, they tend to start using billion) in 2005. continued...

Continued assets. Ahli Bank and Bank Sohar are two Shortage of Islamic money market The opportunities for Islamic of Oman’s most recently incorporated products financial services banks. Although recently established, Apart from Sukuk and commodity The Omani consumer market has gone to both these banks have managed to Murabahah, there remains a shortage of considerable lengths to ensure that their penetrate the market successfully. short-term Shariah compliant liquidity funds are kept in a Shariah compliant management instruments. This shortage manner. A sizeable number of people Bank Sohar and Ahli Bank assets grew can be measured in terms of availability, keep their money as cash, in commodities at a four-year CAGR of 42% and 38% sophistication and tenor of instruments. respectively between 2006-2010; and 2010 or overseas; which is ultimately having an impact on the banking sector itself, saw a rebound in asset growth. National For Oman, these products will not exist as well as a consequential impact on the Bank of Oman reported a 16% increase when the banks begin their Islamic overall economy in Oman. in total assets, with Oman International banking operations but the banks will Bank and Bank Dhofar achieving 7% and have considerable liquidity from their The retail market in particular has 22% growth respectively over the same own capital as well as liabilities they will demonstrated its growing appetite for period. acquire at launch. Islamic banking products, including Absence of an active interbank market fi nancing, time deposits and money The Omani Despite strong growth in the number and market instruments, by having a lower size of Islamic fi nance institutions, there penetration level for such conventional consumer is still no active interbank money market products whilst Islamic versions have for them, and this prevents effi cient remained unavailable. market has gone liquidity management. As Oman opens up to Islamic fi nance, to considerable Lack of diversifi cation and exposure to there is considerable excitement. With real estate a number of new institutions coming to lengths to ensure Institutions are required to invest in the market in 2012, the expectation is asset-backed investments or directly into that there will be a fl ight of funds from that their funds are assets, as opposed to fi nancing. While conventional institutions to the new various real economy sectors could have Islamic institutions as the distribution of kept in a Shariah been utilized to meet these requirements, products and services spreads across the their investments are currently heavily nation. compliant concentrated in the real estate sector. Conclusion manner Shortage of skilled human resources The launch of Islamic fi nancial services With the introduction of Islamic banking and products will also spur the launch into any market, there is an issue with a of a number of new banks in Oman Key challenges void of local knowledge and talent. This and a natural consequence of this is a Oman will face the same challenges that is something that Oman is now facing. high demand for talent who can deliver other markets continue to encounter. Despite the huge leaps Islamic banks the service to meet the demands of have taken, there is a shortage of skilled customers. Small capital base of Islamic fi nancial professionals who are well-versed in both institutions banking and Shariah knowledge. Early estimations have indicated The Islamic fi nance landscape in Oman approximately 1,000 above-average- could become populated by the presence The result is that a majority of resources pay jobs could be created, along with of many small-sized institutions or within the industry are either seasoned signifi cantly more in the distribution window operations with small capital conventional bankers or scholars with channels, giving a further boost to the bases. The consequence of Islamic an academic understanding of fi nancial economy in Oman. fi nancial institutions having lower capital issues and Shariah law. Oman will benefi t bases has implications on their ability to from sourcing talent from other markets Abid Shakeel is a member of Ernst & Young’s make a sizeable economic impact and that will bring good practitioners’ Islamic Financial Services Advisory. He can fi nance large projects. experience of Islamic banking. be contacted at [email protected].

Next Forum Question:

What infl uence has Islamic fi nance had on the corporate governance practices of the wider fi nancial industry?

If you would like to air your views on the next Forum Question, please email your response of between 50 and 300 words to Christina Morgan, forum editor, at: [email protected] before the 14th April 2012.

Will the development of the Islamic derivatives market facilitate the development of Islamic structured finance?

GREGORY MAN questions whether the development of the Islamic derivatives market will facilitate the development of Islamic structured ﬁ nance.

The last few years have seen a number between parties. One of the issues which previously owned the assets. of signifi cant developments in the following the launch of the TMA in 2010 Islamic derivatives market. Over the was that there were no accompanying Are Sukuk transactions past seven years or so, the International forms of Shariah compliant confi rmations Swaps and Derivatives Association accompanying the TMA in order structured in this way? The above is a concept that is consistent (ISDA), the International Islamic to document the actual derivative with the general principles of Shariah Financial Market (IIFM), the Shariah transactions. advisory panel of the IIFM and Cliff ord which state that investors should invest in assets or equity and take the potential Chance as counsel have endeavored Following the publication of the TMA risks and rewards associated with such to develop widely acceptable industry in 2010, market participants therefore an investment. standard documentation for Islamic identifi ed the need for standard profi t derivative transactions. rate swap templates as the next priority However, other than a few notable for the Islamic fi nancial industry. Since examples, such as the Sun Finance then the ISDA and IIFM, again with the securitization of the receivables Another reason assistance of Cliff ord Chance, have been generated from the sale of plots of land working towards meeting that need. in Abu Dhabi, the majority of Sukuk for the scarcity transactions have not been structured in of truly asset-backed The launch of the this way but rather in a manner which Mubadalatul Arbaah (profit replicates the fi xed income risk profi le of a conventional bond where investors Sukuk structures has rate swap) documentation take the risk of the performance or Almost two years aft er the launch of the credit quality of the obligor in the Sukuk been the difficulty th TMA, on the 27 March 2012, the ISDA structure. These sorts of structures have in structuring and and IIFM launched two sets of template generally been referred to as being asset- product documentation (PRS templates) based as opposed to asset-backed. executing such for Mubadalatul Arbaah (profi t rate swaps) designed to be used with the TMA. Why the reluctance towards transactions Two sets of PRS templates have been asset-backed Sukuk? published. One set of PRS templates are There are a number of potential reasons Waad (undertaking)-based and involve that the majority of Sukuk have been In March 2010, the ISDA/IIFM Tahawwut two separate sales of assets between the asset-based as opposed to asset-backed, Master Agreement (TMA) was launched. parties. The other set of PRS templates including the fundamental fact that the Taking an approach similar to that of are also Waad-based, but involve only appetite of the largest group of existing the ISDA’s 2002 Master Agreement, but a single sale of an asset. Only Shariah Islamic investors is for this type of adapted for Shariah compliance, the compliant assets that are suitable as the corporate credit risk of the obligor with TMA is a framework agreement under subject matt er of a Murabahah sale (cost whom they would be familiar and in which a range of Islamic products can be plus fi nancing arrangement) may be sold whom they would be comfortable making documented. The TMA can be utilized by the buyer to the seller. an investment. Many of these investors are by market participants across geographic not used to taking true asset risk and have regions, regardless of the market no appetite to begin doing so. participant’s adherence to a particular What is structured finance? Islamic school of jurisprudence. Structured fi nance in the world of Another reason for the scarcity of truly conventional fi nance generally refers to asset-backed Sukuk structures has been Like ISDA’s 2002 Master Agreement, asset-backed securitization, which is a the diffi culty in structuring and executing the TMA contains the general terms technique whereby investors ultimately such transactions. In order to achieve the and conditions agreed between the invest their capital in the credit of a desired rating for the Sukuk, which is parties. However, like the ISDA’s pool of assets rather than the credit of a oft en intended to be a higher rating than conventional swap documentation, corporate or other entity. The investors the potential rating of the actual owner/ additional documentation referred to take risk on the performance of the originator of the assets itself, a number of as confi rmations are required in order assets themselves as opposed to risk on to document individual transactions the performance of the corporate entity continued...

Continued structural features are usually included address is the potential insolvency of the to analyze a hedging arrangement to provide credit enhancement to the swap counterparty. In order to mitigate utilizing the TMA and PRS templates structure. this potential risk, the agencies can in the context of a specifi c Islamic require the swap counterparty to post structured fi nance transaction, it is Hedging as a means to collateral in certain circumstances. The diffi cult to say with any certainty what provide credit enhancement posting of collateral is an area which is their feedback would be in relation to still not addressed by either the TMA or their use. One of the key credit enhancements the PRS templates. It therefore remains oft en required by the rating agencies in to be seen whether the rating agencies In addition, as mentioned above, a conventional asset-backed transaction would be able to satisfy themselves although hedging has been a material is the inclusion of hedge protection that other potential mitigants would be obstacle to Islamic structured fi nance against potential risks, including the adequate to achieve the desired rating. transactions, it is not the only obstacle. potential fl uctuations between the return The largest hindrance to these sorts generated by the pool of assets and the Other potential mitigants could of transactions being structured and rate-of-return which investors would take the form of requiring a standby executed may still be the lack of expect to receive under their investment. swap counterparty to be appointed demand from investors for this type of to safeguard against the potential product. This has previously been a material insolvency of the initial swap obstacle to the implementation of Islamic counterparty; a time frame being However, what can be said is that the structured fi nance transactions as the specifi ed in which a replacement swap development of the Mubadalatul Arbaah conventional derivative transactions of counterparty can be appointed if the templates is certainly a very positive the type required by the rating agencies risk of insolvency of the initial swap step in the right direction in terms of to hedge against the relevant risks are not counterparty increases; or a guarantee encouraging the evolution of Islamic generally compliant with the principles of the initial swap counterparty’s fi nance, not necessarily only in the of Shariah, such as the prohibition on obligations being obtained from a context of Islamic structured fi nance, but speculation (Maysir) and uncertainty suffi ciently highly rated entity. across the industry as a whole. (Gharar). Conclusion Gregory Man is a senior associate at Cliff ord Potential for future Chance in Hong Kong and he can be Until the rating agencies are required Islamic structured finance contacted at Greg.Man@Cliff ordChance.com. transactions Given the fact that an obstacle to the development of rated Islamic structured fi nance transactions that are truly asset- backed has previously been the ability to include hedging transactions required to provide credit enhancement to such structures, it will be interesting to see whether the TMA together with the newly available PRS templates for profi t rate swaps will facilitate further Islamic structured fi nance transactions in the future.

Apart from parties gett ing comfortable with the new documents, this will also largely depend upon the views of the rating agencies once they come to analyze these arrangements in the context of assigning a rating to the Sukuk to be issued pursuant to such a transaction. The TMA and PRS templates should certainly look familiar to the rating agencies as they follow closely the structure and operation of the conventional ISDA documents.

Having said that, when analyzing derivative transactions in the context of asset-backed securitizations, one of the issues that rating agencies oft en seek to

The plight of Islamic alternative investments

Cover Story funds: one of which mainly focused on of developing Shariah compliant hedge the global equity markets while the other funds due to the prohibition of using A fund of funds is defi ned as a multi- centered on emerging markets. conventional derivatives to hedge losses manager investment strategy of as well as short selling, forward and holding a portfolio of investment funds In less than a year it launched on its futures contracts. instead of the usual route of investing own three more Islamic funds of funds directly into shares, securities or bonds. targeting three types of risk. The aim was This has resulted in only a few Islamic This allows diversifi cation of asset to ease an investor’s task by delegating hedge funds successfully seeing the classes, markets and risks as well as to Jadwa’s fund managers the important light of day, from the likes of Shariah of fund managers themselves. In the task of asset allocation and diversifi cation compliant hedge managers such as US- conventional space many diff erent with the intention of producing superior based Shariah Capital and UK-based types of funds of funds exist, providing risk-adjusted returns. Amiri Capital, which have had Shariah fund managers with a wide range compliant hedge funds in the market for of underlying asset classes. In the several years. Islamic fi nance arena, fund managers The positive are allowed to invest in diff erent In 2010, Islamic hedge funds launches investment funds subject to Shariah returns on were predicted to increase according parameters, including equities, real to a report that suggested they would estate, private equity and Sukuk as well these funds did little invest in key areas such as healthcare, as Murabahah instruments. telecommunications and technology. This to entice has certainly contributed to a growing Islamic funds of funds fi rst emerged in demand from new markets. However the late 1990s, focusing on the Middle investors with the numerous crises occurring last East and with the majority domiciled year, including the Arab Spring and the in Saudi Arabia. Data provider Eurozone debt problems, this investment Eurekahedge lists a total of 26 such However, the positive returns on these has yet to materialize. Islamic funds of funds. However a funds did litt le to entice investors. further check reveals that South Africa’s Although there has been no formal Hedge funds continue to make headway Oasis Group has launched three other announcement, it has been learnt that in the conventional markets, reportedly funds of funds specifi cally for domestic Jadwa appears now to have closed all clawing back to the US$2 trillion levels investors. fi ve funds. seen in 2007. However, with the ongoing debate over permissible structures in However, few of the Islamic funds of Another fund from Kuwait’s Global Shariah, Islamic hedge funds likely to funds have gott en off the ground as Investment House has suff ered a similar remain in stagnant waters for some time fund managers struggle to boost the fate, with the current status of its Global to come. Only time will tell if their ship assets under management of this type Islamic fund of funds listed as under may yet set sail. — RW of fund. A case in point is Saudi Arabia’s ‘restructuring’ according to some media Jadwa Investment, one of the bigger sources. This is despite its assets under fund management companies and the management reaching US$78.26 million recipient of numerous accolades for its as at April last year. top performing funds both in the Islamic and conventional spaces. In this issue... Another type of fund that has yet to gain popularity with investors in the Fund Focus: Jadwa initially partnered with global TA Islamic Fund ...... 37 Islamic space is the hedge fund. There asset manager Russell Investment Group has long been a debate as to the process Eurekahedge Data ...... 38 in 2007 to launch two Islamic funds of

Prudential Al-Wara Asset Management Berhad (PRU Al-Wara') is the Islamic asset management business of Prudential Corporation Asia. Established in 2009 andnd headquartered in Malaysia, PRU Al-Wara' is responsible for managing Shariahah comcompliantnt assets on behalf of retail and institutional investors, as well as onshore andd ooffshoreffs institutional mandates. Visit www.prudentialfunds.com.my for more information.

TA Islamic Fund

To achieve steady capital growth over the medium to long-term period by investing in a portfolio of authorized investments which conform strictly to Shariah principles.

What led to this fund being launched? companies and plantation players, due to Fact sheet TAIM has identifi ed a need in the market our view that the sector off ers much upside Fund Manager TA Investment for an Islamic fund that will cater to the re- potential and is a sector in focus for 2012. Management (TAIM) ligiously inclined with the option to invest 40-95% of its NAV in Shariah compliant How oft en do you review this fund? Trustee Universal Trustee (Malaysia) equities depending on market conditions. The fund is constantly monitored by our Notwithstanding, the fund should also aim fund manager and is reviewed at least on Shariah IBFIM to achieve steady capital growth over the a monthly basis. Advisor(s) medium to long-term period. Benchmark FTSE Bursa Malaysia What are the sectors you have recently (Index) EMAS Shariah Index What are the key factors that drive the exited and why? Domicile Kuala Lumpur fund’s performance? The fund has reduced its weightage in Inception Date 24th April 2001 Performance has been driven by a detailed property-related stocks due to increased and precise selection of a diversifi ed array unfavorable demand-supply dynamics and Fund Fund Size of Shariah compliant equities mainly listed tighter loan requirements. Characteristics RM97.97 million (As at the 29th (US$31.86 million) on the Bursa Malaysia, with the balance February 2012) invested in Sukuk and Shariah-based How has this change aff ected your NAV per unit liquid assets. portfolio of this fund? RM0.4881 (US$0.1589) It has slightly reduced the fund volatility as Who are your investors? property stocks are highly cyclical. Minimum Investment Domestic investors want to invest in stocks RM1,000 (US$325.5) and other approved instruments that meet What is the rate of return of this fund? Shariah requirements. They also require Since inception to date, the fund has Management Fee 1.5% per annnum of NAV liquidity but are willing to invest for the recorded a total return of 213.02%, with an medium to long-term. average of 19.36% yearly. However, with a modest view of providing investors with a *Performance Summary What specifi c risks does the fund take steady capital growth, we aim to provide a YTD Return 5.63% into consideration? And why? rate bett er than fi xed deposit. Return since 213.02% The fund takes into consideration that Inception investments in equities are volatile and are What is the market outlook for the cyclical. Loss of capital is a key risk for the fund? Asset & Sector allocation fund. In addition, the fund takes note of The current market outlook for the fund liquidity, solvency, diversifi cation and also is positive, owing to the carefully selected interest rate risk. Cash and other Sukuk sectors we are focusing on this year. are particularly sensitive to movements in interest rates. When interest rates rise, the How has this fund performed compared return on cash will rise while the demand to your initial expectations? of Sukuk will fall and vice versa, thus The fund has exceeded expectations, with aff ecting the net asset value of the fund. a year to date return of 5.63% (as of the 29th February 2012). Despite the current global What are the sectors you are heavily market conditions amid the crisis across invested in and why? the globe, the fund has been able to take We are heavily invested in commodity- advantage of the new year market rebound related sectors such as oil and gas and has registered some profi ts. Trading & services 24.44% Industrial products 13.36% Performance Quantity of Gold Held (Ounces)* Construction 9.09% Since inception from the 24th April 2001 to the 29th February 2012 percentage growth Mining 6.59% total return, tax default, in RM Energy 6.14% 250 Infrastructure 5.42% 225 200 REITs / Derivatives 3.71% 175 TAIF 213.02% Consumer products 3.54% 150 125 Plantations 3.11% 100 Properties 2.88% 75 50 Technologies 1.82% 25 Benchmark 151.84%

Percentage growth Percentage Power 1.62% 0 -25 Oil & Gas 1.58%

2005 2003 2004 2006 2007 2008 2009 2010 2011 Shariah-based Deposits & Others 16.68%

Eurekahedge North America Islamic Fund Index

120

110

100

80 Index Values

50 Jul-07 Jul-00 Jan-11 Jan-04 Jun-10 Jun-03 Feb-08 Sep-08 Feb-01 Sep-01 Oct-05 Dec-06 Apr-09 Mar-12 Dec-99 Apr-02 Mar-05 May-06 Nov-09 Aug-11 Nov-02 Aug-04

Top 10 Annualized returns for ALL funds Fund Fund Manager Performance Measure Fund Domicile 1 Reliance Global Shariah Growth - USD I Reliance Asset Management (Malaysia) 19.68 Guernsey 2 Atlas Pension Islamic - Equity Sub Atlas Asset Management 17.41 Pakistan 3 Public Islamic Select Enterprises Public Mutual 16.75 Malaysia 4 Futuregrowth Albaraka Equity Futuregrowth Specialist Asset 15.79 South Africa Management 5 Saudi Equity - (Al Raed) Samba Financial Group 15.13 Saudi Arabia 6 Jadwa Saudi Equity Jadwa Investment 13.86 Saudi Arabia 7 Am-Namaa' Asia-Paciﬁ c Equity Growth AmInvestment Management 13.40 Malaysia 8 Public Islamic Opportunites Public Mutual 13.12 Malaysia 9 Riyad Equity 2 Riyad Bank 13.04 Saudi Arabia 10 Public Islamic Dividend Public Mutual 12.02 Malaysia Eurekahedge Islamic Fund Index 2.64 Based on 62.13% of funds which have reported March 2012 returns as at 10th April 2012

Top 10 Annualized Standard Deviation for ALL funds Fund Fund Manager Performance Measure Fund Domicile 1 RHB Islamic Income Plus 1 RHB Investment Management 0.09 Malaysia 2 Public Islamic Money Market Public Mutual 0.15 Malaysia 3 PB Islamic Cash Management Public Mutual 0.16 Malaysia 4 CIMB Islamic Money Market CIMB-Principal Asset Management 0.18 Malaysia 5 Al Rajhi Commodity Mudarabah - EUR Al Rajhi Bank 0.24 Saudi Arabia 6 CIMB Islamic Deposit CIMB-Principal Asset Management 0.25 Malaysia 7 PB Islamic Cash Plus Public Mutual 0.25 Malaysia 8 Emirates Islamic Money Market Limited Emirates NBD Asset Management 0.27 Jersey Institutional Share Class I USD 9 Euro International Trade Finance - (Al Samba Financial Group 0.35 Saudi Arabia Sunbula) 10 Watani USD Money Market National Bank of Kuwait 0.36 Cayman Islands Eurekahedge Islamic Fund Index 8.94 Taking into account funds that have at least 12 months of returns as at 31st March 2012

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

120 102

115 101

110 100

105 99

100 98 Percentage Percentage

95 97

90 96

85 95

80 94 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12

Top 10 Fund of Funds by 3 Month Returns Fund Fund Manager Performance Measure Fund Domicile 1 Al Yusr Tamoh Multi Asset Saudi Hollandi Bank 12.76 Saudi Arabia 2 Russell Jadwa Emerging Markets Equity Jadwa Investment 12.52 Saudi Arabia 3 Al Rajhi Multi Asset Growth Al Rajhi Bank 8.83 Saudi Arabia 4 Jadwa Aggressive Allocation Jadwa Investment 7.37 Saudi Arabia 5 Russell Jadwa World Equity Jadwa Investment 6.86 Saudi Arabia 6 Al Yusr Mizan Multi Asset Saudi Hollandi Bank 6.28 Saudi Arabia 7 Al-Mubarak Balanced Arab National Bank 4.24 Saudi Arabia 8 Al Rajhi Multi Asset Balanced Al Rajhi Bank 3.12 Saudi Arabia 9 Jadwa Conservative Allocation Jadwa Investment 2.04 Saudi Arabia 10 Al Yusr Aman Multi Asset Saudi Hollandi Bank 1.91 Saudi Arabia Based on 73.34% of funds which have reported March 2012 returns as at 10th April 2012

Top 5 Real Estate Funds by 3 Month Returns Fund Fund Manager Performance Measure Fund Domicile 1 Al Qasr GCC Real Estate & Construction Banque Saudi Fransi 23.48 Saudi Arabia Equity Trading 2 Oasis Crescent Global Property Equity Oasis Global Management Company (Ireland) 8.19 Ireland 3 Al-'Aqar KPJ REIT AmMerchant Bank 6.19 Malaysia 4 Al Dar Real Estate ADAM 5.57 Kuwait 5 Markaz Real Estate Kuwait Financial Centre 1.12 Kuwait Based on 100.00% of funds which have reported February 2012 returns as at 10th April 2012

Contact Eurekahedge To list your fund or update your fund information: [email protected] For further details on Eurekahedge: [email protected] Tel: +65 6212 0900

Disclaimer Copyright Eurekahedge 2007, All Rights Reserved. You, the user, may freely use the data for internal purposes and may reproduce the index data provided that reference to Eurekahedge is provided in your dissemination and/or reproduction. The information is provided on an “as is” basis and you assume and will bear all risk or associated costs in its use, and neither Islamic Finance news, Eurekahedge nor its aﬃ liates provide any express or implied warranty or representations as to originality, accuracy, completeness, timeliness, non-infringement, merchantability and ﬁ tness for any purpose.

Cover story states on the 24th March clarifi ed a carve- A ban on European insurance cover for out for liability insurance until the 1st Iranian oil exports from the 1st July will The 23rd January 2012 saw the European July sanctions deadline, but uncertainty curtail shipments and raise costs for Union issue a new wave of sanctions persists over what will happen when the major buyers. Global reinsurance giants against Iran, following a similar move deadline is reached. including some of the major European by the US in December. Amongst other reinsurance fi rms have already begun to things, these prohibited providing The decision to sanction environmental back out from their current and future directly or indirectly, fi nancing or other insurance is perplexing because unlike underwriting commitments on assets fi nancial assistance, including insurance hull or cargo insurance, the intended in Iran as well as shipments transiting and reinsurance coverage related to the benefi ciaries are third parties: it pays for through the sanctions-hit country. import, purchase or transport of crude oil people who suff er damage because of and petroleum products of Iranian origin oil pollution or collision. It is not there While a few reinsurance or re-Takaful or that have been imported from Iran. to benefi t the sanctions’ targets and as a providers may step into the market, the result, the people who are going to lose capacity they can off er will be severely out are third party victims. Policymakers inadequate. In the absence of international The concern for argue that a certain amount of collateral reinsurers to whom the bulk of the risk damage is necessary to ensure that is passed on for any sizeable cover, local many nations alternative transporters do not simply General Takaful fi rms are choosing to stay step into the breach. out of Iran for fear of negative associations has been that their that may result from such operations. However, halting trade with Iran Even if cover is available, remitt ing the ships, which are altogether is very unlikely as there will money to a client against a claim will always be people that continue to trade. be extremely challenging as banks are currently restricted from handling the Off ering basic marine Takaful coverage is highly dependent claim money and as such it has to be part of a competitive industry where the parked in an escrow account and can only barriers to entry are very low and there on international be paid to the insurance buyer aft er the is always somebody that will continue to sanctions have been lift ed. protection and off er such services. Other insurers that are not EU regulated can still provide the As western sanctions on Iran grow minimum cover that is necessary to gain reinsurance, will be tighter, some small banks have found a access to international ports. lucrative niche fi nancing what remains of unable to sail if they the legal trade with the Islamic republic. The overall impact on the marine At the same time, top tier fi nancial cannot obtain insurance market is however unlikely institutions and insurers have stepped to be impacted, as the juggernaut that back from business with Iran in recent cover is Saudi Arabia steps up its production months, citing increased political risk capabilities and thus its transportation and logistical hassles that att end even The concern for many nations has and insurance requirements to keep up legal trade with the country. — SW been that their ships, which are highly with any shortfall. The increased price in dependent on international protection and oil is also likely to cause insured values to In this issue... reinsurance, will be unable to sail if they increase and thus mitigate any shortfall cannot obtain cover. There has also been in coverage. There is a determination Takaful News ...... 41 increasing concern about the sanctioning to keep the oil fl owing, so the Takaful of third party and environmental Feature: premiums for the all-round insurance Takaful in Yemen: Is there a future? ...... 42 insurance. The meeting of EU member market will remain unchanged.

For more information, please call 03-2723 9999

www.takaful-ikhlas.com.my

Strong growth expected Meanwhile, Abdel-Latif Sallam, the Bumida Syariah’s net profit managing director of Wethaq Takaful EGYPT: Industry players are expecting INDONESIA: Local Takaful operator Insurance, believes that key factors for up to 40% growth in the local Takaful Bumida Syariah has reported a net profi t the growth of the market are stability and market within the next fi ve years. of IDR5.41 billion (US$590,231) for the economic growth. fi nancial year ended the 31st December According to Abdel Raouf Kotb, the 2011, compared to IDR2.57 billion He also added that the insurance chairman of the Egyptian Insurance (US$280,387) in 2010. industry is currently vulnerable, noting Federation, the Takaful market in the that: “When there is a strong economic country currently amounts to EGP10 As a result, the fi rm has increased its performance, you fi nd a fl ourishing billion (US$1.66 billion) and is expected targeted premiums for 2012 by 70% to insurance industry, and vice versa.” to grow as the country has a strong IDR52.25 billion (US$5.7 million). religious outlook that will benefi t its Islamic insurance market. OnBase for Takaful Malaysia Solidarity seeks to widen MALAYSIA: Syarikat Takaful Malaysia Manfred Dirrheimer, the founder and has deployed US-based Hyland operations chairman of German-based insurance Soft ware’s content management solution, BAHRAIN: Insurance fi rm Solidarity provider, FWU Group, also said that OnBase. Group Holding is planning to explore Egypt has all the components to make options for strategic expansion, despite the Takaful market a success as it has The Takaful fi rm hopes that the soft ware, continuing challenges in Middle East both a sizeable market and the necessary which has been implemented throughout economies this year, said Khalid Abdulla- expertise. all of its branches, will help it to Janahi, its chairman. streamline its underwriting and claims However, the country needs to pass processes and increase its organizational Khalid added that Solidarity also plans legislation to manage Takaful providers. effi ciencies. to grow its retail Takaful business via its There are currently no laws covering the subsidiary, Solidarity General Takaful. local Takaful market.

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Takaful in Yemen: Is there a future?

DR MONEER HASAN SAIF believes that a shift in demand for Takaful in Yemen will occur as it is an innovative product that suits the socioeconomic and religious teachings of Islam.

With the development of Islamic Table 1: Islamic share in the local market (18 banks) fi nance in Yemen, certain banks Consolidated Assets growth Financing Equity chose to inaugurate a new Takaful balance sheet % company seven years ago. However the banks encountered many diffi culties; YER US$ YER US$ especially as many people did not yet 1 Tadhamon Bank 20.9 -14 -9.8 27.8 15.4 26.8 fully comprehend the nature of Takaful 2 Saba Islamic Bank 8.8 -18.4 -18 9 18.5 5 and how it works. 3 Shamel Bank 1.8 4.1 -7.2 4 3.6 3.4 In 2010, Takaful gained momentum 4 Yemen Islamic Bank 1.2 3.4 21.3 4 1.3 2.5 in Yemen when the United Insurance 5 Al Kurimi is a SME 0.2 21.2 0.0 0.0 0.6 Company, one of the nation’s leading Total 32.9 -3.7 29.2 44.8 38.8 38.3 insurance institutions, started a Takaful sector. This move introduced the idea of 1 CAC Bank 12.7 -29.9 -31.2 13.7 20.1 6.1 Takaful to Yemen. Three other insurance 2 Arab Bank 11.1 4.1 -1.1 4.1 5.7 5.7 companies later also introduced some 3 International Bank of 10.3 -4.9 -16.9 7.7 12.8 9.8 Takaful products. The number of Yemen investors has continued to grow, with 4 The Yemen Bank for 7.6 1.9 -15.1 11.3 2.5 7.7 many customers now choosing Takaful. Reconstruction And Development People now 5 National Bank 6.2 0.5 -22.5 4.1 2.1 7.3 6 Credit Agricol 5.9 -5.2 -10.3 1.5 0.8 4.1 see these new 7 Y-Commercial Bank 4.6 -24.8 -5.7 5 2.7 4.2 developments in 8 Y- Kuwait Bank 3.1 -15 -11.2 2.5 4.6 3.5 9 United Bank 2.5 27.3 22.3 0.5 6.5 4.3 Shariah compliant 10 Qatar National Bank 0.9 16.7 95.6 0 1.3 3.3 products as a good 11 Al Rafedain Bank 0.9 7.6 2.3 0.1 0 4.1 12 Y- Gulf Bank 0.7 -4.7 0.5 4.5 1.9 0.6 alternative to 13 Al Amal Bank 0.2 3.4 63.5 0.3 0 1 conventional Total 66.7 -23 70.2 55.3 61 61.7 ones Tareq Abdul added that: “Eighty percent Since there is a lack of clear of our customers have turned to Takaful understanding of Takaful among Tareq Abdul Wasie Hayel Saeed, the and this change is being based on the customers, many customers fear that general manager of United Insurance Yemeni society’s preference in dealing Takaful is dominated by the commercial Company, said that: “We established a with Takaful, as they do in dealing with line of the company. As a result, many special sector of insurance, Takaful, as it Islamic banks.” of them believe both kinds of insurance is our priority to meet the requirements to be similar to each other. However, as of the Yemeni society through the Prospects of Takaful many investors in Yemen are religion- off ering of new and distinctive products The concept of Takaful has spread oriented, they still prefer Takaful as and services to satisfy our clients. This throughout the Islamic and non-Islamic opposed to the conventional option. sector was launched in September 2008 banks. People now see these new within the conventional insurance developments in Shariah compliant Challenges company. products as a good alternative to According to Tareq Abdul: “This lack conventional ones. of understanding and vision is not “Takaful has att racted many customers, only limited to Takaful but also to particularly those who have a strong Moreover, there are some investors conventional insurance. The insurance desire to deal with an insurance which who see them as profi table alternatives, market in Yemen is still very small represents a quantum leap in terms of especially aft er the global economic when compared to foreign countries, services provided to the local market, collapse in 2008. As a result, the issuance not exceeding US$75 million, while the as well as a new vision that has kept of Sukuk has since been adopted by non- insurers are no more than 10% - and 90% pace with global changes and regional Islamic countries such as the UK. of Yemenis are still not aware of or do insurances industries around the world.” continued...

Continued not use the insurance system. However, 1st - 2nd October 2012 Takaful has achieved big success which Kuala Lumpur Convention Centre has great impact on other insurance Issuers Day: Monday, 1st October companies to establish Takaful sectors.” Investors Day: Tuesday, 2nd October Takaful & re-Takaful Day: Tuesday, 2nd October It is obvious that the interaction of demand and supply will determine the growth of Takaful. Yemen, as an Islamic country, is likely to have good economic growth when it comes to activities which The 7th IFN Asia Forum will be held in Kuala Lumpur, Malaysia. The renowned 'Issuers meet the religious requirements of & Investors' format will again ensure both the buy-side and sell-side are fully incorpo- customers. rated in this 2-day event.

However, any major increase in the With complimentary delegate passes for all issuers, investors, regulators and other consumption of Takaful will result from senior and relevant key practitioners, the IFN Asia Forum 2012 will be the industry’s largest and leading annual event. an increase in supply, as the demand already exists.

Takaful is still a reflection of the size of wealth www.REDmoneyevents.com Attendance, while FREE, is by invitation only and open to those who register in the country and and have an active interest in this fast growing industry. it is notable that SPONSORS & PARTNERS risk management Lead Partners awareness is still very low

Exclusive Partners Conclusion The Takaful market in Yemen is bound to grow more alongside Islamic banks, which obtained good records up to 2011 despite the crisis that is currently facing the country. If there is a strong media demand for Islamic banks to introduce Takaful, it will increase public awareness of the oﬀ erings of Islamic banks and will create a strong demand for Takaful, Exclusive Knowledge Partner UK Pavillion Sponsors prompting faster growth.

However, Takaful is still a reﬂ ection of the size of wealth in the country and it is notable that risk management awareness is still very low among Yemeni investors. Takaful & re-Takaful In addition, there is an urgent need Day Endorser Corporate Gift Sponsor Booth Sponsor Partner to create a deeper understanding and awareness among policymakers as to what role Takaful can play to improve the quality of life and economic growth.

Dr Moneer Hasan Saif is the head of the Lead Media Partner Media Partners Islamic banking sector at Cooperative & Agriculture Credit Bank. He can be contacted at [email protected]

Robert Minnegaliev, What are the obstacles faced in running your business today? chairman of the The debt crisis in the Eurozone is accelerating, creating substantial board, AK BARS diffi culties and risks for Russian companies in att racting fi nancing Bank Open Joint from western markets. With the global fi nancial uncertainty for capital markets, Stock Company the growing state debt of the US, and the instability of the European banking system, it is obvious that Russian Robert Minnegaliev was the companies will have to off er paper with director of the treasury department higher interest or those markets will simply be closed for Russian companies. of the ministry of fi nance of the Republic of Tatarstan from 1999- 2003. He holds a PhD in Economics Where do you see the Islamic from the University of Chicago fi nance industry in the next Booth School of Business, US. fi ve years? Minnegaliev is also an honored In Russia Islamic instruments are at economist of the Russian the very early stage of development. Federation. The demand for these instruments is growing from both sides – corporate and individual. Could you provide a brief journey of how you arrived Currently, major investment houses and banks are primarily focused on att racting where you are today? fi nancial resources to Russia including I started my business career as a deputy free capital originating from Islamic the fi nancial gates between Russia and the accountant for Kazan Milk Factory. In countries. Individuals, as well as middle Middle East. A deal in accordance with 1998, I was appointed as the fi rst deputy companies, are showing interest in small Shariah norms gives a real possibility to minister of Tatarstan. The ministerial Shariah compliant fi nance instruments and diversify funding sources. We have started experience was of great value when I was investments. appointed as the chairman of the executive to form our own success story and to drive this new market area for Russia. board of AK BARS Bank in 2003. There are certain limitations for the development of the Islamic fi nancial During the last nine years, my team has Which of your products/ institutions however. Most important of accomplished a series of large projects. services deliver the best these is a lack of legal norms regulating Many of them have been innovative not results? this sphere of fi nancial activity. only for our bank but for the Russian Nevertheless, according to practical The majority of the bank’s revenue (71.5%) fi nancial market in general. One of those evidence, running a Shariah compliant is derived from corporate business, and projects is the recent Islamic fi nance business is still feasible within the current the accounts of the bank’s corporate clients Murabahah deal. legislation. comprise over 60% of total customer holdings. The bank is developing and What does your role involve? implementing the same number of services Name one thing you would As the chairperson, I am responsible for for both corporate and private customers. operating as the CEO and managing the like to see change in the world executive board. I represent AK BARS of Islamic fi nance. Bank in governmental relations, interact What are the strengths of your AK BARS Bank is a new player to this with key partners and clients, and manage business? market and is still surveying its partners current banking business. My competence AK BARS Bank has always followed these and competitors. Moreover, it is not the includes the realization of the bank’s main principles – rational conservatism, current centers of Islamic fi nance that need development strategies, control of fi nancial responsibility to clients and adequate to change, but Russia itself. and business performance indicators as estimation of existing risks. well as timely execution of the decisions of In the framework of Russian legislation, the board of directors and shareholders. What are the factors it is practically impossible for banks to perform transactions where they would What is your greatest contributing to the success of be acting as the seller of a real asset, your company? such as property. In particular, many achievement to date? AK BARS Bank remains one of the most tax-related issues arise. Bans on banks Our bank was the fi rst in Russia to eff ective credit issuing organizations in engaging in sales transactions lead to succeed in closing a Murabahah deal, Russia, thanks to the timely off ering of having to involve additional operating an achievement not only for AK BARS new products to clients and constant companies, making the service for the Bank, but for the whole Russian banking implementation of new technologies. client more expensive. system. Practically, the bank has opened

DATE ISSUER SIZE ANNOUNCED IFN Correspondents AFGHANISTAN: Zulfi qar Ali Khan State Bank of Pakistan TBA 2nd April 2012 head of Islamic banking division, fi nancial supervision department, Da Afghanistan Bank Saudi Aramco TBA 2nd April 2012 AUSTRALIA: Gerhard Bakker director, Madina Village Development Bank of Kazakhstan US$500 million 30th March 2012 BAHRAIN: Dr Hatim El-Tahir director, Islamic Finance Knowledge Centre, Deloitt e & Ethical Asset Management TBA 30th March 2012 Touche BANGLADESH: Md Shamsuzzaman National Australia Bank US$500 million 29th March 2012 executive vice president, Islami Bank Bangladesh BERMUDA: Belaid A Jheengoor Jebel Ali Free Zone AED2.4 billion 21st March 2012 director of asset management, PwC BRUNEI: James Chiew Siew Hua Indonesia sovereign TBA 20th March 2012 senior partner, Abrahams Davidson & Co CANADA: Jeff rey S Graham Yemen sovereign US$232 million 20th March 2012 partner, Borden Ladner Gervais EGYPT: Dr Walid Hegazy Saudi Electricity Company TBA 19th March 2012 managing partner, Hegazy & Associates FRANCE: Antoine Saillon Noble Group, Hong Kong RM3 billion 15th March 2012 head of Islamic fi nance, Paris Europlace HONG KONG & CHINA: Anthony Chan Kiler Group US$100 million 12th March 2012 partner, Brandt Chan & Partners in association with SNR Denton Dubai Investments US$200 million 12th March 2012 INDIA: Keyur Shah partner, KPMG Kazakhstan sovereign US$1 million 8th March 2012 INDONESIA: Rizqullah president director, BNI Syariah Encorp System Bilt RM1.58 billion 8th March 2012 IRAN: Majid Pireh Islamic fi nance expert, SEO First Community Bank KES2 billion 8th March 2012 IRAQ: Khaled Saqqaf partner and head of Jordan & Iraq offi ces, Al Tamimi & Co Pakistan sovereign TBA 7th March 2012 IRELAND: Ken Owens Shariah funds assurance partner, PwC Ireland Syarikat Prasarana Negara RM4 billion 6th March 2012 JAPAN: Serdar A. Basara president, Japan Islamic Finance CIMB Singapore SG$100 million 2nd March 2012 JORDAN: Khaled Saqqaf partner and head of Jordan & Iraq offi ces, Al Tamimi & Co Kingdom Holding TBA 1st March 2012 KAZAKHSTAN: Timur Alim area manager, Al Hilal Bank Qatar Petroleum TBA 27th February 2012 KOREA: Yong-Jae Chang partner, Lee & Ko Acwa Power US$800 million 27th February 2012 KUWAIT: Alex Saleh partner, Al Tamimi & Company South Africa sovereign US$500 million 23rd February 2012 LUXEMBOURG: Marc Theisen partner, Theisen Law Maybank RM7 billion 22nd February 2012 MALAYSIA: Nik Norishky Thani head special projects (Islamic), PNB th MAURITIUS: Sameer K Tegally Oman Arab Bank OMR10 million 20 February 2012 associate, Conyers Dill & Pearman th NEW ZEALAND: Dr Mustafa Farouk Yemen sovereign TBA 20 February 2012 counsel member for Islamic fi nancial institutions, FIANZ th OMAN: Anthony Watson Kuwait Finance House, Turkey TBA 18 February 2012 senior associate, Al Busaidy Mansoor Jamal & Co th PAKISTAN: Bilal Rasul Maxis RM2.45 billion 17 February 2012 director (enforcement), SEC of Pakistan th QATAR: Jaime Oon Egypt sovereign TBA 6 February 2012 solicitor, Eversheds th SAUDI ARABIA: Nabil Issa Development Bank of Kazakhstan TBA 6 February 2012 partner, King & Spalding rd SINGAPORE: Yeo Wico, Turkey sovereign TBA 3 February 2012 partner, Allen & Gledhill th SRI LANKA: Roshan Madewala Musteq Hydro RM80 million 24 January 2012 director/CEO, Research Intelligence Unit th SWITZERLAND: Khadra Abdullahi General Authority for Civil Aviation TBA 24 January 2012 associate of investment banking, Faisal Private Bank th UK: Dr Natalie Schoon Indonesian fi nance ministry IDR2 trillion 24 January 2012 Formabb rd YEMEN: Moneer Saif Albaraka Turk Katilim Bankasi US$200 million 23 January 2012 head of Islamic banking, CAC Bank AirAsia X US$200 million 17th January 2012 1Malaysia TBA 16th January 2012 IFN Correspondents are experts in their respective fi elds and HSBC Amanah TBA 12th January 2012 are selected by Islamic Finance th Bank Muamalat Indonesia IDR1.25 trillion 9 January 2012 news to contribute designated Sudan sovereign TBA 3rd January 2012 short country reports Malaysian Airline System and Air Asia RM12 billion 23rd December 2011 Emery Oleochemicals Group US$151 million 20th December 2011 Saudi Arabia sovereign TBA 13th December 2011 For more information KMCOB Capital RM343.1 million 5th December 2011 about becoming an IFN th Emirates NBD TBA 29 November 2011 Correspondent please Solum Asset Management TBA 27th November 2011 contact Bank Syariah Mandiri IDR500 billion 18th November 2011 sasikala@ UEM Group & EPF RM33 billion 17th November 2011 redmoneygroup. Abu Dhabi Islamic Bank US$500 million 9th November 2011 com

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 1110 950

1018 880

926 810

834 740

742 670

650 600 Oct Nov Dec Jan Feb Mar Apr Oct Nov Dec Jan Feb Mar Apr

REDmoney GCC 6 Months REDmoney Global 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 780 1200

724 1096

668 992

612 888

556 784

500 680 Oct Nov Dec Jan Feb Mar Apr Oct Nov Dec Jan Feb Mar Apr

REDmoney MENA 6 Months REDmoney US 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 750 1670

700 1496

650 1322

600 1148

550 974

500 800 Oct Nov Dec Jan Feb Mar Apr Oct Nov Dec Jan Feb Mar Apr

SAMI Halal Food Participation (All Cap) 6 months

2000

1825

1650

1475

1300 Sep-2011 Oct-2011 Nov-2011 Dec-2011 Jan-2012 Feb-2012 Mar-2012 Apr-2012

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 1100 1000

980 890

860 780

740 670

620 560

500 450 Oct Nov Dec Jan Feb Mar Apr Oct Nov Dec Jan Feb Mar Apr

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 1700 1450

1460 1260

1220 1070

980 880

740 690

500 500 Oct Nov Dec Jan Feb Mar Apr Oct Nov Dec Jan Feb Mar Apr

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

RED Email: [email protected] Tel +603 2162 7800

Most Recent Global Sukuk

Priced Issuer Nationality Instrument Market US$ (mln) Managers 28th Mar 2012 Saudi British Bank Saudi Arabia Sukuk Domestic market 400 HSBC private placement 28th Mar 2012 Aman Sukuk Malaysia Sukuk Domestic market 441 Lembaga Tabung Haji, RHB Capital, CIMB public issue Group, AmInvestment Bank, Maybank Investment Bank 27th Mar 2012 Saudi Electricity Saudi Arabia Sukuk Euro market 1,750 Deutsche Bank, HSBC public issue 21st Mar 2012 Cagamas Malaysia Sukuk Domestic market 163 RHB Capital, AmInvestment Bank public issue 12th Mar 2012 DRB-HICOM Malaysia Sukuk Domestic market 123 Maybank Investment Bank private placement 7th Mar 2012 Almarai Saudi Arabia Sukuk Domestic market 267 HSBC private placement 7th Mar 2012 Tanjung Bin Energy Malaysia Sukuk Domestic market 1,089 HSBC, OCBC, RHB Capital, DRB-HICOM, Issuer private placement CIMB Group, Aﬃ n Investment Bank, Maybank Investment Bank 22nd Feb 2012 DRB-HICOM Malaysia Sukuk Domestic market 232 Maybank Investment Bank private placement 31st Jan 2012 MAF Sukuk UAE Sukuk Wakalah Euro market 400 Standard Chartered Bank, HSBC, Dubai public issue Islamic Bank, Abu Dhabi Islamic Bank

17th Jan 2012 General Authority Saudi Arabia Sukuk Domestic market 4,000 HSBC for Civil Aviation private placement 12th Jan 2012 Tamweel UAE Sukuk Euro market 300 Standard Chartered Bank, Dubai Islamic public issue Bank, Citigroup

11th Jan 2012 FGB Sukuk UAE Sukuk Wakalah Euro market 500 Standard Chartered, HSBC, National Bank of public issue Abu Dhabi, Citigroup

11th Jan 2012 Sarawak Energy Malaysia Sukuk Domestic market 796 RHB Capital, Kenanga Investment Bank, public issue AmInvestment Bank 10th Jan 2012 EIB Sukuk UAE Sukuk Euro market 500 Standard Chartered, HSBC, RBS, National public issue Bank of Abu Dhabi, Citigroup, Emirates NBD 16th Dec 2011 Projek Lebuhraya Malaysia Sukuk Domestic market 6,155 RHB Capital, CIMB Group, AmInvestment Usahasama private placement Bank, Maybank Investment Bank

16th Dec 2011 Projek Lebuhraya Malaysia Sukuk Domestic market 3,455 CIMB Group, AmInvestment Bank, Maybank Usahasama private placement Investment Bank

5th Dec 2011 Gulf International Bahrain Sukuk Euro market 300 JPMorgan Bank private placement 28th Nov 2011 DRB-HICOM Malaysia Sukuk Domestic market 132 Maybank Investment Bank private placement 24th Nov 2011 ANIH Malaysia Sukuk Domestic market 786 CIMB Group, Maybank Investment Bank private placement 22nd Nov 2011 ADIB Sukuk UAE Sukuk Euro market 500 Standard Chartered, Nomura, HSBC, public issue National Bank of Abu Dhabi, Abu Dhabi Islamic Bank, Citigroup

Global Sukuk Volume by Month Global Sukuk Volume by Quarter

US$ bn Value (US$ bn) Avg Size (US$ m) US$ m US$ bn Value (US$ bn) Avg Size (US$ m) US$ m 12 1200 18 600 16 10 1000 500 14 800 8 12 400 6 600 10 300 4 400 8 6 200 2 200 4 100 0 0 2 12345678910111212 3 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2011 2012 2007 2008 2009 2010 2011 2012

Top 30 Issuers of Global Sukuk 12 Months Issuer Nationality Instrument Market US$ (mln) Iss Managers 1 Projek Lebuhraya Malaysia Sukuk Domestic market 9,610 2 RHB Capital, CIMB Group, Usahasama private placement AmInvestment Bank, Maybank Investment Bank 2 General Authority for Civil Saudi Sukuk Domestic market 4,000 1 HSBC Aviation Arabia private placement 3 Pengurusan Air SPV Malaysia Sukuk Murabahah Domestic market 2,388 3 HSBC, CIMB Group, Maybank public issue Investment Bank 4 Wakala Global Sukuk Malaysia Sukuk Euro market 2,000 1 HSBC, CIMB Group, Citigroup, public issue Maybank Investment Bank 5 Sarawak Energy Malaysia Sukuk Domestic market 1,783 2 RHB Capital, AmInvestment Bank, public issue Kenanga Investment Bank 6 Saudi Electricity Saudi Sukuk Euro market 1,750 1 Deutsche Bank, HSBC Arabia public issue 7 Manjung Island Energy Malaysia Sukuk Ijarah Domestic market 1,545 1 Lembaga Tabung Haji, CIMB Group public issue 8 Tanjung Bin Energy Issuer Malaysia Sukuk Domestic market 1,089 1 HSBC, OCBC, RHB Capital, DRB- private placement HICOM, CIMB Group, Aﬃ n Investment Bank, Maybank Investment Bank 9 Perusahaan Penerbit SBSN Indonesia Sukuk Ijarah Euro market 1,000 1 Standard Chartered, HSBC, Citigroup Indonesia II public issue 10 Aman Sukuk Malaysia Sukuk Musharakah Domestic market 812 2 Lembaga Tabung Haji, RHB Capital, public issue CIMB Group, AmInvestment Bank, Maybank Investment Bank 11 ANIH Malaysia Sukuk Domestic market 786 1 CIMB Group, Maybank Investment Bank private placement 12 Kingdom of Bahrain Bahrain Sukuk Euro market 750 1 Standard Chartered, BNP Paribas, public issue Citigroup 12 Islamic Development Bank Saudi Sukuk Euro market 750 1 Standard Chartered, Deutsche Bank, Arabia public issue BNP Paribas, HSBC 14 Syarikat Prasarana Negara Malaysia Sukuk Ijarah Domestic market 667 1 CIMB Group, Maybank Investment Bank public issue 15 First Gulf Bank UAE Sukuk Wakalah Euro market 650 1 Standard Chartered, HSBC, Citigroup public issue 16 HSBC Bank Middle East UK Sukuk Euro market 500 1 HSBC public issue 16 FGB Sukuk UAE Sukuk Wakalah Euro market 500 1 Standard Chartered, HSBC, National public issue Bank of Abu Dhabi, Citigroup 16 EIB Sukuk UAE Sukuk Euro market 500 1 Standard Chartered, HSBC, RBS, public issue National Bank of Abu Dhabi, Citigroup, Emirates NBD 16 Abu Dhabi Commercial Bank UAE Sukuk Euro market 500 1 Standard Chartered, JPMorgan, Abu public issue Dhabi Commercial Bank, Bank of America Merrill Lynch 16 ADIB Sukuk UAE Sukuk Euro market 500 1 Standard Chartered, Nomura, HSBC, public issue National Bank of Abu Dhabi, Abu Dhabi Islamic Bank, Citigroup 21 DRB-HICOM Malaysia Sukuk Domestic market 486 3 Maybank Investment Bank private placement 22 Saudi International Saudi Sukuk Domestic market 480 1 Deutsche Bank, Riyad Bank Petrochemical Arabia public issue 23 Sharjah Islamic Bank UAE Sukuk Euro market 400 1 Standard Chartered, HSBC public issue 23 MAF Sukuk UAE Sukuk Wakalah Euro market 400 1 Standard Chartered, HSBC, Dubai public issue Islamic Bank, Abu Dhabi Islamic Bank 25 Saudi British Bank Saudi Sukuk Domestic market 400 1 HSBC Arabia private placement 26 Cagamas Malaysia Sukuk Domestic market 393 3 CIMB Group, Maybank Investment public issue Bank, RHB Capital, AmInvestment Bank 27 Kuveyt Turk Katilim Bankasi Turkey Sukuk Euro market 350 1 Standard Chartered, HSBC, KFH, Abu public issue Dhabi Islamic Bank, Commerzbank Group 28 Tamweel UAE Sukuk Euro market 300 1 Standard Chartered, Dubai Islamic Bank, public issue Citigroup 28 Gulf International Bank Bahrain Sukuk Euro market 300 1 JPMorgan private placement 30 Putrajaya Holdings Malaysia Sukuk Musharakah Domestic market 294 2 CIMB Group, AmInvestment Bank, private placement Maybank Investment Bank, RHB Capital Total 40,103 106

Top Managers of Sukuk 12 Months Sukuk Volume by Currency US$ (billion) 12 Months

Manager US$ (mln) Iss % Malaysian ringgit 22.3 1 HSBC 8,350 18 20.8 2 Maybank Investment Bank 7,174 33 17.9 US dollar 9.4

3 CIMB Group 7,129 29 17.8 Saudi riyal 4.7 4 AmInvestment Bank 4,902 23 12.2 Singapore dollar 0.0 5 RHB Capital 2,750 20 6.9 6 Standard Chartered Bank 1,874 12 4.7 Sukuk Volume by Issuer Nation US$ (billion) 12 Months 7 Citigroup 1,692 8 4.2 8 Deutsche Bank 1,302 3 3.3 Malaysia 24.0 9 Lembaga Tabung Haji 935 3 2.3 Saudi Arabia 5.5 UAE 3.8 10 BNP Paribas 438 2 1.1 Bahrain 1.1 11 JPMorgan 425 2 1.1 Indonesia 1.0 12 Aﬃ n Investment Bank 334 5 0.8 UK 0.5 13 OCBC 313 6 0.8 Turkey 0.4 14 National Bank of Abu Dhabi 292 3 0.7 15 Kenanga Investment Bank 265 1 0.7 Global Sukuk Volume by Sector 12 Months 16 Abu Dhabi Islamic Bank 253 3 0.6

17 DRB-HICOM 250 5 0.6 8% 6% 18 Riyad Bank 240 1 0.6 Construction 28% Government 19 Dubai Islamic Bank 200 2 0.5 17% Finance 20 Hong Leong Bank 141 4 0.4 Utility & Energy 21 Bank of America Merrill Lynch 125 1 0.3 Transportation 20% Other 21 Abu Dhabi Commercial Bank 125 1 0.3 21% 23 KFH 109 2 0.3 24 Public Bank 108 3 0.3 25 RBS 83 1 0.2 Global Sukuk Volume - US$ Analysis 25 Nomura 83 1 0.2 US$ bn US$ Non-US$ 25 Emirates NBD 83 1 0.2 18 16 28 Commerzbank Group 70 1 0.2 14 29 Malaysian Industrial Development 40 1 0.1 12 10 Finance 8 30 OSK 16 3 0.0 6 4 Total 40,103 106 100.0 2 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Top Islamic Finance Related Project Finance Mandated Lead 2007 2008 2009 2010 2011 2012 Arrangers 12 Months

Mandated Lead Arranger US$ (million) No % Top Islamic Finance Related Project Financing Legal Advisors 1 Samba Financial Group 592 4 6.2 Ranking 12 Months 2 Public Investment Fund 463 2 4.9 Legal Advisor US$ (million) No % 3 Arab National Bank 463 2 4.9 1 Allen & Overy 4,198 2 23.9 2 Skadden Arps Slate Meagher & 3,281 1 18.7 4 HSBC Holdings 447 3 4.7 Flom 5 Sumitomo Mitsui Financial Group 404 2 4.2 2 White & Case 3,281 1 18.7 6 Banque Saudi Fransi 386 2 4.1 4 Al-Jadaan & Partners Law Firm 1,200 1 6.8 7 KfW Bankengruppe 369 2 3.9 4 Baker & McKenzie 1,200 1 6.8 4 Cliﬀ ord Chance 1,200 1 6.8 8 Mitsubishi UFJ Financial Group 360 1 3.8 7 Baker Bott s 917 1 5.2 9 Saudi British Bank 324 1 3.4 7 Chadbourne & Parke 917 1 5.2 10 Australia & New Zealand Banking 289 1 3.0 9 Afridi & Angell 267 1 1.5 Group 9 Herbert Smith Gleiss Lutz Stibbe 267 1 1.5 10 Mizuho Financial Group 289 1 3.0 9 Latham & Watkins 267 1 1.5

Top Islamic Finance Related Loans Mandated Lead Arrangers Top Islamic Finance Related Loans Deal List 12 Months Ranking 12 Months Credit Date Borrower Nationality US$ (mln) Mandated Lead Arranger US$ (mln) No % 13th Dec 2011 Barzan Gas Qatar 5,442 1 Samba Capital 1,156 5 10.8 12th Feb 2012 Mobily Saudi 2,667 2 Saudi British Bank 1,054 4 9.9 Arabia 3 Banque Saudi Fransi 904 3 8.5 2nd Dec 2011 Hajr for Electricity Saudi 1,981 4 Al-Rajhi Banking & Investment 753 3 7.1 Production Arabia 5 HSBC 554 5 5.2 14th Feb 2012 Power & Water Utility Saudi 1,200 for Jubail & Yabbu Arabia 6 Saudi National Commercial Bank 459 2 4.3 th 7 Saudi Hollandi Bank 444 1 4.2 15 Oct 2011 Maaden Bauxite & Saudi 929 Alumina Arabia 7 Riyad Bank 444 1 4.2 15th Sep 2011 Dubai Ports World UAE 850 9 Deutsche Bank 321 4 3.0 18th Jul 2011 Pembinaan BLT Malaysia 822 10 Citigroup 316 8 3.0 23rd Jun 2011 Salik One Spc UAE 800 11 Barwa Bank 266 2 2.5 17th May 2011 Emaar Properties UAE 699 12 Maybank Investment Bank 264 2 2.5 27th Feb 2012 Government of Dubai UAE 675 13 Noor Islamic Bank 236 2 2.2 14 RBS 233 1 2.2 Top Islamic Finance Related Loans by Country 12 Months 15 Arab National Bank 219 1 2.1 Nationality US$ (mln) No % 16 Abu Dhabi Islamic Bank 219 5 2.1 1 Saudi Arabia 5,377 5 50.4 17 CIMB Group 216 2 2.0 2 UAE 2,048 8 19.2 18 Qatar Islamic Bank 213 1 2.0 3 Malaysia 926 2 8.7 18 Qatar International Islamic Bank 213 1 2.0 4 Qatar 850 1 8.0 18 Masraf Al Rayan 213 1 2.0 5 Indonesia 601 4 5.6 21 Standard Chartered Bank 199 4 1.9 6 Turkey 384 3 3.6 22 RHB Capital 164 1 1.5 7 Pakistan 203 4 1.9 22 Lembaga Tabung Haji 164 1 1.5 8 China 93 1 0.9 22 AmInvestment Bank 164 1 1.5 9 Kuwait 87 1 0.8 25 Emirates NBD 160 3 1.5 10 Russian Federation 60 1 0.6 26 Bank of America Merrill Lynch 126 3 1.2 Top Islamic Finance Related Loans by Sector 12 Months 27 Arab Banking Corporation 111 3 1.0 28 Bank of China 93 1 0.9 Telecommunications 29 Al Hilal Bank 70 2 0.7 Utility & Energy 30 Bank Al-Jazira 68 1 0.6 Oil & Gas 30 Alinma Bank 68 1 0.6 Real Estate/Property Top Islamic Finance Related Loans Mandated Lead Arrangers 12 Months Construction/Building US$ bln0 124 3 Bookrunner US$ (mln) No %

1 Citigroup 309 6 2.9 Global Islamic Loans - Years to Maturity (YTD Comparison) 2 HSBC 305 2 2.9 2011 3 Abu Dhabi Islamic Bank 267 5 2.5 2010 4 Samba Capital 233 1 2.2 2009 4 RBS 233 1 2.2 2008 6 Standard Chartered Bank 165 3 1.6 2007 7 Emirates NBD 122 2 1.1 2006 8 Maybank Investment Bank 100 1 0.9 2005 9 Bank of China 93 1 0.9 0% 20% 40% 60% 80% 100% 0-3yrs 3-5yrs 5-7yrs 7-10yrs 10+yrs 10 National Bank of Kuwait 87 1 0.8

Are your deals listed here? If you feel that the information within these tables is inaccurate, you may contact the following directly: Jennifer Cheung (Media Relations) Email: [email protected] Tel: +852 2804 1223

16th — 17th April 2012 Finance Forum Economics and Business IFN Indonesia Forum Dubai (Fleming Gulf) Melaka, Malaysia (UiTM (Johor) & Jakarta (REDmoney events) Universitas Indonesia) 30th May 2012 16th — 17th April 2012 IFN Roadshow Hong Kong 10th — 11th July 2012 The 7th Annual World Takaful Conference Hong Kong (REDmoney events) The 3rd Annual Asia Islamic Banking Dusit Thani, Dubai (MEGA Events) Conference, Kuala Lumpur (Fleming Gulf) 5th — 6th June 2012 18th April 2012 The 3rd Annual World Islamic Banking 1st – 2nd October 2012 The 2nd Annual Middle East Islamic Conference: Asia Summit IFN Asia Forum 2012 Finance and Investment Conference Singapore (MEGA Events) Kuala Lumpur (REDmoney events) Dusit Thani, Dubai (MEGA Events) 10th — 12th June 2012 10th – 11th October 2012 nd 8th May 2012 The International Takaful Summit The 2 Annual International Summit IFN Roadshow Australia London (Afkar Consulting) on Islamic Corporate Finance Sydney (REDmoney events) Abu Dhabi (MEGA Events) 11th June 2012 th st 9th — 10th May 2012 IFN Roadshow Thailand 30 – 31 October 2012 The 7th Asia Takaful Conference Bangkok (REDmoney events) IFN Europe Forum 2012 Singapore (Asia Insurance Review) London, UK (REDmoney events) th — th 11 12 June 2012 th th 15th — 17th May 2012 The 3rd Annual World Takaful 12 – 13 November 2012 th IFN Saudi Arabia Forum The 9 Islamic Financial Services Conference: Family Takaful Summit Riyadh (REDmoney events) Board Summit Kuala Lumpur (MEGA Events) Istanbul (IFSB) 20th — 21st November 2012 13th — 14th June 2012 th th International Islamic Accounting and 17 — 18 May 2012 st The 1 International Forum for Islamic Finance Conference 2012 KAZANSUMMIT 2012 Banks and Financial Institutions Kazan, Russia (Linova-Media) Kuala Lumpur (Accounting Research Amman, Jordan (Strategy for Business Institute) Development & CIBAFI) 21st — 22nd May 2012 26th November 2012 The 8th Annual World Islamic Funds st 21 June 2012 IFN Roadshow Brunei and Financial Markets Conference IFN Roadshow Japan Brunei (REDmoney events) Bahrain (MEGA Events) Tokyo (REDmoney events) 3rd December 2012 th th th st 29 — 30 May 2012 29 June — 1 July 2012 IFN Roadshow Egypt The 8th Annual Middle East Project International Conference of Islamic Cairo (REDmoney events)

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AAOIFI 5, 8, 10 Dubai Duty Free 14 National Australia Bank 7 Abu Dhabi Commercial Bank 13, 14 Dubai Group 10 National Bank of Abu Dhabi 13 Abu Dhabi Islamic Bank 10, 12 Dubai Holdings 10, 13 Noble Group 18 ahlibank 14, 21 Dubai International Capital 10, 13 Oasis Group 24 AK Bars Bank 32 Dubai International Financial Center 10 Al Amal Bank 30 Dubai Islamic Bank 14 Otoritas Jasa Keuangan 16 Al Baraka Banking Group 10 Egyptian Insurance Federation 29 Palestine Islamic Bank 12 Al Hilal Banking Services 14 Emirates Airline 13 Parkson Retail Group 9, 18 Al Jaber Group 12, 13 Emirates Islamic Bank 11 Qatar Exchange 12 Al Rafedain Bank 30 Emirates NBD 9, 11, 14 Qatar Financial Center Authority 13 Al Salam Bank-Bahrain 13 Employees Provident Fund 9 Qatar First Investment Bank 12 Albaraka Turk 9 Ernst & Young 21 Qatar International Islamic Bank 12, 21 Alinma Bank 14 Ethical Asset Management 15 Qatar National Bank 30 Allen & Overy 19 Eurekahedge 24 Almarai Company 12 Fitch 12, 19 RAM 10, 18 AmInvestment Bank 18 Foundation for International Community Assistance 17 Russell Investment Group 24 Amiri Capital 12, 24 FTSE 25 S&P 19 Amrahbank. 7 FWU Group 29 Saba Islamic Bank 30 ASM Investment Services 13 General Authority for Civil Aviation 10, 12, 15, 16 SATORP 16 Australian Prudential Regulation Authority 7 Global Investment House 10, 24 Saudi Arabian General Investment Authority 16 Australian Securities and Investment Commission 7 Goldman Sachs 3 Saudi Arabian Mining Company 14 Bangladesh Petroleum Corporation 9 Government Housing Bank 8 Bank Asya 9 HSBC 9, 13, 18 Saudi Aramco 16 Bank CIMB Niaga 8 HSBC Amanah 19 Saudi British Bank 12 Bank Danamon 7 HSBC Amanah Indonesia 7, 16 Saudi Electricity Company 12, 15, 19 Bank Dhofar 21 HSBC Amanah Malaysia 7 Saudi Electricity Global Sukuk Company 19 Bank Indonesia 7 HSBC Bank 19 Securities Commission Malaysia 18 Bank Kerjasama Rakyat Malaysia 9 HSBC Holdings 10,14 Shamel Bank 30 Bank Muamalat Indonesia 7, 8 Hyland Soft ware 29 Shariah Capital 24 Bank Muamalat Malaysia 8 IBFIM 25 SHUAA Asset Management 3 Bank Muscat 20 ICD 7, 8, 9 Bank Nagari 7 ICIEC 14 SNR Denton 18 Bank Negara Malaysia 15 IDB 8, 10, 12, 14 Solidarity General Takaful 29 Bank of America Merrill Lynch 18 IFSB 5 Solidarity Group Holding 29 Bank Sohar 21 IIFM 5, 22 South and West Sulawesi Bank 7 BNI Syariah 17 INCEIF 15 Standard Chartered Saadiq 18 Boston Consulting Group 12 International Bank of Azerbaĳ an 7 State Bank of Pakistan 13 BRAC 17 Investcorp 12 Syarikat Takaful Malaysia 29 Brandt Chan & Partners 18 Ipak Yuli Bank 8 Bumida Syariah 29 ISDA 22 TA Investment Management 25 Bursa Malaysia 25 ITFC 9, 14 Tadhamon Bank 30 CAC Bank 30 Jadwa Investment 24 Tamweel 12 Capivest Islamic Investment Bank 14 Jaiz Bank 7 Tanjung Bin Energy Issuer 15 Central Bank of Oman 20 Jaminan Sosial Tenaga Kerja 9 The Islamic Bank of Thailand 8 Central Bank of the UAE 8, 11,13 Jebel Ali Free Zone 10 The Royal Bank of Scotland 13 CI 12 Kazan Milk Factory 32 Tradewinds Plantation Capital 12 CIMB Islamic 10 Khazanah Nasional 9, 18 Cliﬀ ord Chance 22, 23 Kumpulan Wang Persaraan 9, 10 Union National Bank 13 Cooperative & Agriculture Credit Bank 31 Kuveyt Turk Participation Bank 12 United Bank 30 Co-operatives Commission of Malaysia 9 Kwantas SPV 12 United Insurance Company 30 Da Afghanistan Bank 17 Latham & Watkins 19 Universal Trustee (Malaysia) 25 Dallah Albaraka 10 London Stock Exchange 19 University of Chicago 32 Danareksa Sekuritas 8 Mandiri Sekuritas 8 Uzbek Industrial-Construction Bank 8 Dar Al-Arkan Real Estate Development Company 13 MARC 12 Wethaq Takaful Insurance 29 DBS Group Holdings 7 Maybank Islamic 9 Yemen Commercial Bank 30 Dealogic 24 Mayora Group 7, 8 Deutsche Bank 13, 16 Microﬁ nance Investment Support Facility Yemen- Gulf Bank 30 Dnata 13 for Afghanistan 17 Yemen Islamic Bank 30 Drydocks World 10 Mitsubishi UFJ Securities International 19 Yemen- Kuwait Bank 30 Dubai Bank 11 Moody’s 19

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