The Tortoise Versus the Hare in This Issue an Annual Islamic Banking Conference Took These Shifts Would Conclusively Nurture Social IFN Rapid
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Vol. 6, Issue 49 11th December 2009 The World’s Global Islamic Finance News Provider ALERT Register now - It’s free S The Tortoise versus the Hare In this issue An annual Islamic banking conference took These shifts would conclusively nurture social IFN Rapid ..................................................... 2 place this week in Manama, Bahrain where developments in Islamic societies, as opposed Islamic Finance News ................................ 3 approximately 700 practitioners and students to just trying to fl ip profi ts off hard assets in descended to discus recent trends and future short spurts. But, even with Dubai’s issues Takaful News ............................................13 developments within the industry. and other looming hiccups in the industry, many seemed to affi rm that Islamic fi nance is Rating News .............................................14 Everyone’s mind was on the global fi nancial still relatively young. The bumps experienced IFN Report: crisis and Dubai; as both have heightened now will —hopefully — assist in the industry’s Kuwait forms a front .............................16 attention surrounding Islamic fi nance’s future development with respect to effi ciency, strengths and weaknesses. stronger regulations and risk mitigation. Still mulling over Sukuk........................ 17 Rashid Al Maraj, governor of Bahrain’s Central It does not seem as though the storms the Articles: Bank, opened the conference with some industry is currently weathering will curtail Abundant Opportunities in South Africa ............................................18 interesting insights on investor practices, long-term growth, particularly in non-Islamic especially with respect to managing risk. He markets. After all, publicity — whether positive Shariah Compliant Private Equity: warned against banks rushing into unilaterally or negative — still attracts attention. Post Recession Prospects ....................20 concentrated investment practices like scurrying hares. For those already in the industry, the The Year That Was (Part 1) ..................22 tumultuous events in Dubai are going to Al Maraj iterated that this sort of mentality serve as lessons learned. For those recently Islamic Investments Weather Most of the Storm in Asia ...................................24 manifests from fear of missing out on intrigued with Islamic fi nance, well, they are instantaneous profi ts. He conjured Warren still seemingly interested. The world is still Forum .........................................................26 Buffet’s famous saying on investment fascinated with Islamic fi nance, whether to practices: “... to be fearful when others are draw international capital or accommodate Meet the Head ..........................................27 greedy and greedy when others are fearful.” Muslim constituencies. Hilmy Cader, Global CEO of MTI Consulting Termsheet ..................................................28 Undoubtedly, he was alluding to Dubai’s real But, is Islamic fi nance ready to engage the Indosat’s Sukuk Ijarah estate sector. Ultimately, he drove home the world? point that banks should implement prudent Deal Tracker ..............................................29 practices, tread slowly and invest in diversifi ed As the industry moves into non-traditional sectors. The tortoise approach, Al Maraj markets, other sophisticated fi nancial Islamic Funds Tables ................................30 affi rmed, would mitigate fi nancial risk. sectors and non-Islamic spaces, there will be an increased need to focus on managing S&P Shariah Indexes ...............................31 Another regulator from the Central Bank fi nancial risks across the board — treasury, Dow Jones Shariah Indexes ....................32 of Bahrain, Khalid Hamad Abdul-Rahman operational, liquidity and the like. Ultimately, Hamad, forecasted that there would be a shift these sorts of prudent measures will also Islamic League Tables .............................33 in investments towards small- and medium- assist in eliminating Shariah risk. Of course, sized enterprises (SMEs) and more venture practitioners will have to reconcile with the Thomson Reuters League Tables ...........36 capitalism as Islamic investors (fi nally) shy fact that treading cautiously may not yield high Events Diary...............................................39 away from real estate. He keenly observed returns immediately. Partaking in fi scally solid that such reallocations in Islamic investments dealings will undoubtedly require a tortoise’s Country Index ............................................40 would intrinsically capture the essence of the approach; as Al Maraj pointed out. industry, that is, to build viable and robust Company Index .........................................40 communities organically by promoting smaller That is, slow and steady — not to mention, businesses. diversifi ed — will win the marathon. Subscription Form ....................................40 A round-up of all this week’s news IFN RAPID www.islamicfi nancenews.com Dubai World needs extension on debts Central Bank of Bahrain and Monetary NEWS settlement Authority of Singapore sign MoU Royal Bank of Canada has no direct exposure to debt-laden Dubai World Market to see more Sukuk issuances Liquidity House and ePlanet Ventures to jointly establish asset management fi rm Nakheel’s creditors told to pursue Dubai Global banks’ exposure to Dubai World World’s overseas assets debt is manageable Drydocks World exempted from Dubai World’s restructuring exercise IMF says a sound legal framework is crucial Qatar Islamic Bank announces US$14.8 to encourage investments in Sukuk million exposure to Dubai World Emar Properties drops merger plan with Dubai Holding’s subsidiaries Pakistan’s North-West Frontier Province Ithmaar Bank to invest in Malaysia transfers control of Bank of Khyber Deadline approaches for Dubai Electricity UAE government needs to provide more and Water Authority’s Sukuk payment Asian Finance Bank to establish a support to banking sector representative offi ce in the country by 2010 Dubai World injects US$816.8 million into Legal defi nition of Sukuk sought Nakheel Indonesia to issue Sukuk for retail investors in April 2010 Investment Dar proposes a US$3.5 billion debt restructuring plan to creditors TAKAFUL Indonesia’s central bank optimistic Islamic t’azur signs agreement with National banking to see growth in 2010 Finance House Dubai World’s crisis has minimal impact on the Saudi banking sector Bank Simpanan Nasional to establish Al Salam Bank-Bahrain to launch Takaful more Islamic banking centers credit card Bank Muscat, Bank Sohar and National Bank of Oman reveal total exposure of Indonesia’s new tax regulation already US$77 million to Dubai World attracting foreign investors RATINGS Insurans Islam TAIB gets a ‘BBB+’ rating Dubai World’s creditors may turn down for its fi nancial strength High court adjourns petition opposing the standstill agreement establishment of an Islamic bank in Kerala Fitch assigns ‘AA+(idn)’ national rating for Discussions begins between Dubai World Bank CIMB Niaga State-run utility company PLN to issue and creditors Sukuk and conventional bonds Fitch upgrades Bank Negara Indonesia’s Al Faiz Fund 1 to acquire a 2.49% equity National Bank of Abu Dhabi spreads its long-term rating to ‘AA(idn)’ from ‘AA-(idn)’ interest in Pacifi c Healthcare Holdings wings to Asia PEFINDO reaffi rms Indosat’s ‘idAA+’ rating Amanah Saham Mara Investment Services Dubai protects its prized assets from plans to increase the size of its funds restructuring MARC affi rms Aras Sejagat’s Sukuk Ijarah at ‘AA+ID(bg)’ DP World to continue construction of Ithmaar Bank calls for innovation in Islamic container terminal project fi nance Premium Nutrients’ Islamic notes on MARCWatch Developing UK government to create level playing fi eld Nakheel records loss of US$3.65 billion for Islamic fi nance RAM removes Pharmaniaga’s ratings from DIFC Authority publishes white paper on Rating Watch Kuveyt Türk aims to be among Turkey’s top infrastructure projects ten banks in ten years Fitch affi rms Hong Leong Bank’s IDR at Bahrain Islamic Bank launches fi rst youth ‘BBB+’ Gatehouse-DDCAP to jointly launch account ‘Vevo’ structured trade fi nance fund Abu Dhabi’s backing for UAE a mainstay of Muslim countries to jointly issue Sukuk for its stable rating outlook Legal experts predict getting returns from better liquidity in Islamic fi nancial markets Dubai World will be a challenge Fitch downgrades Tamweel Residential’s Dubai Group sells stake in EFG-Hermes Class A and B notes MTI Consulting urges IFIs to improve their Holding Moody’s places ratings of GRIs on review marketing efforts © Page 2 11th December 2009 NEWS www.islamicfi nancenews.com AMERICAS On safe ground CANADA: The Royal Bank of Canada (RBC) has declared that it has no direct exposure to Dubai World, the Dubai-based holding company that is restructuring its US$26 billion of debt. RBC chief risk offi cer Morten Friis who describes RBC as being in a “fortunate condition”, said the bank has a minimal amount of exposure to the troubled entity and no direct exposure to property developers Nakheel and Limitless. Both fi rms are involved in restructuring efforts. ‘Better to aim big’ US: Nakheel’s creditors may win the right to seize a strip of barren waterfront land meant for the now-delayed Dubai Waterfront project, if the company defaults on the US$3.5 billion Sukuk backing the development, according to the bond’s prospectus. The delayed Dubai Waterfront project,