Breaking the Mold: Female Investors Making Waves

The World’s Leading Islamic Finance News Provider

(All Cap) IDB and Nigeria looks Jordan SECP boosts 1100 World Bank west for acquires best NBFC segment 1050 2.92% sign US$9 Islamic ﬁ nance practices with updated 1000 billion inspiration..7 for maiden rules; creates 921.97 950 strategic Sukuk...8 new asset 949.77 900 partnership classes...12 TMSSFTW

Powered by: IdealRatings® deal...6 COVER STORY 21st October 2015 (Volume 12 Issue 42) Breaking the mold: Female investors making waves

The role of women in the Gulf is Women in the GCC now control over a awareness and understanding are changing — or is it just the perception third of wealth in the region, and are a opening doors to a more proactive of the role of women? It’s a delicate driving force for the economy. Markaz involvement in personal wealth subject but there is no doubt that estimated in 2013 that GCC high-net- management and investment activity. with the advent of bett er education worth (HNW) females controlled over and employment opportunities, US$224 billion and accounted for over Women in the workforce and as major players in the fi elds of 20% of total wealth in the region — and The labor trend in the GCC is changing, family wealth, entrepreneurship and these fi gures have soared in the last few with female participation more than business, Muslim women are becoming years. Around 105 ultra HNW women in doubling over the past few decades. a force to be reckoned with from an Saudi Arabia and the UAE now control In Dubai and Qatar, the female labor investment perspective. LAUREN over US$22 billion alone: while Al workforce has more than tripled since MCAUGHTRY asks what fi nancial Masah Capital estimates that personal 2003 to 47% and 51% respectively institutions are doing to leverage this wealth owned by women in the Gulf (compared to 20% in Saudi Arabia and new powerhouse. tops US$690 billion. With annual growth 29% in Oman). Business is the preferred of over 8%, this could reach almost US$1 fi eld, with 33% of female higher Improving the odds trillion by 2017. education students enrolling in the fi eld: “Women are proving to be a key while according to SAIS Global Women driving force for the GCC economic Higher education access is a key driver in Leadership fi gures, one out of every engine,” claims Al Masah Capital in of this, with the female enrollment four start-ups in the Middle East is its latest report on the opportunities rate for universities now exceeding founded by women. for women in the region. “Women that of men. While women still in GCC countries are believed make up just 29% of the GCC Even in the most conservative of by some in the international workforce (compared to societies the role of women is starting to community to be submissive 40% of the population), take on greater prominence — in 2013 and restricted, with litt le powerful female for example, the late King Abdullah or no role to play in the fi gures in the worlds of Saudi Arabia appointed 30 women socioeconomic development of entrepreneurship, to the Shura Council, while in 2012 of the region. Defying business and politics the UAE made it compulsory for all this popular belief, GCC are paving the corporations and government agencies women are now actively way for greater to include women on their boards of participating in the social, participation, directors. Fourteen per cent of senior political, cultural, and while for management roles in the UAE are now economic aspects of their inherited wealth held by women (according to a recent bett er education, respective societies,” it notes. continued on page 3

The World’s Leading Islamic Finance News Provider Islamic Project Financing: A New Path th IFN Dubai Economic Seminar 26 October 2015, DIFC Centre of Excellence Sponsored by: Islamic Trade Financing: Connecting the World 2015 Series 27th October 2015, DIFC Centre of Excellence LLeaad partnpartnersp ers PartnerPartner Sponsored by: IFN RAPIDS

Volume 12 Issue 42 million (US$26.36 million) marine insurance policy for DEALS Islamic facility Cairo Metro Project IFN Rapids ...... 2 Central Bank of Bahrain’s Khazanah Nasional to IFN Reports: Sukuk Ijarah meets offl oad entire stake in Bank RATINGS • Kuwait consolidates Islamic fi nance expectations subscription target Muamalat Malaysia Capital Intelligence affi rms • IDB and World Bank sign US$9 billion strategic Albaraka Turk plans Employees Provident Emirates NBD’s rating partnership deal to support member countries • capital-boosting Sukuk Fund proposes regulatory RAM reaffi rms Bank Nigeria looks west for Islamic fi nance inspiration before the end of 2015; amendments; seeking to selects arrangers for Islam’s fi nancial institution • Jordan acquires best practices for maiden Sukuk create Shariah Advisory potential issuance and Sukuk ratings • New innovations for Malaysian SMEs • IFN Committ ee Capital Intelligence Indonesian government ISFIN partners with Global Trendswatch • IFN Weekly Poll: A concern downgrades Al Baraka auctions Shariah securities Manolis Eglezos & hindering growth is the lack of Islamic fi nance th Islamic Bank’s foreign on the 20 October with Associates knowledge by CFOs of potential issuers. One target of IDR2 trillion currency ratings DLA Piper expands deterrent is the terminology used for fi nancing (US$146.6 million) Indonesia’s favorable footprint in Africa; launches activities. To overcome this, should the industry government fi nances Arab Petroleum own offi ce in Morocco with continue to be a key rating demystify the jargon using understandable terms? Investments Corporation South African unit to follow strength, says RAM • SECP boosts NBFC segment with updated rules; opens orderbooks for debut suit Sukuk issue RAM reaffi rms the UAE’s creates new asset classes • QIB to tap US dollar Sunrise Properties global scale and ASEAN- Sukuk market • Sovereign Sukuk: Bahrain and ABHC Sukuk to make procures AED515 million profi t payment on the 26th scale sovereign ratings Indonesia ...... 5 (US$140.18 million) October 2015 syndicated term and Development Bank of Murabahah facilities Kazakhstan’s ringgit Sukuk IFN Analysis: NEWS maintains ‘AA2/Stable’ rating The Philippines: The Christian Asian nation vying for IDB signs US$91 million development fi nancing Standard Chartered Saadiq a larger share of Islamic fi nance ...... 14 Senai-Desaru Expressway expects toll increase to agreements with Tajikistan maintains top ratings Islamic microfi nance: At its initial stages boost company’s profi t and Togo ...... 15 and enable it to service its GFH Capital purchases MOVES Case Study: Sukuk repayment US$125 million-worth of US Axis REIT appoints Leong First Singapore dollar Sukuk for 2015 — Cagamas ..16 industrial real estate assets Amanie Advisors eyes Kit May as new CEO; Column: expansion into Nigerian, George Stewart LaBrooy Daud speaks ...... 17 Indian and Gambian markets ASSET to serve the board as non- IFN Country Correspondent: No rules on tapping independent non-executive Oman; Pakistan ...... 18 the Sukuk market yet, MANAGAMENT director says Bangko Sentral ng Special Reports: Ahlussunna WalJama’a Tawreeq Holdings Pilipinas Is Islamic fi nance wanted in Australia? ...... 20 Ashanti Regional Imam welcomes Margrith initiates fi rst Islamic Lütschg-Emmenegger to Islamic fi nance expands at a steady pace in Greater Halkbank requests to cancel approval for investment fund in Kumasi board of directors China ...... 22 establishment of Islamic London Central Portfolio Gatehouse names Trevor Malaysia’s Islamic CASA predicament ...... 23 bank partners with Al Rayan Homes as head of real Country Feature: Ayala Land increases stake Bank to launch Islamic estate fi nance Egypt: Islamic fi nance market review ...... 25 fund targeting Prime in MCT for its solid track Ahli United Bank names Central London’s private Takaful Feature: record in project execution David Hodgkinson as non- rented sector Takaful in Gambia ...... 27 and business strategy executive director; David OCBC Al-Amin targets TAKAFUL Casson to retire next month Islamic Finance news ...... 28 high-net-worth individuals David Williams joins BLME with the launch of Deal Tracker ...... 34 Sun Life Takaful extends Holdings as independent inaugural dedicated Islamic REDmoney Indexes ...... 35 bancaTakaful agreement non-executive director premier banking center with Bank Kerjasama and chairman of the Risk Eurekahedge data ...... 37 Bank Simpanan Nasional Malaysia to achieve Committ ee Performance League Tables ...... 39 subscriptions target plans new Islamic SME Ali Salaam to lead client Events Diary...... 43 fi nancing product Egyptian Railway coverage and placement Company Index ...... 44 Icon Bahtera completes Authority invites insurance capabilities of SHUAA Subscription Form ...... 44 drawdown of BN$37 operators to bid for EUR200 Capital million (US$226.86 million)

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

Breaking the mold: Female investors making waves Continued from page 1 study by Grant Thornton) — more is gaining more widespread recognition profi le (keener on growth markets), than in Japan, the Netherlands or as most family businesses in the GCC among other traits,” noted the report. Switz erland. Leading female fi gures are facing transition from the second to such as Sarah al-Suhaimi (CEO of Saudi the third generation of ownership. As a In addition, women allocate their wealth Arabia’s NCB Capital and the fi rst result, there is a supportive environment diff erently to men — married women woman to head an investment bank in for family businesses to take advantage are often more aggressive with their the Kingdom), Lubna Olayan (CEO of of the contribution that their women allocations, while women can also be Olayan Financing Company and one of can make. GCC family businesses are more interested in philanthropy and Fortune Magazine’s 50 most powerful also looking at global best practices and social impact investing. “Despite the women in global business for 2013) and fi nding that female family members distinct characteristics of this segment, Sheikha Al Bahar (CEO of National are increasingly becoming a vital force there is still no major proposition Bank of Kuwait) are changing the way within their foreign counterparts.” that caters to their specifi c needs and the world looks at Gulf women. behaviors,” highlighted PwC. Investment perspective A family affair So where is all this money going? But it is not new wealth through Historically, female wealth has been There is a entrepreneurship and business that is managed by husbands or family changing the face of female investment. members — often with the bulk simply growing Inherited wealth and family-owned invested in gold or kept in cash. But companies contribute around 80% of with greater awareness and education, recognition that the GCC’s non-oil GDP — and female all this is changing. Barclays Wealth members play a signifi cant role in the notes that almost 50% of women there are some very control of this wealth. surveyed in the MENA region invest in individual stocks and shares, while asset successful and high- “We’ve seen a lot more discussed about classes such as commodities, properties, the segment in the last few years,” personal pensions and bonds are also net-worth female agreed Muneer Khan, a partner at growing in popularity. Simmons & Simmons, speaking to IFN. investors in the “There is a growing recognition that Female investors control an estimated there are some very successful and high- 20-25% of HNW assets in the Gulf region. They are key net-worth female investors in the region region — yet they often face restrictions decision-makers — particularly in Saudi Arabia, Qatar that have hitherto limited their and the UAE. They are key decision- involvement. New initiatives such as when it comes to how makers when it comes to how their female-only branches and perfumed wealth and sometimes family wealth is credit cards have demonstrated an their wealth invested. We are currently working on awareness by fi nancial institutions several structures where the ultimate of the opportunity that this segment is invested investors include female members of the represents — but is this really what family.” women want? It might sound lighthearted, but this Succession planning is a critical issue An untapped opportunity absence is a serious issue that leaves for family businesses in the Gulf. A a major segment of the GCC wealth In fact, a 2015 study from PwC suggests market untapped and unserviced. recent study from Alsayedah Khadijah that female investors could in fact be Bint Khawilid Center and Strategy& And where local asset managers are much more aware and demanding than dropping the ball, international players notes that family businesses in the GCC previously thought — and a perfumed are looking to increase the number are stepping in to take their place — IFN credit card is just not going to cut it is aware of at least one major US asset of women in senior management in terms of wealth solutions. positions over the next decade manager that is making a targeted play “Although they are being for female wealth in the region. to emulate the success of their served the same ‘plain global counterparts. “This is vanilla’ propositions that are a propitious time for family available to all other wealth Carving a niche businesses as all of the GCC segments, research shows Not all regional players are missing countries have made female that female investors have the trick however — and those who economic inclusion a top diff erent investment styles specifi cally target the female market are priority,” noted CEO Dr and preferences, on already seeing material returns. “The Basmah M Omair. average, in terms of distinct sub-segments in the Middle East trading frequency demand more sophisticated and custom- “The value of diverse (more stable and tailored advisory from their relationship perspectives from all accepting of members of the family volatility) and risk continued on page 4

Breaking the mold: Female investors making waves Continued from page 3 manager, as well as enhanced And with the majority of Other key elements to off er female and targeted product and participants Muslim, the investors include tailored solutions service off erings based on courses provide an ideal from qualifi ed advisors they can trust their needs, lifestyles, and grounding for Shariah and who understand the cultural behaviors,” emphasized compliant investment sensitivities of the region. For a recent report on GCC education. “There is a example, if the investor is Muslim wealth from Strategy& that section of the course where and thus subject to the Shariah laws highlighted the absence of we specifi cally teach of inheritance, their fi nancial advisor tailored wealth solutions the Shariah compliant should have an understanding of those for specifi c segments. “Put element. That is proving implications. simply, the often stark very popular,” confi rmed diff erences among HNW sub- Mohammad. “Most of these Breaking the mold segments have not been well leveraged, women are Muslim and that’s what “In some cases women can be the most and local players that identify niches they want, but they don’t know how it sophisticated investors — and they are they want to target and focus on will works. They can be very religious but often active in regional businesses. We be able to design leading propositions they don’t know the mechanics.” just don’t see them that often,” agreed that make for meaningful client Muneer. “I don’t know if it is entirely to experiences.” do with cultural sensitivities or whether We realized they tend to stay out of the limelight, One bank that has carved its own niche but I think that there is a growing in the industry is Gatehouse, which there is a realization that a substantial amount of through its Kuwaiti division has been real power and wealth lies in the hands running cross-border programs targeted deϔinite gap — but of women. This is defi nitely the case in at educating female investors for over the Gulf, and should challenge some of four years. “When we fi rst launched the that women are the inaccurate stereotypes of women in program we realized that there are a lot the Middle East.” of women investors in the region who a lot more ready inherit or have a lot of money or high However you approach it, education positions — but they are not involved now to learn about and awareness are vital tools to in the investment fi eld. For a lot of leverage the potential of the segment. these women either their husbands investments and to The Gatehouse initiative, for example, or their parents invest for them,” put the time in to do has translated into direct benefi t for explained Mohammad T. Razzouqi, the Gatehouse as a bank, far beyond its assistant vice-president of investment, initial expectations. speaking to IFN. “We realized there is it themselves a defi nite gap — but that women are “It has defi nitely helped Gatehouse a lot more ready now to learn about in terms of branding — the women investments and to put the time in to do trust our advice and it may have even it themselves. It is amazing how much A targeted offering translated into direct mandates for us,” untapped the sector is in this region, So what more can Islamic wealth confi rmed Mohammad. “With women and how much potential there is.” managers do to provide the right service it is much more interactive than with for women? Is there really a ‘female’ men, and we see a lot of potential The key issue is education — and while approach that appeals to the whole here. This could even translate into women might be making waves in segment? “I’m not sure there is a one- new segments — teaching the younger business, they can often be unaware of size-fi ts-all solution: it really depends generation and the inheritors how to the investment opportunities available on the individual in question,” notes manage their wealth and access the right to them. “Often we fi nd that their Muneer. “It would be inappropriate opportunities. And yet no one else in husband or their relatives manage their to say that ‘female investors the region does anything like this to my wealth, but in fact they want to take would always prefer female knowledge — I don’t know why not.” more control. We give them the tools advisors’ — but that could to do that,” explained Mohammad. be one way to att ract more However you access the “We used to teach women on the MBA female investors to the opportunity, there is no question courses in Saudi Arabia but that evolved market. It would be good that women are fast becoming into accessing women at higher levels if there were more women one of the most appealing growth who were more sophisticated and involved in the Islamic prospects of the asset held senior positions in Saudi Arabia asset management industry, management industry. Ignore it at — and now there is a wide range of to provide a more diverse, your peril. participants. Each course sees more and representative and more women coming from all over. We inclusive service.” can get up to 50 people per class.”

Kuwait consolidates Islamic ϐinance expectations

The Islamic fi nance industry continues to go from strength to strength in Kuwait, with its fi ve Islamic banks experiencing 11% growth this year (compared to 8% for the fi ve conventional banks) and capturing 38% of total assets. But the country off ers much more than just Islamic banking — asset management and international investment opportunities are also expanding while the huge infrastructure and project fi nance pipeline is fi nally welcoming the prospect of Islamic fi nance involvement. At the second annual IFN Kuwait Forum the elite of the GCC industry gathered together to analyze the exciting opportunities in this unique market. LAUREN MCAUGHTRY reports. into the real economy,” confi rmed Emad. Authority of Kuwait reportedly issued While the market is growing rapidly an executive memorandum including There is a and the opportunities are promising, details of Sukuk regulations; which has challenges remain in terms of legislation led to cautious optimism in the market. perceived and regulation, with some gaps still “Regulatory changes are only the fi rst waiting to be fi lled. “We need a debt step. How long will it be before we see need… for legal and management offi ce to come back again,” deals coming through?” asked McViety. suggested Issam Al Tawari, the managing “Balance is key — investor protection is regulatory change director of Rasameel Structured Finance. important but we also need something “There is huge potential for fi nancing that allows issuers to go to market to encourage government projects and government quickly and eff ectively.” debt. But what is needed is a clear investor conϔidence message of how that is going to be The event saw a crowded room covering done — what kind of tenor, what kind wide-ranging topics from treasury and — this is what is of currencies, so that the market can liquidity management in the GCC to respond accordingly. This could open up investment opportunities and preferred needed to develop a huge opportunity for the banks – who asset classes for Kuwaiti investors: are always looking for new things that along with a focused Deal Dialogue on the market can be done in Kuwait.” the recent National Industries Group (NIG) KWD105 million (US$347.45 in Kuwait While the low oil prices have raised million) syndicated fi nancing featuring concerns over budget defi cits and NIG’s CFO Mubasher Sheikh. With potential funding gaps in both the public a keenly collaborative audience and “Islamic banks are performing extremely and private sectors, the situation also an illustrious array of speakers, IFN well. We have the pipeline to be a major creates an opportunity for Sukuk to play Kuwait 2015 yet again demonstrated player in the Kuwaiti economy. The a signifi cant role in fi nancing these gaps the ongoing commitment to Islamic banks are ready to step in and provide — which is encouraging news for the fi nance in the country. With a strong the right fi nancing and expertise to any debt capital markets in Kuwait. “There investment industry already in place and major project in Kuwait,” said Emad is a perceived need… for legal and a burgeoning debt capital market that Al Monayea, CEO of Kuwait Finance regulatory change to encourage investor looks to be on the verge of taking fl ight, House Investment. “But the big question confi dence — this is what is needed the opportunities are exciting — as long is whether anyone is listening to these to develop the market in Kuwait,” as the country takes advantage of its own messages. Does the government think pointed out Paul McViety, the head of ambitions. that Islamic banks and assets are ready to Islamic fi nance for DLA Piper. Change support their projects?” could be on its way however, with the “Kuwait has mastered the art of investing long-awaited Sukuk law potentially on and exporting overseas, but we have yet A key theme of the event was the the verge of completion following the to learn how to borrow. That is what we exceptional opportunities for public- Companies Law of 2012 tasking the lack,” noted Issam. The country has a private partnerships in the Islamic Kuwait Investment Authority with a good rating (‘AA/A-1’ from S&P) but space, with multiple mega infrastructure specifi c mandate to develop rules and “banks need to know where to go, which projects coming to the market. “All regulations for Islamic bonds. In the door to knock on and how to tap the of these should create the right last few weeks, the Capital Markets market,” he suggested. environment to att ract Islamic fi nancing

IDB and World Bank sign US$9 billion strategic partnership deal to support member countries

Committ ed to reducing poverty, challenges facing our member countries,” development fi nance institutions and promoting economic development said IDB Group president, Dr Ahmad the United Nations to support confl ict- and pushing for social progress, the Mohamed Ali. aff ected nations (See IFN Report Vol IDB and the World Bank have over the 12 Issue 41: ‘Global agencies to issue years built a strong relationship to meet Sukuk to ease refugee crisis and support their common goals. Having disbursed reconstruction eff orts’), will focus on over US$7 billion in fi nancing for We have supporting infrastructure services, developmental projects, VINEETA regional integration and cross-border TAN writes that these multilateral definitely trade facilitation, water and food security, institutions are taking it a step education and employment and Islamic further announcing a new landmark set for ourselves fi nance. partnership that looks to more than an ambitious double that fi gure. “We have defi nitely set for ourselves an partnership ambitious partnership agenda because The IDB and the World Bank this ‘business as usual’ is not really an month agreed to scale-up joint work agenda because option,” shared Ahmad. He however and investments across their common added: “I am highly confi dent that both member countries in Asia, Africa, ‘business as usual’ institutions will work diligently to Europe and South America, expecting to deliver on development promises mobilize up to US$9 billion in fi nancing is not really building on each other’s comparative over the next three years. advantages and strengths to unleash the an option synergy that this strategic partnership “Our new partnership is a natural can bring to our member countries.” evolution in our long-standing relationship with the World Bank Group This new agreement, which follows and is most timely given the growing a joint initiative between the two

The World’s Leading Islamic Finance News Provider IFN DUBAI ECONOMIC SEMINAR 2015 SERIES Islamic Trade Financing: Connecting the World 27th October 2015, DIFC Centre of Excellence

• The current climate for trade fi nance – what pressures are there and how can they be resolved? • What are the key drivers of GCC trade fi nance growth and where are they coming from? • Trends in commodity prices and the impact of the ongoing volatility and declining credit quality – and how this is impacting payment terms and supply chain solutions. • The impact of weak liquidity and margin pressures on UAE trade fi nancing. • Product development: as corporates look for more innovative ways to fi nance themselves, what demand is there for non-traditional trade fi nance products and are we moving beyond LCs and loans? How developments such as factoring, open accounts and non-recourse receivables fi nancing are changing the market. • Global fl ows: the role of Dubai as a central hub and facilitator? • Aligning Islamic trade fi nance operations to common practice — what are the challenges and how can they be addressed? • Looking to the future – where are the opportunities and how can they be leveraged going forward? Sponsored by: Lead Partners Partner

Nigeria looks west for Islamic ϐinance inspiration

Despite some challenges at the the government set up a committ ee of western markets for regulatory and leadership level following the 2014 experts to establish a 10-year masterplan fi nancial market advice rather than departure of central bank governor to develop the non-interest capital relying on the existing expertise of Sanusi Lamido Sanusi, a leading market. the leading industry pioneers such as advocate for Islamic fi nance, Nigeria has Malaysia and Dubai. Could it be seeking nevertheless had a strong year for the to compete rather than collaborate? industry. In February, the central bank Our goal is “Nigeria has more than 80 million under new governor Godwin Emefi ele Muslims compared to Malaysia’s total issued guidelines for an advisory body to boost non- population of 30 million. In addition, to oversee Islamic banking, while the Nigeria has a larger economy than country’s only Islamic bank, Jaiz Bank, interest capital Malaysia’s, being the largest economy in saw total assets jump 24% in 2014 on the Africa,” commented Garuba. back of strong demand. Now, reports market product LAUREN MCAUGHTRY, the nation It is certainly not an opportunity that appears to be expanding its ambitions innovation so that the UK plans to pass up, with Yarrow further afi eld: looking to new sources emphasizing his enthusiasm. “We want for potential collaboration. the segment can be our Nigerian friends and partners to see London as Nigeria’s international At a recent roundtable in Abuja between at least a quarter of companion whatever type of expertise Nigeria’s Securities and Exchange is required. From looking at Nigeria’s Commission (SEC) and a UK delegation the overall market legal framework, to helping to upskill led by Lord Mayor of London Alan your young, dynamic and ambitious Yarrow, an agreement was reached to capitalization population, London has the expertise, partner on the development of non- the variety and the capacity to help. And interest fi nancing in the Nigerian capital most of all, we off er the willingness and market — an interesting development, we stand ready to do our bit.” given the current paucity of Islamic “Our goal is to boost non-interest capital capital markets activity in the UK. market product innovation so that The second-biggest economy in Africa the segment can be at least a quarter and with the second-biggest stock The SEC hopes to build a strong of the overall market capitalization,” exchange in the sub-Saharan region, regulatory regime for Islamic products, commented SEC director-general Mounir Nigeria is seen as a gateway to Africa and as well as encouraging stakeholders Gwarzo (represented by executive with the world tumbling over itself to in order to grow the non-interest commissioner for corporate services leverage the vast opportunities of the capital markets segment to at least Zakawanu Garuba) during the recent African continent, the new relationship 25% of total market capitalization. It is meeting. could bring new life to the UK’s own already considering the establishment Islamic fi nance ambitions. Perhaps the of a Shariah Advisory Council and a While the UK may seem an odd choice leading Islamic fi nance markets should platform to enable secondary market for Islamic fi nance expertise (its 2014 be looking to their laurels, as new trading of Islamic products, as well as sovereign Sukuk notwithstanding), cross-border relationships emerge which working with the central bank to provide it seems as though Nigeria has taken could shift the balance of power across liquidity status for Sukuk. Last year, a conscious decision to look toward the global industry. STRUCTURING ISLAMIC www.REDmoneytraining.com TRADE FINANCE SOLUTIONS [email protected] 25th – 27th October 2015, DUBAI

Course Highlights: • Review the main principles of Islamic finance applied to trade transactions • Analyze traditional collections and documentary credits in order to contrast them to Shariah principles • Examine the documentary credit cycle and how Shariah compliant approaches may be structured applying LC Murabahah, LC Istisnah and documentary collections • Provide clear examples of Islamic finance structures applied to pre-export finance, export finance, manufacturing and shipping guarantees • To illustrate the Shariah principles governing guarantees, bonds, and counter guarantees • Foreign exchange issues, risk and accounting issues will be incorporated

Jordan acquires best practices for maiden Sukuk

Having passed relevant legislation of being a leader in the Sukuk industry, of 2015 which will be used to fi nance the regulating Sukuk issuances in the Malaysia is seen as a perfect model for Jordan Water Authority projects, adding country last year, the government has other member states to replicate. The ICD that the fi rst issuance would cover the been gearing itself toward making aims to develop its member countries’ purchases of the state-owned National its fi rst off ering. With a view to capital markets, specifi cally Islamic debt Electric Power Company. completing the issuance by the end of capital markets through the issuance of this year, the Ministry of Finance has Sukuk. Apart from Jordan, the ICD is The volume of Sukuk for this year is mandated the Islamic Corporation for also assisting other member countries in set to be between JOD200-300 million the Development of the Private Sector Africa in the issuance of Sukuk. (US$281.17-421.76 million). Izzeddin also (ICD) for the upcoming issuance. added that next year, the government NABILAH ANNUAR elaborates in To be used as an instrument to absorb will issue more Sukuk with the amount more detail on this Jordanian debut. excess liquidity (estimated to be to be determined in the 2016 budget bill. JOR1.4 billion (US$1.97 billion)) held With the assistance of the ICD as by the Kingdom for Islamic banks, the On the corporate side, Jordan Islamic transaction technical support and government early September announced Bank is also expected to make a debut in advisor, the Ministry of Finance of the that it will launch the fi rst issuance of the global Sukuk scene following the Hashemite Kingdom of Jordan is in the Sukuk worth JOD150 million (US$210.75 amendment of its Memorandum and process of implementing the necessary million) in the said month. This, Articles of Association to allow for Sukuk infrastructure for the dinar-denominated however, did not materialize. With the issuances. No updates have surfaced Sukuk and in particular the medium- deadline having passed, a statement following this announcement; term papers. A delegation from both was issued earlier this month to realign nevertheless Jordan’s three capital market parties was in Malaysia earlier this expectations announcing that the Sukuk institutions: the Financial Securities month to learn the end-to-end technical will be issued before the end of the year. Commission, the Amman Stock process from the country’s regulators and Exchange and the Securities Depository market players. According to The Jordan Times quoting Center since the passing of the country’s fi nance ministry secretary-general legislation are open to Sukuk Having a robust legal and regulatory Izzeddin Kanakrieh last month, another applications regarding both the private framework, together with its reputation issuance is also expected before the end and public sectors.

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New innovations for Malaysian SMEs

In the wake of the ongoing slowdown is an area where Islamic banks have the represents a new equity-based, Shariah in emerging economies, SMEs could be potential to take the lead in innovation, compliant investment product off ered by some of the biggest losers in the market. and thus broaden their intermediary Islamic banks. Similar to a crowdfunding As the cost of doing business rises role within the real economy. Multiple platform, it seeks to match and channel on the back of currency depreciation new initiatives are currently in the funds between private investors and and lower commodity prices, NURUL planning stages, which could boost the ventures that are in need of funding. HALIM asks if Islamic banks are opportunities available to the sector and Through the IAP, investors will have prepared to facilitate SMEs and support expand their activities. an income tax exemption for the next the real economy — and what other three years (eff ective the 1st September opportunities are available. Malaysian prime minister Najib Razak 2015) in a bid to encourage more reportedly hopes to implement a investors to diversify their portfolios into “Generally, we see a slowdown — performance-based incentive system for equity. It is hoped that the successful especially in the retail and wholesale SMEs by next year, for example: which implementation of the IAP will not only trade segment,” confi rmed Alliance Bank could include bank loans, transport contribute to the fi nancial inclusion Malaysia’s senior vice-president and rebates and tax exemptions. The minister agenda of Islamic fi nance, but support head of SMEs, Christopher Yap. “Most for international trade and industry, and extend the fi nancing opportunities of the reductions are due to perceptions Mustapa Mohamed, is also reported available to SMEs in the country via a by businesses that this may not be an to have confi rmed an RM89.7 million true risk-sharing structure. opportune time to implement expansion (US$21.5 million) government funding plans in view of the volatility in the allocation across 36 programs this year to Conditions may be challenging, but there currency and the economic slowdown promote access to market — benefi ting could be light at the end of the tunnel. globally.” He believes that the sector’s over 18,000 SMEs. “SMEs should look at the current access to fi nance will nevertheless situation as an opportunity to prepare continue to fl ourish as both government The Islamic fi nance industry is also themselves for the economic recovery and fi nancial institutions view this stepping up to support the sector. “An which is expected to begin in 2017 and segment as a key component of the industry level-initiative is afoot in 2018,” said Dr Mohamed Al-Amin Abdul country’s growth. But is this really the the Malaysian Islamic banking sector Majid, the chairman of SME Corp, case? to introduce the Investment Account speaking at the recent event. Platform (IAP),” confi rmed Yap. The IAP SMEs represent 97.3% of businesses in the country, employ 57% of the nation’s workforce, account for 19% of exports and are projected to grow their contribution to national GDP from 33.1% in 2015 to 41% by 2020. And while the banking sector may be vocal about its support for the sector, in reality smaller companies are often subject to strict lending criteria and high interest rates due to their perceived higher risk.

Hafsah Hashim, CEO of SME Corp Malaysia, highlighted the urgent need for incentives and capacity expansion to assist SMEs through the current economic challenges. Speaking at the IPO Seminar 2015 this month, she noted that in a list of proposals recently submitt ed to the government for inclusion in the 2016 budget, SME Corp focused on capacity-building, tax incentives and SME overseas expansion assistance as key features for consideration. “The proposals are aimed at assisting SMEs tide over the current economic situation and sustain their business,” she explained.

While banks can be reluctant to take on SME ﬁ nancing, Yap also suggested that: “With the right program model for SME ﬁ nancing, the risk is manageable. This

IFN Global Trendswatch

What’s been going on in the world this 10% paycut on 500 contractors in money within six months (in place week? LAUREN MCAUGHTRY brings its investment banking arm. HSBC of the current 12) or see their listing you an update of the most signifi cant shares have fallen by around 15% so canceled. It is hoped that the new economic, regional and global events, far this year. moves will reduce speculation and issues and trends. volatility, which have risked the • Schlumberger, the word’s largest oil reputation of the market. • US banks are struggling; with company by market capitalization, earnings falling for many of the has warned of an increasingly biggest players — including challenging outlook as companies Indonesia Goldman Sachs, whose latest fi gures continue to cut their spending amid show a 40% fall in third quarter tightening economic conditions. stands ϔirm profi ts, driven by a decline in bond Brent Crude dropped almost 10% trading. CEO Lloyd Blankfein over the week of the 12th October, among the ϔlood cited “challenging” conditions in falling to US$48.46 per barrel as of emerging markets and “limited” the 15th October. of capital leaving client activity, according to the FT. The drop comes on the back • After a two-week global equities emerging markets — of retreats from other major rally, markets once again faltered international banks including during the week of the 12th October. with foreign direct Morgan Stanley, JPMorgan and UBS After enjoying the biggest climb — although Citigroup stood out of 2015 during the week of the 5th investment (FDI) with third quarter earnings that beat October, the S&P 500 saw a three- ϔigures up by 62% to expectations. day slide from 2,017.46 on the 10th October to 1,994.24 on the 13th, on almost US$14 billion • Most traders no longer think the the back of weak US retail sales, poor US will raise rates this year, with third quarter bank earnings, further in the ϔirst many thinking that the hike will not commodity declines and weak data occur until after March next year — from China. However, the end of half of 2015 sending the 10-year Treasury yield week of the 12th October has seen back down below 2%. Questions a robust recovery, with the index are now being raised as to whether jumping back to 2,023.92 at the close the US Federal Reserve has missed of trading on the 15th October — its • Indonesia stands fi rm among the its chance to normalize policy, with highest point since the middle of fl ood of capital leaving emerging economic data less promising and August. markets — with foreign direct fears of another slowdown in the investment (FDI) fi gures on US economy. Interest rate futures • In the GCC, equity markets saw greenfi eld projects up by 62% to now suggest around a 10% chance a mixed performance with most almost US$14 billion in the fi rst half that rates will stay where they easing in tandem with the global of 2015, according to the latest data are until 2017, compared to a 27% slide and amid concerns over from fDi Markets. In 2014, the chance that they will be raised at China’s performance. Saudi Arabia’s country saw US$17 billion FDI over the Fed’s December meeting (down Tadawul rose by 0.1% to 7,785 and the whole year — accounting for from a 62% expectation last month, Bahrain also jumped 0.7% to 1,258. around 7% of total investment into according to Bloomberg data). However, Dubai slid 0.4% to 3,698, Asia Pacifi c (and 31% of ASEAN Abu Dhabi lost 0.6% to 4,538, Qatar investment). Japan is currently the • The dollar continues to weaken, 0.7% to 11,759 and Oman 0.3% leading investor into the country, sliding by almost 4% against the to 5,909, according to data from accounting for around US$18 billion euro over the last three months. NASDAQ. in 218 projects between 2010-14. Weak US retail sales and poor China comes next with US$11 billion employment data have some • The London Stock Exchange is in 36 projects. Indonesia is currently economists predicting US growth for hoping to boost the reputation of the third most popular the fourth quarter of less than 2%. its Alternative Investment Market manufacturing destination in Asia arm with a clampdown on shell Pacifi c, after China and Vietnam. • Concerns over HSBC cost-cutt ing companies, reports the FT. The new However, the FT warns that local measures continue following its regulations include a 100% increase companies are turning bearish and restructuring plan announced in on the level of cash a company must with low commodity prices and June this year which turned the raise when it joins the market (from weak export fi gures reducing focus toward Asia and away from GBP3 million to GBP6 million, or Indonesia’s growth forecast to 5.2%, Europe and the US. The bank expects US$4.6 million to US$9.2 million; foreign companies could soon to cut 50,000 jobs over the next two while companies that have no assets follow. years and it recently imposed a except cash will have to invest their

IFN Weekly Poll: A concern hindering growth is the lack of Islamic ϐinance knowledge by CFOs of potential issuers. One deterrent is the terminology used for ϐinancing activities. To overcome this, should the industry demystify the jargon using understandable terms?

One of the fundamental challenges in Drawing a few examples, Shariah A concern hindering growth is the lack the advancement of Islamic fi nance is of Islamic ęnance knowledge by CFOs contracts such as Murabahah, Ijarah the lack of comprehension of Islamic of potential issuers. One deterrent is and Musharakah can be simplifi ed into fi nancial concepts. An issue that begins the terminology used for ęnancing clearer fi nancial jargon that could be even before the initial stages of using activities. To overcome this, should the understood by the conventional industry. Shariah compliant products, educating industry demystify the jargon using For instance, Murabahah could be called potential stakeholders in a simplifi ed understandable terms? Islamic buyer’s credit for consumer, manner is crucial for a continuous intermediary and capital goods in Yes progression globally. With a resounding trade fi nance or an Islamic mortgage opinion from the industry, NABILAH 100% in project fi nance. Ijarah on the other ANNUAR explores this issue. hand is common and would perhaps be bett er if it is more permanently called The poll results this week displayed Islamic leasing. Musharakah could be a 100% vote to simplify Islamic called Islamic pre-export fi nance in trade fi nance concepts and contracts into fi nance transactions or Islamic equity understandable terms. IFN has learned investments in project fi nancing deals. that pertinent fi gures in an organization particularly CFOs, fi nancial decision- Evidently, simplifying Shariah structures makers as well as advisors are reluctant into easily comprehensible terms is what (on the outset) to explore Islamic the industry needs to eff ectively move fi nancial options due to their inability to forward. It is these large companies who understand Shariah terminologies. are market-movers, and could eff ectively make a diff erence for the Islamic fi nance This is clearly an unfortunate industry. It has been suggested this is institutions as well as industry regulators circumstance for the Islamic fi nance something that the industry should to address this issue in order to ensure industry. Even before an instrument can seriously look into, to put Islamic fi nance continual development in all segments of be tried and tested, it is already rejected on a more fl exible, global and ‘user- the industry especially in the Islamic debt due to ambiguity and unfamiliarity. It is friendly’ platform. capital market. therefore imperative for Islamic fi nance

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SECP boosts NBFC segment with updated rules; creates new asset classes

After fi ve months of consultation institutions other than microfi nance and deliberation, the Securities banks. and Exchange Commission of Pakistan (SECP) has approved an Looking to bolster its asset management updated version of the Non-Banking and lending industry as well as Finance Companies (Establishment enhance SME access to funding, the & Regulation) Rules 2003 (NBFC regulator now extend leasing licenses Rules 2003) which adopt signifi cant to non-NBFCs such as equipment amendments designed to bett er meet manufacturers and automobile the growing needs of the Islamic assemblers. With regards to the fund fi nance industry as well as the industry, not only are NBFC fund permitt ed to undertake commercial investment and fi nancing demands of managers allowed to launch private housing fi nance activities. the public. VINEETA TAN reports. funds across a variety of fi nancial assets, but their scope of services has also “It is expected that the new regulatory As a result of the revision — which been broadened to include investment framework would be helpful in details provisions and eligibility advisory, private equity and venture developing and promoting the non- requirements for Modaraba companies capital as well as real estate investment banking fi nancial sector in order to — two new asset classes have been trust management. diversify the inherent systemic risk and created: non-bank microfi nance to enhance the resilience of the fi nancial companies (NBMFCs) and private Eligibility criteria for fund management system by increasing outreach and funds. Expanding the rules to include companies have also been relaxed to penetration especially for the micro, a framework for fi nancing for the poor allow non-public limited fi rms to apply small and medium enterprises,” said the and microenterprises, SECP now has for a private fund management license. SECP in a statement. the power to regulate microfi nance Residential mortgage providers are now

QIB to tap US dollar Sukuk market

In less than four months after its fi rst after which — depending on market off ering at the end of June — the Tier 1 Sukuk sale at the end of June, conditions — it may issue a benchmark country’s pioneering Basel III-compliant Qatar Islamic Bank (QIB) — the largest US dollar Regulation S senior Sukuk. Tier 1 capital Islamic debt — which also Shariah bank in Qatar by assets — is To be launched under its existing ended a 19-month Sukuk drought in gearing up to tap the Islamic debt US$1.5 billion trust certifi cate issuance the GCC nation. Earlier in February, the market again, this time with a US program, the transaction is managed by Islamic bank gave the green light for the dollar issuance to att ract international Barwa Bank, Citi, HSBC, Noor, QInvest issuance of up to QAR5 billion (US$1.37 investors. VINEETA TAN has the details. and Standard Chartered Bank in their billion) of Tier 1 Islamic bonds. capacity as joint lead managers. The Qatari fi nancier began meeting QIB is part of a relative small community investors across Asia, the Middle The proposed issuance follows QIB’s of corporate Sukuk issuers — less East and Europe on the 16th October, QAR2 billion (US$548.68 million) than 10 according to market fi gures. Other Islamic banks are also said to be considering Sukuk issuance this year including Masraf Al Rayan and Qatar International Islamic Bank.

The government last issued a Sukuk in September — a QAR750 million (US$205.8 million) facility, bringing total sovereign issuance to QAR28.9 billion (US$7.93 billion) since 2010.

For the ﬁ rst nine months of 2015, QIB realized a 24.8% year-on-year growth in net proﬁ t to QAR1.4 billion (US$384.08 million) while assets expanded 28% to QAR123 billion (US$33.74 billion) from the end of December.

Sovereign Sukuk: Bahrain and Indonesia

Not much happening in the sovereign Upcoming sovereign Sukuk Sukuk space this week; the market only Country Amount Expected date saw regular issuances from Bahrain and Indonesia. Bahrain held two auctions Indonesia IDR150 trillion 2016 while Indonesia made one. As usual, Oman TBA October 2015 NABILAH ANNUAR provides an Pakistan TBA Second quarter of update of the developments in the 2016 sovereign Sukuk market. Shandong Province CNY30 billion TBA Egypt TBA The Central Bank of Bahrain (CBB)’s 2015/16 fi scal year Sukuk Ijarah has been subscribed by Ivory Coast XOF300 billion Fourth quarter of 100%. Subscriptions worth BHD26 million 2015 (US$68.47 million) were received for the Sindh Province US$200 million TBA issue which carries a maturity of 182 Kazakhstan TBA 2016 days. The expected return on the issue, Turkey US$1.1 billion TBA which began on the 15th October 2015 and Bangladesh TBA TBA matures on the 14th April 2016, is 1.6%. The CBB followed this with a Sukuk Hong Kong US$500 million to US$1 billion TBA Salam issuance worth BHD43 million Ningxia Hui Autonomous Region US$1.5 billion TBA (US$113.26 million). Fully subscribed, the Kenya TBA 2016 Sukuk carries a maturity of 91 days with South Africa TBA 2016 an expected return of 1.48%, which begins Senegal TBA TBA on the 21st October 2015. Niger XOF150 billion TBA In Indonesia, the government of Tunisia US$500 million 2015 Indonesia auctioned two project-based Jordan JOD200-300 million Before end of 2015 Sukuk and an Islamic treasury bills UAE TBA 2015 series on the 20th October 2015 with Luxembourg TBA TBA an indicative target of IDR2 trillion (US$146.6 million), according to a net as saying that the central bank has Malaysia’s CIMB Bank) have expressed statement on the Ministry of Finance’s not yet issued the policy on the issuance their intentions to sell Sukuk. website. of Sukuk, which may lead to the delay in the issuance of the Republic’s fi rst Inching toward the end of the year, it is Moving east to the Philippines, the lack Sukuk. This clarifi cation follows recent hoped that countries intending to issue of a legislative framework for Sukuk is announcements from the private and this year are gearing up to reach the expected to delay the nation’s maiden public sectors of their plans to tap the fi nish line. The sovereign Sukuk primary Islamic bond auction. The governor of Sukuk market. State-run National Home market still anticipates off erings from Bangko Sentral ng Pilipinas, Amando M Mortgage Finance Corp and First Metro Oman, Ivory Coast, Tunisia, Jordan and Tetangco Jr, was quoted by INQUIRER. Investments Corp (in partnership with the UAE. ASSET LIABILITY MANAGEMENT & 2 nd - 4th November 2015 RISK-BASED PRICING FOR ISLAMIC BANKS KUALA LUMPUR

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The Philippines: The Christian Asian nation vying for a larger share of Islamic ϐinance

Despite having one of the earliest Islamic banks in the world, Islamic banking and fi nance in the Philippines have been slow to take off . VINEETA TAN, however, observes that there has been a concerted eff ort by legislators and market players alike to push Shariah fi nance forward. Could this be the industry’s break?

Regulatory environment Table 1: Financial performance of AAIIBP as at the 31st December 2014 (in PHP) The Philippines in the last couple of years has made a strong push for Islamic 2014 2013 banking and fi nance with legislators Net loss 24.74 million 49.57 million rounding their eff orts to amend the Total resources 702.66 million 678.58 million existing legislation which is perceived as Source: AAIIBP’s 2014 audited fi nancial reports being limited in nature. In terms of Islamic debt: There has Introduced in 1973, the legal provisions Banking and ϐinance yet to be a Sukuk issuance out of the for the creation of an Islamic bank in AAIIBP, initially established as Philippine Philippines; however, several entities the country — Presidential Decree No Amanah Bank in 1973, remains the sole from both the public and private sector 264 — were only limited to one bank, Islamic bank in the country and has eight in 2015 vocalized their keen interest to Al-Amanah Islamic Investment Bank of branches in Mindanao, as at the end of tap the Islamic debt capital markets. the Philippines (AAIIBP), which is still 2014. State-backed National Home Mortgage governed by the General Banking Law of Finance Corporation expects to launch 2000. In September 2013, the central bank AAIIBP continues to make losses (see a PHP2 billion (US$43.3 million) Sukuk requested the government to amend Table 1). on behalf of a Mindanao-based fi rm in its charter allowing it to issue Islamic the fi rst quarter of 2016, using Paglas fi nancial instruments, particularly Corp’s socialized housing project and Outlook interbank lending products. As a result, a banana plantations as underlying assets. Most Islamic banking and fi nance working group was formed to draft such The fi rm reportedly will engage the activities are focused in the Autonomous legislation but no timeline was given Land Bank of the Philippines and the Region of Muslim Mindanao where on when this may be presented to the Development Bank of the Philippines to the Muslim population is signifi cant; government, approved or passed. underwrite the issuance. and with Bangsamoro (a new autonomous political entity to replace In February 2014, senator Grace Poe Property developer Ayala Land is also the Autonomous Muslim Region of fi led a resolution seeking a review of considering raising funds through Sukuk Mindanao by 2016) looming, the Islamic government policies on Islamic banking to fi nance its investments in Malaysia. fi nance industry is expected to receive a to help hasten development in the The real estate developer was reportedly signifi cant boost. predominantly Muslim Autonomous in talks with banks to see if it is possible Region of Muslim Mindanao. In 2015, to match its investments in Malaysia Under the proposed Bangsamoro Basic another legislator, Sitt i Djalia Turabin- with ringgit-denominated loans, either Law, the central bank, the Department of Hataman, fi led a bill called the House through Sukuk, note or bilateral bank Finance and the National Commission Bill (HB) 5989 ‘An Act amending debt. Another potential Filipino Sukuk on Muslim Filipinos are mandated to Republic Act No 6848’ or the ‘Charter issuer is First Metro Investment Corp. “jointly promote the development of an of Al Amanah Islamic Investment Bank Looking to develop state infrastructure Islamic banking and fi nance system, to of the Philippines’. A technical working in Mindanao, the proposed US$200 include among others the establishment group has been created to fi nalize the million facility reportedly will be off ered of a Shariah Supervisory Board.” House Bill No 5989 which seeks to in partnership with CIMB Bank, and amend the Republic Act 6848 to provide will also target international investors, Recent events show that there is a strong the Philippines with the necessary particularly Saudi Arabia, Qatar and the political will to further the Shariah framework to expand its Islamic banking UAE. The two entities are now seeking fi nance proposition as well as eff orts system including tax neutrality for regulatory approval for what could be from the public sector to tap the market. Islamic fi nancial transactions. the country’s fi rst dollar Sukuk. These could translate to signifi cant development for the industry and Islamic capital markets While the potential entries from these perhaps mitigate the challenges the In 2013, the Philippine Stock Exchange institutions into the Sukuk market are industry face including an (PSE) partnered with IdealRatings to most welcomed by the industry as unsophisticated Islamic fi nance legal screen listed companies for Shariah promising developments, however such infrastructure, the scarcity of relevant compliance in accordance with AAOIFI plans could be halted, or faced with human capital as well as a lack of standards. Screened on a quarterly stumbling blocks, as the Philippines still awareness. basis, the PSE has 58 Shariah compliant lacks a comprehensive legislation or securities as at the end of September 2015. policy on the issuance of Sukuk.

Islamic microϐinance: At its initial stages

A concept that has been popularly toyed with over the last few years, Shariah compliant microfi nance has undoubtedly picked up pace, particularly across Asia. Indonesian fi nancial institutions have increased eff orts in pushing its services domestically, while in other parts of the world, countries such as Pakistan, Jordan, Bahrain and Germany have showed signifi cant interest in the area. With positive indications surrounding this market segment, NABILAH ANNUAR provides a rundown of the interesting developments that have taken place over the past year in the Islamic microfi nance space.

Africa A promising development and a well-received move, Jordan this year witnessed the establishment of the country’s fi rst Islamic microfi nance institution. Queen Noor Al Hussein in August inaugurated Ethmar, an establishment affi liated to the King Hussein Foundation, to promote entrepreneurship among marginalized communities and enhancing their fi nancial and social inclusion. Ethmar will begin by providing three specifi c Shariah compliant products and other Islamic fi nancial services, in collaboration with public and private organizations throughout Jordan. the provincial government of Khyber- surprise as Germany has always been Pakhtunkhwa, launching a Shariah one of the European countries in the Asia compliant microfi nance service known continent that is a major player in the With an aim for Islamic banks to hold a as Raast Islamic Bankari. Through the Islamic fi nance industry. In November 15% market share by 2023, Indonesia’s agreement, the provincial government last year, Deutsche Gesellschaft für Otoritas Jasa Keuangan in November has allott ed PKR1 billion (US$9.5 million) Internationale Zusammenarbeit (GIZ), the German government’s international last year announced that it would to be distributed by the bank to eligible development agency, is instituting a introduce a package of 20 new rules applicants for amounts ranging from series of German-fund studies and pilot ranging from corporate governance to PKR10,000-5 million (US$95-47,498.7). projects to study, develop and implement microfi nance. Following a slight lull National Rural Support Program Islamic microfi nance in developing in 2015, the IDB in early September Microfi nance Bank in the same month countries. GIZ has collaborated with stated that it is currently focusing on the was allowed to start Islamic microfi nance Washington-based Consultative Group Member Country Partnership Strategy operations as a pilot project for six to Assist the Poor on a study of Islamic for Indonesia to support the country in months and will be issued a license after fi nance products to fi nd a way to reduce Islamic banking, private sector projects the successful completion of the pilot run costs; GIZ is also working on a study and programs as well as microfi nance. and fulfi llment of other requirements. to explore demand factors and plans At the end of the same month, This move will pave the way for the introduction of Islamic banking to a to sponsor a study to compare Islamic Perhimpunan Baitul Maal Wat Tamwil fi nance regulations across fi ve countries. Indonesia, a fi nancial cooperative which number of microfi nance banks. coordinates the activities of its member Islamic microfi nance institutions, has Perhaps due to the lack of demand, Middle East implemented a three-stage fi nancial Malaysia only saw initiative from one Over in the Gulf, Bahrain’s Islamic empowerment program aiming to benefi t Islamic bank. In eff orts to become a microfi nance institution Family Bank in low-income individuals in the country. universal bank, CIMB Islamic in January January signed an agreement with announced that it seeks to off er a full Tamkeen to expand the latt er’s microfi nance support scheme, bringing Pakistan this year saw encouraging range of Islamic products and services the program’s total portfolio value to developments as it seriously pushed this year. Subject to relevant approvals, BHD5 million (US$13.17 million), from Shariah compliant microfi nance. The the bank plans to introduce a range BHD3 million (US$7.9 million). Under State Bank of Pakistan in May submitt ed of products including microsavings, the program, designed to provide a proposal to the fi nance ministry to microinsurance and advisory services. customized Islamic fi nancing solutions to amend the tax laws via Finance Bill microenterprises, Tamkeen supports half 2015-16 for rationalizing tax provisions Europe of the fi nancing profi t. Finance amounts related to banks, including Shariah Most interestingly, the European region range between BHD500 (US$1,326) and and microfi nance banks. Later in July, also saw interest in Shariah compliant BHD5,000 (US$13,260). Bank of Khyber signed an MoU with microfi nance. This, however, came as no

First Singapore dollar Sukuk for 2015 — Cagamas

Malaysia’s national mortgage company than 70% of the total issue size while Cagamas explored new pastures by the balance was allocated to domestic Cagamas Global Sukuk SG$162.75 issuing a SG$162.75 million (US$117.09 investors with a Singaporean dollar book. million Sukuk EMTN million) Islamic paper. Said to be the company’s debut EMTN Sukuk Commenting on the challenges issuance and the fi rst Sukuk issuance encountered in the process of the sale, SG$162.75 million (US$117.09 denominated in Singapore dollars this Chung relayed to IFN that the auction million) year, the off ering received interest from was carefully handled against a tough a diverse investor base with a large economic backdrop. “The economic take-up from foreign stakeholders. recovery in the US market resulted in the Speaking to Chung Chee Leong who strengthening of [the] US dollar against is the president and CEO of Cagamas, other currencies amid the market’s NABILAH ANNUAR exclusively expectation of [an] impending hike in the 25th September 2015 provides a detailed account of the US interest rate. However, compared to transaction. other currencies, the Malaysian ringgit has been the worst performer in [the] Issuer Cagamas Global Sukuk Structured according to the principles Asian region, weakening by 27% year- of Wakalah, the Sukuk was issued on-year mainly due to the softening of Obligor Cagamas under the company’s US$2.5 billion global crude oil and also re-escalation Size of issue SG$162.75 million multicurrency Sukuk issuance of domestic concern. This contributed to (US$117.09 million) program. “The Wakalah principle the outfl ow of foreign funds, which in Mode of issue Private placement is generally conforming to Islamic turn negatively aff ected the local bond Purpose Purchase of Islamic funds Shariah requirements and is market.” home fi nancing widely accepted among global Sukuk Tenor One year investors,” explained Chung to IFN as Furthermore, the slowdown in China Issuance price Par he elaborated on the reason for selecting and subsequent devaluation of the the particular structure. Chinese yuan also led to the lower Profi t rate 2.113% global demand for commodity and Payment Semi-annual basis Despite the challenging market caused its prices to drop. Chung Currency Singapore dollar operating environment at the time of conveyed that these factors not only Maturity date 26th September 2016 issuance due to growing uncertainty on aff ected investors’ confi dence in the variables for valuation which increased country’s economy but also caused Lead managers OCBC Bank, Singapore price volatility and consequently risk an increase in market volatility that Principal CIMB Investment Bank premium for new issuance, Cagamas resulted in investors demanding for advisors and managed to conclude its inaugural higher premium for their investments. HSBC Amanah Malaysia foreign currency Sukuk issue in Governing law English law Singapore dollars at very competitive To overcome such unfavorable Underlying assets Wakalah assets and pricing in a foreign market. “The conditions, Cagamas’s continuous commodity Murabahah strength and diversity of demand engagement with international Rating ‘A3’ by Moody’s achieved for the deal underscore bond market participants eff ectively Shariah advisors CIMB Islamic Bank, continued investors’ confi dence in high- developed a pool of confi dent investors HSBC Amanah Malaysia quality Islamic Sukuk issues and has that were willing to put in competitive and Amanie Advisors renewed market interest for other Sukuk bids for the company’s issuance. Against Structure Principle of Wakalah issuance in the region,” he highlighted. the growing market expectation for a Tradability Yes rise in the US interest rate, the company The competitive pricing of 2.113% opted to price the issuance on the 15th Investor Local and foreign or 36bps over the corresponding September 2015 ahead of the Federal breakdown fi nancial institutions, asset managers and Singapore swap off er rate achieved for Open Market Committ ee (FOMC) private banks the company’s debut foreign currency meeting on the 17th September 2015 to Sukuk is believed to have contributed avoid the risk of undesirable investor signifi cantly to the effi ciency of price reaction caused by any oddity in the “Greater participation from foreign discovery for the regional Sukuk market FOMC’s decision during the meeting. investors has reduced the company’s and established a benchmark for other reliance on domestic liquidity and [the] potential issuers to price their credit Taking into consideration the fact that single sovereign benchmark for pricing. premium. the company’s previous Sukuk were Also, by tapping the new liquidity pool issued in Malaysian ringgit, Cagamas’s the company helped reduce the Receiving interest from a diverse investor entry in the international Sukuk space overcrowding eff ect in the domestic base comprising fi nancial institutions, enabled it to enhance the funding market while off ering diversifi cation of asset managers as well as private banks, fl exibility and capitalize on the att ractive [the] credit profi le to the international foreign investors constituted more pricing in foreign currency. Sukuk investors.”

Daud speaks

By Daud Vicary Abdullah communicated. A plethora of speakers, current malaise and return the global including some of the best brains from fi nancial industry to a stronger ethical Just for once, I have not traveled all over the world and from all sorts base. One key focus area that emerged overseas at all in the last four weeks. of backgrounds att ended. There was was that of risk sharing, as a sound Although that will be corrected in nothing specifi c about Islamic fi nance ethical base, as opposed to risk shifting a few days with a visit to the US to in the entire conference that you could and risk transfer, which is, of course, explain education in Islamic fi nance identify from reading the agenda. Or a fundamental platform for Islamic to academics and business people at was there? fi nance. The panelists were very the annual FMS conference, which is supportive of the concept of risk sharing including Islamic fi nance on its agenda The theme was creative disruption. and the need to build economies on the for the fi rst-time ever. More of that in Most of the takeaways that I got, and basis of equity rather than debt. When next month’s article. I crossed checked mine with put to an online poll of the audience many other att endees and of some 500+, where they were speakers, revolved around asked the question “In an the need for transparency ethical context, do you believe Relationships and good ethics to that a growth in risk sharing unlock the power of would be preferable to risk and networks, inclusive innovation. transfer and risk shifting?”, preferably Additionally, there the overwhelming response was a lot of common in the affi rmative was over conducted on a face- agreement that 90%. relationships and to-face basis, were networks, preferably Remember, this was not an conducted on a face- Islamic fi nance conference essential fuel for the to-face basis, were and the agenda did not essential fuel for the include anything specifi c creativity creativity to disrupt. on the subject. Yet a highly professional and learned global to disrupt The panel that I moderated audience resonated positively was entitled ‘Ethics in to the fundamental Islamic I did, however, travel within Malaysia Finance — Gett ing back fi nance concept of risk sharing. and would like to share with you a on track: How do we Depends on how you frame recent experience in the build-up to and return to higher ethical the discussion and how att endance at a forum that was focused values in fi nance?’ you speak to the audiences on ‘Harnessing Creative Disruption’. A lively discussion listening I guess. A very The event and the speakers’ retreat framed the concept of encouraging result. prior to the forum itself were extremely ethics and looked at things well organized. The theme of the event that could be done creatively As ever, there is much to do and was well thought through and well that would disrupt the not a moment to lose.

FINANCIAL MODELS FOR ISLAMIC BANKING INSTITUTIONS 26th - 28th October 2015, DUBAI

Course Highlights: • Key Differences in how Islamic Banks do Financial Modelling • Financial Modelling of Islamic Banking Funding Sources • Key Financial Modelling Aspects of Various Islamic Banking Activities • Financial Modelling of Embedded Options in Islamic Banking Products www.REDmoneytraining.com • Modelling for Islamic Investment and Corporate Finance Activities [email protected]

Islamic retail ϐinance in Oman IFN Country Correspondents AFGHANISTAN: Dr Alam Khan Hamdard president, Afghanistan Islamic Finance and Consulting Co AUSTRALIA: Dr George Mickhail OMAN senior lecturer, School of Accounting, Economics and Finance, University of Wollongong, Australia BAHRAIN: Dr Hatim El-Tahir By Anthony Coleby director of Islamic Finance Knowledge Center, Deloitt e & Touche BANGLADESH: Md Shamsuzzaman deputy managing director, Islami Bank Bangladesh Much of the focus at present in BELGIUM: Prof Laurent Marliere, CEO, ISFIN Islamic fi nance in Oman is on the BERMUDA: Belaid A Jheengoor director of asset management, PwC delayed government OMR200 million BRAZIL: Fábio Figueira partner, Veirano Advogados (US$517.83 million) Sukuk issue for BRUNEI: Dr Aimi Zulhazmi, Islamic fi nance consultant, which subscription closes on the 22nd Draznine Advisory CANADA: Jeff rey S Graham October. Nevertheless, Islamic fi nance partner, Borden Ladner Gervais CHINA: Abdullah Han in the Sultanate this year has generally partner, Al-Sadiq Consulting seen a very signifi cant growth in EGYPT: Dr Walid Hegazy 3.5% annual growth despite the oil price managing partner, Hegazy & Associates business. FRANCE: Kader Merbouh slump) combined with this will be one co-head of the executive master of the Islamic fi nance, Paris- Dauphine University explanation. The Omani government’s HONG KONG: Amirali Bakirali Nasir Up to the end of the second quarter of chairman, The Law Society of Hong Kong working party on encouragement to banks to support the Islamic fi nance 2015, banks’ Islamic assets increased INDIA: H Jayesh year-on-year by 64%, representing 6.3% SME sector will also help. founder partner, Juris Corp INDONESIA: Farouk A Alwyni of total bank assets (set to reach 7% only CEO of Alwyni International Capital and the chairman Additionally, early issues facing the of Centre for Islamic Studies in Finance Economics and by 2018). Total Islamic fi nancing at the Development development of retail Islamic fi nance in IRAN: Majid Pireh same point this year has been in excess Islamic fi nance expert, Securities & Exchange Organization the country — staff training, customer of Iran of OMR1.38 billion (US$3.57 billion), IRAQ: Khaled Saqqaf awareness, product development and partner and head of Jordan & Iraq offi ces, Al Tamimi & Co compared year-on-year to OMR745 ITALY: Stefano Padovani, partner and head of Banking & million (US$1.93 billion) in 2014 (just marketing — will have been addressed to Finance, NCTM Studio Legale Associato a great extent over three years since the JAPAN: Kaoru Haraguchi over 85% of an increase). founding att orney, Haraguchi International Law Offi ce launch of Islamic fi nance in the Sultanate. JORDAN: Nafi th Al Hersh Nazzal, Islamic banking specialist, certifi ed fi nancial and investment advisor And this will have helped as well. KAZAKHSTAN: Timur Rustemov, deputy chairman, association for development of Islamic fi nance KENYA: Mona K Doshi The need to But turnover or volume of fi nancing, senior partner, Anjarwalla & Khanna Advocates prodigiously rising as it may be, is one KOREA: Yong-Jae Chang, partner, Lee & Ko KUWAIT: Alex Saleh, partner, Al Tamimi & Co continue to thing, profi tability is of course quite LEBANON: Johnny El Hachem another. Back in 2013, Bank Muscat was partner – corporate, Bin Shabib & Associates LUXEMBOURG: Said Qaceme, senior manager of Advisory & develop innovative the only one of the eight participating Consulting, Deloitt e Tax & Consulting MALAYSIA: Ahmad Mukarrami Ab Mumin banks to avoid a loss from Islamic head, Shariah division, RHB Islamic Bank MALDIVES: Aishath Muneeza customer products banking activities. And three important deputy minister, Ministry of Islamic Aff airs, Maldives MALTA: Reuben Butt igieg factors that led to this remain today: president, Malta Institute of Management (and not simply historically very low benchmark rates of MAURITIUS: Mohammad Akshar Maherally Director (taxation), International Financial Services return, LIBOR for example; the continued MOROCCO: Ahmed Tahiri Jouti those derived from problems in allocating prudent levels managing consultant, Al Maali Consulting Group NEW ZEALAND: Mohamed Nalar of capital weighting for compliance trustee and board member, Awqaf New Zealand NIGERIA: Auwalu Ado; the conventional purposes, where a cornerstone of Islamic Shariah auditor, Jaiz Bank OMAN: Muhammad Abdullah Dewaya fi nance is the balance of risk between Islamic fi nance scholar ones) that PAKISTAN: Muhammad Shoaib Ibrahim the bank and the customer (not an issue managing director & CEO, First Habib Modaraba in conventional banking); and the need PHILIPPINES: Rafael A Morales meet demand managing partner, SyCip Salazar Hernandez & Gatmaitan to keep fi nancing costs att ractive to the QATAR:Amjad Hussain customer, compared to conventional partner, K&L Gates expectations RUSSIA: Roustam Vakhitov banking products if market share is to be managing partner, International Tax Associates SAUDI ARABIA: Nabil Issa achieved and maintained. partner, King & Spalding remains as pressing SENEGAL: Abdoulaye Mbow Islamic fi nance advisor, Africa Islamic Finance Corporation As noted previously, there are continued SOUTH AFRICA: Amman Muhammad as ever CEO, First National Bank-Islamic Finance signs of consolidation within the Islamic SINGAPORE: Suhaimi Zainul-Abidin, advisor, 5Pillars banking sector in Oman, and this refl ects SRI LANKA: Imruz Kamil the issues of profi tability and market head of Islamic banking, Richard Pieris Arpico Finance SWITZERLAND: Khadra Abdullahi share discussed. Finally, the need to associate, Investment banking, Faisal Private Bank In view of the limited takeup of Islamic SYRIA: Gabriel Oussi, fi nance products in other sectors to continue to develop innovative customer general manager, Oussi Law Firm products (and not simply those derived TANZANIA: Yassir Masoud date — corporate, projects, trade, for head, Islamic banking, retail banking, National Bank of Commerce from the conventional ones) that meet TURKEY: Ali Ceylan example, it is safe to assume that a partner, Baspinar & Partners demand expectations remains as pressing UAE: Rima Mrad signifi cant proportion of this rise is partner, Bin Shabib & Associates att ributable to the retail sector — home as ever. UK: Fara Mohammad director of Islamic fi nance, Foot Anstey fi nancing, vehicle purchase, deposits, US: Joshua Brockwell Anthony Coleby heads the corporate investment communications director, Azzad Asset Management credit cards, for instance. Bank liquidity YEMEN: Moneer Saif; head of Islamic banking, CAC Bank commercial department of Said Al Shahry IFN Correspondents are experts in their respective fi elds and in Oman is currently plentiful and the are selected by Islamic Finance news to contribute designated Law Offi ce (SASLO). He can be contacted at short country reports. For more information about becoming existence of robust consumer demand (in an IFN Correspondent please contact sasikala.thiagaraja@ an economy still achieving in excess of [email protected]. redmoneygroup.com

MoU signed for the promotion of Takaful IFN Sector Correspondents CROSS-BORDER FINANCING Fara Mohammad, director of Islamic fi nance, Foot Anstey PAKISTAN which always needs Takaful coverage. The Mudarabah sector is engaged in CAPITAL MARKETS: By Muhammad Shoaib Ibrahim Suhail Ahmad, CEO, Hikmah Capital Corp several types of Shariah compliant businesses backed with various types of DERIVATIVES NBFI & Modaraba Association of Suhaimi Zainul - Abidin, treasurer for Gulf-Asia Shariah assets of diff erent natures. Compliant Investment Association and advisor to 5Pillars Pakistan (NBFI & MAP) has signed an GLOBAL ECONOMIC OUTLOOK Tariq Alrifai, expert, Islamic investment products and MoU with Pak-Qatar General Takaful market trends (PQGTL) to launch a powerful program LAW (EUROPE): for promoting Shariah compliant The beneϔits Ayhan Baltaci, att orney at law, Bereket & Baltaci Law Firm Takaful products all over the country. LAW (MIDDLE EAST) Bishr Shiblaq, head of Dubai offi ce, Arendt & The chief guest during the launching may only be Medernach ceremony was Mian Muhammad LEASING: Adress, the president of the Federation realized if people Youssef Aboul-Naja, Ijarah specialist, a supranational banking institution of Pakistan Chambers of Commerce and MERGERS & ACQUISITIONS: Industry. are given proper Tushar Garg, associate, bulge bracket investment bank MICROFINANCE (ASIA): Presently, there are fi ve companies education and are Dr Mahmood Ahmed, executive vice-president and director training, Islami Bank Training and Research operating as dedicated Takaful aware about the Academy companies in Pakistan. Previously, MICROFINANCE (AFRICA): Mansour Ndiaye, director of microfi nance, Assistance and Takaful companies were only allowed features of the Consulting for Development to operate as a separate entity; however, PRIVATE BANKING & WEALTH MANAGEMENT: Thomas Woods, product development, wealth recently conventional insurance Takaful system, management, The Islamic Bank of Asia companies have been allowed to operate PRIVATE EQUITY & VENTURE CAPITAL: Arshad Ahmed, partner, Elixir Capital their own Takaful window. Entry into the particularly about PROJECT & INFRASTRUCTURE FINANCE Takaful industry will allow companies Anthony Coleby, head of corporate commercial to increase insurance penetration and department, Said Al Shahry Law Offi ce (SASLO) life Takaful REAL ESTATE underwriting business similar to the Philip Churchill, founder partner, 90 North Real Estate Islamic banking window operated by Partners REAL ESTATE (MIDDLE EAST): conventional banks. Yahya Abdulla, head of capital markets — Middle East, Within the Islamic fi nancial sector, Cushman & Wakefi eld Mudarabah plays a signifi cant role in REGULATORY ISSUES (ASIA) The MoU was signed by NBFI & MAP the promotion of Islamic fi nance within Intan Syah Ichsan , chief operating offi cer, Samuel Aset chairman M Shoaib Ibrahim and PQGTL Manajemen the country. Over the years, Mudarabah CEO Javed Muslim. Javed said that the REGULATORY ISSUES (MIDDLE EAST): has emerged as a major sector within Mohammad Abdullah Malik Dewaya, head of Shariah signing of this MoU will help develop compliance and audit, Maisarah Islamic Banking Services the segment of non-banking fi nancial RETAIL BANKING: mutually benefi cial relationships between Chowdhury Shahed Akbar, offi cer, Southeast Bank, institutions. It is a viable and dependable Bangladesh. Takaful companies and members of source of medium-term fi nancing which RISK MANAGEMENT: NBFI & MAP. Shoaib highlighted the also off ers an opportunity for investors Dr Ken Baldwin, CEO, Islamic Financial Analytics performance of the Mudarabah sector to earn Riba-free income. At present, the SECURITIES & SECURITIZATION: and was hopeful that Takaful products Nidhi Bothra, executive vice-president, Vinod Kothari Mudarabah sector is performing well Consultants in the fi nancial sector would grow and now poised for faster growth with STOCK BROKING & TRADING: further. He also appreciated the eff orts of Athif Shukri, research analyst, Adl Capital an improved regulatory and monitoring Mian who has done a remarkable job of STRUCTURED FINANCE: framework. John Dewar, partner and head of Islamic fi nance, Milbank, promoting Islamic fi nance in Pakistan. Tweed, Hadley & McCloy SUKUK Takaful is an opportunity whereby a big During his speech, Mian appreciated Anthony Coleby, head of corporate commercial population of Pakistan will have a chance department, Said Al Shahry Law Offi ce (SASLO) the joint collaboration between PQGTL to access insurance using the Takaful SYNDICATED FINANCE and NBFI & MAP and added that it Damir Galiev, portfolio manager, AK BARS Bank system. The benefi ts may only be realized is a signifi cant event in the history of TAKAFUL & RE-TAKAFUL: if people are given proper education and both institutions and is a milestone in Dr Sutan Emir Hidayat, assistant professor and academic are aware about the features of the advisor for Islamic fi nance, University College of Bahrain the promotion of the Islamic fi nancial TAKAFUL & RE-TAKAFUL (AFRICA): Takaful system, particularly about life system. Uwaiz Jassat, acting head of Islamic banking, Absa Islamic Takaful. The Pakistan market is largely Banking untapped where Takaful products are TAKAFUL & RE-TAKAFUL (EUROPE): The Takaful business has proved Ezzedine Ghlamallah, director, Solutions Insurance and concerned and therefore it has huge Islamic Finance in France (SAAFI) its viability in a period of only two potential with good growth expected in TRADE FINANCE decades and has huge potential as there Anthony Coleby, head of corporate commercial this segment in the coming years. department, Said Al Shahry Law Offi ce (SASLO) is increasing demand for a Shariah TREASURY PRODUCTS: compliant system, particularly with the Nafi th ALHersh Nazzal, Islamic banking specialist, Muhammad Shoaib Ibrahim is CEO and the certifi ed fi nancial and investment advisor development of the Islamic banking managing director of First Habib Modaraba IFN Correspondents are experts in their respective fi elds industry. With the development of — Pakistan. He can be contacted at Shoaib@ and are selected by Islamic Finance news to contribute Islamic banking, there has been a designated short sector reports. For more information habibmodaraba.com. about becoming an IFN Correspondent, please contact signifi cant increase in asset fi nancing [email protected]

Is Islamic ϐinance wanted in Australia?

In the fi rst instalment of a special series, DR GEORGE MICKHAIL looks at Islamic fi nance developments in Australia and the challenges hindering the growth of the Australian Islamic fi nance industry.

AUSTRALIA Chart 1: International participation banking assets (US$ billion) By Dr George Mickhail 778 PwC and EY had independently found that the global market in Islamic fi nance 23 has been growing at an average annual 17% rate of 17% since 2009 and will continue 20 78 to do so until 2017. 69 417 17 160 A recent research working paper by the IMF investigated the relationship 14 53 140 between Islamic banking development 11 50 117 and economic growth in a sample of low and middle-income countries, using 41 93 data over the period of 1990-2010. Its 71 results showed that, notwithstanding 454 517 its relatively small size compared to 385 the economy and the overall size of 333 the fi nancial system, Islamic banking 295 is positively associated with economic growth (Imam and Kpodarby, 2015). 2009 2010 2011 2012 2013 That rapid growth in Islamic fi nance GCC ASEAN Turkey and ROW South Asia in value and geographical reach is signifi cant with an estimated 38 million Source: EY – World Islamic Banking Competitiveness Report 2014-2015 consumers of Islamic banking products, despite having a small share of global fi nance. However, the main interest Chart 2: Share of international participation explain the weak demand for Islamic in Islamic fi nance lies not only in the banking assets fi nance services. relative stability of the funds held in Islamic banks, but also due to its The supply contribution to economic growth. On the 7th December 2014, the Australian GCC 33% government released the fi nal report The demand of the Financial System Inquiry with The 2011 census identifi ed 476,291 44 recommendations. The focus of ASEAN 14% people, or 2.2% of the total Australian its recommendations was two-fold: population as Muslims, with 40% born in (a) funding Australia’s economy and Australia and the rest from more than 30 boosting competition, and (b) fi ve countries of origin. According to the 2011 South Asia 12% specifi c areas: resilience; superannuation census, the unemployment rate among and retirement incomes; innovation; Muslims was 12% (double the national consumer outcomes and the regulatory average and the worst of any religious Turkey 5% system. and ROW group), with some groups having much higher unemployment rates, like Iraqi- Since the close of submissions from born Australians (70%) and Lebanese- 0% 20% 40% 60% 80% 100% all stakeholders, including industry born Australians (60%). Islamic and members of the public to respond Conventional to the report’s recommendations on st It was not a surprise then that the labor Malaysia the 31 March 2015, there has been no decision by the government to the 237 force participation rate among Muslims Source: EY – World Islamic Banking submissions, including 11 submissions was far below the national average. The Competitiveness Report 2014-2015 rate of home ownership for Australian (4.6%) that mentioned Islamic fi nance Muslims was less than half the national in their response, to the most important average, and 25% of Muslim households review of the fi nancial system in stress for Muslims in Australia, which no had above-average household income Australia. doubt places considerable pressure on compared with 35% for non-Muslim any att empt to have disposable income households. These fi gures only highlight This rather small number of submissions available for investment, and may also the stark economic realities and material to the Financial System Inquiry that

Continued

in cross-border insolvencies. In their Chart 3: Weekly earnings response, Islamic fi nance industry bodies have developed and issued standards, 120 but without any uniformity in their adoption across countries. 100 No doubt, a stable fi nancial system 80 hinges not only on consumer protection, US$2,500 or more but also more importantly ensures US$800 – US$2,499 60 suffi cient disclosures by institutions so US$400 – US$799 that consumers with reasonable fi nancial literacy would avoid taking on excessive US$1 – US$399 40 debts due to a poor understanding of the risks inherent in fi nancial products. 20 There are neither obvious nor publicly 0 stated regulatory impediments to Islam Catholic Anglican Buddhism Hinduism establishing Islamic fi nancial institutions in Australia. Recently, the APRA, the banking regulator, signed an MoU on ȱŚǱȱ ȱę the 30th of July 2015 with its counterpart in the UAE, the Dubai Financial 120 Services Authority (DFSA) concerning cooperation in banking and insurance supervision (including Islamic fi nance). 100

Other However, the APRA does not have a 80 Sales member status or even an observer status with the IFSB. There are 30 institutions Clerical 60 from non-Islamic countries out of a total Technicians and trade of 188 members on that board, and none of them is Australian. There is not one 40 Laborers Australian institution that is a member Professionals of AAOIFI or the International Islamic 20 Managers Financial Market.

0 The issue is not whether the regulators in Islam Catholic Anglican Buddhism Hinduism Australia are ignoring the weak demand for Islamic fi nance products and a small market that has not grown much in the were concerned with Islamic fi nance is a Islamic fi nancial transactions. last few years, but whether they are only refl ection of the small market of Islamic The regulator: Ambiguity, avoidance or too aware of a global system that “needs fi nance in Australia. There are three simply wait and see? reforms to address consumer institutions off ering Shariah compliant vulnerabilities from current practices fi nance products (MCCA, Islamic The Twin Peaks regulatory model with respect to profi t-sharing investment Co-operative Finance Australia and pioneered in Australia after the Wallis accounts, Ijarah Muntahia Bitt amlik, and Iskan Finance) and two Islamic equity Commission inquiry in 1996 resulted in conventional deposit insurance schemes funds (Crescent Investments and LM prudential regulation being placed in as well as to address the legal risks for Investment). the hands of the Australian Prudential investors in Sukuk, particularly in Regulation Authority (APRA), while the cross-border default cases” (Lukonga, Crescent Wealth helped create its own responsibility for regulating the conduct 2015). ASX Islamic index (Thomson Reuters of business was given to the Australian Credit Wealth Islamic Australia Index) Securities and Investments Commission. Dr George Mickhail is a senior lecturer at the from some 142 fi rms that represent School of Accounting, Economics & Finance, 55% of the ASX’s overall market Australia, as well as other nations, has University of Wollongong, Australia. He capitalization. Meanwhile, there are unevenly integrated consumer protection is also a Professeur des Universités Invité, no Sukuk and fewer Islamic REITs due in their regulatory structures post the IAE Ecole Universitaire de Management to the lack of Australian legislation 2008 global fi nancial crisis. However, few d’Orléans, Université d’Orléans, France as allowing for the sale of Sukuk (with their of them actually adapted their structures well as a visiting professor, IESEG School of increasingly complex structures) and the to address the unique risks of Islamic Management, Université Catholique de Lille, tax complications (eg double taxation fi nance, especially with the divergent France. He can be contacted at george@uow. on capital gains and income streams) for views on Shariah as a source of law edu.au.

Islamic ϐinance expands at a steady pace in Greater China

Since China became a member of the IFSB in 2009, Islamic fi nance has been gaining prominence as a channel for the country to expand its economic infl uence. For example, the ‘One belt, one road’ initiative is a key development for China that aims to build stronger trade ties with Asian and European countries and the network to be formed will include the world’s main centers of Islamic fi nance. The funding of this initiative will be carried out mainly through China’s own Silk Road Fund and the newly established Asian Infrastructure Investment Bank, which is expected to co-fi nance projects with the IDB. Such practice is expected to att ract fresh investors to Islamic fi nance. MICHELE LEUNG delves further.

CHINA Chart 1: Market exposure by par amount of By Michele Leung the Dow Jones Sukuk Index

In fact, collaboration continues to be fostered between Chinese entities and Islamic corporations that seek to develop an Islamic ﬁ nance framework. For instance, Southwest Securities has formed a partnership with Qatar International Islamic, and the Industrial and Commercial Bank of China is partnering with the Islamic Corporation market exposure of the Dow Jones Sukuk for the Development of the Private Index while Malaysia and Turkey each Sector. constitutes 10%.

Meanwhile, GCC countries continue to The new Bahrain 2% Qatar 12% dominate the market with a 53% market Saudi Arabia 13% exposure (see Chart 1). It is interesting issues were UAE 26% to note that the new issues were all Hong Kong 4% launched in the second quarter while all launched in the Indonesia 12% primary activities were muted on the Malaysia 8% back of market uncertainty recently. second quarter South Africa 1% Supranational 10% As of the 30th September 2015, the year- while primary Turkey 10% US 2% to-date (YTD) total return of the Dow activities were Jones Sukuk Index is 1.69%. The Dow Source: S&P Dow Jones Indices. Data as of Jones Sukuk Higher Quality Investment muted on the back of the 30th September 2015. Past performance is Grade Total Return Index outperformed no guarantee of future results. Chart is with a 2.01% gain during the same date. market uncertainty provided for illustrative purposes. The S&P MENA Sukuk Index, which recently denominated Sukuk will hit the market tracks the performance of US dollar- soon. denominated investment-grade Sukuk issued in the Middle East and African Hong Kong, viewed as the gateway to markets, was the best performer, gaining China for Islamic fi nance, sold US$1 2.31% YTD. billion of fi ve-year sovereign Sukuk Furthermore, there appears to be a this year, following the successful Among the maturity-based indices, the robust Sukuk issuance pipeline from placement of the debut Sukuk last Dow Jones Sukuk 3-5 Year Total Return Chinese issuers. China’s Ningxia Hui September. It reaffi rmed the city’s Index outperformed, rising 2.33%. Autonomous Region has announced its ongoing commitment to develop itself Meanwhile, the Dow Jones Sukuk ‘AAA’ plan for a US$1.5 billion debut Sukuk as a regional hub for Islamic fi nance. Rated Total Return Index outperformed sale. Chinese companies, such as HNA Its decision to use a diff erent Shariah other rating-based sub-indices with a Group and Country Garden, have also contract (Wakalah instead of Ijarah) also 2.11% gain. announced off shore Sukuk issuances. demonstrates its abilities to engineer Policy banks, on the other hand, are various Shariah compliant debt products. Michele Leung is the director of fi xed income enhancing their visibility in the Middle To put it into perspective, Hong Kong indices with S&P Dow Jones Indices. She can East by listing their bonds in Dubai. currently represents 4% of the overall be contacted at [email protected]. It is expected that the fi rst renminbi-

Malaysia’s Islamic CASA predicament

The implementation of the Islamic Financial Services Act 2013 (IFSA 2013), which took eff ect in June 2013, resulted in specifi c requirements needing to be adhered to by Islamic fi nancial institutions within a certain time frame. One of its major consequences was the eff ect toward Islamic current accounts and savings accounts (CASA). AHMAD MUKARRAMI AB MUMIN and AIZUL AIMAN MUSA explore.

ISLAMIC CASA Diagram 1: Reverse commodity Murabahah via Tawarruq arrangement By Ahmad Mukarrami Ab Mumin & Aizul Broker A Broker B Aiman Musa

The IFSA 2013 has defi ned Islamic deposits as: “A sum of money accepted or paid in accordance with Shariah on terms under which it will be repaid in full, with or without gains, and under an arrangement on terms whereby the 5. Commodity 6. Spot transaction RM10,000 1. Commodity 2. Spot transaction RM10,000 proceeds under the arrangement to be 3. Commodity paid to the person paying the sum of money shall not be less than such sum of Depositors IFIs money.” 4. Murabahah (RM10,000 + 2%) on deferred basis Source: RHB Islamic Bank This defi nition suggests that an Islamic deposit account shall only use a concept has left Islamic banks with one major to go the extra mile in creating alternative which guarantees the principal amount hurdle to overcome with regards to their solutions while at the same time deposited and such amount deposited CASA products. This stems from the complying with the current regulatory shall not be diminished due to any fact that the IFSA 2013 has left Wadiah requirements. reason. as its sole underlying contract. Wadiah in this context should follow the ruling The solutions should be able to minimize However, this defi nition is not new of Wadiah Yad Dhamanah (safekeeping the cost of funds, enable the bank to as it has been implemented in the UK with guarantee), whereby the element of undertake promotions and capture (Financial Services and Markets Act 2000) Qard exists when the bank utilizes the customers’ att ention. In this context, the as well as in Singapore (Guidelines on customer’s money. application of commodity Murabahah Defi nition of ‘Deposit’). has been seen as a possible concept to In other words, Qard prevents banks be used to structure CASA products and Prior to the IFSA 2013, Islamic banks in from promoting Wadiah CASA with any furnish the banks’ needs. Malaysia used three underlying contracts amount of returns or gifts as this would for their deposit products namely be tantamount to Riba. Furthermore, CM as an option for Islamic Wadiah, Mudarabah and commodity following the latest Shariah resolution Murabahah (CM). Wadiah and by Bank Negara Malaysia (BNM), the CASA Mudarabah were used for CASA deposit bank is no longer allowed to publish Under the CM deposit product, the roles products, while Mudarabah and CM any indicative/historical Hibah rate to of the customer (depositor) and the bank were used for term deposit products. customers, and Hibah can only be given are outlined in Diagram 1. The depositor solely at the bank’s discretion. will appoint the bank as an agent to buy As a result of the imposition of the specifi ed commodities from Broker A on IFSA 2013, all deposit products based Due to its nature, CASA have always been the spot, by using the deposit amount. on Mudarabah had to be removed the main source of funding for banks, be Thereafter, the depositor will sell the since conceptually, the capital provider it Islamic or conventional. However, by commodities on a deferred basis, by way (depositors) would bear all fi nancial having restricted promotional capabilities of Murabahah, to the bank. The bank losses in the Mudarabah arrangement, and less att ractive features, Islamic banks then sells the commodities to Broker B on thus, becoming ineligible to be defi ned will not be able to att ract customers’ funds spot basis to get cash. as a ‘deposit’ under the Act. This into CASA and Wadiah CASA will be seen subsequently means that the only as inferior compared to its conventional Unlike Diagram 1, structuring CASA contract available for CASA is Wadiah, counterpart. products based on CM will prove to be while CM will continue as the underlying far more complex as there are certain contract for term deposits. As a result of this conundrum, requirements that need to be fulfi lled. Islamic banks will need to raise funds Among the challenges in structuring this Post-IFSA concern in Islamic through term deposits and interbank product are: facilities which will increase the bank’s CASA overall costs signifi cantly. Hence, this 1. Reducing the overall cost of It cannot be denied that the IFSA 2013 predicament has pushed industry players operating the product

Continued

The cost of the brokerage fee that the 4. Finding the best commodity trading majority of cases, trade information and bank needs to absorb proves to be platform PDF confi rmations are still accessible by the main operational concern. In a It is a challenge for Islamic fi nancial customers via internet banking. deposit product, customers have the institutions to fi nd a suitable freedom to withdraw and deposit commodity platform that can ease the In a recent development in the Malaysian their money at any given time. There operational workfl ow and at the same Islamic banking industry, one of the is also an uncertainty when it comes time fulfi ll the Shariah requirement. Islamic fi nancial institutions successfully to the size of the transaction value. The commodity platform should be launched CASA products based on the able to cater to smaller denominations CM principle, being both principal- Should the transaction value be high, and should be able to capture each guaranteed deposit products and fully the brokerage fee will be a burden for and every single transaction as this compliant with the IFSA 2013. The the bank to absorb. Thus, this product product will involve a larger number product is based on multiple sale and may result in a high operation cost of clients. In addition, the transaction purchase transactions involving Shariah which has to be borne by the banks should be properly documented as it compliant commodities, which in turn, and would not solve the predicament. is important for the audit trail. facilitate profi t payment to depositors. In its general workfl ow, customers will 2. Determining the principal amount appoint the Islamic fi nancial institution to be traded as an agent (Wakil) to perform matt ers The execution of a CM Aqad is a It is a pertaining to CM transactions. The vital element for the adherence to amount to trade is determined based on the Shariah principle of the product challenge for the net deposit of the end-of-day balance and therefore needs to be properly at 2359 hours on a daily basis. The observed. Islamic ϔinancial tenure for the CM transaction is from the account opening date to either month- Under the typical term deposit institutions to ϔind a end or half-year-end. The tenure expiring structure which uses CM, the date is the profi t crediting day. deposited amount by customers will suitable commodity be regarded as the amount to be platform that can Conclusion traded. In contrast, the cash fl ow in Post-IFSA 2013 has seen a lot of changes CASA products is volatile, making it ease the operational in the landscape of the Islamic banking hard to determine the amount to be industry in Malaysia. It is undeniable traded. Furthermore, unlike CM term workϔlow and at that many Islamic fi nancial institutions’ deposits, CM CASA would neither portfolios, particularly deposit portfolios have any fi xed tenure nor maturity the same time are impacted by not only the IFSA that allows the banks to easily 2013 but also by the new regulation determine the trading amount. This fulϔill the Shariah and Shariah standard by BNM. The element needs to be decided by the continuation of the existing Islamic product developer. requirement deposit product may prove to be unwise as there will be a real struggle for the 3. Shariah justifi cation on daily Islamic fi nancial institutions to att ract deposit and withdrawal activities customers since it is no longer possible It is essential to have clear Shariah Case studies to promote Wadiah-based products with justifi cations to determine the Shariah att ractive benefi ts. contracts used for daily withdrawals Although the CM CASA structure seems complex, there are several Islamic and deposits after CM trading has Hence, innovation and initiative by been executed. banks across the globe that have already developed demand deposit products industry players in introducing CM CASA is considered as a way out from For example, some may justify the based on CM with their own distinct operational workfl ow. the predicament. With serious eff orts by withdrawal by the customer as the BNM and the government of Malaysia in bank is paying the traded amount to ensuring all products in the market the customer and the deposit by the Some banks in the Middle East, for example, use sophisticated commodity comply with the Shariah standard, CM customer is for the purpose of buying CASA could potentially be considered as the commodity. However, this will platforms which can automate the entire CM process. The commodity platform a new beacon of relief for the whole result in the bank bearing a higher Islamic banking industry in Malaysia. brokerage fee as each deposit activity is a fully web-based interface and is is justifi ed as an amount to be traded. available 24 hours, seven days a week. It is designed to integrate directly with Ahmad Mukarrami Ab Mumin is the head banking systems, eg internet banking of the Shariah Division and Aizul Aiman Having said that, the Shariah Musa is the head of the Shariah research justifi cation should be suited to the and ATMs. The bank systems request commodity through web service section, both at RHB Islamic Bank. They product’s operations and system can be contacted at ahmad.mukarrami@ capabilities to ensure the product is messages, and these messages constitute trade confi rmations, although in the rhbgroup.com and aizul.aiman@rhbgroup. feasible and justifi able. com respectively.

Egypt: Islamic ϐinance market review

The progress of Islamic fi nance in Egypt appears to be the progress made in Islamic banking in addition to the major role played by the Egyptian Financial Supervision Authority (EFSA) in terms of new products in the various non- banking fi nancial services sectors as follows. DR SHAHINAZ RASHAD takes a look at the Islamic fi nance industry in Egypt.

EGYPT regulations relating to new mortgage law. In comparison, the leasing sector has By Dr Shahinaz Rashad grown tremendously reaching a volume of almost EGP11 billion (US$1.37 billion) Islamic banking as of July 2015 compared to EGP7.9 The Islamic banking landscape has billion (US$986.27 million) in 2014. shown some progress over the years. The total volume of assets of Islamic banks and banks with Islamic branches amounted to about EGP150 billion Historically, (US$18.73 billion), up to 6.8%. The balance of deposits amounted to around Egypt has EGP136 billion (US$16.98 billion) representing 7.8% with a growth rate of been one of the most 18% compared to 2014. Funding reached EGP117 billion (US$14.61 billion), active countries transparency in the information which accounted for 7% of the market memorandum and post-issuance. Some at a growth rate of 37% coampared to in the arena of main diff erences are related to returns, last year. The total number of branches ratings, and responsibilities of the issuer, reached 237, an increase of 6.3%. There microϔinance but etc. The draft was submitt ed to the were 2.8 million customers dealing with minister of investment and is expected to Islamic products representing 18.8% of the microϔinance be passed within the coming weeks. the number of customers of the banking market has been sector in Egypt. Microϐinance The EFSA has increasingly embraced The total number of banks licensed to solely relying on fi nancial inclusion as one of its policy off er Islamic products is 14, with three commercial banks objectives. It issued the fi rst new banks off ering only Islamic banking Microfi nance Law that regulates while 11 banks have Islamic branches. and NGOs microcredit provided by non-bank Faisal Islamic Bank together with both microfi nanciers, such as companies Albaraka Bank and Abu Dhabi Islamic and non-governmental organizations, Bank are the three banks which hold a placing them under the authority of 55% market share. Faisal Islamic Bank the EFSA, while banks will continue to kept the number one ranking in terms of Capital market answer to the Central Bank of Egypt. business volume, deposits, and fi nance, The EFSA is regulating the capital market The law allows fi nancial products and while Abu Dhabi Islamic Bank was fi rst in terms of all types of investment funds. services related to the agricultural in terms of the number of branches with The number of Islamic mutual funds in sector, industrial sector, services sector 70. Egypt numbered 14 from 2004 to 2014. The challenge currently facing Islamic and trade sector to fi ll the gap in the microfi nance cycle. This will help Mortgage and leasing mutual funds is investor appetite and double taxation issues. The EFSA has implementation of the nationwide The mortgage sector has a very low undertaken a new approach diff erent to microfi nance strategy and fi nancial penetration rate, given a population size the one during the Muslim Brotherhood inclusion at large. exceeding 90 million, reaching almost in which a new Sukuk law was passed 500 million as of June 2015 Amendments in 2013. It only introduced some The EFSA’s new Microfi nance Law were made to the Mortgage Finance amendments to the Capital Market Law was passed in November 2014 and Law No 55 for the year 2014 regulating No 95 of 1992 that regulates Sukuk. The focuses solely on economic value-added the mortgage fi nance sector and its new amended capital market regulations activities, for example, production, executive regulations that will allow addressed Sukuk in 19 articles rather services and trading activities with mortgage fi nancing and investment in than having a separate law. The new a credit exposure cap of EGP100,000 Egypt to be Shariah compliant. The EFSA regulations include Ijarah (movables and (US$12,484.5) per client. Under the new introduced new products such as Ijarah services) and Murabahah as the two main Microfi nance Law, microfi nance could in accordance with Leasing Law 95, types of Sukuk and allowed the fl exibility be provided by non-governmental and also Murabahah and Musharakah to include other types subsequently organizations (NGOs) and newly products. Currently, the EFSA is in through executive regulations. The established microfi nance institutions the process of fi nalizing the executive new regulations also allow for more (MFIs). The EFSA is working on

Continued including new products compliant increased from 29.5% in 2011 to 38% in MFIs are not allowed to accept deposits with Shariah as microfi nance is not 2014. Investments reached EGP1.645 and since the microfi nance segments restricted to lending only but it could million (US$205,370) in 2014 from are with no savings, there should be include forms of Ijarah (Islamic leasing) EGP713,182 (US$89,037) in 2011 with an an alternative to encourage savings. or Murabahah (cost plus), Musharakah increasing rate of 4.6%, while net Takaful MicroTakaful could protect MFIs/NGOs’ (Islamic joint ventures) and so forth. investment income decreased from microfi nance funds against default risk. EGP47,418 (US$5,919.89) in 2011 reaching This could also help MFIs to reduce their Historically, Egypt has been one of EGP16,9621 (US$21,176.3) in 2014, with credit risk through collaborations with the most active countries in the arena a decreasing rate of 4%. Total premiums microinsurance companies using the of microfi nance but the microfi nance of microinsurance in Egypt reached partner-agent model. market has been solely relying on EGP24 million (US$3 million), total commercial banks and NGOs. Egypt claims reached EGP11.3 million (US$1.41 Needless to say, microTakaful goes hand still suff ers from a low penetration rate million) and the total number of policies in hand with other Shariah compliant especially in rural areas. Also, there is reached 11,000. fi nance modes such as Murabahah, or a sizable fi nancing gap as witnessed by Musharakah and Ijarah. the demand from microcredit borrowers Microinsurance may play a crucial role that far exceeds the supply. The market in the future to reduce risks, eliminate On a fi nal note, it seems obvious that the currently has around 600 NGOs off ering poverty and create sustainability among non-banking sector’s potential in the area microcredit with a loan portfolio that the low-income microfi nance segments of Islamic fi nance is growing exceeds EGP2 billion (US$249.69 million). by encouraging savings through low- tremendously and the challenge in the premium contributions collected on a future would be how to maintain such periodic basis. MicroTakaful is the best growth rates and the proliferation of new MicroTakaful match for the poor microsegments’ needs products and to att ract a new pool of in line with the teachings of Islam and investors from the MENA region. goes hand Shariah and in line with the principles of Takaful, ie risk sharing versus risk Dr Shahinaz Rashad is the executive director in hand with other transfer. The EFSA is trying to encourage at the Financial Services Institute of the the banking and non-banking system Egyptian Financial Supervisory Authority. Shariah compliant (leasing, factoring, mortgage) to fi nance She can be contacted at shahinaz.rashad@ ϔinance modes such small enterprises to reduce poverty. efsa.gov.eg. as Murabahah, or Musharakah and Ijarah

Takaful and microTakaful The EFSA treats all types of insurance as the same, whether life insurance or Takaful and is keen to provide the needs of all insurance clients, including Takaful as the EFSA is about to complete the new draft law for insurance supervision and control. It will include for the ﬁ rst time articles governing the work of Takaful insurance companies; the variety of insurance products helps to provide insurance coverage to larger categories and enterprises. Also, the EFSA is working on a new chapter in Law No 10 of 1981 concerning Takaful and microinsurance. While the insurance industry, especially Takaful, is growing fast it is still small in terms of the market penetration rate which is around 0.5% of GDP for both life and Non-life.

According to the EFSA’s June 2014 statistics, Takaful assets’ growth rate

Takaful in Gambia

Takaful Gambia (TGL) is a growing insurance company with a novel insurance concept that began operations in Gambia in January 2008. TGL is the only Islamic insurance company (Shariah compliant) in Gambia where 95% of the two million people are Muslims. Its head oﬃ ce is in Pipeline, Fajara with six branches across the country. TGL practices the hybrid model of Takaful charging both Wakalah and Mudarabah fees. SAINABOU GAYE writes.

TAKAFUL (profi t) for three consecutive years since Chart 1: Graphical presentation of TGL’s the commencement of operations in a By Sainabou Gaye performance over the past four years bid to fulfi ll its promise to the public as endorsed by the Shariah Board. Takaful regards its insured/ GMD Henceforth, the company will consider policyholders as participants to a joint 50,000,000 one of the options in lieu of the profi t- guarantee. They contribute to each 45,000,000 sharing; the funds will be reinvested other’s well-being by committ ing to 40,000,000 or retained to reduce the respective a pool which serves to protect those 35,000,000 qualifi ed participants’ subsequent year’s unfortunate who have suff ered a 30,000,000 contribution/premium. fi nancial loss. TGL’s modus operandi as 25,000,000 a Shariah compliant company is that, if In a bid to satisfy the varied needs of 20,000,000 the total contribution received exceeds its esteemed customers, TGL plans to 15,000,000 the total losses (claims), TGL as the pool introduce new products in the area of 10,000,000 administrators will share the realized Family Takaful, microinsurance and 5,000,000 surplus among the Takaful shareholders agricultural insurance, among others. 0 for investing in TGL and Takaful 2011 2012 2013 2014 participants for contributing. There are inadequate avenues for training in Takaful in the region and Being a participant means: as such, eff orts such as online/distance TGL deducts 40% of the contribution • One agrees to donate a certain learning programs have been made as stipulated in the schedule which portion of his/her contribution/ available to train staff . Other training the participant pay or undertake to premium to assist any member of the on conventional insurance were done pay based on the principle of Wakalah. fund who has suff ered a loss. locally (in-house or by the West Africa The balance thereof is credited into the • One will also receive fi nancial Insurance Institute (WAII)) or overseas. General Takaful fund for the company assistance from fellow brothers/sisters TGL has also approached some training to manage including its investment, through contributions. institutions for collaboration and support in a manner deemed fi t subject to the in the capacity-building of its staff . TGL approval of its Shariah Advisory Council. also encourages educational exchange The public’s visits, on-the-job training, workshops, In accordance with the principle of seminars, internship, etc. Mudarabah, 80% of the net profi t of the perception of fund, if any, is paid to the participants of The public’s perception of insurance is the fund provided that the participant insurance is mixed mixed with many regarding insurance has not incurred any claims or received as just a formality instead of security. In any benefi ts under the certifi cate while it with many regarding a bid to allay such misconceptions, TGL is in force. insurance as carries out intensive sensitization over activities using the print and electronic In the same manner, 20% of such profi t, just a formality media. Such concerted eff orts are done in if any, is paid to the company and the collaboration with its umbrella body, the participant shall agree that any part of Insurance Association of Gambia. the said contribution, including its profi t, Over the years, the company has ensured be relinquished as Tabarru’ for payment continuous improvement in its service Over time, public trust/confi dence of the company to pay benefi ts to any provision; where TGL is unable to and by extension interest, is gradually participant who may be entitled to such operate branches, it has agencies that being re-instated. This has resulted in benefi ts in accordance with the terms and will serve the communities as many shy progressive performance over the past conditions of the agreement. away from the Riba aspect of insurance four years. TGL’s products/services or banking. TGL has aligned itself with include: fi re, accident, engineering, Alternatively, TGL with the participants’ the only Islamic bank in the country to motors, miscellaneous, marine, medical consent has the option of using part of provide bancaTakaful so customers can and hospitalization Takaful. the excess funds as a rebate to subsidize have access to Islamic fi nance. the subsequent year’s premium or invest it in the prescribed investment fund. One cardinal diff erence between Takaful The proϐit-sharing clause and conventional insurance is the mode It is TGL’s basic principle to insert a Sainabou Jallow Gaye is the general manager of operation including the way surplus standard profi t-sharing clause in all its of Takaful Gambia. She can be contacted at is treated. TGL has shared surplus policies as follows. [email protected].

statement on the Ministry of Finance’s to arrange the ﬁ ve-year quasi-sovereign DEALS website. issue. CBB’s Sukuk 100% subscribed APICORP’s Sukuk underway ABHC’s Sukuk payment due SAUDI ARABIA: Arab Petroleum MALAYSIA: ABHC Sukuk has BAHRAIN: The monthly Sukuk Ijarah Investments Corporation (APICORP) announced on Bank Negara Malaysia’s issued by the Central Bank of Bahrain has has opened orderbooks for its dollar- website that it will make a proﬁ t been subscribed by 100%. According to denominated Sukuk issue with an payment for the stock code VG130120 a statement, subscriptions worth BHD26 initial price guidance set around 110bps under the Sukuk Wakalah program of million (US$68.47 million) were received over midswaps, according to Reuters. up to RM1 billion (US$235.54 million) in for the issue which carries a maturity Emirates NBD, First Gulf Bank, Goldman nominal value on the 26th October 2015. of 182 days. The expected return on the Sachs, NCB Capital, Noor Bank and issue, which began on the 15th October Standard Chartered have been selected 2015 and matures on the 14th April 2016, is 1.6%.

The bank’s BHD43 million (US$113.26 million) Sukuk Salam, which carry a maturity of 91 days, have also been 100% subscribed. The expected return on the issue, which begins on the 21st October 2015 and matures on the 20th January 2016, is 1.48%, according to a statement.

Albaraka Turk picks Sukuk arrangers TURKEY: Albaraka Turk is looking to raise around US$250 million from a Sukuk issuance before the end of the year to bolster its Tier 2 capital, according to Reuters quoting unnamed sources. The lender has selected seven arrangers for the potential dollar-denominated issuance namely: Barwa Bank, Dubai Islamic Bank, Emirates NBD, Nomura, Noor Bank, Standard Chartered and QInvest.

Indonesia auctions Sukuk INDONESIA: The government of Indonesia auctioned two project-based Sukuk and an Islamic treasury bills series on the 20th October 2015 with an indicative target of IDR2 trillion (US$146.6 million), according to a

DEAL TRACKER Full Deal Tracker on page 34 EXPECTED DATE COMPANY’S NAME SIZE STRUCTURE ANNOUNCEMENT DATE TBA Country Garden Real Estate RM1.5 billion Sukuk 6th October 2015 Murabahah First quarter of 2016 National Home Mortgage Finance PHP2 billion Sukuk 29th September 2015 Corp TBA XL Axiata IDR1.5 trillion Sukuk 15th September 2015 By December 2015 HNA Group US$150 million Sukuk 11th September 2015 TBA Governmeent of Jordan JOD200-300 million Sukuk 4th September 2015 Before end of 2015 Government of Jordan JOD200-300 million Sukuk 4th September 2015 TBA Saudi Electricity Company US$1.5 billion Sukuk 1st September 2015

Sukuk market. State-run National Home total portfolio, deputy CEO for corporate ASIA Mortgage Finance Corp and First Metro support Frederick Siew confi rmed with SDE relies on toll increase for Investments Corp (in partnership with IFN. BSN, which recently unveiled a new Malaysia’s CIMB Bank) have expressed brand identity, will spend RM130 million proϐit their intentions to sell Sukuk. (US$31.09 million) over the next three MALAYSIA: Senai-Desaru Expressway years on corporate branding. (SDE) has failed to record profi ts Halkbank postpones Islamic during the six years of its operations Icon Bahtera completes BBA and can only expect to pay dividends banking plans to its four shareholders, Rancak Bistari, TURKEY: Halkbank has submitt ed an facility drawdown YPJ Holdings, Ranhill and Tabung application to the Banking Regulation MALAYSIA: Malaysia-based Icon Infrastruktur Bank Pembangunan Islam, and Supervision Agency to cancel the Bahtera has completed the drawdown in 2048 on its RM940 million (US$223.22 authorization process of the bank’s of a term fi nancing facility of BN$37 million) Sukuk program, according to proposed Islamic banking subsidiary. The million (US$26.36 million) pursuant to The Rakyat Post quoting SDE’s CEO bank confi rmed in a statement that its the Islamic principle of Bai Bithaman Ajil Mustaza Salim. Mustaza added that the plans to set up a participation bank will (BBA) on the 19th October 2015, according toll increase would boost profi t for the be placed on the agenda in the future. to a bourse fi ling. company with the bulk of the proceeds to be used to repay the interest rate on the ALI increases stake in MCT Khazanah to sell Bank loans and interest for the Sukuk program PHILIPPINES: Ayala Land (ALI) has Muamalat stake and the rest for the maintenance and increased its stake in the Malaysia-based operation of the highway. MALAYSIA: Sovereign wealth fund property developer MCT to 32.95% from Khazanah Nasional looks to offl oad 9.16% for US$92 million. ALI’s CFO Jaime Amanie plans expansion into its entire 30% stake in Bank Muamalat Ysmael was quoted in The Standard as Malaysia in a proposed merger between new markets saying that the fi rm is confi dent of MCT’s the Islamic bank and exempt fi nance solid track record in project execution MALAYSIA: Shariah advisory fi rm company Malaysia Building Society and business strategy. Earlier, the fi rm Amanie Advisors is looking to enter into (MBSB), according to The Edge quoting announced that it was considering Sukuk new markets such as Nigeria, India and unnamed sources. The remaining 70% fi nancing to fund the investments in Gambia to provide Islamic products and stake in Bank Muamalat is held by Malaysia. services due to the strong demand for conglomerate DRB-Hicom while MBSB is the industry. As there is less competition 65%-owned by the Employees Provident in new markets compared to established OCBC opens Islamic premier Fund. ones, the fi rm aims to be more active banking center in the former, according to Bernama MALAYSIA: OCBC Al-Amin, according EPF proposes bill quoting the fi rm’s executive chairman Dr to a statement, has launched its inaugural amendments Mohd Daud Bakar. dedicated Islamic premier banking center MALAYSIA: The Employees Provident at its newly opened 11th branch in Shah No rules on Sukuk issuance Fund (EPF) has proposed amendments Alam. to the Employees Provident Fund Act yet 1991 which will allow the board to PHILIPPINES: The governor of Bangko BSN to launch Islamic SME declare a dividend of any rate for Shariah Sentral ng Pilipinas, Amando M Tetangco product compliant accounts in tandem with the Jr, was quoted by INQUIRER.net as actual performance of the investment MALAYSIA: Bank Simpanan Nasional saying that the central bank has not made by the board in relation to the (BSN) is looking to launch a new yet issued the policy on the issuance accounts, whereas for non-Shariah Islamic SME fi nancing product in the of Sukuk, which may lead to the delay accounts, a dividend of not less than next few months, according to Yusof in the issuance of the Republic’s fi rst 2.5%, according to Bernama. The bill also Abdul Ghani, the bank’s deputy CEO Sukuk. This clarifi cation follows recent seeks to provide for the establishment of for retail banking. The bank’s Islamic announcements from the private and the Shariah Advisory Committ ee among fi nancing portfolio stands at 65% of its public sectors of their plans to tap the other amendments.

EUROPE ISFIN partners with Greek ϐirm GREECE: Global Islamic ﬁ nance legal network ISFIN in a statement announced a new partnership with Manolis Eglezos & Associates, a Greece-based law ﬁ rm specializing in maritime, banking and commercial law.

and Togo, according to a statement. For Gulf International Bank and HSBC GLOBAL Tajikistan, the US$70 million agreement Bank Middle East as the mandated lead DLA Piper expands African will contribute toward fi nancing a power arrangers, while Sharjah Islamic Bank grid project connecting the Central and and Warba Bank were the lead arrangers presence South Asian nations (CASA-1000). For together with Qatar International Islamic GLOBAL: International law fi rm DLA Togo, the US$21 million agreement Bank as the asset custodian. Piper has expanded its presence in will contribute toward fi nancing the Africa with the establishment of its own construction of the Tchamba–Sadori road, S&P’s 2016 projections offi ce in Casablanca, Morocco, which a vital 60 kilometer link connecting Togo GLOBAL: Due to weaker oil prices, is to be followed by Johannesburg, to Burkina Faso. South Africa in the fi rst quarter of next changes in global regulatory frameworks for banks and insurers as well as a year. The fi rm’s Casablanca offi ce will GFH Capital buys US real be led by Christophe Bachelet as the lack of integration within the industry, managing partner with partner Mehdi estate S&P expects the growth of the Islamic Kett ani and counsel Mohamed Mahjoubi GLOBAL: GFH Capital has agreed to fi nance market to moderate to single whereas Michael Whitaker, the former acquire a US$125 million industrial real digits in 2016 from the 10-15% expansion COO of Cliff e Dekker Hofmeyr, has estate portfolio in the US, confi rmed experienced over the last 10 years. been appointed by the fi rm to assist in its parent company Shariah compliant However, the industry would still the development of the new offi ce in GFH Financial Group in a bourse fi ling. be able to maintain some traction as Johannesburg, according to a statement. Comprising 18 income-producing governments of core markets are likely to assets across six states with an overall continue using Islamic fi nance as part of their investment spending strategy. The Sunrise Properties procures occupancy rate of 98%, the expected return for the portfolio is an average rating agency said in a statement that it Islamic ϐinancing facilities cash-on-cash yield of 8.5% while the expects the industry to be worth US$3 GLOBAL: Sunrise Properties has signed internal rate of return stands at 10%. trillion sometime in the next decade. AED515 million (US$140.18 million) syndicated term and Murabahah Ezdan secures Islamic facility Moody’s reviews GCC facilities, according to a statement by sovereign credit proϐiles Emirates NBD Capital which was the sole for expansion plan mandated lead arranger and bookrunner, GLOBAL: Mashreq Al Islami, acting in GLOBAL: Moody’s has, in its report on whereas Doha Bank and Emirates NBD the capacity of mandated lead arranger, the GCC sovereigns, observed that GCC Bank were the fi nanciers of the fi nancing. sole bookrunner and facility agent, has governments’ fi scal and current account The facilities, which will be used for closed a fi ve-year US$500 million senior balances will remain under pressure with the development of the Emerald Palace secured syndicated facility for Ezdan lower oil prices expected to stretch for Kempinski Hotel on Palm Jumeirah, were Holding Group Company, according to longer. Steff en Dyck, a vice president — fully subscribed by the fi nanciers. a statement. Oversubscribed by more senior analyst at Moody’s said that the than 2.5 times, the facility will be utilized impact will spur policy adjustments in 2016 in which energy subsidy reforms are IDB extends ϐinancing to Togo to support Edzan’s expansion and developmental plans in its core market. among the fi scal options available. The and Tajikistan rating agency also projects that all GCC GLOBAL: The IDB has signed Other banks that participated in the countries except Kuwait will again run development fi nancing agreements fi nancing include: Abu Dhabi Islamic fi scal defi cits in 2016. totaling US$91 million with Tajikistan Bank, Ahli United Bank, Emirates NBD,

portfolio through renovation and capital a share premium of QAR40 (US$10.97) MIDDLE EAST expenditure, according to a statement. per share. Investcorp acquires new residential properties Islamic Holding to increase EI to provide DLD smart BAHRAIN: Alternative investment capital by 50% payment platform manager Investcorp, through its US- QATAR: The extraordinary general UAE: Emirates Islamic (EI) has signed an based real estate arm and separate assembly of Islamic Holding Group agreement with Dubai Land Department transactions, has acquired a portfolio has approved the company’s capital (DLD) to provide a smart payment of eight residential properties in the increase by 50% from QAR40 million platform, which is being developed by metropolitan areas of Las Vegas, (US$10.97 million) to QAR60 million EI together with Network Intelligent Denver, Chicago, Atlanta and Dallas (US$16.46 million) through the issuance Payment Solutions. The platform will for approximately US$400 million. of two million new shares. According to allow DLD’s customers to pay fees and The properties have been acquired a statement, eligible shareholders will process their payments via EI’s local through joint ventures with several local be oﬀ ered shares at a rate of one new branches, ATMs, online banking and and regional operating partners. The share for each two existing shares at a other payment channels, according to a ﬁ rm also intends to add value to the nominal value of QAR10 (US$2.74) plus statement.

Amlak to offer Palma Serenia Residences, according to a press balance based on the customer’s portfolio property ϐinancing package release. Under the agreement, customers and fi nancial status. The fi nancing is wishing to purchase property at Serenia available for up to 25 years, with profi t UAE: Amlak Finance has entered Residences using Amlak’s services will rates from 3.75% to 4.9% being fi xed for into a strategic alliance with Palma make an initial downpayment of the unit the fi rst three years. Development to off er Shariah compliant price whereby Amlak will fi nance the fi nancing for the latt er’s property at

share. The investment plan is established London’s private rented sector. In a along three minimum risk areas: short- statement, the asset manager details that ASSET term businesses (catt le rearing, washing it is targeting to raise GBP100 million bay and cash-crop farming); medium- (US$154.56 million) in funds which MANAGEMENT term businesses (transportation and will be invested to expand the existing First Islamic investment fund commodity trading); and long-term portfolio and is projecting returns in launched in Kumasi businesses (real estate development, excess of 10% annually over a fi ve- Islamic microfi nance, project fi nancing year period. The fund will be open for GHANA: Ahlussunna WalJama’a Ashanti and venture capital). subscriptions until March 2016 with a Regional Imam has initiated the fi rst minimum subscription of GBP75,000 Islamic investment fund in the Ghanaian LCP collaborates with Al (US$115,925) for direct investors or metropolis of Kumasi, off ering ethical GBP25,000 (US$38,641) for those investment tools to investors seeking Rayan Bank on LCA III investing through SIPPs, SSAS, ISAs or to invest in profi table Halal business UK: London Central Portfolio (LCP) has off shore pension schemes. LCA III is ventures. According to Myjoyonline. partnered with Al Rayan Bank to fi nance exempt from a range of new taxes, which com, GHC100,000 (US$2.48) is to be its latest Shariah compliant property buyers, acting on their own, will now raised in the IPO of 200 shares at a share fund, the London Central Apartments pay. value of GHC500 (1.24 US cents) per III (LCA III), focusing on Prime Central

the same period in 2014. Total income borrowings into Islamic fi nancing RESULTS increased to OMR4.26 million (US$11.03 and reduced fi nance cost payments Takaful Oman Insurance million) from OMR1.25 million (US$3.24 by converting to mid and short-term million) but total expenses edged up to repayment schedules, according to a OMAN: Takaful Oman Insurance OMR7.96 million (US$20.61 million) from statement. announced a post-tax profi t of OMR1.1 OMR5.57 million (US$14.42 million). Total million (US$2.85 million) for the fi rst assets more than doubled to OMR236.77 Al Rajhi Bank nine months of 2015, against a net loss million (US$612.93 million). of OMR193,592 (US$501,157) from the SAUDI ARABIA: Al Rajhi Bank has corresponding period in 2014. According posted a decline in net profi t by 2.54% to a bourse fi ling, gross contribution Qatar Islamic Bank to SAR5.18 billion (US$1.38 billion) for surged to OMR5.53 million (US$14.32 QATAR: Qatar Islamic Bank for the fi rst the period ending 30th September 2015 million) from OMR157,225 (US$407,013) nine months of 2015 recorded a 24.8% from last year’s SAR5.32 billion (US$1.42 while revenue was up to OMR1.41 increase in net profi t to QAR1.4 billion billion). However, according to the bank’s million (US$3.65 million) from OMR7,438 (US$384.16 million) as compared to interim fi nancial statements, total assets (US$19,255). The fi rm began operations the same period last year while total rose to SAR325.21 billion (US$86.68 in June 2014. income rose 23% to QAR3.3 billion billion) over the period, up 8.87% year- (US$905.53 million). Total assets as at the on-year. Ahli Bank 30th September stood at QAR123 billion (US$33.75 billion), a 28% jump from the Bank Dhofar OMAN: Ahli Bank, which operates an end of December 2014, confi rmed the Islamic window, announced a 14.1% bank in a statement. OMAN: Bank Dhofar, which operates improvement in profi t for the January- Maisarah Islamic Banking Services, has September 2015 period to OMR21.8 disclosed a consolidated post-tax net million (US$56.43 million), according to a Al Mazaya Holdings profi t of OMR33.4 million (US$86.68 bourse statement. Total assets grew 20.8% UAE: Al Mazaya Holdings achieved million) for the January-September 2015 to OMR1.92 billion (US$4.97 billion). an increase of 18.8% in net profi t to period (up 10.12%) while earnings after AED82.34 million (US$22.41 million) tax from its Islamic banking operations Alizz Islamic Bank in the third quarter of 2015 compared stood at OMR1.67 million (US$4.33 to AED69.3 million (US$18.87 million) million) — a 13,775% surge from the OMAN: According to Alizz Islamic recorded in the similar period last year. corresponding period last year. The Bank’s unaudited fi nancial results, the Earnings per share observed an increase bank’s initial unaudited fi nancial results bank made a net loss of OMR4.23 million to 13.29 fi ls (3.62 US cents) per share over show that total assets reached OMR3.34 (US$10.95 million) for the fi rst nine the period compared to last year’s 11.19 billion (US$8.67 billion) as at the 30th months of 2015 against a loss of OMR4.43 fi ls (3.05 US cents) per share. Al-Mazaya September 2015. million (US$11.47 million) registered in has also successfully transformed all

Bank Muscat 2015 against OMR1.35 million (US$3.5 23% to OMR316.43 million (US$819.15 million) achieved in the similar period million). OMAN: Bank Muscat, which operates last year. According to its preliminary Islamic window Meethaq, has reported fi nancial statement, consolidated gross an increase of 7.5% in net profi t to Sabana REIT contributions from General Takaful and OMR136.2 million (US$352.64 million) Family Takaful over the period totaled SINGAPORE: Sabana Shariah Compliant for the nine-month period ending the 30th OMR19.64 million (US$50.87 million). Industrial REIT (Sabana REIT) disclosed September 2015. Net income from Islamic a 1.5% increase in gross revenue to fi nancing also observed a growth of SG$25.49 million (US$18.4 million) and 10.2% year-on-year to OMR13.7 million Bank Nizwa a 1.4% growth in net property income (US$35.47 million) over the period, OMAN: Bank Nizwa disclosed a net loss to SG$18.29 million (US$13.21 million) according to a press release. of OMR4.23 million (US$10.95 million) for the third quarter of 2015. In its for the nine-month period ended the 30th fi nancial results for the third quarter, the Al Madina Takaful September 2015, a 29% improvement aggregate leverage level in the period from the OMR5.96 million (US$15.43 stood at 38%; the fi rm produced a SG$50 OMAN: Al Madina Insurance Company million) loss it made in the corresponding million (US$36.1 million) revolving recorded a growth in net profi t to period in 2014. According to a bourse commodity Murabahah facility due 2018 OMR1.46 million (US$3.78 million) for fi ling, the Islamic bank’s total assets grew in September. the nine-month period ending September

(US$35.87 million) in premiums a year marine insurance policy. According to TAKAFUL from subscriptions and is also targeting Amwal Al Ghad, quoting Mohamed Sun Life Takaful targets to secure about 960,000 Bank Rakyat El-Ghadrify, the insurance broker for customers over the next four years. Wethaq Takaful, Iskan and AIG Egypt’s increased subscriptions technical bids, the technical envelopes MALAYSIA: Sun Life Malaysia Takaful Egyptian Railway Authority would be opened on the 26th October has signed a four-year bancaTakaful 2015. The policy is to cover the imported agreement with Bank Kerjasama Rakyat launches call for tenders equipments and train carriages of the Malaysia (Bank Rakyat), according to EGYPT: Egyptian Railway Authority fourth phase of Cairo Metro Project’s a press release. The Takaful operator has invited tenders for a EUR200 million third line. expects to achieve RM150 million (US$226.86 million) two-year renewable

CI afϐirms Emirates NBD’s ‘seaAAA(pi)/Stable’ respectively with a RATINGS rating view that the ratings are supported by Indonesia’s ratings the country’s strong external position, the UAE: Capital Intelligence has affi rmed vast amount of savings in its sovereign reafϐirmed the fi nancial strength rating (FSR) wealth funds and its conducive business INDONESIA: Indonesia’s global-scale of Emirates NBD at ‘BBB+’ with the environment, according to a statement. and ASEAN-scale sovereign ratings have outlook on the FSR changed to positive been reaffi rmed at ‘gBBB2(pi)/Stable’ from stable, according to a statement. DBK’s Sukuk reafϐirmed and ‘seaAA3(pi)/Stable’ respectively Concurrently, the bank’s long-term GLOBAL: State-backed Development by RAM, which are premised on the foreign currency rating is maintained at Bank of Kazakhstan (DBK)’s RM1.5 country’s fi scal strength, demonstrated ‘A’ and the short-term rating at ‘A1’ with billion (US$358.77 million) Sukuk by low government debt levels and the support rating at ‘1’. Murabahah program (2012/32) has been commendable fi scal management. In a reaffi rmed at ‘AA2/Stable’ by RAM, statement, the rating agency noted that Bank Islam’s ratings refl ecting the credit strength of the favorable government fi nances continue reafϐirmed Kazakhstani government and a high to be a key rating strength. MALAYSIA: RAM has reaffi rmed likelihood of parental support when Bank Islam’s ‘AA3/Stable/P1’ fi nancial needed, according to a statement. CI downgrades AIB’s ratings institution ratings, and concurrently BAHRAIN: Capital Intelligence has the ‘A1/Stable’ rating of its RM1 billion Top ratings for Saadiq lowered Al Baraka Islamic Bank’s long (US$241.65 million) subordinated Sukuk MALAYSIA: Standard Chartered and short-term foreign currency ratings Murabahah program (2015/2045) has Saadiq’s ‘AAA/Stable/P1’ ratings have to ‘BB’ and ‘B’ respectively from ‘BB+/ also been reaffi rmed, according to a been reaffi rmed by RAM based upon A3/Stable’, according to a statement. The statement. the strong integration of the bank’s outlook on the ratings is revised to stable operations with its parent, according to from negative. Concurrently, the support RAM reafϐirms the UAE’s a statement. As at the end of March 2015, level rating of ‘2’ is maintained on the ratings the Islamic bank accounted for 2% of grounds of the high likelihood of support Malaysian Islamic banking assets and in UAE: RAM has reaffi rmed the UAE’s from the parent Al Baraka Banking 2014, saw fi nancing grow 40%. Group, also in Bahrain. global-scale and ASEAN-scale sovereign ratings of ‘gAA2(pi)/Stable’ and

MOVES Axis REIT MALAYSIA: Islamic industrial REIT, Axis REIT, has appointed Leong Kit May as its new CEO, eﬀ ective on the 1st January 2016, according to a bourse ﬁ ling. Leong — who led the creation of Axis REIT’s maiden Sukuk issuance in 2012 — will succeed George Stewart LaBrooy, who will retire on the 31st December 2015 and will continue to serve the board as a non-independent non- executive director from the 1st January 2016.

Tawreeq Holdings UAE: Margrith Lütschg-Emmenegger, previously president of FIMBank, has been appointed to the board of directors of Shariah compliant Tawreeq Holdings, according to a press release. Turkey Forum Gatehouse 17th November 2015 UK: Trevor Homes has joined Gatehouse The Marmara Taksim, Istanbul Bank as the Islamic bank’s head of real estate ﬁ nance, eﬀ ective the 13th October 2015, according to a press release. Homes was previously a partner at ICG Taking Participation Finance to the Next Level Longbow.

Ahli United Bank The IFN Turkey Forum continues to grow from strength to strength. With the full support of financial regulators and the participation finance community, the Turkey Forum is viewed as the meeting place for UK: Ahli United Bank (UK), which oﬀ ers customized Islamic ﬁ nancial dealmakers from Turkey, Asia and across Europe. With an exploding debt capital market and a rapidly products, has appointed David developing Shariah compliant equity market the forum will bring together the industry’s leading Hodgkinson as a non-executive director arrangers and issuers to discuss the newest deals and trends impacting participation finance in Turkey. in replacement of David Casson, who will retire in November. According to a press release, Hodgkinson will also sit on the Audit and Compliance REGISTER FREE NOW at Committ ee of the bank. www.REDmoneyevents.com

BLME Holdings UK: Barclays veteran David Williams has been appointed as an independent IN PARTNERSHIP WITH LEAD PARTNERS non-executive director and chairman of the Risk Committ ee for BLME Holdings. Williams has been approved by the

UK Prudential Regulation Authority to LEAD LAW PARTNER MULTILATERAL STRATEGIC PARTNER ASSOCIATE PARTNER perform controlled functions with eﬀ ect from the 15th October 2015, conﬁ rmed a statement. EXECUTIVE PARTNERS SHUAA Capital UAE: Ali Salaam, previously the head BREAKOUT SESSION SPONSOR EXCLUSIVE KNOWLEDGE PARTNER LUNCHEON SPONSOR LANYARDS SPONSOR of coverage for the Middle East at VTB

Capital, has been appointed as the head RESEARCH PARTNER LEAD MEDIA PARTNER STRATEGIC MEDIA PARTNERS of coverage and placement for SHUAA Capital where he will oversee the ﬁ rm’s sales function and product oﬀ ering, MEDIA PARTNERS according to a statement.

Expected date Company's name Size Structure Announcement Date TBA Country Garden Real Estate RM1.5 billion Sukuk Murabahah 6th October 2015 First quarter of 2016 National Home Mortgage Finance PHP2 billion Sukuk 29th September 2015 Corp TBA XL Axiata IDR1.5 trillion Sukuk 15th September 2015 By December 2015 HNA Group US$150 million Sukuk 11th September 2015 TBA Governmeent of Jordan JOD200-300 million Sukuk 4th September 2015 Before end of 2015 Government of Jordan JOD200-300 million Sukuk 4th September 2015 TBA Saudi Electricity Company US$1.5 billion Sukuk 1st September 2015 TBA Albaraka Turk TRY1 billion Sukuk 1st September 2015 TBA Turkiye Finans TRY1.5 billion Sukuk 1st September 2015 2016 Government of Indonesia IDR12.2 trillion Sukuk 1st September 2015 By 2017 KT Bank EUR100 million Sukuk 11th June 2015 Before end of 2015 National Commercial Bank SAR2 billion Sukuk 24th August 2015 TBA TIME dotCom UP to RM1 billion Sukuk 19th August 2015 2016 Government of South Africa TBA Sukuk 13th February 2015 TBA Government of Niger XOF150 billion Sukuk 26th February 2015 Third quarter of 2015 Government of Tunisia US$500 million Sukuk 13th January 2015 2015 Al Baraka Turk Participation Bank US$300 million Sukuk 12th August 2015 2016 Al Baraka Bank (Egypt) US$100 million Sukuk 12th August 2015 2016 Jordan Islamic Bank US$100 million Sukuk 12th August 2015 2016 Al Baraka Bank (South Africa) US$50 million Sukuk 12th August 2015 Fourth quarter of 2015 Government of Ivory Coast XOF300 billion Sukuk 24th April 2015 September Government of Jordan JOD200 million Sukuk 17th June 2015 2015 Government of UAE TBA Green energy Sukuk 12th March 2015 TBA Turkiye Finans US$400 million Sukuk 20th July 2015 TBA Tenaga Nasional Up to RM9.5 billion Sukuk 16th July 2015 TBA Arab National Bank Up to SAR2 billion Sukuk 16th July 2015 TBA Arab Petroleum Investment Corp US$3 billion Sukuk 1st July 2015 TBA Eskom TBA Sukuk 25th June 2015 Fourth quarter of 2015 Republic of Turkey TBA Sukuk 25th June 2015 End of 2015 Kuveyt Türk TRY800 million Sukuk 24th June 2015 TBA 1Malaysia Development RM5 billion Sukuk 18th June 2015 TBA Toyota Capital Malaysia TBA Sukuk 17th June 2015 TBA SapuraKencana Petroleum RM7 billion Sukuk Murabahah 16th June 2015 TBA Sindh Province US$200 million Sukuk 15th June 2015 TBA Grand Sepadu RM210 million Sukuk Murabahah 5th June 2015 TBA Abu Dhabi Islamic Bank US$3 billion Sukuk 29th May 2015 2015 Government of Oman US$1 billion Waqf Sukuk 26th May 2015 TBA Masraf Al Rayan TBA Sukuk 14th May 2015 TBA AEON Credit RM1 billion Sukuk Murabahah 13th May 2015 TBA Bank OCBC NISP TBA Sukuk 13th May 2015 TBA Government of Oman OMR200 million Sukuk 11th May 2015 Jun-15 Adira Dinamika Multi Finance IDR500 billion Sukuk 6th May 2015 2015/2016 ﬁ scal year Government of Egypt TBA Sukuk 5th May 2015 2016 Government of Kazakhstan TBA Sukuk 9th April 2015 TBA CIMB Group Holdings RM1 billion Sukuk 9th April 2015 TBA Government of Senegal TBA Sukuk 6th April 2015 TBA Oman Telecommunications TBA Sukuk 23rd March 2015 TBA Zorlu Energy TRY100 million Sukuk 20th March 2015 TBA Turkiye Finans RM2.05 billion Sukuk 20th March 2015

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 2500 1200

2130 1120

1760 1040

1390 960

1020 880

650 800 May Jun Jul Aug Sep Oct May Jun Jul Aug Sep Oct

REDmoney GCC 6 Months REDmoney Global 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 1300 2200

1140 1896

980 1592

820 1288

660 984

500 680 May Jun Jul Aug Sep Oct May Jun Jul Aug Sep Oct

REDmoney MENA 6 Months REDmoney US 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 1150 2250

1020 1960

890 1670

760 1380

630 1090

500 800 May Jun Jul Aug Sep Oct May Jun Jul Aug Sep Oct

SAMI Halal Food Participation (All Cap) 6 months

2250

2110

1970

1830

1690

1550 May-2015 Jun-2015 Jul-2015 Aug-2015 Sept-2015 Oct-2015

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 1400 1300

1230 1130

1060 960

890 790

720 620

550 450 May Jun Jul Aug Sep Oct May Jun Jul Aug Sep Oct

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 2250 2450

1900 2060

1550 1670

1200 1280

850 890

500 500 May Jun Jul Aug Sep Oct May Jun Jul Aug Sep Oct

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

Eurekahedge North America Islamic Fund Index 200.00 190.00 180.00 170.00 160.00 150.00 140.00 130.00 120.00 110.00

Index Values 100.00 90.00 80.00 70.00 60.00 50.00 Jul-06 Jun-14 Jun-10 Oct-11 Feb-13 Sep-15 Dec-99 Dec-03 Apr-01 Aug-02 Mar-05 Mar-09 Nov-07

Top 10 Annualized Returns for ALL Funds since Inception Fund Fund Manager Performance Measure Fund Domicile 1 Atlas Pension Islamic - Equity Sub Atlas Asset Management 21.21 Pakistan 2 Alkhair Capital Istanbul Alkhair Portfoy Yonetimi 18.81 Turkey 3 Meezan Tahaﬀ uz Pension - Equity Sub Al Meezan Investment Management 18.40 Pakistan 4 Atlas Islamic Stock Atlas Asset Management 15.00 Pakistan 5 Public Islamic Opportunites Public Mutual 13.06 Malaysia 6 AlAhli Saudi Trading Equity The National Commercial Bank 12.87 Saudi Arabia 7 Alkhair Capital Index Alkhair Portfoy Yonetimi 12.81 Turkey 8 Public Islamic Select Enterprises Public Mutual 12.00 Malaysia 9 WSF Global Equity - USD I Cogent Asset Management 11.96 Guernsey 10 Danareksa Syariah Berimbang Danareksa Investment Management 11.50 Indonesia Eurekahedge Islamic Fund Index 2.84 Taking into account funds that have at least 12 months of returns as at the 19th October 2015 Top 10 Annualized Standard Deviation for ALL Funds since Inception Fund Fund Manager Performance Measure Fund Domicile 1 Boubyan USD Liquidity Boubyan Capital Investment Company 0.04 Kuwait 2 Boubyan KWD Money Market Boubyan Bank 0.06 Cayman Islands 3 Public Islamic Money Market Public Mutual 0.13 Malaysia 4 PB Islamic Cash Management Public Mutual 0.14 Malaysia 5 CIMB Islamic Deposit CIMB-Principal Asset Management 0.17 Malaysia 6 CIMB Islamic Money Market CIMB-Principal Asset Management 0.17 Malaysia 7 PB Islamic Cash Plus Public Mutual 0.21 Malaysia 8 Emirates Islamic Money Market Limited Emirates NBD Asset Management 0.26 Jersey Institutional Share Class I USD 9 FALCOM SAR Murabaha FALCOM Financial Services 0.28 Saudi Arabia 10 AlAhli Euro Murabahat The National Commercial Bank 0.33 Saudi Arabia Eurekahedge Islamic Fund Index 8.30 Based on 53.33% of funds which have reported September 2015 returns as at the 19th October 2015

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 Fixed Income Index over the last 5 years Eurekahedge Islamic Fund Fixed Income Index over the last 1 year 180 103 170 101 160 99 150 97 140 95 130 93

Percentage 120 Percentage 91 110 89 100 87 90 85 Jul-15 Jul-10 Jan-15 Jan-10 Jan-11 Jun-15 Jun-11 Jun-12 Oct-14 Oct-14 Sep-14 Sep-15 Sep-15 Dec-14 Dec-11 Apr-15 Apr-14 Apr-15 Aug-15 Mar-15 Mar-15 Nov-14 Nov-12 Nov-13 May-15 May-13

Top 10 Islamic Fixed Income Funds by 3 Months Returns Fund Fund Manager Performance Measure Fund Domicile 1 Public Islamic Bond Public Mutual 1.76 Malaysia 2 Atlas Pension Islamic - Debt Sub Atlas Asset Management 1.40 Pakistan 3 Meezan Tahaﬀ uz Pension - Debt Sub Al Meezan Investment Management 0.94 Pakistan 4 Public Islamic Enhanced Bond Public Mutual 0.60 Malaysia 5 CIMB Islamic Enhanced Sukuk CIMB-Principal Asset Management 0.49 Malaysia 6 Public Islamic Select Bond Public Mutual 0.17 Malaysia 7 AlAhli Diversiﬁ ed US Dollar Trade The National Commercial Bank 0.13 Saudi Arabia 8 AlAhli International Trade The National Commercial Bank 0.10 Saudi Arabia 9 AlAhli Euro Murabahat The National Commercial Bank 0.03 Saudi Arabia 10 BIMB Dana Al-Fakhim BIMB UNIT Trust Management (BUTM) -0.04 Malaysia Eurekahedge Islamic Fund Index (0.55)

Based on 63.33% of funds which have reported September 2015 returns as at the 19th October 2015

Top 10 Sortino Ratio for ALL Islamic Funds since Inception Fund Fund Manager Performance Measure Fund Domicile 1 CIMB Islamic Money Market CIMB-Principal Asset Management 57.62 Malaysia 2 Atlas Pension Islamic - Debt Sub Atlas Asset Management 25.57 Pakistan 3 Meezan Tahaﬀ uz Pension - Debt Sub Al Meezan Investment Management 24.66 Pakistan 4 Public Islamic Income Public Mutual 10.00 Malaysia 5 Public Islamic Bond Public Mutual 5.78 Malaysia 6 Public Islamic Select Bond Public Mutual 5.61 Malaysia 7 PB Islamic Bond Public Mutual 5.27 Malaysia 8 QInvest Sukuk QInvest 3.96 Cayman Islands 9 Atlas Pension Islamic - Money Market Sub Atlas Asset Management 3.31 Pakistan 10 BLME Sterling Liquid Bank of London and The Middle East 2.99 Luxembourg Eurekahedge Islamic Fund Index 1.74

Based on 53.33% of funds which have reported September 2015 returns as at the 19th October 2015

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.

Most Recent Global Sukuk Priced Issuer Nationality Instrument Market US$ (mln) Managers 8th Oct 2015 Rantau Abang Malaysia Sukuk Domestic market 358 CIMB Group, AmInvestment Bank Capital public issue 5th Oct 2015 IDB Trust Saudi Sukuk Euro market 336 Natixis Services Arabia private placement 18th Sep 2015 International UK Sukuk Euro market 200 Standard Chartered Bank, National Bank Finance Facility public issue of Abu Dhabi, Maybank, Emirates NBD, for Immunisation National Commercial Bank Jamaica 15th Sep 2015 Pengurusan Air Malaysia Sukuk Domestic market 362 Maybank, Bank Islam Malaysia, CIMB Group SPV public issue 2nd Sep 2015 SapuraKencana Malaysia Sukuk Domestic market 200 Maybank TMC public issue 24th Aug 2015 West Coast Malaysia Sukuk Domestic market 239 RHB Capital Expressway public issue 6th Aug 2015 Sarawak Energy Malaysia Sukuk Domestic market 386 RHB Capital, Kenanga Investment Bank, public issue AmInvestment Bank 30th Jul 2015 Kuala Lumpur Malaysia Sukuk Domestic market 289 Maybank, CIMB Group Kepong public issue 9th Jul 2015 Putrajaya Malaysia Sukuk Domestic market 237 Maybank, CIMB Group, AmInvestment Bank Holdings public issue 19th Jun 2015 Maxis Malaysia Sukuk Domestic market 226 CIMB Group public issue 4th Jun 2015 Pengurusan Air Malaysia Sukuk Domestic market 163 Maybank SPV public issue 28th May 2015 Hong Kong Hong Kong Sukuk Euro market 1,000 Standard Chartered Bank, HSBC, National Sukuk 2015 public issue Bank of Abu Dhabi, CIMB Group 27th May 2015 Garuda Indonesia Indonesia Sukuk Euro market 500 Standard Chartered Bank, Deutsche Bank, Global Sukuk public issue ANZ, National Bank of Abu Dhabi, First Gulf Bank, Maybank, Dubai Islamic Bank, Sharjah Islamic Bank, Emirates NBD, Al Hilal Bank, Warba Bank, Noor Bank 25th May 2015 Benih Restu Malaysia Sukuk Domestic market 278 OCBC, RHB Capital, Maybank, CIMB Group public issue 22nd May 2015 Jana Kapital Malaysia Sukuk Domestic market 419 RHB Capital public issue 22nd May 2015 Malaysia Malaysia Sukuk Domestic market 250 RHB Capital Building Society public issue 21st May 2015 Perusahaan Indonesia Sukuk Euro market 2,000 JPMorgan, HSBC, Dubai Islamic Bank, CIMB Penerbit SBSN public issue Group Indonesia III 18th May 2015 Dubai Islamic UAE Sukuk Euro market 750 Standard Chartered Bank, HSBC, National Bank public issue Bank of Abu Dhabi, First Gulf Bank, Maybank, Dubai Islamic Bank 18th May 2015 THP Suria Mekar Malaysia Sukuk Domestic market 280 RHB Capital public issue 15th May 2015 Jambatan Kedua Malaysia Sukuk Domestic market 560 RHB Capital, Maybank, Kenanga Investment public issue Bank, AmInvestment Bank

Global Sukuk Volume by Month Global Sukuk Volume by Quarter

US$bn US$m US$bn Value (US$bn) Avg Size (US$m) US$m 12 1500 18 600 Value (US$bn) 16 10 1250 14 500 Avg Size (US$m) 8 1000 12 400 10 300 6 750 8 4 500 6 200 4 100 2 250 2 0 0 0 0 112543 5 9876 11 1210 432 9876 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 4Q3Q2Q 4Q3Q2Q1Q 3Q2Q1Q 2014 2015 2010 2011 2012 2013 2014 2015

Top 30 Issuers of Global Sukuk 12 Months Issuer Nationality Instrument Market US$ Iss Managers (mln) (%) 1 Perusahaan Penerbit Indonesia Sukuk Euro market 2,000 6.7 JPMorgan, HSBC, Dubai Islamic Bank, CIMB Group SBSN Indonesia III public issue 2 Dubai Islamic Bank UAE Sukuk Euro market 1,750 5.8 Standard Chartered Bank, HSBC, National Bank of Abu Dhabi, public issue Dubai Islamic Bank, Sharjah Islamic Bank, Emirates NBD, Al Hilal Bank, Noor Bank, First Gulf Bank, Maybank 3 DanaInfra Nasional Malaysia Sukuk Domestic market 1,663 5.6 RHB Capital, Maybank, Bank Islam Malaysia, CIMB Group, public issue AmInvestment Bank, Aﬃ n Investment Bank 4 Malaysia Sovereign Malaysia Sukuk Euro market 1,500 5.0 Standard Chartered Bank, HSBC, CIMB Group Sukuk public issue 5 IDB Trust Services Saudi Sukuk Euro market 1,336 4.5 Saudi National Commercial Bank, Standard Chartered Bank, Arabia private placement HSBC, National Bank of Abu Dhabi, RHB Capital, Dubai Islamic Bank, Gulf International Bank, Natixis, CIMB Group 6 Petronas Global Malaysia Sukuk Euro market 1,250 4.2 JPMorgan, Deutsche Bank, Morgan Stanley, HSBC, Maybank, Sukuk public issue Mitsubishi UFJ Financial Group, CIMB Group, Citigroup, Bank of America Merrill Lynch 7 Islamic Republic of Pakistan Sukuk Euro market 1,000 3.3 Standard Chartered Bank, Deutsche Bank, Dubai Islamic Bank, Pakistan public issue Citigroup 7 Hong Kong Sukuk Hong Sukuk Euro market 1,000 3.3 Standard Chartered Bank, HSBC, National Bank of Abu Dhabi, 2015 Kong public issue CIMB Group 7 Hazine Mustesarligi Turkey Sukuk Euro market 1,000 3.3 HSBC, CIMB Group, Citigroup Varlik Kiralama public issue Anonim Sirketi 7 Government of Ras UAE Sukuk Euro market 1,000 3.3 JPMorgan, National Bank of Abu Dhabi, Citigroup, Al Hilal Bank Al Khaimah public issue 11 Danga Capital Malaysia Sukuk Domestic market 992 3.3 RHB Capital, CIMB Group public issue 12 Khadrawy UAE Sukuk Euro market 913 3.1 Standard Chartered Bank, JPMorgan, HSBC, National Bank of Abu public issue Dhabi, Dubai Islamic Bank, Abu Dhabi Islamic Bank, Citigroup, Emirates NBD 13 Dubai International UAE Sukuk Euro market 700 2.3 Standard Chartered Bank, Dubai Islamic Bank, Emirates NBD, Financial Centre public issue Noor Bank 14 Pengurusan Air SPV Malaysia Sukuk Domestic market 678 2.3 CIMB Group, Maybank, Bank Islam Malaysia public issue 15 Jana Kapital Malaysia Sukuk Domestic market 604 2.0 RHB Capital public issue 16 Mumtalakat Sukuk Bahrain Sukuk Euro market 594 2.0 Standard Chartered Bank, Deutsche Bank, BNP Paribas, Holding public issue Mitsubishi UFJ Financial Group 17 Jambatan Kedua Malaysia Sukuk Domestic market 560 1.9 RHB Capital, Maybank, Kenanga Investment Bank, public issue AmInvestment Bank 18 Prasarana Malaysia Malaysia Sukuk Domestic market 541 1.8 RHB Capital, Kenanga Investment Bank, CIMB Group, Aﬃ n public issue Investment Bank, AmInvestment Bank 19 Sharjah Islamic UAE Sukuk Euro market 500 1.7 Standard Chartered Bank, HSBC, Kuwait Finance House, Dubai Bank public issue Islamic Bank, Abu Dhabi Islamic Bank, Emirates NBD, Al Hilal Bank, Noor Bank 19 Noor Bank UAE Sukuk Euro market 500 1.7 Standard Chartered Bank, Dubai Islamic Bank, South Indian public issue Bank, Citigroup, Emirates NBD, Al Hilal Bank, QInvest, Barwa Bank 19 IFFIm Sukuk UK Sukuk Euro market 500 1.7 Saudi National Commercial Bank, Standard Chartered Bank, public issue National Bank of Abu Dhabi, CIMB Group, Barwa Bank 19 Flydubai UAE Sukuk Euro market 500 1.7 Standard Chartered Bank, HSBC, National Bank of Abu Dhabi, public issue Dubai Islamic Bank, Emirates NBD, Credit Agricole, Noor Bank 23 Garuda Indonesia Indonesia Sukuk Euro market 496 1.7 Standard Chartered Bank, Deutsche Bank, ANZ, National Bank of Global Sukuk public issue Abu Dhabi, First Gulf Bank, Maybank, Dubai Islamic Bank, Sharjah Islamic Bank, Emirates NBD, Al Hilal Bank, Warba Bank, Noor Bank 24 Malaysia Building Malaysia Sukuk Domestic market 433 1.4 RHB Capital, DRB-HICOM, AmInvestment Bank Society public issue 25 National Higher Malaysia Sukuk Domestic market 426 1.4 Maybank, CIMB Group Education Fund public issue 26 Sarawak Energy Malaysia Sukuk Domestic market 386 1.3 RHB Capital, Kenanga Investment Bank, AmInvestment Bank public issue 27 AmIslamic Bank Malaysia Sukuk Domestic market 363 1.2 AmInvestment Bank public issue 28 HSBC Amanah UK Sukuk Domestic market 358 1.2 HSBC, Maybank, Hong Leong Financial Group Malaysia public issue 29 THP Suria Mekar Malaysia Sukuk Domestic market 304 1.0 RHB Capital public issue 30 Cagamas Malaysia Sukuk Domestic market 298 1.0 Standard Chartered Bank, AmInvestment Bank public issue 29,979 100

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

Manager US$ (mln) Iss % US dollar 16.8 1 CIMB Group 5,192 48 17.3 Malaysian ringgit 12.5 2 RHB Capital 3,458 36 11.5 0.3 3 HSBC 2,690 18 9.0 Euro

4 Maybank 2,475 28 8.3 Saudi riyal 0.3

5 Standard Chartered Bank 2,475 22 8.3 6 AmInvestment Bank 1,951 22 6.5 Sukuk Volume by Issuer Nation US$ (billion) 12 Months

7 Dubai Islamic Bank 1,663 12 5.6 Malaysia 15.0 8 National Bank of Abu Dhabi 1,253 11 4.2 UAE 5.9 Indonesia 2.5 9 Citigroup 1,149 6 3.8 Saudi Arabia 1.6 10 JPMorgan 1,003 4 3.4 Turkey 1.2 11 Emirates NBD 692 8 2.3 Pakistan 1.0 12 Deutsche Bank 579 4 1.9 Hong Kong 1.0 13 Kenanga Investment Bank 559 12 1.9 14 Al Hilal Bank 541 5 1.8 Global Sukuk Volume by Sector 12 Months 15 Noor Bank 475 5 1.6 16 Natixis 447 2 1.5 13% 5% Finance 17 Aﬃ n Investment Bank 424 6 1.4 Government 5% 39% Transportation 18 Bank Islam Malaysia 293 3 1.0 10% Construction/Building 19 Mitsubishi UFJ Financial Group 287 2 1.0 Oil & Gas Other 20 Saudi National Commercial Bank 211 2 0.7 28% 21 Hong Leong Financial Group 192 6 0.6 22 Abu Dhabi Islamic Bank 177 2 0.6 Global Sukuk Volume - US$ Analysis 23 BNP Paribas 169 2 0.6 24 Sharjah Islamic Bank 166 2 0.6 US$bn US$m 24 First Gulf Bank 166 2 0.6 18 600 16 Non-US$ US$ 500 26 Barwa Bank 163 2 0.5 14 12 400 10 27 Morgan Stanley 139 1 0.5 300 8 27 Bank of America Merrill Lynch 139 1 0.5 6 200 4 100 29 Riyad Bank 133 1 0.4 2 0 0 30 Gulf International Bank 111 1 0.4 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 4Q3Q2Q 4Q3Q2Q1Q 3Q2Q1Q 2010 2011 2012 2013 2014 2015 Total 29,979 121 100

Top Islamic Finance Related Project Finance Mandated Lead Top Islamic Finance Related Project Financing Legal Advisors Arrangers 12 Months Ranking 12 Months Mandated Lead Arranger US$ (million) No % Legal Advisor US$ (million) No % 1 Sumitomo Mitsui Financial Group 1,354 1 18.0 1 Salans FMC SNR Denton Group 3,334 2 26.6 2 HSBC 750 3 10.0 2 Milbank Tweed Hadley & McCloy 2,704 1 21.6 3 National Commercial Bank 651 3 8.7 2 White & Case 2,704 1 21.6 4 Riyad Bank 584 2 7.8 4 Allen & Overy 1,086 5 8.7 5 Samba Capital & Investment 518 3 6.9 5 Cli ﬀ ord Chance 720 2 5.8 Management 6 Al Rajhi Capital 356 3 4.7 6 Baker & McKenzie 433 2 3.5 7 Mitsubishi UFJ Financial Group 354 1 4.7 7 Norton Rose Fulbright 354 1 2.8 7 Mizuho Financial Group 354 1 4.7 7 Pekin & Pekin 354 1 2.8 9 Banque Saudi Fransi 346 2 4.6 9 Latham & Watkins 333 1 2.7 10 National Bank of Kuwait 290 1 3.9 10 Linklaters 311 1 2.5

Top Islamic Finance Related Financing Mandated Lead Arrangers Ranking 12 Months Top Islamic Finance Related Financing Deal List 12 Months Mandated Lead Arranger US$ (mln) No % Credit Date Borrower Nationality US$ (mln) 1 Samba Capital 1,273 6 6.9 th 2 First Gulf Bank 1,214 13 6.6 30 Mar 2015 Saudi Aramco Saudi Arabia 9,999 3 Banque Saudi Fransi 1,051 5 5.7 16th Mar 2015 Rabigh Reﬁ ning & Saudi Arabia 2,870 Petrochemical 4 Abu Dhabi Islamic Bank 950 6 5.2 15th Jan 2015 SapuraKencana TMC Malaysia 2,239 5 HSBC 903 9 4.9 18th Jun 2015 Emirates National Oil UAE 1,500 6 Saudi National Commercial Bank 903 6 4.9 th 7 National Bank of Abu Dhabi 788 5 4.3 19 Nov 2014 Saudi Binladin Group Saudi Arabia 1,327 8 Riyad Bank 644 3 3.5 10th Mar 2015 Port & Free Zone World UAE 1,100 9 Abu Dhabi Commercial Bank 634 4 3.5 17th Apr 2015 Turkiye Vakiﬂ ar Bankasi Turkey 1,021 10 Standard Chartered Bank 614 7 3.3 15th Dec 2014 Arab Petroleum Saudi Arabia 949 11 Emirates NBD 508 7 2.8 Investments 12 Noor Bank 496 6 2.7 28th Jul 2015 GEMS Education UAE 817 13 Mashreqbank 490 5 2.7 16th Aug 2015 ACWA Power International Saudi Arabia 769 14 Alinma Bank 490 2 2.7 15 Arab Banking Corporation 371 6 2.0 Top Islamic Finance Related Financing by Country 12 Months 16 SABB 342 3 1.9 Nationality US$ (mln) No % 1 Saudi Arabia 6,255 6 34.0 17 Barwa Bank 340 5 1.9 2 UAE 6,079 13 33.0 18 Dubai Islamic Bank 332 4 1.8 3 Malaysia 2,411 3 13.1 19 RHB Capital Bhd 322 3 1.8 4 Turkey 1,890 4 10.3 20 Sumitomo Mitsui Financial Group 314 3 1.7 5 Kuwait 622 3 3.4 21 ING 269 2 1.5 6 Qatar 500 1 2.7 22 Gulf International Bank 263 3 1.4 7 Cayman Islands 325 1 1.8 23 Maybank 247 2 1.3 8 Egypt 212 1 1.2 23 AmInvestment Bank 247 2 1.3 9 Oman 55 1 0.3 25 Kuwait Finance House 241 2 1.3 10 Italy 51 1 0.3 26 Qatar Islamic Bank 222 4 1.2 Top Islamic Finance Related Financing by Sector 12 Months 27 UOB 215 1 1.2

27 CIMB Group 215 1 1.2 Oil & Gas

29 Union National Bank 200 4 1.1 Finance 30 Kuwait International Bank 190 3 1.0 Utility & Energy

Top Islamic Finance Related Financing Mandated Lead Arrangers Construction/Building 12 Months Transportation Bookrunner US$ (mln) No % bln10US$ 28 3 7654 1 Maybank 2,239 1 20.7

2 Samba Capital 1,327 1 12.3 Global Islamic Financing - Years to Maturity (YTD Comparison) 3 Abu Dhabi Islamic Bank 805 4 7.5 2015 4 Noor Bank 748 4 6.9 2014 5 Saudi National Commercial Bank 666 1 6.2 2013 2012 5 Riyad Bank 666 1 6.2 2011 5 Alinma Bank 666 1 6.2 2010 2009 8 Emirates NBD 519 4 4.8 2008 9 Dubai Islamic Bank 376 2 3.5 0% 20% 40% 60% 80% 100% 0-3yrs 3-5yrs 5-7yrs 7-10yrs 10+yrs 10 Standard Chartered Bank 304 2 2.8

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

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AAOIFI 14, 21 Egyptian Financial Supervision Authority 25, 26 Nomura 28 ABHC Sukuk 28 Egyptian Railway Authority 32 Noor Bank 12, 28 Abu Dhabi Islamic Bank 30 Emirates Islamic 30 OCBC Al-Amin 29 Ahli Bank 31 Emirates NBD 28, 30, 32 Ahli United Bank 30, 33 Emirates NBD Capital 30 OCBC Bank (Singapore) 16 Ahlussunna WalJama’a Ashanti Regional Imam 31 Employees Provident Fund 29 OJK 15 Al Baraka Bank 25 Ethmar 15 Olayan Financing Company 3 Al Baraka Islamic Bank 32 EY 20 Paglas Corp 14 Al Madina Insurance Company 32 Ezdan Holding Group Company 30 Pak-Qatar General Takaful 19 Al Masah Capital 1 Faisal Islamic Bank 25 Palma Development 31 Al Mazaya Holdings 31 Family Bank 15 Al Rajhi Bank 31 FIMBank 33 Philippine Stock Exchange 14 Al Rayan Bank 31 First Gulf Bank 28 PwC 3, 20 Al-Amanah Islamic Investment Bank First Habib Modaraba 19 Qatar International Islamic Bank 12, 22, 30 of the Philippines 14 First Metro Investments Corp 13, 14, 29 Qatar Islamic Bank 12 Albaraka Turk 28 Gatehouse Bank 4, 33 QInvest 12, 28, 31 Alizz Islamic Bank 31 GFH Capital 30 Alliance Bank Malaysia 9 GFH Financial Group 30 Raast Islamic Bankari 15 Alsayedah Khadijah Bint Khawilid Center 3 GIZ 15 RAM 32 Amanie Advisors 16, 29 Goldman Sachs 28 Rancak Bistari 29 Amlak Finance 31 Gulf International Bank 30 Ranhill 29 Amman Stock Exchange 8 Halkbank 29 Rasameel Structured Finance 5 APICORP 28 HNA Group 22 Australian Prudential Regulation Authority 20 HSBC 10, 12 RHB Islamic Bank 24 Australian Securities and Investments HSBC Amanah Malaysia 16 S&P 30 Commission 20 HSBC Bank Middle East 30 S&P Dow Jones Indices 22 Axis REIT 33 ICD 6, 8, 22 Sabana REIT 32 Ayala Land 14, 29 ICG Long Bow 33 Said Al Shahry Law Oﬃ ce 18 Bangko Sentral ng Pilipinas 13, 29 Icon Bahtera 29 Schlumberger 10 Bank Dhofar 31 IDB 15, 30 Bank Islam 32 IMF 20 SEC of Nigeria 7 Bank Kerjasama Rakyat Malaysia 32 Industrial and Commercial Bank of China 22 SECP 12, 15 Bank Muamalat Malaysia 29 International Islamic Financial Market 21 Securities Depository Center 8 Bank Muscat 18, 32 Investcorp 30 Senai-Desaru Expressway 29 Bank Negara Malaysia 28 ISFIN 29 Sharjah Islamic Bank 30 Bank Nizwa 32 Iskan 20 Bank of Khyber 15 Islamic Cooperative Finance Australia 20 SHUAA Capital 33 Bank Simpanan Nasional 29 Islamic Holding Group 30 Simmons & Simmons 3 Banking Regulation and Supervision Jaiz Bank 7 SME Corp Malaysia 9 Agency of Turkey 29 Jordan Islamic Bank 8 Standard Chartered Bank 12, 28 Barclay Wealth 3 Jordan Water Authority 8 Standard Chartered Saadiq 32 Barwa Bank 12, 28 Khazanah Nasional 29 BLME Holdings 33 King Hussein Foundation 15 Strategy& 3, 4 Cagamas 16 Kuwait Finance House Investment 5 Sun Life Malaysia Takaful 32 Capital Intelligence 32 Kuwait Investment Authority 5 Sunrise Properties 30 Capital Markets Authority of Kuwait 5 Land Bank of the Philippines 14 Tabung Infrastruktur Bank Pembangunan Islam 29 Central Bank of Bahrain 13, 28 LM Investments 20 Tadawul 10 Central Bank of Egypt 25 London Central Portfolio 31 CIMB Bank 13, 14, 29 London Stock Exchange 10 Takaful Gambia 27 CIMB Investment Bank 16 Manolis Eglezos & Associates 29 Takaful Oman Insurance 31 CIMB Islamic 15, 16 Markaz 1 Tamkeen 15 Cliﬀ e Dekker Hofmeyr 30 Mashreq Al Islami 30 Tawreeq Holdings 33 COMSATS 10 Masraf Al Rayan 12 UK Prudential Regulation Authority 33 Consultative Group to Assist the Poor 15 MBSB 29 United Nation 6 Country Garden 22 MCCA 20 Crescent Wealth 20 Moody’s 30 Université Catholique de Lille 21 Development Bank of Kazakhstan 32 NASDAQ 10 Université d’Orléans 21 Development Bank of the Philippines 14 National Bank of Kuwait 3 University of Wollongong 21 DLA Piper 5, 30 National Electric Power Company 8 US Federal Reserve 10 Doha Bank 30 National Home Mortgage Finance Corp 13, 14, 29 VTB Capital 33 DRB-Hicom 29 National Industries Group 5 Dubai Financial Services Authority 21 NBFI & Modaraba Association of Pakistan 19 Warba Bank 30 Dubai Islamic Bank 28 NCB Capital 28 World Bank 6 Dubai Land Department 30 NCB Capital 3 YPJ Holdings 29

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