Marco Mauri, Senior Director — Asset

The World’s Global Islamic Finance News Provider 19th December 2012

RED (All Cap) 900 Looking forward, looking back 886.56 In our fi nal issue of the year, we take the big leagues. Malaysia, Qatar and Turkey 875 882.48 a look at the key trends of past 12 ranked fi rst in issuance, with three of the months in what was a stellar year for the biggest deals of the year coming out of the 850 0.4% development of the industry. And looking Middle East. to the future, we talk to some leading market experts on their outlook for 2013, The year has been characterized by 825 with their predictions on what we can massive deals and new entrants, refl ecting expect for the new year. the growing confi dence in the market. 800 Turkey raised TRY1.62 billion (US$904 W T F S S M T million) in its maiden sovereign Sukuk in Powered by: IdealRatings® Back to the future In January of this year we took a look October, kickstarting the sector with major Volume 9 Issue 50 at what we might expect from the year corporates including Turk Telekom, Turkish Airlines and Bank Asya all reported to be IFN Rapids ...... 2 to come, on the back of a strong 2011 characterized by high oil prices and record planning issuances within the next few Islamic Finance news ...... 6 government expenditure in the GCC region months. Qatar Islamic Bank returned to the market for the fi rst time in two years IFN Reports: Islamic Financial Services Board buff ering the industry against the economic to raise US$750 million with a fi ve-year appoints Qatar Central Bank governor as slowdown, and record Sukuk issuance from Malaysia and a growing market from Sukuk in October, while the IDB issued chairman; Collaborative cross-border SME fund in other jurisdictions lending strength to the US$500 million in the same month. Saudi the works ...... 10 Islamic capital markets. Going forward, Arabia has spread its wings this year on the we expected the core markets to continue back of several benchmark-sized Sukuk, IFN Correspondents: Iran; Iraq; Jordan; building on their strong performance, with including the US$1 billion Saudi Aramco Pakistan ...... 11 several new territories also look promising. Total Refi ning and Petrochemical Company (SATORP) issuance in October and the Special Reports: Samer Hĳ azi, a director at KPMG fi nancial services, predicted that: “I expect organic semi-sovereign SAR15 billion (US$4 billion) Affi rmative defenses by debtors in a Wakalah growth to come from markets such as General Authority of Civil Aviation(GACA) arrangement ...... 13 Indonesia, central Asia and Africa, although Sukuk in January, adding to a total of US$9 Standard & Poor’s Sukuk Forecast 2013 ...... 14 the core markets of the GCC, Malaysia continued on page 3 and the UK will continue to dominate. I Column: also expect some interesting and positive Daud Vicary Abdullah ...... 16 developments in Islamic fi nance in North ‘Tis the season Africa in the wake of the Arab Spring.” In Features: addition, we expected to see the industry Editor’s Note The Bahrain economy and Islamic fi nance ..... 17 build on its 2011 Sukuk success to develop As we prepare to close out 2012 and The rise of Islamic cross-border fi nancing ...... 18 a new market. enter a new year, our cover story for Whether to prohibit Islamic windows ...... 20 this last issue of the year looks back at A great year for Sukuk developments in the past 12 months Sukuk issues and advancement in global And 2012 exceeded all expectations: most of and the outlook for the Islamic fi nance markets ...... 22 all in the Islamic capital markets, which are industry going forward. expected to storm home with total issuance Forum ...... 23 of over US$134 billion as of December We also have a feature on the Bahrain Meet the Head: Marco Mauri, senior director this year, up by around 59% on last year’s economy and Islamic fi nance by Dustin — asset management, Alkhair Capital Saudi fi gures: with US$84.4 billion issued in 2011 James Collins of international wealth, and US$52 billion in 2010. And although asset and investment manager The Arabia ...... 25 Malaysia continues to dominate the sector Ott oman Group, while Wasim Saifi , the Deal Tracker ...... 24 with 68% of issuance, the Gulf countries are global head of Islamic consumer... Eurekahedge data ...... 27 catching up while new markets are entering continued on page 5

REDmoney Indexes ...... 29

Performance League Tables ...... 31

Events Diary...... 35

Company Index ...... 36

Subscription Form ...... 36 www.islamicﬁ nancenews.com IFN RAPIDS

Germany’s FWU Group issues Libya’s Warriors Aff airs National Asset Management DEALS largest Sukuk out of Europe Commission plans Shariah launches Shariah compliant compliant funding for SMEs unit trust Islamic Bank of Britain GFH Capital said to have extends deadline for off er missed part-payment for Saudi Electricy Company’s Crescent Wealth launches from Masraf Al Rayan Leeds United takeover US$1.25 billion Sukuk returns superannuation fund 10% UEM Land sells US$196.25 StanChart launches Shariah million Sukuk compliant online banking Central Bank of the UAE’s RATING platform for corporates tough new rules being Banque Saudi Fransi to close Fitch affi rms ratings on delayed US$506.56 million Sukuk ICD inks MoU with African Alinma Bank Guarantee Fund ING Public Takaful MARC affi rms ratings on Ĳ N Ehsan sees higher gross NEWS Asian Development Bank Capital’s US$97.96 million contributions Absa eyes Islamic banking provides US$750,000 grant for Sukuk program Islamic banking growth Fitch sees challenging operations in the country Fitch affi rms ratings on earnings environment for what country CIMB Group in talks to Bahrain Mumtalakat insurance and Takaful sector LBS Bina Group to partially arrange Sukuk for Chinese Holding Company’s multi- redeem US$44.15 million and Indian fi rms Takaful Ikhlas targets currency Sukuk programs US$21.63 million contribution IMTN program Yield on Dana Gas’s Sukuk MARC affi rms ratings on from health products Malaysia’s debt market rises on restructuring plan CIMB Islamic Takaful Malaysia announces to grow up to 5% in 2013, Bahrain’s Islamic banks MARC affi rms ratings on 10% dividend says Hwang Investment cannot compete with larger Konsortium Lebuhraya Management players, says governor of Prudential BSN Takaful Utara-Timur’s US$268 million Bank Muamalat Malaysia central bank launches new health product Sukuk reports US$39.28 million in Oman’s Islamic banking Association of the pre-tax profi t for fi rst half of industry ready to take fl ight Luxembourg Fund Industry MOVES 2012 publishes best practices for Nakheel repays Sukukholders Islamic funds Bain & Company names Dr Islamic Bank of Britain US$57.17 million Yasar F Jarrar as partner at reports growth in home Alkhabeer Capital plans Middle East operations BankDhofar set to launch fi nancing and deposits for the initial public off ering by early Maisarah Islamic banking fi rst nine months of 2012 2014 window

Disclaimer: Islamic Finance news 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.

WE ARE NOW ON iPad, iPhone and Tablets

Looking forward, looking back Continued from page 1 Not just countries billion in issuance for Saudi Arabia The Development Bank of Kazakhstan in the fi rst nine months of the year; issud a debut US$75 million Sukuk in compared to US$5.3 billion for the UAE. July 2012, while the International Bank IrAq Infrastructure projects are driving this of Azerbaĳ an this month announced LuxemBourg boom in the Gulf, accounting for around a US$150 million Islamic syndicated 30% of Sukuk issuance in 2012 compared fi nance facility for 2013 and recently MoroCco ,, to just 7% in 2011, according to Standard launched the country’s fi rst Islamic & Poor’s (S&P), which cites “low yields, banking window. ThailanD m m relatively high liquidity, large capital expenditure needs, and strong investor Remaining challenges IrEland appetite” as the reasons behind the surge. However, it has not all been plain sailing AFghanistan this year, and the industry continues to face challenges to its growth which must SinGapore While some be faced before it can fully exploit its own potential. Standardization remains CHina countries the biggest issue and is highlighted by almost every leading industry expert BahraIn ,,,,, have taken great as the biggest factor holding back the development of a truly global cross- DJibouti strides forward in border industry. PaKistan developing their In 2012, Islamic retail banking also suff ered a blow with the exit of HSBC AustraLia ... domestic sectors, from six of its key Islamic markets. While TurkMenistan the capital markets have boomed this others which once year, Shariah compliant retail banking GermaNy ..... has failed to see the same growth, and showed promise Islamic banks need to capitalize on this CrOatia next year if they are to truly meet market have fallen demand. JaPan behind And while some countries have taken Qatar great strides forward in developing their FRance New markets domestic sectors, others which once We have seen regional dominance shift showed promise have fallen behind. IndoneSia .... and change, with the usual suspects The UK has done litt le to shout about maintaining their strength but new this year, and the handful of Islamic SwiTzerland markets rapidly building their own banks that operate in the country have industries – and we’ve had some struggled to remain profi table. The TUrkey surprises along the way. While at the Islamic Bank of Britain, the country’s start of the year many expected Egypt to only fully-fl edged Islamic retail bank, MoldoVa .. build on the political changes brought is in the process of being sold by its about by the Arab Spring, this has as yet majority shareholder Qatar International KuWait failed to materialize and in fact despite Islamic Bank to Qatari lender Masraf Al MeXico its potential, we have seen litt le real Rayan, aft er failing to turn a profi t since activity coming out of Africa at all. On its inception in 2004. And despite MalaYsia the other hand, Turkey has more repeated rumors, this year the than fulfi lled its early promise UK Treasury publicly said BraZil with a benchmark debut Sukuk that it had no intention of and rapidly increasing trade issuing a sovereign UK fl ows and Islamic investment Sukuk either, with Lord especially with the Middle East. Sassoon, the commercial These are some of the countries we In addition, surprise runners in secretary to the treasury, have subscribers central Asia have been increasingly stating in January that: active in the Islamic fi nance space, “The UK government Contact us now for a free trial…… with Kazakhstan and Azerbaĳ an does not consider a competing for the role of hub sovereign Sukuk Musfaizal Mustafa in the strategically important to be value for Subscriptions Director CIS region that holds so money.” [email protected] much potential in terms Tel: +603 2162 7800 x 24 of oil and gas funds. continued...

Looking forward, looking back Continued from page 3

Looking forward by the SAMA Committ ee for Banking consolidation to meet the continuing So while 2012 has been an exceptional Disputes, and an expected new Saudi capital and business effi ciency challenges year for the industry overall, there is funds law in 2013. We are also seeing a of the ongoing economic crisis. It has to no denying that it has seen both peaks growing interest in Shariah compliant in order to survive.” and troughs. What then, now that we venture capital structures.” are reaching the end of the year, can we In addition, he believes that new growth expect for 2013? However as in the wider global industry, areas are vital and should be encouraged. barriers remain to be surmounted. “The “I expect more news to come out of Saudi Arabia on the up question that must be asked is can the Africa and Central Asia as the industry Islamic fi nancing industry in Saudi Nabil Issa, a partner at King & Spalding also needs new markets to grow.” Arabia get beyond Tawarruqs? Islamic Middle East, believes that Saudi Arabia fi nancing in Saudi Arabia continues to be will continue to advance in 2012 to Dr Hatim El-Tahir, the director of dominated by commodity Murabahahs become a dominant player in the the Islamic fi nance group at Deloitt e, rather than other asset-based market, spreading its wings into fi nancing structures.” agrees that new regional and sectoral new sectors including venture opportunities need to be exploited to capital and real estate. “In terms provide new avenues for growth. He of Saudi Arabia, we continue Regional growth suggests that: “I would like to see the Samer suggests that the to see tremendous growth in industry tapping more into real economy industry in 2013 will start to relation to locally domiciled and commodities and fi ll the gap in adapt to the specifi c needs Shariah compliant funds, Islamic SMEs fi nancing in agribusiness.” He fi nancings and Sukuk of its participants, and must become more also thinks that more needs to be done issuances. The trend is to encourage local growth at a grass expected to intensify with sophisticated in terms roots level. “It goes without saying that the passage of the long of its off ering. “I expect it is vital to assist indigenous industries awaited Saudi Mortgage the industry to see Regulations, reforms more streamlining and continued...

,)1KDVDFWLYHPRELOHXVHUV $UH\RXRQHRIWKHP"

Looking forward, looking back Continued from page 4 and local communities to build their We believe that Sukuk will continue more risk-sharing and asset-backed capabilities to contribute more eff ectively to rise on the back of strong investor Sukuk structures rather than just the in the economy.” demand and increased interest from the debt-like ones.” conventional market. However, we see Strong year for Sukuk Malaysia losing dominance as increased New regions will gain in size and And of course, Sukuk looks set to competition comes from the GCC importance in the industry, with continue its meteoric rise. S&P in an countries and new issuers such as Turkey particular ones to watch being Indonesia, exclusive 2013 forecast for Islamic get in on the game. North Africa and central Asia. However, Finance news (see special report, p.14) concurrently we think cross-border notes that the asset class has had an transactions will increase and with that, exceptional year and looks to continue There remain the importance of a global standard this trajectory in 2013. However, it for Shariah compliance. New capital adds the proviso that issues remain concerns over adequacy guidelines from the IFSB surrounding standardization and will also impact the Sukuk market by cross-border controls which must still Shariah compliance redefi ning which structures can be be resolved. Innovation in Sukuk is also classifi ed as capital and to what extent. on the increase, with new structures and as instruments being used and new fl exibility being The industry is growing from a small introduced — as exemplifi ed by the become more base. While we have seen exceptional recent November issuance by Abu complex, their growth, we are nowhere close to Dhabi Islamic Bank of its US$500 million maturity and there is still much potential perpetual Tier 1 Sukuk, the world’s fi rst global acceptance to grow. However, as the market hybrid Sukuk. gradually begins to reach economies of across multiple scale it is inevitable that the speed of However there remain concerns over growth will slow. Concurrent to this, we Shariah compliance and as instruments jurisdictions will can expect to begin seeing real quality become more complex, their global and innovation as markets start to look acceptance across multiple jurisdictions become ever more at new ways to serve their clients bett er will become ever more important. “The now that their penetration has increased pie is gett ing bigger, at an accelerated important to a level where this is possible. pace,” explains S&P, “but its very recipe is yet to convincingly and durably Despite all the ups and downs, we evolve.” should feel very proud of what we have achieved as an industry in 2012: and we There is also room for growth in the hope to see Islamic fi nance reach even The year ahead development of Sukuk structures. Khalid greater heights in the year to come. — So as we move forward into the fi nal Howladar, a senior credit analyst with LM month of the year and start gett ing ready Moody’s, comments that: “I particularly for 2013, what trends can we expect to would like to see scholars encourage see?

‘Tis the season Editor’s Note Saifi , the global head of Islamic affi rmative defenses by debtors consumer banking at Standard in Wakalah contracts, by our IFN As we prepare to close out 2012 Chartered, writes on the rise of Correspondent Alex Saleh of Al and enter a new year, our cover Islamic cross-border fi nancing. Tamimi & Company; and our IFN story for this last issue of the year Correspondents this week also write looks back at developments in the Aarĳ Wasti and Peter Hodgins of on developments in Iran, Iraq, Jordan past 12 months and the outlook for Clyde & Co debate on the operation of and Pakistan. the Islamic fi nance industry going Islamic branches and windows, while forward. Nafi th Al-Hersh Nazzal, a certifi ed We hope you will fi nd our fi nal issue fi nancial and investment advisor and of the year as informative as always; We also have a feature on the Bahrain statistical analyst in Jordan, discusses and look forward to bringing you economy and Islamic fi nance by the diff erent factors aff ecting Sukuk more industry-leading news and Dustin James Collins of international issuance processes. analysis in the year ahead. Happy wealth, asset and investment manager New Year! The Ott oman Group, while Wasim We also have a special report on

program, at 4.25% aft er receiving orders Germany’s FWU Group issues DEALS worth almost RM3.7 billion (US$1.21 largest Sukuk out of Europe billion). Offer deadline extended GERMANY: Takaful provider FWU UK: Masraf Al Rayan’s deadline to Sukuk closes Group has issued a US$55 million Sukuk announce an off er to take over Qatar Ijarah in a deal touted as the largest International Islamic Bank’s controlling SAUDI ARABIA: Banque Saudi Fransi is Islamic bond sale out of Europe and the stake in the Islamic Bank of Britain has reportedly expected to close a Lower Tier fi rst ever by a German corporate. th 2 Sukuk worth SAR1.9 billion (US$506.56 been extended to the 7 January 2013, th from the 10th December 2012. million) off ering on the 18 December The notes were structured similarly to 2012. the German state of Saxony-Anhalt’s UEM Land sells Sukuk quasi-sovereign EUR100 million The seven-year notes, callable aft er fi ve (US$130.25 million) Sukuk issued in 2005; MALAYSIA: Property fi rm UEM Land years, were priced at 110 basis points and were taken up by a number of GCC- has sold a RM600 million (US$196.25 over three-month Saudi interbank off ered based investors, primarily from within million) fi ve-year Sukuk, its fi rst off ering rate and oversubscribed 2.2 times, the Takaful sector. from a RM2 billion (US$654.2 million) according to Reuters. The Sukuk was backed by assets DEAL TRACKER Full Deal Tracker on page 26 including intellectual property rights. ISSUING DATE ISSUER SIZE (US$) Dr Manfred J Dirrheimer, the chairman CURRENCY ANNOUNCED of FWU Group, said that the fi nancing Teknologi Tenaga Perlis RM 272.44 million 4th December 2012 will expand the group’s global network Consortium while broadening its Takaful off ering; Albaraka Türk Katılım US$ 200 million 19th November 2012 and provided an investment product for Bankası Takaful operators “oft en starved of such products.” Dialog Axiata LKR 397.1 million 2nd November 2012 Malaysia sovereign RM 1.74 million 6th November 2012 Local consultancy fi rm RölfsPartner acted Almarai Company SAR 613.27 million 6th November 2012 as the fi nancial and tax advisor for the transaction, while Vinson & Elkins was the legal advisor. Loyens & Loeff advised on Luxembourg law and international in Europe and the global economy, as tax structuring for the issuing special foreign investors are seen to continue AFRICA purpose vehicle (SPV), which was fl ocking to Malaysian debt issuances, incorporated using a Dutch Stichting Absa to go Islamic in Ghana said Hwang Investment Management. structure. GHANA: Absa, which is in the midst of taking over its parent Barclays’ African Foreign investor interest, driven by Maples FS and ATC Capital Markets operations, plans to commence Islamic the high yields in Malaysian sovereign provided corporate services to the SPV banking in Ghana and other countries bonds, will also be boosted by the and the Dutch Stichting, while Ernst & in the region, such as Egypt, Tanzania, country’s upcoming elections, the Young provided specialist intellectual Uganda and Zambia, said Arrie appreciation of the ringgit against the US property advice for the Sukuk’s Rautenbach, the head of retail markets at dollar and subsidy reform. underlying assets. the bank. Bank Muamalat Malaysia While Germany has traditionally lagged reports results behind its European counterparts Ireland, Luxembourg and the UK in ASIA MALAYSIA: Bank Muamalat Malaysia supporting Islamic fi nance, FWU Group’s reported gross fi nancing of RM10.1 LBS Bina to partially redeem Sukuk and other recent developments, billion (US$3.3 billion) for its fi rst half such as Kuveyt Türk Katılım Bankası’s Sukuk ended the 30th September 2012, with pre- plans to launch Germany’s fi rst fully- MALAYSIA: LBS Bina Group will tax profi t amounting to RM120.2 million fl edged Islamic bank, could signal that partially redeem RM5 million (US$1.64 (US$39.28 million). million)-worth of Sukuk from its RM135 the tide is fi nally turning for the industry in the country. million (US$44.15 million) Islamic The bank’s total assets increased by 19% medium-term notes program on the 20th to RM18.2 billion (US$5.95 billion). December 2012. Malaysian debt market to EUROPE grow IBB reports growth MALAYSIA: The domestic Sukuk and conventional bond market is expected UK: The Islamic Bank of Britain (IBB) has to grow between 4.5-5% and 5% next reported a 63% growth in home fi nancing year, despite prevailing uncertainties continued...

© 6 19th December 2012 NEWS continued... ADB in Islamic funding Oman’s Islamic banking and 43% increase in long-term savings GLOBAL: The Asian Development Bank industry ready to take flight deposits for the nine months ended the (ADB) has channeled a US$750,000 grant OMAN: Islamic Finance news has learnt 30th September 2012. to the governments of Afghanistan, that the fi rst licenses for Islamic banking Bangladesh, Indonesia and Pakistan windows in the sultanate are expected to GFH Capital misses payment? to help the countries’ Islamic banking be issued by the second week of January UK: GFH Capital has reportedly failed sectors comply with IFSB standards. next year, following the release of its to meet a scheduled part-payment for Islamic Banking Regulatory Framework its acquisition of Leeds United Football CIMB sees Sukuk boost (IBRF). Club (LUFC) due in the second week of GLOBAL: Malaysia’s CIMB Group is Qaboos Said Al Said, the sultan of December. optimistic of arranging more Sukuk Oman, has already approved the draft following its acquisition of most of regulations, which will now be followed The private equity fi rm however is said The Royal Bank of Scotland’s Asia- by the Central Bank of Oman’s issuance to have reassured LUFC that the funds Pacifi c operations; and has commenced of the new rules. are now in their lawyer’s client account, discussions with fi rms in India and with Bahrain banking regulations China for the sale of ringgit-denominated “The earliest expected date of any formal requiring an amendment to the payment Islamic bonds, said Badlisyah Abdul license to be issued would be around the schedule. The sale is set to be fi nalized on Ghani, CEO of CIMB Islamic, in a fi rst or second week of January,” said a the 21st December 2012. Bloomberg interview. source.

Six conventional banks have applied GLOBAL MIDDLE EAST for Islamic window licenses, including BankDhofar and BankMuscat. Oman’s StanChart launches Shariah Investors positive on Dana fi rst two fully-fl edged Islamic banks, compliant online banking Gas Sukuk plan Alizz Islamic Bank and Bank Nizwa, commenced operations this year, aft er GLOBAL: Standard Chartered has UAE: The yield on Dana Gas’ Sukuk rose authorities last year announced their launched a Shariah compliant online 2.4% on the 11th December 2012 aft er it approval for Islamic banking in the banking platform for its corporate clients announced its restructuring plans for the sultanate. in Bahrain, Bangladesh, Malaysia and US$920 million notes which matured on Pakistan; off ering cash management, the 31st October 2012. trade, securities and reporting services. Meanwhile, Ernst & Young’s World Islamic Banking Competitiveness Report The yield declined 197 basis points to 2013 has warned that Islamic banks’ ICD in MoU for African SMEs 9.56% in November following its failure profi tability continues to lag behind GLOBAL: The ICD has inked an MoU to repay the debt, representing the largest conventional banks operating in the same with the African Guarantee Fund to monthly decline in over three years, country. develop small and medium-sized according to Bloomberg. enterprises (SME) in the ICD’s member Therefore, could Oman’s Islamic countries in sub-Saharan Africa. Call for larger Islamic banks banks struggle to compete with their BAHRAIN: The kingdom’s Islamic conventional counterparts? The agreement covers term fi nancing, fi nancial institutions lack the scale equity investment and other lines of and size to compete with larger banks, Nonetheless, with strong royal and fi nancing or guarantees; with both with the large and lucrative deals oft en government support encouraging the institutions to cooperate in structuring, beyond the reach of the Islamic banks, rapid development of Islamic fi nance in establishing, promoting, marketing and Oman, 2013 could just be the year for the launching funds for the SMEs. continued... industry to take off in the sultanate.

Bank Negara Malaysia has 335 subscribers to Islamic Finance news, and pays less than US$36 per subscription.

IFN is for everyone, not just the CEO’s

Call: +603 2162 7800 or Email: [email protected]

© 7 19th December 2012 NEWS continued... (US$396.98 million) in Shariah compliant Central Bank of the UAE’s said Rasheed Al Maraj, the governor of funds to fi nance the establishment of tough new rules delayed the Central Bank of Bahrain. small and medium-sized enterprises by former fi ghters. UAE: The Central Bank of UAE has offi cially announced that it is pushing He also said that the kingdom’s Islamic SEC Sukuk outperforms the deadline for its new lending and banks must build their capitalization and fi nancing limits to UAE governments and profi tability; and reduce their reliance on SAUDI ARABIA: Saudi Electricity their entities for further review. the property sector. Company’s (SEC) US$1.25 billion Sukuk maturing in 2022 has returned 10% In a statement, the central bank Nakheel repays Sukuholders since the notes were sold in March this noted that the implementation of the year; and 50% more than global peers, regulations, which was supposed to take UAE: Nakheel has paid AED210 million according to Bloomberg data. eff ect in September this year, as well as (US$57.17 million) to Sukukholders new rules governing liquidity scheduled as part of its US$16 billion debt to take eff ect on the 1st January 2013, restructuring, bringing its total paid will be delayed “until all items of the to creditors to AED9.6 billion (US$2.6 TAKAFUL regulations are reviewed with banks.” billion) since November 2009. Higher gross contributions This is the fi rst time the central bank has BankDhofar ready to go MALAYSIA: ING Public Takaful Ehsan offi cially announced a postponement of sees gross contributions rising 20% Islamic the rules, aft er lenders Emirates NBD and to RM80 million (US$26.1 million) in National Bank of Abu Dhabi indicated OMAN: BankDhofar, whose 2012 from a year earlier, driven by that they would not be able to meet the shareholders approved plans for the the launch of its employee benefi ts September deadline. establishment of Islamic banking business, said Saiful Yazan Ahmad, its activities earlier this year, is prepared to CEO. The central bank said on the 4th April launch its Shariah compliant window, that banks cannot lend more than 100% Maisarah, as soon as it receives Takaful firms’ earnings of their capital to local governments and regulatory approval, according to challenged government-related entities as part of a Anthony Mahoney, its CEO. plan to reduce concentration risk. MALAYSIA: Fitch sees the earnings Shariah funds for soldiers stability of the country’s insurance and Hussain Al Qemzi, CEO of Noor Islamic Takaful sector challenged by regulatory Bank noted in November that the LIBYA: The Warriors Aff airs Commission measures and ongoing volatility in the timeframe for the new rules is extremely is awaiting approval from the capital market. challenging, with Noor only likely to be government to launch a LYD500 million continued... to adhere in three to fi ve years.

WE SEE AN EVEN BRIGHTER FUTURE IN ASIA Our eyes are constantly on the ground to uncover the brightest opportunities in Asia. With a focus on delivering the best for our clients, our results speak for themselves.

Award Winning Fund Eastspring Investments Dana Dinamik, The Edge-Lipper Malaysia Fund Awards 2012, 5 years Best Mixed Asset MYR Flexible Category Eastspring Investments Dana Dinamik, Morningstar Fund Awards Malaysia 2012, Islamic MYR Allocation Category

eastspringinvestments.com.my

© 8 19th December 2012 NEWS continued... The Takaful operator has aslo signed an RATINGS Nonetheless, low market penetration MoU with the NIH which will see the and wider distribution coverage, institute act as the strategic partner and Outlook stable coupled with the entry of more Takaful panel hospital for the Takaful operator’s ChoicePlus medical card. SAUDI ARABIA: Fitch has affi rmed operators, could drive the growth of Alinma Bank’s long term issuer default General and Family Takaful, while the rating at ‘A’; with a stable outlook. central bank’s introduction of a risk- Dividend announced based capital framework for the Islamic MALAYSIA: Takaful Malaysia has Ratings affirmed insurance sector is positive as it will announced a second single-tier interim align the capital requirement of Takaful dividend of 10% for the fi nancial year MALAYSIA: MARC has affi rmed its operators with that of their conventional ending the 31st December 2012, bringing ratings on Ĳ N Capital’s RM30 million (US$97.96 million) Sukuk Musharakah counterparts, it said. its total dividends declared for the year program at ‘AAAIS’; with a stable to 25%. Higher contribution from outlook. health products New offering from PruBSN Solid standing Takaful MALAYSIA: Takaful Ikhlas is targeting BAHRAIN: Fitch has affi rmed Bahrain a RM66 million (US$21.63 million) MALAYSIA: Prudential BSN Takaful Mumtalakat Holding Company’s US$750 contribution from its health coverage (PruBSN Takaful) has launched a new million Sukuk maturing on the 30th June products for its 2013 fi nancial year, health off ering, Takaful Health 2, with 2015, and its RM300 million (US$98.15 from RM41 million (US$13.44 million) minimum contributions starting from million) Sukuk maturing on the 3rd a year earlier, through its collaboration RM100 (US$32.72) a month. October 2017, at ‘BBB’. with the National Heart Institute (NIH) and other hospitals, said Wan Mohd The company’s long-term issuer default Fadzlullah Wan Abdullah, its executive rating and senior unsecured rating was vice-president. FUNDS also affi rmed at ‘BBB’. Best practices published LUXEMBOURG: The Association of Strong affirmations the Luxembourg Fund Industry has MALAYSIA: MARC has affi rmed CIMB published best practices for sett ing up Islamic’s fi nancial institution ratings at and servicing Islamic funds, providing ‘AAA/MARC-1’ and its second-tier junior information and guidance on the Sukuk at ‘AA+IS’. legal framework, fund establishment processes, administration, custody and Affirmed strong ® depository bank services for Islamic funds in Luxembourg. MALAYSIA: MARC has affi rmed its ratings on expressway operator Konsortium Lebuhraya Utara-Timur IPO in the pipeline (KL)’s RM820 million (US$268 million) SAUDI ARABIA: Local investment Sukuk at ‘AA-IS’; with a stable outlook. fi rm Alkhabeer Capital plans to launch an initial public off ering (IPO) by early 2014, off ering around 30% of its capital; pending regulatory approval, according Are you reading to Ammar Shata, its CEO. us on your Islamic unit trust in Sri Lanka iPad / SRI LANKA: National Asset Management (NAMAL) has launched iPhone? the NAMAL Sharia Fund, a unit trust investing in Shariah compliant equities listed on the Colombo Stock Exchange.

Dar Al Sharia provided Shariah To find out more, visit www.inceif.org or contact Mulyadi consultancy for the fund. Harun at [email protected] or call +6.03.7651 4036. New fund by Crescent Wealth MOVES AUSTRALIA: Crescent Wealth ® has launched ‘Personal Choice, Bain & Company Private eWrap’ a Shariah compliant UAE: Global consulting ﬁ rm Bain & superannuation fund. Company has named Dr Yasar F Jarrar as a partner at its Middle East operations.

Islamic Financial Services Board appoints Qatar Central Bank governor as chairman

The Islamic Financial Services Board Monetari Brunei Darussalam, as a deputy Association (UAE), National Insurance (IFSB) has appointed Sheikh Abdullah governor. Commission (Nigeria), Prudential BSN Saoud Al-Thani, the governor and the Takaful (Malaysia), Safran Stratejik chairman of the Qatar Central Bank Sheikh Abdullah has been the governor of Yönetim ve Teknolojik Danışmanlık (QCB), as its new chairman, eﬀ ective the QCB since 2006. He is also the chairman Hizmetleri (Turkey); and Standard & 1st January 2013. of Qatar’s State Audit Bureau, the Qatar Poor’s (Singapore), while Morocco-based Financial Center Regulatory Authority Bank Al-Maghrib was upgraded to full The decision to appoint Sheikh Abdullah and the Qatar Development Bank. member status. was made by IFSB’s existing board of directors on the 13th December 2012. He IFSB also announced the admitt ance of With the addition, the IFSB now has 184 will take over from Rasheed Al Maraj, eight more organizations into its fold, members which comprise 55 supervisory who is also the governor of the Central namely: Capital Markets Authority and regulatory authorities from the bank- Bank of Bahrain. (Kuwait), the Central Bank of the Turkish ing, capital markets and Takaful sectors Republic of Northern Cyprus (Northern in 41 jurisdictions, 121 market players The board also appointed Mohd Rosli Cyprus), Financial Reporting Foundation and eight international inter-governmen- Sabtu, the managing director of Autoriti (Malaysia), the Gulf Bond and Sukuk tal organizations. — LR

Collaborative cross-border SME fund in the works

The small and medium-sized compliant SME fund is a testament to the technology expertise for the SME project, enterprises (SMEs) sector has always economic force of SMEs. according to Khalid Ali Saif Al Yahmadi, been a driving force in propelling CEO of Al Madina, in an interview with economies and global trade. The fi rst of its kind, the fund will provide local daily, Times of Oman. seed capital for SMEs in Oman, and A newly-inked cross-border MoU is expected to be launched in the fi rst He also said that the SME fund is the between Oman’s Al Madina Financial & quarter of 2013. fi rst off erings in what could be the Investment Services and ACA Amanie, a beginning of cross-border funding to be joint venture between Malaysia’s Amanie KoFC and the Omani government will launched by the joint venture, with plans Advisors and government-backed Korea each fund 25% of the capital for each to establish a fund for infrastructure Finance Corporation (KoFC) for the project, with the rest to be provided by projects. — LR establishment of a US$50 million Shariah a South Korean fi rm that will provide

Best Banks

Closing date: Monday 31st December 2012 VOTE NOW

Salam contract applications to answer financing needs

IRAN Generally agreed conditions for a Salam unforeseeable factors. The quantity sale are that: of goods purchased under the By Majid Pireh, IFN Correspondent Salam contract cannot for example 1. The goods sold need not be in be defi ned as that resulting from Sukuk Salam is a model to answer some existence at the time of contracting. the cultivation of a given plot of fi nancing needs. This model of Islamic land since such a quantity may vary fi nancial instruments (Sukuk) is based 2. The delivery date and location must according to unforeseeable factors. on the Salam contract in Shariah. The be specifi ed. Salam contract is a known method for 6. The seller may deliver the contracted fi nancing farmers in their agricultural 3. Full advance sett lement of the agreed items irrespective of the buyer’s activities. trade price is required at the time of circumstances on the delivery date. contracting; otherwise the contract The Salam contract is a contract for would sanction the trading of one 7. The buyer is permitt ed to trade the deferred delivery that was originally debt for another which is not deemed commodity only aft er maturity date. sanctioned during the time of the permissible in Islam. So trading the commodity that is Prophet, peace be upon him, to bought via a Salam contract before facilitate the trading activities of 4. The quality of the items to be maturity is not permissible. farmers who were awaiting the harvest delivered should be defi ned. Rare of crops. In more modern times it has items, or those that are not precisely Based on a Salam contract with above also been applied to the production of specifi able, cannot be the subject of mentioned criteria, a Sukuk Salam raw materials and fungible goods in the Salam sale contract. If the quality could be structured. Sukuk Salam are general. of the items upon delivery is found to certifi cates of equal value issued for the be other than specifi ed, the buyer has purpose of mobilizing Salam capital so According to AAOIFI, the Salam contract the right of refusal. that the goods to be delivered on the is purchase of a commodity for deferred basis of Salam come to the ownership of delivery in exchange for immediate 5. The quantity of the items to be the certifi cate holders. payment according to specifi ed delivered should be defi ned and conditions or sale of a commodity fi xed according to the normal Majid Pireh is an Islamic fi nance expert at for deferred delivery in exchange for method of measurement of those Iran’s Securities and Exchange Organization. immediate payment. items and should not depend upon He can be contacted at [email protected].

Islamic microfinance offering new opportunities

IRAQ the process of draft ing and suggesting the country’s microfi nance institutions, new Islamic legislation that could aid in tackled important issues facing the By Khaled Saqqaf, IFN Correspondent developing the Iraqi economy in addition growing Iraqi microfi nance market. to developing new ways of fi nancing and In recent news 27 countries, including micro fi nancing entities to help them over As a whole, it seems that the concept of Iraq, held a global Islamic microfi nance come the hurdles. These eff orts included using Islamic microfi nancing as a tool forum in Dubai. During this forum, a the development of legislation aimed for rebuilding Iraq has been growing in lot of issues were targeted aiming to at regulating the operations of small popularity. This is seen through the rapid introduce Islamic microfi nance as an eff ective tool of fi ghting poverty and aid and medium-sized enterprise fi nancing growth in Islamic microfi nancing in Iraq social development. Additionally, this companies in Iraq. in addition to the growth in the number forum aimed at discussing ways which of Islamic banks and institutions off ering could be used in developing Islamic In addition to the aforementioned Global such services. This is also easily observed microfi nance on an international level. Islamic Finance Forum held in Dubai, from the ever growing international a conference with the theme of ‘Iraqi recognition through the forums and On a local level, Iraq has, in recent Microfi nance — The Path to Economic conferences being help for this very years, been doubling the eff orts for and Social Advancement’ was held in purpose. strengthening and developing new Erbil through the cooperative eff orts ways to repair the eff ects of the violence of USAID and the Iraq Microfi nance Khaled Saqqaf is a partner at Al Tamimi & caused by the recent years of war in the Network. This conference, which Company. He can be contacted at K.Saqqaf@ region. These eff orts have been through brought together the leaders amongst tamimi.com.

FollowF us on

JDIB launch new services

JORDAN savings accounts programs to its long which suits the needs of every customer. list of services which already cover a Improvements on this type of account By Khaled Saqqaf, IFN Correspondent wide spectrum of services such as retail include the ability of customers to banking, corporate banking, treasury and withdraw larger amounts of their savings As the size of the Islamic fi nance market fi nancial solutions, internet banking and without aff ecting the profi t ratio and in Jordan grows, it is motivating to a JDIB Visa Charge Card. the ability to open accounts in diff erent see that new services are always being currencies. developed to fi ll the gaps in the market. When it comes to the services of home One example of this is the development fi nancing, JDIB has stated that it would of new services by the Jordan Dubai As the Islamic fi nance market grows, like to off er its clients a chance to a lot of the Islamic banks in Jordan are Islamic Bank (JDIB) which has decided acquire “ready to live in real estate” to off er newly developed services developing new services in an att empt to at competitive Ijarah rates. This is a cover the needs of the customers looking that comply with the principles of the particularly helpful service as it covers to go on with the normal day to day Islamic Shariah. the needs of many Jordanians looking business or personal activities without for the benefi ts of regular lease fi nancing breaking the principles of Islamic Shari’a JDIB is a fully integrated Islamic bank while abiding by the Islamic Shariah and have managed to provide an aid for that was established in 2007 when talks rules. began between the Dubai Islamic Bank businesses and families looking for easily and its partner Jordan Dubai Capital. As for the savings account program, accessible solutions while recovering It upholds values which it integrates JDIB is aiming to fulfi l the needs of from the recent economic recession. into its services and strives to serve its customers who authorize the bank all spectrums of the society. That is to invest in their money. Many of the Khaled Saqqaf is a partner at Al Tamimi & why JDIB has recently decided to add benefi ts of using this service would Company. He can be contacted at K.Saqqaf@ services such as home fi nancing and include its ability to be modifi ed in a way tamimi.com.

New regulations for Islamic commercial banks

PAKISTAN pools of assets would be fi nanced by diff erent types of Mudarabah-based By IFN Correspondent deposits. In a bid to improve the reporting These deposits will be placed in income requirements for Pakistani Islamic generating assets such as fi nancing, commercial banks the central bank, and not fi xed assets which will be more the State Bank of Pakistan, has issued diffi cult for banks while managing their rules and procedures which are more asset portfolios. The pool of deposits elaborate with regard to the rate of would be managed and rewarded return on deposits and in accordance separately, every bank will have to strive with Shariah requirements. harder to maximize returns on various pools/categories of deposits to att ract These would now ensure more depositors. standardization in the profi t and loss distribution policies and practices of Depositors would also have to be more the banks. The rules entail that every ‘hands on’ in their selection of the right individual pool of deposits created pool of deposits as the base rate of by the banks would have a complete return on saving deposits as prescribed separate constitution in terms of assets by the state bank from time to time will owned, expenses incurred and the cease to exist on banks. But generally, sources of revenues. it’s the banks that will have to be more effi cient in managing their portfolios to The earnings on the return generated on att ract deposits. the lending and investment decisions through each pool would be distributed The introduction of the new set of Company-Wide between the bank and the depositors instructions by the State Bank of on a predetermined ratio and losses Pakistan will probably be received Subscriber would be inherited by the depositors in with a lot of caution and skepticism all instances other than those occurring in the beginning but that is expected (Since 2007) due to the mismanagement of funds by when any conventional financial or the bank. Under these rules the banks economic structure is replaced by an profi t and loss distribution and fund Islamic one. management structure for creation of

Affirmative defenses by debtors in a Wakalah arrangement

Wakalah contracts are agency agreements that are widely used in Shariah compliant Islamic ﬁ nance transactions. ALEX SALEH talks us through the details.

Wakalah contracts are agency agreements Company (the principal) provided a the appellate court remanded the case that are widely used in Shariah facility amount to Al-Madina Finance and to a panel of experts to determine, compliant Islamic fi nance transactions. Investment Company (the investment among other issues, whether the facts A Wakalah contract is formed when a agent). In the agreement, the two parties of the case merit an interpretation that principal, the Muwakkil, appoints an agreed the investment agent would repay the agreement is a Shariah compliant agent, the Wakeel, to undertake certain to the principal the facility amount plus Wakalah arrangement. transactions on the principal’s behalf. a prescribed profi t. Upon maturity, the An important characteristic of Wakalah investment agent failed to repay said An ultimate decision has yet to be held contracts is that the Muwakkil and the amounts and so the principal fi led a claim in either case; however, from a Kuwaiti Wakeel share in the profi t and risk of against the investment agent. law and court perspective, this case may loss of the transaction. Nonetheless, ultimately provide an affi rmative defence some Wakalah contracts contain The Kuwaiti court rendered a judgment for Islamic fi nancial institutions that provisions that guarantee a specifi ed in favour of the principal ordering the because the transaction was later viewed rate of return or certain profi ts despite investment agent to pay the principal. as non-Shariah compliant despite having the results of the transaction(s). Such The investment agent fi led an appeal knowingly agreed and accepted terms provisions arguably contravene Shariah based on, among other things, that its and conditions of the so-called Wakalah principles as guaranteed returns or judgment was based on an expert’s arrangement, its obligations to repay has profi ts are not Shariah compliant in that opinion which failed to apply the become nullifi ed. they do not enable risk sharing between principals of a Shariah compliant the Wakeel and the Muwakkil. Wakalah agreement. Such a decision will likely raise a red fl ag to any creditor who has entered into similar Recent court decisions regarding disputes The appellant argued that the expert arrangements under Kuwaiti law with involving such Wakalah contracts have falsely concluded that the parties Kuwaiti court jurisdiction. Furthermore, created some concerns among the intended for the facility amount to be the credibility of these institutions may be Islamic fi nance sector. One such dispute repaid with a fi xed profi t. Further, the negatively impacted if such an affi rmative involving Blom Developments Bank, a investment agent argued that the expert defence would allow nullifi cation. Lebanese bank, and The Investment Dar, should have interpreted the agreement Ultimately, any creditor who seeks to enter a Shariah compliant fi nance house based whereby the investment agent was not into a similar arrangement shall consider in Kuwait, was litigated in England in guaranteeing the facility amount but inserting protective provisions such as a late 2009. The case has yet to render a rather that the two parties shared the waiver by the Wakeel to any defence it may fi nal judgment. However, a case with a risk of loss, unless in circumstances of have in connection with the arrangement similar fact patt ern has been litigated in intentional error or gross negligence by being Shariah compliant and furthermore, Kuwaiti courts and its ultimate outcome the investment agent. to require a Shariah pronouncement may have implications on the current confi rming the terms and conditions of the Islamic fi nance sector within Kuwait. The appellate court agreed with the arrangement. investment agent in that if the expert With respect to the Kuwaiti case, two did not apply an acceptable rationale for Alex Saleh is a partner and head of the companies entered into a Wakalah its opinion, then there would be reason Kuwait offi ce at Al Tamimi & Company. He agreement whereby National Sukuk to overturn the judgment. Therefore, can be contacted at [email protected].

Going on a business trip to Indonesia

Use IFN Researh Report to get ALL the information you need on Islamic ﬁ nance in Indonesia

Standard & Poor’s Sukuk Forecast 2013

Sukuk growth bounces back unabated, aided by cross-border ﬂ ows and favorable market conditions, with further potential remaining.

In an exclusive forecast for Islamic the conventional sphere, lengthening accordance with its theoretical weight. Finance news by the Standard & Poor’s the queue of conventional would-be Landmark transactions in Saudi Arabia Ratings Services Islamic fi nance focus issuer of Sukuk. Third, there is a greater and Qatar over the past two years att est team, we bring you an insight into what commitment by key nations to support the potential fi repower of issuers in we can expect in the year to come for the the industry, most notably Malaysia and this region, due to their ‘jumbo-sized’ industry’s fl agship product. Saudi Arabia. Favorable regulation and nature—in the US$1-4 billion range--in legislation are giving the market a boost the context of a Sukuk market where Two thousand and twelve will fi nish in Asia, while lower prices vis-à-vis those most transactions come out of Malaysia with a fl ourish in terms of the fl agship of conventional banks are helping GCC with an average ticket in the US$250-500 product of the Islamic fi nance industry, issues. million range. Elsewhere in Asia, S&P namely Sukuk. Standard & Poor’s further foresees Indonesia to become a Ratings Services (S&P) believes there is rising star in the Sukuk market, largely litt le in the way of another strong year The pie is emulating the combo that made Malaysia in 2013. As of early December 2012, total a success, i.e. passing a supportive global Sukuk issuances exceeded US$134 getting bigger, regulatory framework and building billion, an advance of 59% compared to at an accelerated a track record of sovereign Sukuk the FY2012. Yet again the market saw issuances a fl urry of innovations, new entrants, pace, but its very and record-breaking transactions—all Infrastructure projects are a good fi t for of which got well-advertised — but recipe is yet to Sukuk the fundamentals remain very much Transactions based on stable or the same, being largely skewed toward convincingly and foreseeable cash fl ows from identifi ed the resilient and infrastructure-driven and hard assets, at long tenor, are economies of the GCC countries — durably a natural fi t for Islamic fi nance comprising Bahrain, Kuwait, Oman, transactions, and notably Sukuk. Islamic Qatar, Saudi Arabia, and the UAE — evolve infrastructure deals have started in 2012 and the Asian regions, most notably to rival and equal their conventional Malaysia. The pie is gett ing bigger, at an counterparts in the GCC region, notably accelerated pace, but its very recipe is supported by the GCC fi nancial system’s yet to convincingly and durably evolve: GCC and Asia are to remain the sound liquidity, local investors’ strong on that front we will monitor recent heavyweights on the back of large appetite for debt, and accommodative agreements to standardize further the infrastructure needs, driving the size monetary policies around the world industry or innovations such as Sukuk as and shape of the Sukuk industry translating into tighter yields. Sukuk an alternative capital-raising tool. The GCC-Asia connection is expected to have notably been favored in the GCC remain the key engine for growth for the in the transportation sector and in the S&P believes that Sukuk issuances may sukuk industry. Those two regions off er power sector in Asia, refl ecting the be on a permanently and longer-term a coherent economic partnership as the priorities of the region’s governments. higher trajectory. GCC holds the key—hydrocarbon—to We notably believe that creating an First, we believe there is good forward quenching Asia’s growing thirst for investment culture in infrastructure momentum for Sukuk, with the market energy. GCC-Asia trade relations have assets within each region could boost improving for three good years aft er grown substantially over the past few cross-border Sukuk trading, which, a relative lull aft er the fi nancial crisis years reaching about 30% of total trade in turn, could help harmonize Islamic hit in 2008 and market uncertainty between the two regions. Additionally, fi nance globally rose about the Shariah compliance of faced with rising populations those two some Sukuk structures. Second, the economically resilient regions boast a Companies usually structure Islamic market sees that a good track record is more-than-healthy pipeline of projects fi nance instruments for sale in their in place, now that several high-quality to cater for ever-increasing needs for own backyard: the trend is changing as counterparties have issued well- infrastructure upgrade or expansion. cross-border issuances are picking up. structured Sukuk. Average yields on These projects are fuelling a need by all We believe that greater cross border Sukuk are particularly favorable these types of issuers—from banks, sovereigns, issuances is a smart funding solutions in days as supply is not suffi cient to slake and corporates—to come to the market to the context of two heavyweights of the the appetite of strong investor demand, fi nance those. Both regions are therefore sukuk industry, ie the GCC and Malaysia, combined with growing liquidity in monopolizing more than 95% of global both of which remain two regions with the market, and increased appetite by Sukuk issuances, with Malaysia routinely robust economic prospects on the back non-Islamic investors. The former are accounting for 60-70% of total issuances. of sustainably high commodity prices. realizing that the risk-reward balance We believe the mix may gradually vary is not fundamentally diff erent from over time to let the GCC punch more in continued...

Continued

It could notably develop the trade a new liquidity management body for the with an underdeveloped geographic relationship between the countries industry, based in Malaysia. footprint, and a limited amount of the GCC and Asia to their mutual of market players, products, tools, benefi t. We noted over the past couple and expertise. This notably includes of years that some GCC companies have widespread commonly-agreed upon been crossing the fi gurative border into The industry knowledge to understand and assess Asia (and seldom the opposite) and the specifi c risks of those products, even issued in Malaysian ringgit, either for is far from though most basic Sukuk structures infrastructure fi nance or for general are now increasingly familiar to the funding purposes. The Malaysian mature, with an fi nancial sphere. Depth and breadth currency remains att ractive because of of capital markets, most notably in the that country’s established regulatory underdeveloped GCC, remain limited and an obvious framework for Islamic fi nance, a wider impediment for an industry yearning pool of available standardized Sukuk geographic for more off er In addition, the industry structures, liquidity, as well as investors still has to pass the test of maturity and issuers active in that market. footprint, and a successfully over a full economic limited amount cycle, with a lengthening track record Most of the transactions have been from of resolution of Sukuk defaults (and the GCC to Asia, hardly any the opposite, of market players, restructuring) being the litmus test. a trend we foresee may continue. A positive side-eff ect of increased cross- products, tools, and Yet, 2013 may see game-changing debates border issuances could be further that could reshape the industry and bring standardization and globalization expertise it to the next levels. As a rating agency, of the Islamic fi nance market. Some we will closely follow how the so-called important milestones have for instance ‘hybrid Sukuk’ could help banks bolster been reached as regards the works to their capitalization to reconcile rising homogenize Shariah standards across We expect much of the same in 2013, demand for funding from the corporate jurisdictions. with continued wide infrastructure sector as projects gradually materialize needs across emerging markets and with the upcoming adoption of Basel III According to the Malaysian central signs of continued innovation. requirements. bank, talks including Gulf and Islamic Shariah scholars have led to a consensus S&P remains conscious that for much Paul-Henri Pruvost is head of the S&P on Shariah compliance for about 80% of of the Islamic fi nance market, including Islamic Finance Focus Team and he can all issues outstanding. Asian and Arab Sukuk, current growth is from a small be contacted at paul-henri_pruvost@ states have also come together to support base. The industry is far from mature, standardandpoors.com.

Daud speaks

By Daud Vicary Abdullah trust can work and to actually of this has been achieved, uncover evidence that it without a single penny A couple of months ago I wrote in this does indeed work. Just a of government or state column on the need for a return to a few weeks ago, while help. The basis of their ‘Back to Basics’ approach in the global I was in Egypt, I was success is TRUST fi nancial system so that TRUST could able to take a look at and a strong sense be restored. One of the building blocks a Shariah compliant of COMMUNITY. I highlighted was the need for the re- microfi nancing Where there is this establishment of sound ethical values organization that success story in grounded in a concept that I called the started over 25 years Egypt, there are Golden Rule: “Do unto others as you ago with a few dollars many other similar would have them do to you.” and a few clients ones around the in a small local globe where the This month I would like to revisit community in the same or similar this Back to Basics approach from the Nile delta. Today system is working perspective of microfi nance, a subject it is still a small very well. matt er to which I have had increasing local community- exposure to during the last quarter. As based organization, As we try to alleviate an ex-banker, and particularly during with over 1.25 million poverty, as we try to my time as a banker, microfi nance has clients, all treated in promote ethical values been one of those topics that just did not the same way as the and as we try to join really get on the radar screen at all. It was original clients were 25 up the dots with Islamic an alien topic. It just did not compute. years earlier. Twenty three fi nance. There is strong How could you fi nance people who thousand new fi nancings are evidence that the Back had no track record, no documentation, take up every month, there to Basics approach really no connections and no collateral? So is a less than a 1% default does work and that the the subject matt er was just erased from rate, the community restoration of TRUST the bankers’ DNA and left to inspired has established in the global fi nancial individuals and organizations to do entrepreneurial model should be our something about it and to recognize that training centers so highest priority. the basis of the system was built on one that knowledge can of TRUST. be shared and grown As always, there is always and they have adopted a Takaful much to do and not a moment to Now that I am no longer a banker, it is a model in order to protect the lose. lot easier to see how a simple system of interests of the community. All

htrndrndnthnnnttrthr rtrnnthntnddndnddtntththrth rdrrthndndnrndthnddr rnhtthnrrr

15th - 16th April 2013 21st - 22nd May 2013

27th - 28th June 2013 21st - 22nd October 2013 18th - 19th November 2013 Register NOW to secure your FREE seat! www.redmoneyevents.com

The Bahrain economy and Islamic finance

Bahrain has a strategic location at the heart of the Gulf, and is att empting to re-boost its Islamic ﬁ nance sector following the disruption of the Arab Spring. DUSTIN JAMES COLLINS sings its praises.

The Kingdom of Bahrain is composed Management Center (LMC); the posting solid profi ts and many increasing of over 30 islands, with Bahrain Island International Islamic Financial Market their asset bases. According to Bahrain’s being the largest. Bahrain boasts (IIFM), the Islamic International Rating fi nance minister, Sheikh Ahmed bin sophisticated communications and Agency (IIRA) and the Shariah Review Mohammed Al Halifax, one of the trade facilities and is host to many Bureau. These organizations are in reasons Bahrain’s Islamic sector managed multinational fi rms who do business in addition to the many Islamic fi nancial to avoid the worst of the global recession the Gulf. Petroleum, both production institutions within Bahrain’s fi nancial was its close adherence to the principles and refi ning, accounts for more than sector. laid down by Shariah. This helped the half of Bahrain’s exports, fueling kingdom’s banks avoid buying into signifi cant economic growth in recent In addition, the CBB has recently setup some of the more risky assets that years. Bahrain also has a surging and recognized a special fund, the Waqf subsequently turned toxic. fi nancial sector, focused on Islamic Fund, to fi nance research, training, and banking. education in Islamic fi nance; as well “We’ve never claimed we were as actively working with the fi nancial immune. We were exposed like the rest Bahrain’s strategic location in the heart industry to develop industry standards of the world. But by adhering to best of the gulf is att ractive to multinational and standardized market practices. This practices, were able to make sure that we fi rms, with ready access to the large fund was set up to help bridge the skills minimized the damage to controllable economies of Kuwait, Saudi Arabia and defi cit in Bahrain, and also in an eff ort to levels,” Sheikh Ahmed claims. Iran. expand the Islamic banking sector within Bahrain. Islamic fi nance knowledge hub Increasingly, Bahrain is a major leader Bahrain has been chosen as an Islamic in Islamic fi nance, with the largest Most recently, the fund unveiled plans fi nance knowledge hub by international concentration of Islamic fi nancial to conduct training programmers in business intelligence fi rm Thomson institutions. Bahrain is presently at the conjunction with the Islamic Finance Reuters. The hub will initially employ 21 forefront of Islamic insurance, currently Council UK (IFC) for Shariah scholars, Bahrainis, and this is expected to grow with seven Islamic insurance companies auditors and compliance professionals, over time. (Takaful), as well as two re-Takaful aimed at enhancing their understanding companies within the kingdom. of global fi nancial markets. Specifi cally, “Bahrain has been a pioneer in the Islamic the training program will cover topics fi nance sector, and the establishment Bahrain is also a major player in Islamic such as the global fi nancial crisis, of this knowledge hub by Thomson securities (Sukuk), both governmental development of the monetary system, Reuters will both enhance the kingdom’s short-term and leasing securities. The fi nancial derivatives, the treasury position in the sector and in the global Central Bank of Bahrain (CBB) has function, and equity and debt capital knowledge economy. We have always taken the lead in introducing these new markets. placed a great deal of emphasis on products. making sure we have a local workforce Bahrain has been an innovator in Islamic that has the skills needed by international Tailored for the specifi c needs of Islamic fi nance ever since it brought Sukuk to the businesses and this initiative will support banking, fi nance, and insurance, The CBB international market. They have continued the development of the next generation has produced an all-inclusive prudential to lead the signifi cant growth in this sector of highly-skilled Bahraini Islamic fi nance and reporting framework. Among and have the largest concentration of experts,” said the acting chief executive others, the framework of rules includes Islamic fi nancial institutions in the world, of the Bahrain Economic Development areas such as capital adequacy, risk including commercial, investment and Board, Kamal Ahmed. management, fi nancial crime, licensing leasing banks, insurance companies and rules and requirements and disclosure mutual funds. “Along with promoting entrepreneurship and reporting requirements. The CBB has and innovation, encouraging and also composed an insurance rulebook Bahrain’s Islamic fi nance sector has supporting foreign investments is among addressing the specifi c features of averaged a 15-20% annual growth rate the key means in which Tamkeen is Takaful and re-Takaful fi rms. These two over the last fi ve years. This has prompted fostering the creation and development rulebooks were the fi rst comprehensive consulting giant Deloitt e to establish its of enterprises,” said Shaikh Mohammed regulatory frameworks that dealt with new Islamic Finance Knowledge Centre bin Essa Al Khalifa, the chairman of the Islamic fi nance industry. (IFKC) in Bahrain. This att ests to Bahrain Tamkeen. as the best-regulated fi nancial centre in Bahrain plays host to numerous the Middle East. Dustin James Collins is chairman of The organizations who are critical to Ott oman Group, an international wealth, the development of Islamic fi nance, With regards to the international asset and investment manager that off ers including the Accounting and Auditing economic crisis, Bahrain has weathered public and private capital management Organisation for Islamic Financial the storm relatively well, with most solutions. He can be contacted at dcollins@ Institutions (AAOIFI); the Liquidity Islamic banks and insurance fi rms ott omangroupllc.com.

The rise of Islamic cross-border financing

Over the years, Islamic ﬁ nance has established itself as one of the fastest growing niche markets in the ﬁ nancial industry. WASIM SAIFI looks at how the internationalization of the sector is key in driving it forward.

Islamic assets globally have seen an The internationalization of Islamic Qatar Islamic Bank, Emirates Islamic average annual growth rate of more fi nance off ers potential for it to become Bank, Emaar Properties, Jebel Ali Free than 20%. The growth and demand of a further means by which cross-border Zone Authority (JAFZA), Majid Al the Islamic assets is mainly att ributed fi nancial fl ows are intermediated Futt aim Group, Tamweel, First Gulf to: (i) the increased awareness of between economies worldwide. These Bank, Saudi Electricity Company and Shariah compliant asset classes; cross-border fl ows have been in the form Abu Dhabi Islamic Bank. (ii) rising global wealth; (iii) the of cross-border trade fl ows, syndicated strengthening demand for Shariah fi nancings and Sukuk, project fi nancing At the same time, the demand for compliant investments; and (iv) the and cross-border investments in Shariah Sukuk is also fostered from the increasing global Muslim population. compliant equities and funds. investor community as it att racts both conventional and Islamic investors. One With the total estimated Shariah The fastest growing segment of the of the benefi ts for Sukuk is that it adds compliant assets globally around US$1.3 Islamic fi nancial system has been the a new Islamic liquidity pool which is trillion and Islamic fi nancial services Sukuk market which has provided the not available in case of a conventional being off ered by more than 675 fi nancial platform for issuers to tap the Islamic bond because interest paid on bonds is institutions (including fully-fl edged liquidity. The global Sukuk market has not allowed under Islamic principles. Islamic banks and Islamic windows) played a vital role to eff ectively channel At the same time the issuance is in over 75 countries, Islamic fi nance is the funds across borders, allocating equally att ractive to the conventional fi nally accumulating the economies of surplus funds to productive investment investors as it is structured on the same scale in the global fi nancial system. opportunities. commercial and risk parameters as a typical conventional bond hence allows In 2012, the Sukuk industry emerged traditional bond investors to diversify The global as one of the main components of the their holdings to high quality GCC and Islamic fi nancial system with a steady Asia credits. Sukuk market pipeline of issuances since the beginning of this year. Around US$40 billion- The cross-border linkages between Asia has played a vital worth of Sukuk was issued globally in and the GCC are seeing a signifi cant the third quarter of 2012, almost double boost in the Islamic markets illustrated role to effectively the amount raised during the same by Sukuk issuances such as Abu Dhabi period last year. Total issuances from National Energy Company’s (TAQA) channel the funds the beginning of this year until end of RM650 million (US$212.6 million) October 2012 amounted around US$112 Sukuk, which saw high demand from a across borders, billion. This volume is 60% higher than wide pool of investors. Industry players the same period of 2011. Malaysia has believe that the extensive regulations allocating surplus been leading the market; issuances there put in place in Asian jurisdictions such account for around 70% of the total as Malaysia have spurred these cross- funds to productive global issuances. border linkages. The total Sukuk issuance by foreign issuers in Malaysia in 2012 to investment A number of sovereigns such as date amount to RM3.92 billion (US$1.3 opportunities Malaysia, Indonesia, the Government billion) which is 57% of the total foreign of Dubai, Bahrain, Qatar, Pakistan and Malaysian ringgit Sukuk issuances in recently Turkey have issued Sukuk in the Malaysia. international markets. In 2012, Standard Islamic fi nance is now moving Chartered Bank acted as the joint lead Another signifi cant area for Islamic beyond its traditional boundaries of manager and joint bookrunner for the cross-border fi nancing with signifi cant Muslim-dominated countries such as US$4 billion State of Qatar dual tranche potential for growth is project fi nancing. the countries in GCC, Malaysia and Sukuk issuance and the US$1 billion A number of project fi nancing facilities in Indonesia to other countries such as Republic of Indonesia Sukuk issuance. the GCC are structured as multi-tranche Singapore, which already has Islamic The bank currently ranks third in the facilities with conventional tranches, banking regulations in place; Hong Debt – International Sukuk league table Islamic tranches and ECA backed Kong, which announced a consultation (Bloomberg) having arranged 14 Sukuk tranches tied together with common process on proposed changes to its tax issuances to date in 2012. In addition, terms agreement and security sharing regime to promote the development of an a number of corporates, fi nancial agreements. The structuring of Islamic Islamic bond market; and other countries institutions and multilateral institutions project fi nancing allows addition of a in Africa, Asia and Europe who have have issued Sukuk in 2012 including new liquidity pool which is not available consciously taken steps to promote the Axiata Group, Islamic Development development of the industry. Bank, Qatar International Islamic Bank, continued...

Continued in case of conventional facilities and at from diff erent parts of the world to the same time diversifi cation of funding In terms provide liquid short-term Shariah sources. compliant instruments to facilitate of cross- eff ective cross border Islamic liquidity Majority of the funding / investment management. avenues available to Islamic banks border trade flows, are short to medium term in nature Islamic cross-border fi nancing is an area (majority of international Sukuk fall in trade among the that has huge potential which is yet to be the fi ve-year maturity profi le with some fully explored. It provides (i) benefi ts to recent issuances in the 10-year bucket) expanding emerging issuers in terms of additional liquidity whereas the project fi nancing facilities pool and diversifi cation of funding are typically longer tenor in nature hence economies now sources; (ii) benefi ts to conventional it provides Islamic banks opportunities investors in terms of diversifi cation of to lock in their funds in long-term capital accounts for more investment portfolio; and (iii) funding intensive and infrastructure-based assets. / investment opportunities to Islamic than half of the investors so that they can invest in a In terms of cross-border trade fl ows, Shariah compliant manner. At the same trade among the expanding emerging world trade time, continuing support from regulators economies now accounts for more is required to facilitate the growth of than half of the world trade. In this the Islamic fi nance industry in general environment, Islamic fi nance has Management Corp (IILM) will further and to streamline the local regulatory & important potential to facilitate trade and enhance the capacity of Islamic fi nance tax regimes such that both issuers and investment fl ows that will be mutually in facilitating effi cient cross-border investors can benefi t from the growth in reinforcing. According to various investment fl ows, international linkages the Islamic industry. estimates, Islamic fi nance could tap up to and fi nancial stability, primarily for 20% of the total trade fi nancing by 2013. the Islamic fi nance market. IILM is Wasim Saifi the global head of Islamic established as a supranational institution consumer banking at Standard Chartered & Finally, the establishment of institutions involving central banks from several CEO at Standard Chartered Saadiq Malaysia. like the International Islamic Liquidity jurisdictions and multilateral institutions He can be contacted at wasim.saifi @sc.com.

To receive the latest Get to know the leaders in your Readeadead exclusiveexc usi e articlesa ticlees ananda d developments on the global industry case studies in our annual Islamic capital markets guides and supplements sent Keep abreast of latest deal flows to you in hard copy Read exclusive research and funds performances reports from industry practitioners every week Exclusive online access to www.islamicfinancenews.com

Tel: +603 2162 7800 ext 24 Contact Musfaizal for a FREE Trial subscription Email: [email protected]

Whether to prohibit Islamic windows

AARĲ WASTI and PETER HODGINS explore the continued debate around regulatory frameworks for Islamic ﬁ nancial institutions, and discuss whether conventional ﬁ nancial institutions should be allowed to operate Islamic branches and windows.

Islamic fi nance has continued to expand both supervisory and monetary policy of Islamic fi nancial services side globally, including in the GCC, over considerations. by side with the more familiar the last few years. The Institute of conventional system. This, in the International Finance (IIF) estimated In undertaking an assessment of the long run, will allow global fi nancial in its latest report that Islamic banking international regulatory coverage for regulators to tailor well developed industry assets in the GCC reached conventional fi nancial institutions that rules in relation to Islamic banking. US$314 billion by the end of 2011, operate Islamic branches or Islamic representing about 19% of the total windows, it is apparent that there are • Liquidity support can be provided assets of GCC banks. The IIF also both advantages and disadvantages to to the Islamic window by the estimated that assets of Islamic banks these models. conventional operations of the globally amount to US$1.6 trillion. institution, particularly for banks. The IIF expects the industry to grow at Islamic • Islamic windows provide competition an annual rate of 15-20%, driven mainly to standalone Islamic institutions by reforms in applicable regulatory windows which can improve products and framework, high oil prices and the services and potentially lower costs. increase in demand for Islamic products. provide competition • Windows are a proven way of The IIF’s recent report noted that the to standalone allowing conventional players to region’s Islamic fi nancial institutions decide if they wish to establish an will continue to att ract new players Islamic institutions Islamic operation. For example, Swiss and further boost the sector. The report Re started its Islamic operations via underpinned the need for the Islamic which can improve a window in Malaysia in 2006 (we banking industry to introduce regulatory understand that the viability of this reforms to further boost the banking products and operation having been proven, it sector. converted into a separate branch in services and 2009 and subsequently a separate However, there is a continuing debate company has now been established). around regulatory frameworks for potentially The need to establish, license and Islamic fi nancial institutions and their capitalize a separate entity is a relationship to regulatory frameworks lower costs signifi cant bar to entry for new for conventional fi nancial institutions, players in the market. In the context particularly with respect to allowing of insurance, it is highly unlikely that conventional fi nancial institutions to In broad terms, these include: a conventional insurer considering operate Islamic branches and Islamic whether to enter a market would windows. Advantages be prepared to establish both a • Islamic fi nance windows are able conventional operation and a Takaful In terms of the regulatory approach to leverage off the experience and operation given the scale of most to allowing Islamic windows of operational systems of conventional markets. conventional fi nance institutions, certain fi nance. There is potentially the jurisdictions allow this practice while broader advantage for windows of Using Takaful as an illustrative sector, others require Islamic institutions to being able to leverage off internal Takaful operations currently generate operate on a standalone basis. training and expertise. A continuing signifi cantly less return on equity theme at industry conferences is the than their conventional counterparts In February 2011, the Qatar Central lack of properly trained/ skilled staff (according to the Ernst & Young World Bank (QCB) for example announced that and the lack of diversity of products. Takaful Report 2012) and therefore, in it would prohibit conventional banks It would appear that there is greater the absence of the economies of scale from operating Islamic branches. Qatar’s scope for product development/ that a window operation can bring, there approach is consistent with the approach development of staff at larger is a deterrent for new players if Islamic being advocated in a number of other international players than in what windows are not permitt ed to operate. territories in the region. For example, in are oft en niche Islamic counterparts. the UAE the Takaful regulations issued Another additional advantage of In addition, the risk that a Takaful by the UAE Insurance Authority in 2010 retaining the current model is that operator cannot pay Qard Hasan in prohibit windows and Bahrain likewise the commingling of activities and the event of defi cit in the Takaful fund has a similar prohibition. The QCB is services may provide an opportunity is, arguably, greater than for many believed to have based this decision on for regulators to study the provision continued...

Continued conventional insurers with Islamic there are very few places in the region There are also issues with regard to windows. that international insurers consider to potential confl icts of interests that arise have suffi cient market opportunity to in window operations. However, such warrant the expense of a standalone issues can usually be addressed through The Takaful operation). the establishment of clear policies and procedures. overlapping Disadvantages • The overlapping nature of non- Notwithstanding the above advantages nature of non- Islamic and Islamic activities of and disadvantages, we can see the conventional fi nancial institutions rationale and basis for disallowing Islamic and and the commingling of their Islamic windows, particularly given the activities and services make it international policy position on reducing Islamic activities diffi cult for regulators to properly regulatory arbitrage within a state. supervise the risks encountered by of conventional these institutions. In general, the decision on whether to permit Islamic windows requires the financial • Diffi culties in applying the same delicate balance of state policy with oversight instruments and prudential Shariah principles — in the context institutions and ratios to institutions exposed to both of the fast evolving world of fi nancial Islamic and conventional operations regulation. the commingling whose risks are integrated in a single fi nancial risk position. As stated above, Islamic fi nance is of their activities continuing to expand. This in itself is one and services • The nature of non-Islamic and signifi cant reason to allow conventional Islamic activities of conventional fi rms to operate Islamic fi nance windows make it difficult fi nance institutions makes it diffi cult — to allow the sector to grow. and complex for them to prepare for regulators integrated fi nancial reports given Allowing Islamic fi nance to become more that each type of business is subject mainstream and developed before its to properly to separate international reporting segregation would give Islamic fi nance standards. providers the benefi t of developing supervise the a considered and developed niche, • Diff erences between the legal drawing experience from the more risks encountered frameworks governing Islamic established conventional system. fi nance and conventional fi nance by these would create uncertainties regarding Premature segregation may stall the orderly resolution of conventional development of the Islamic fi nance institutions banks that operate an Islamic sector, to the detriment of not just the window. sector but the fi nancial consumers who in Finally, the size of most individual greater numbers are demanding Shariah markets makes it unlikely that many • The capital adequacy requirements compliant services. players will be prepared to set up a under the Islamic Financial Services Takaful operation to compete with Board diff er from the Basel capital Aarĳ Wasti is a senior associate and Peter conventional insurers. The opportunity adequacy standards for banks and Hodgins is a partner at Clyde & Co. They is simply too limited (in our experience thus make it diffi cult to combine can be reached at aarĳ [email protected] these two approaches. and [email protected].

Are there more than one of you in your company involved in Islamic Finance? Join our SAVE company-wide subscription today 70%

Sukuk issues and advancement in global markets

Sukuk issues have witnessed much popularity over the past 10 years, specifi cally as Islamic banking activities have grown due to increasing demand for Islamic products. NAFITH AL-HERSH NAZZAL discusses the diff erent factors which aff ect Sukuk issuance processes.

Experts estimate huge demand for was a Wakalah structure (and low risk). until the regulatory framework is in place, Sukuk specifi cally in GCC countries. Other factors that play an important role however. The GCC att racts strong infl ows which in risk management decisions include have reached trillions of dollars in the uncertainty over the level of protection for Islamic fi nance has been receiving strong shape of cash surplus or as funds and investors. support from the Jordanian government, portfolios. despite being a small part of the In Sukuk development by country, Jordanian fi nancial system. The support Gulf countries such as Kuwait, Qatar, Turkey sold its fi rst sovereign Sukuk in from the government was demonstrated Saudi Arabia are raising funds for the international markets, raising US$1.5 when a committ ee was formed in 2010 diff erent reasons including expansion and billion, marking a long-awaited entry into to study legislative issues relating to infrastructure. With the expectations of the Islamic fi nance capital markets and the issuance of Sukuk and other Islamic a low interest rate policy environment, sett ing the benchmark for more corporate fi nancial products and services and we expect fi xed income assets (Sukuk) to Sukuk out of the republic. in 2011 a draft law was submitt ed. continue in popularity. The proposed law was to enable the September witnessed issuance of around issuance of Sukuk under various Islamic We can say that there are a lot of Sukuk US$11.7 billion compared to US$6 billion principles such as Ijarah and Murabahah determinants in the GCC fi nancial last year with an increase to 95%. By as well as other mortgage and equity markets. The Shariah structure of October 2012 Malaysia had the largest type of transactions which will benefi t Sukuk does not mean Sukuk are 100% market share of Sukuk by country (70%), the retail and wholesale market. capital guaranteed or safer compared to Qatar came second with 13.1%, then conventional bonds. Like bonds, Sukuk Turkey with 8.1%, Saudia Arabia with According to Sukuk law prepared in are aff ected by the same risk factors such 4.5%, Indonesia with 1.4% and fi nally October 2012, Sukuk shall be tradable at as interest rate risk due to the fact that other countries such as Bahrain. the stock exchange. It is required by the no global market index exists for Islamic state law that the owner of the Sukuk shall products, although there are some eff orts Malaysia continues to dominate the have all rights, obligations and actions in this respect. That makes Sukuk returns Sukuk market and stays upbeat in terms as decided by the Shariah concept. The linked with libor rates. The direction of of regulatory initiatives to support the law has also provided a number of forms regional bonds and Sukuk, for the most growth of the Islamic fi nance industry; the which can be used for Sukuk issuances part, follow US bonds as Gulf countries’ newest initiative being the introduction such as leasing, Mudarabah, Murabahah, currencies are pegged to the US dollar. of the Agro Sukuk — which would help Musharakah, Istisnah and any other garner capital to fi nance companies in the contract the commission approves. A The second factor is the credit quality agriculture industry. successful practical case was the issuance of issuers. If the Sukuk are issued by a of the seven-year AlRajhi Cement Sukuk government or sovereign, their credit Thomson Reuters announced the launch Ijarah in the amount of JOD85 million rating will be bett er than if issued by a of the Thomson Reuters Global Sukuk (US$120 million). corporate company. Index, an independent and transparent benchmark for investors seeking exposure In order to encourage the growth of In addition political risk can also aff ect the to Shariah compliant fi xed-income Sukuk market in Jordan, exemptions are region. The aft er-eff ects of the Arab Spring investments, to be used to monitor the given to the special vehicle companies that have not only created the potential for performance of the Sukuk market. are responsible in issuing Sukuk. Special political instability, but also put a damper eff orts were made to aff ect Sukuk rules on business in the region. On other Libya, Tunisia, Algeria and Morocco have and laws by all Jordanian professionals hand, other experts have revealed the all expressed their willingness to sell Arab Spring to be a motive for potential Sukuk following similar announcements Investors are encouraged to maintain a opportunities in future. from Egypt. Oman’s Islamic banking law well-diversifi ed portfolio and always look could encourage Sukuk issuance in the at the risk before taking any investment Another factor investors should look sultanate as well as the other six GCC decision. The investment decision will at is the real rate of return. The higher states. be critical as the investor become the the risk, the higher the return. For risk-taker during this highly changeable example the recent Abu Dhabi Islamic Qatar’s QIB, Turkey’s Bank Asya, Saudi environment in both political and Bank Sukuk (ADIB Tier 1 Sukuk) raised Arabia’s Sadara and Saudi Hollandi and economical integration. US$1 billion at a high rate 6.375% as a the Indonesian government, are but a few Mudarabah structure (meaning high names expected to sell Sukuk in the fourth Nafi th Al-Hersh Nazzal is an Islamic banking risk). In contrast the IDB Global Sukuk quarter of 2012. Countries from North specialist, certifi ed fi nancial and investment (2017) (Tranche 1) issue of US$800 million Africa are also expected to join the club of advisor and statistical analyst in Jordan. He had a rate of return of just 1.357 % as it issuers. This might have to wait till 2013 can be contacted at [email protected].

What have been the outstanding Q developments, achievements and disappointments in the world of Islamic finance in 2012?

Islamic fi nancial activity tends to global market and oft en ignores what can The Islamic fi nance industry’s inability to A refl ect trends in gross domestic be achieved by focussing on the local work together on unifi cation eff orts is a product growth. This year saw a market. This could, incidentally, also matt er of concern and I hope in coming slowdown in global GDP growth which provide an outlet for excess liquidity. years greater att ention and support had a negative eff ect on Shariah Perhaps not as exciting as announcing a is provided by more jurisdictions, compliant deposits and Islamic fi nancing large international transaction, but institutions and market participants to in the UK. Fortunately economic activity ultimately a very worthwhile infrastructure institutions. Moreover, the has been more buoyant in most Muslim consideration. industry is yet to overcome challenges countries than in Europe and the US. in issuing asset-backed Sukuk which is Islamic retail banking continued to grow DR NATALIE SCHOON disappointing. in the GCC countries and Malaysia with Principal consultant, Formabb Ĳ LAL AHMED ALVI 2012 a record year in terms of deposits CEO, International Islamic Financial Market and fi nancing. Islamic capital markets also fared well with Malaysia continuing My comments are focusing on the to dominate in Sukuk issuance but a A Takaful industry. Sukuk continues to dominate the signifi cant amount of new issuance in A Islamic fi nance industry in 2012. A Saudi Arabia, the UAE and Qatar. The most outstanding developments have been on the regulatory side with series of milestone transactions, both in terms of innovation and size, shows not The major disappointment has been the introduction of the RBC framework only the remarkable fl exibility of Sukuk the performance of Islamic fi nance in in Malaysia, the new Takaful rules in but also its importance in generating the Arab Spring countries. Despite the Pakistan and the decision by the Saudi regulator to forbid the Takaful model in fi nance and high return. While Malaysia election of Islamist political parties in has emerged as an unchallenged global Egypt and Tunisia, Islamic banking still the country. All of these regulations will have a profound eff ect on the Takaful leader in Islamic banking and fi nance, accounts for only a small proportion with further marginalization of Bahrain industry in the respective market. of deposits and fi nancing. The Turkish and Dubai, one may also look at Turkey market also continues to disappoint with as a rising star of Islamic banking and The biggest achievement has been the the slowdown in its economic growth fi nance. Following the rise to power of growth of Takaful in Africa which can refl ected in stagnant Islamic fi nancing Islamist governments in Egypt and be considered as one the new growth activity when adjustments are made Tunisia and a new regime in Libya, there engines for the industry. for infl ation. Iran’s banking system, is expectation that Islamic banking and which is completely Islamic, has been fi nance in these countries will fl ourish in The biggest disappointment was the adversely aff ected by tightened US and the next few years. EU sanctions. The outlook for the Islamic decision by the Saudi regulator to forbid republic’s banks will remain problematic the Takaful model in Saudi Arabia as this Overall, this year has shown some signs unless the sanctions are eased. puts the viability of the Takaful model in of vulnerability of Islamic banking and question. fi nance. HSBC has wound up their RODNEY WILSON Islamic businesses in most countries Emeritus Professor, Durham University MARCEL PAPP except Saudi Arabia and Malaysia; UK and Visiting Professor, Qatar Faculty of Head of Retakaful, Swiss Re Retakaful though in my opinion, it is only a matt er Islamic Studies of time before HSBC Amanah decides to call it a day even in Malaysia. This The year 2012 could be considered is certainly disappointing for HSBC, The Islamic fi nancial industry has A as one of the most memorable years which invested greatly in creating a A continued to grow at a similar pace in Islamic fi nance and no doubt the global Islamic brand. Some other western as previous years which, given the record Sukuk issuances is an outstanding institutions have also shut down their current economic climate, is an development. Several innovative Sukuk Islamic businesses but rather quietly. achievement in itself. However, the issues were introduced and in my view regarding available liquidity still need to issuance of perpetual Tier 1 Sukuk as It is also disappointing to see Islamic be resolved and the fact that the IILM has well as medium/long-term sovereign Bank of Britain still struggling. not yet issued any instrument has been Sukuk is step in the right direction and Islamic retail banking in UK has not disappointing. The focus of the industry will pave the way for further innovation is still largely on being a player in the and growth in our industry. continued...

Continued been successful at all. One questions accusing the bank of making him Islamic banks in UK have non-Muslim the quality of market research and redundant because of his Christian faith. CEOs; Islamic Bank of Britain is without intelligence available to the people Obviously, his case is weak, as more a full-time CEO but has never had a who started Islamic retail banking in than half of the said Islamic bank’s top Muslim CEO since its inception). It UK. Similarly, despite some real estate management (including its CEO) is would be really damaging for an Islamic success, Islamic investment banks have Christian and none of them have been bank in UK if its non-Muslim CEO aft er not been able to make a mark on the treated unfairly because of their faith. It being removed from his job decides to market. I have always argued that there is interesting to note that the person in take the matt er to a court. is no need for fully-ﬂ edged Islamic question was perfectly happy when he investment banks in the UK. Islamic drew over a million pounds in wages Overall, not a bad year for Islamic investment companies are easier to run and bonuses working for the bank. It banking and ﬁ nance, but the players in and cheaper to maintain than investment was only when he was made redundant this market must be more cautious in the banks constrained by the dictates of that he maliciously used his faith as a New Year. regulation. factor contributing to the termination of his employment. This was an interesting PROFESSOR HUMAYON DAR It was also disappointing to see a incident, which many Muslims would Chairman, president & CEO, Edbiz former non-Muslim senior executive like to use in favor of their argument Consulting of Gatehouse Bank in London drag its that CEOs of Islamic banks in UK should former employer into a labor tribunal, be Muslims (at present four out of six

Next Forum Question:

What can the Islamic ﬁ nance industry look forward to as we enter 2013?

If you would like to air your views on the next Forum Question, please email your response of between 50 and 300 words to Christina Morgan, forum editor, at: [email protected] before the 4th January 2013.

Heading into its 6th year, the Islamic Finance newsZŽĂĚƐŚŽǁĐŽŶƟŶƵĞƐ ƚŽƌŽĂŵƚŚĞŐůŽďĞĞĚƵĐĂƟŶŐĂŶĚƵƉĚĂƟŶŐƚŚĞĚĞǀĞůŽƉŝŶŐ/ƐůĂŵŝĐ ĮŶĂŶĐŝĂůŵĂƌŬĞƚƐ͘/ŶϮϬϭϯ͕ƚŚĞ/&EZŽĂĚƐŚŽǁǁŝůůǀŝƐŝƚϭϮŬĞǇŵĂƌŬĞƚƐ ǁŚŝĐŚǁĞďĞůŝĞǀĞǁŝůůǁŝƚŶĞƐƐĞǆƉŽŶĞŶƟĂůŐƌŽǁƚŚŝŶƚŚĞĐŽŵŝŶŐǇĞĂƌƐ͘

BANGLADESH PAKISTAN 5th February 2013 27th August 2013 SINGAPORE SRI LANKA 22nd March 2013 29th August 2013 MOROCCO TURKEY 29th April 2013 3rd September 2013 AUSTRALIA EGYPT 7th May 2013 5th September 2013 JAPAN THAILAND 12th June 2013 11th September 2013 HONG KONG BRUNEI 25th June 2013 28th November 2013

Marco Mauri, senior What are the factors contributing to the success of director — asset your company? Asset management, in particular for management at a small boutique, is a talent driven business. In our team we have a Alkhair Capital combination of local and international experience that has been able so far to Saudi Arabia provide cutt ing edge wealth management solutions to our client base. Marco Mauri is an experienced asset manager covering various What are the obstacles faced asset classes with particular focus in running your business on frontier and emerging markets. today? He worked with European asset In the asset management business the managers including Primegest economy of scale is the key success and Generali Investments before factor. Being a new-comer into the moving to the Middle East. He is market requires more eff orts in gaining a Certifi ed Alternative Investment client trust and developing a fruitful relationship. Shareholder support is Analyst (CAIA) and CFA Institute and 2010 we received from clients many member. He obtained his Islamic essential to move the fi rst steps and requests of asset monetization and we developing a distribution platform is Finance Qualifi cation from the IFQ worked on innovative structures to needed to move to the next level. Institute, London. extract cash from those assets (Sukuk, equities and real estate). Where do you see the Islamic Could you provide a brief fi nance industry in the next journey of how you arrived Which of your products/ services deliver the best fi ve years? where you are today? There is no doubt that Islamic fi nance I have almost 15 years experience in asset results? has experienced extraordinary growth management with the last fi ve years spent The off ering of Sukuk enhanced portfolio in the last decade. Even if with marginal in the Shariah compliant investments solutions has provided a way to att ract impact, the recent fi nancial crises industry. I initially approached Islamic client interest and a peculiar approach highlighted some weaknesses, especially fi nance from an academic angle. When to develop an Islamic asset allocation, on the Islamic investment banking side: I was in Europe, in parallel to my allowing Shariah compliant investors concentration in illiquid assets, lack of professional activity, I was assistant to gain confi dence with Sukuk (for diversifi cation and a propensity towards professor at the university for the courses many of them an unknown asset class), accounting earnings instead of cash of International Monetary Economics receive stable income stream, obtain earnings generating business model. and Microeconomics and I decided to leverage and implement diversifi cation During the euphoria of the early 2000s, bring to the att ention of the faculty the in other asset classes. Sometimes, with Islamic fi nance was utilized sometimes subject of the Islamic fi nance in order to more sophisticated investors, we have more as a marketing tool instead of been able to use Shariah compliant develop research activities. Subsequently, a ‘new’ fi nancial proposition. The derivative solutions providing also the move to the Middle East has been an crisis helped to put things in the right downside protection to their portfolios. opportunity to combine my professional perspective and few changes occurred. Transparency and continuous client experience in asset management and the We see the Islamic retail banking gaining education are the key success factors for interest in Islamic fi nance. market share in the emerging-frontier developing trust with our clients. markets, the Sukuk market developing What does your role involve? substantially and Islamic assets being What are the strengths of your managed by professionals with more Within the asset management team att ention to developing a proper asset I’m responsible for Sukuk investments, business? allocation framework. international equities, multi asset classes’ Since the beginning we have been strategies and overlooking the clients’ convinced that Islamic asset management portfolio asset allocation. I’m responsible will evolve from funds to more tailor- Name one thing you would for the business development of our asset made wealth management solutions. like to see change in the allocation-advisory service. Even if we are launching few fl agship funds, we spend more eff ort in world of Islamic fi nance. developing an open architecture platform We would like to see more development What is your greatest of Islamic investment solutions under the in the secondary market of Sukuk, in achievement to date? brand of alkhair innovate®. We want to particular among domestic issuances Focusing only on the years of experience off er the best product-solutions available and regulators can play a role to set up in the Islamic fi nance, I would say that into the market focusing on the asset proper infrastructure. the fi nancial crisis has provided ground allocation that for us is still the missing for challenging ourselves. During 2009 action in Islamic fi nance.

DATE ISSUER SIZE ANNOUNCED IFN Correspondents AFGHANISTAN: Zulfi qar Ali Khan Teknologi Tenaga Perlis Consortium US$272.44 million 4th December 2012 head of Islamic banking division, fi nancial supervision department, Da Afghanistan Bank Albaraka Türk Katılım Bankası US$200 million 19th November 2012 AUSTRALIA: Gerhard Bakker director, Madina Village nd BAHRAIN: Dr Hatim El-Tahir Dialog Axiata LKR51 billion 2 November 2012 director, Islamic Finance Knowledge Centre, Deloitt e & th Touche Malaysia sovereign RM5.3 billion 6 November 2012 BANGLADESH: Md Shamsuzzaman executive vice president, Islami Bank Bangladesh th Almarai Company SAR2.3 billion 6 November 2012 BERMUDA: Belaid A Jheengoor director of asset management, PwC Sumberdaya Sewatama IDR1 trillion 24th October 2012 BRUNEI: James Chiew Siew Hua senior partner, Abrahams Davidson & Co MNRB Holding RM150 million 16th October 2012 CANADA: Jeff rey S Graham partner, Borden Ladner Gervais th CZECH REPUBLIC: JUDr Ivana Hrdlickova, Banque Saudi Fransi SAR2.5 billion 15 October 2012 judge, Judiciary, Appelate Court Pardubice th EGYPT: Dr Walid Hegazy Edaran SWM RM1 billion 5 October 2012 managing partner, Hegazy & Associates th FRANCE: Kader Merbouh International Islamic Liquidity US$200 to 500 million 4 October 2012 co head of the Executive Master of the Islamic Finance, Management Corporation Paris-Dauphine University HONG KONG & CHINA: Anthony Chan th partner, Brandt Chan & Partners in association with SNR Turkish Airlines TBA 4 October 2012 Denton INDIA: Keyur Shah Danainfra Nasional RM1.5 billion 4th October 2012 partner, KPMG INDONESIA: Farouk A Alwyni Weststar Capital RM900 million 4th October 2012 chairman, Center for Islamic Studies in Finance, Economics, and Development Dubai Electricity and Water Authority AED4.5 billion 3rd October 2012 IRAN: Majid Pireh Islamic fi nance expert, SEO th IRAQ: Khaled Saqqaf Tunisia sovereign TBA 30 September 2012 partner and head of Jordan & Iraq offi ces, Al Tamimi & Co th IRELAND: Ken Owens Bank Asya TRY150 million 25 September 2012 Shariah funds assurance partner, PwC Ireland JAPAN: Serdar A. Basara Qatar Islamic Bank US$1.5 billion 16th September 2012 president, Japan Islamic Finance JORDAN: Khaled Saqqaf Bolton RM380 million 6th September 2012 partner and head of Jordan & Iraq offi ces, Al Tamimi & Co KOREA: Yong-Jae Chang HSBC Amanah RM3 billion 4th September 2012 partner, Lee & Ko KUWAIT: Alex Saleh Sime Darby US$1.5 billion 3rd September 2012 partner, Al Tamimi & Company LUXEMBOURG: Marc Theisen Malakoff Corporation RM1.8 billion 17th August 2012 partner, Theisen Law MALAYSIA: Nik Norishky Thani th head special projects (Islamic), PNB Putrajaya Holdings RM3 billion 13 August 2012 MALDIVES: Aishath Muneeza head of Islamic fi nance, Capital Market Development Indonesia sovereign US$1 billion 10th August 2012 Authority MALTA: Reuben Butt igieg Indonesia sovereign US$750 million 10th August 2012 president, Malta Institute of Management MAURITIUS: Sameer K Tegally Tanjung Bin Power RM4.5 billion 7th August 2012 associate, Conyers Dill & Pearman NEW ZEALAND: Dr Mustafa Farouk Kuala Lumpur Kepong RM1 billion 1st August 2012 counsel member for Islamic fi nancial institutions, FIANZ NIGERIA: Hajara Adeola th managing director, Lotus Capital Limited Kimanis Power RM1.16 billion 16 July 2012 OMAN: Anthony Watson senior associate, Al Busaidy Mansoor Jamal & Co th Syarikat Prasarana Negara RM4 billion 12 July 2012 PAKISTAN: Bilal Rasul director (enforcement), SEC of Pakistan th Türkiye Finans Katilim Bankasi US$300 million 9 July 2012 PHILIPPINES: Rafael A Morales managing partner, SyCip Salazar Hernandez & Gatmaitan Sudan sovereign US$758 million 5th July 2012 QATAR: Amjad Hussain partner, K&L Gates South Africa sovereign TBA 4th July 2012 SAUDI ARABIA: Nabil Issa partner, King & Spalding rd SENEGAL: Abdoulaye Mbow Indonesia sovereign IDR500 billion 3 July 2012 Islamic fi nance advisor, Africa Islamic Finance Corporation rd National Treasury South Africa US$500 - 700 million 3 July 2012 SOUTH AFRICA: Amman Muhammad managing director, Absa Islamic Bank nd Qatar sovereign US$4 billion 2 July 2012 SINGAPORE: Yeo Wico, partner, Allen & Gledhill Indosat IDR300 billion 20th June 2012 SRI LANKA: Roshan Madewala director/CEO, Research Intelligence Unit Sadara SAR1.4 billion 13th June 2012 SWITZERLAND: Khadra Abdullahi associate of investment banking, Faisal Private Bank th TANZANIA: Khalfan Abdallah UEM Group RM2.2 billion 13 June 2012 head of product development and Sharia compliance, Amana Bank th General Authority of Civil Aviation TBA 24 May 2012 TUNISIA: Karim Amous Managing partner, Smarteco rd Morocco sovereign TBA 23 May 2012 TURKEY: Ali Ceylan partner, Baspinar & Partners Amer Group Holding EGP2.7 billion 14th May 2012 UAE: Moinuddin Malim CEO, Mashreq Al Islami Emirates NBD US$500 million 7th May 2012 UK: Siraj Ibrahim associate, Credit Agricole CIB th US: Saeid Hamedanchi Epmex RM1.35 billion 25 April 2012 CEO, ShariahShares th YEMEN: Moneer Saif Noor Islamic Bank US$1 billion 19 April 2012 head of Islamic banking, CAC Bank Encorp RM1.58 billion 18th April 2012

Johor Corp Group RM3 billion 13th April 2012 IFN Correspondents are experts in their respective ﬁ elds and are selected by Islamic Finance news to Citra Marga IDR1.2 trillion 12th April 2012 contribute designated short country reports.

Nakheel AED240 million 11th April 2012 For more information about becoming an IFN Correspondent please contact sasikala@ Development Bank of Kazakhstan US$500 million 30th March 2012 redmoneygroup.com

Eurekahedge Asia Paciﬁ c Islamic Fund Index

150

140

130

120

110

100 Index Values 90

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

Top 10 Monthly Returns for Developed Markets Funds

Fund Fund Manager Performance Measure Fund Domicile

1 AlAhli US Trading Equity The National Commercial Bank 2.66 Saudi Arabia

2 Azzad Ethical Mid Cap Azzad Asset Management 2.63 US

3 AlAhli Global Real Estate The National Commercial Bank 2.42 Saudi Arabia

4 The Iman Allied Asset Advisors 2.06 US

5 Oasis Crescent Balanced High Equity Fund of Funds Oasis Crescent Management 1.72 South Africa

6 CIMB Islamic Greater China Equity CIMB-Principal Asset Management 1.59 Malaysia

7 Amana Income Saturna Capital 1.55 US

8 Oasis Crescent Balanced Stable Fund of Funds Oasis Crescent Management 1.49 South Africa

9 Amana Growth Saturna Capital 1.33 US

10 HSBC-Link Ethical Global Equity (Formerly Takaful HSBC Insurance Singapore 1.31 Singapore Global)

Eurekahedge Islamic Fund Index 0.11

Based on 83.58% of funds which have reported November 2012 returns as at the 18th December 2012

Top 10 Real Estate Funds by 3 Months Returns

Fund Fund Manager Performance Measure Fund Domicile

1 Oasis Crescent Global Property Equity Oasis Global Management (Ireland) 3.88 Ireland

2 Markaz Real Estate Kuwait Financial Centre 3.26 Kuwait

3 Al-'Aqar KPJ REIT AmMerchant Bank -6.42 Malaysia

4 Al Qasr GCC Real Estate & Construction Equity Banque Saudi Fransi -6.81 Saudi Arabia Trading

Eurekahedge Islamic Real Estate Fund Index (1.52)

Based on 66.67% of funds which have reported November 2012 returns as at the 18th December 2012

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

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

105.000 108.000

100.000 106.000 104.000 95.000 102.000 90.000 100.000 85.000 98.000 80.000 Percentage Percentage 96.000 75.000 94.000

70.000 92.000

65.000 90.000

60.000 88.000 Jul-08 Jul-09 Jul-10 Jul-11 Jul-12 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Dec-11 Jun-12 Oct-12 Aug-12 Nov-11 Nov-12 Nov-07 Nov-08 Nov-09 Nov-10 Nov-11 Nov-12 Apr-12 Feb-12 Jan-12 Jul-12 Sep-12 May-12 Mar-12

Top 10 Monthly Returns for Emerging Markets Funds Fund Fund Manager Performance Measure Fund Domicile 1 Markaz Islamic Kuwait Financial Centre 9.10 Kuwait

2 CIMB Islamic Asia Paciﬁ c Equity UOB Asset Management 3.74 Malaysia

3 Meezan Tahaﬀ uz Pension - Equity Sub Al Meezan Investment Management 3.15 Pakistan

4 HSBC-Link Ethical Asia Equity (Formerly Takaful Asia HSBC Insurance Singapore 2.83 Singapore Paciﬁ c) 5 Al-Aman Islamic Al-Aman Investment 2.75 Kuwait

6 Meezan Islamic Al Meezan Investment Management 2.47 Pakistan

7 Al Meezan Mutual Al Meezan Investment Management 2.36 Pakistan

8 Al-Themar Securities Bayan Investment 1.81 Kuwait

9 Am-Namaa' Asia-Paciﬁ c Equity Growth AmInvestment Management 1.75 Malaysia

10 Meezan Balanced Al Meezan Investment Management 1.73 Pakistan

Eurekahedge Islamic Fund Index 1.15

Based on 61.38% of funds which have reported November 2012 returns as at the 18th December 2012 Top 10 Fund of Funds by 3 Month Returns Fund Fund Manager Performance Measure Fund Domicile 1 AlManarah Conservative Growth Portfolio The National Commercial Bank -0.23 Saudi Arabia

2 AlManarah High Growth Portfolio The National Commercial Bank -0.24 Saudi Arabia

3 Al Rajhi Multi Asset Balanced Al Rajhi Bank -0.25 Saudi Arabia

4 Al-Mubarak Balanced Arab National Bank -0.32 Saudi Arabia

5 AlManarah Medium Growth Portfolio The National Commercial Bank -0.34 Saudi Arabia

Eurekahedge Islamic Fund Index (1.20)

Based on 90.00% of funds which have reported November 2012 returns as at the 18th December 2012

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

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

REDmoney Asia ex. Japan 6 Months REDmoney Europe 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 1110 1000

1018 920

926 840

834 760

742 680

650 600 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

REDmoney GCC 6 Months REDmoney Global 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 850 1300

780 1176

710 1052

640 928

570 804

500 680 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

REDmoney MENA 6 Months REDmoney US 6 Months

All Cap Large Cap Medium Cap Small Cap All Cap Large Cap Medium Cap Small Cap 850 1700

780 1520

710 1340

640 1160

570 980

500 800 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

SAMI Halal Food Participation (All Cap) 6 months

2000

1825

1650

1475

1300 Jan-2012 Feb-2012 Mar-2012 Apr-2012 May-2012 June-2012 July-2012 Aug-2012 Sept-2012 Oct-2012 Nov-2012 Dec-2012

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

REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA REDmoney GCC REDmoney US REDmoney GCC REDmoney US 1100 1000

980 890

860 780

740 670

620 560

500 450 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

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

REDmoney Asia ex. Japan REDmoney Global REDmoney Asia ex. Japan REDmoney Global REDmoney Europe REDmoney MENA REDmoney Europe REDmoney MENA REDmoney GCC REDmoney US REDmoney GCC REDmoney US 1700 1450

1460 1260

1220 1070

980 880

740 690

500 500 Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

REDmoney Global Shariah

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

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

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

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

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

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

Most Recent Global Sukuk

Priced Issuer Nationality Instrument Market US$ (mln) Managers 30th Nov 2012 Weststar Capital Malaysia Sukuk Domestic market 295 AmInvestment Bank public issue 28th Nov 2012 Sime Darby Malaysia Sukuk Domestic market 230 Public Bank, CIMB Group, Maybank Musharakah public issue Investment Bank 28th Nov 2012 First Resources Indonesia Sukuk Foreign market 131 RHB Capital (Indonesia) public issue 26th Nov 2012 Saudi Hollandi Bank Saudi Sukuk Domestic market 373 HSBC, Saudi Hollandi Bank Arabia public issue 23rd Nov 2012 National Bank of UAE Sukuk Foreign market 163 Standard Chartered Bank, HSBC, National Abu Dhabi Murabahah public issue Bank of Abu Dhabi, Maybank Investment Bank 15th Nov 2012 Perusahaan Penerbit Indonesia Sukuk Ijarah Euro market 1,000 Standard Chartered Bank, Deutsche Bank, SBSN Indonesia III public issue HSBC 8th Nov 2012 Abu Dhabi Islamic UAE Sukuk Euro market 1,000 Standard Chartered Bank, Morgan Stanley, Bank public issue HSBC, National Bank of Abu Dhabi, Abu Dhabi Islamic Bank 7th Nov 2012 Turus Pesawat Malaysia Sukuk Domestic market 1,110 Lembaga Tabung Haji, RHB Capital, CIMB Murabahah public issue Group, AmInvestment Bank, Maybank Investment Bank 6th Nov 2012 Golden Assets Singapore Sukuk Domestic market 490 RHB Capital International Finance public issue 5th Nov 2012 Imtiaz Sukuk Malaysia Sukuk Domestic market 327 CIMB Group, Maybank Investment Bank Musharakah public issue 22nd Oct 2012 Putrajaya Holdings Malaysia Sukuk Domestic market 262 CIMB Group, AmInvestment Bank, private placement Maybank Investment Bank 11th Oct 2012 Qatar International Qatar Sukuk Euro market 700 Standard Chartered Bank, HSBC, Qatar Islamic Bank public issue National Bank 4th Oct 2012 Edaran SWM Malaysia Sukuk Domestic market 245 Hong Leong Bank, CIMB Group public issue 3rd Oct 2012 Qatar Islamic Bank Qatar Sukuk Euro market 750 Standard Chartered Bank, Deutsche Bank, public issue HSBC, QInvest 1st Oct 2012 Khazanah Nasional Malaysia Sukuk Domestic market 651 CIMB Group, AmInvestment Bank Musharakah private placement 20th Sep 2012 Republic of Turkey Turkey Sukuk Euro market 1,500 HSBC, Kuwait Finance House, Citigroup public issue 20th Sep 2012 MISC Malaysia Sukuk Domestic market 163 HSBC, CIMB Group, AmInvestment Bank public issue 20th Sep 2012 HSBC Amanah United Sukuk Domestic market 163 HSBC, AmInvestment Bank, Hong Leong Malaysia Kingdom public issue Islamic Bank, Maybank Investment Bank 18th Sep 2012 Malaysia Airline Malaysia Sukuk Domestic market 165 Maybank Investment Bank System private placement 7th Sep 2012 National Higher Malaysia Sukuk Domestic market 321 CIMB Group, Maybank Investment Bank Education Fund public issue

Global Sukuk Volume by Month Global Sukuk Volume by Quarter

US$bn US$m US$bn US$m 12 1200 18 600 Value (US$bn) Avg Size (US$m) 16 Value (US$bn) Avg Size (US$m) 500 10 1000 14 8 800 12 400 10 300 6 600 8 4 400 6 200 4 100 2 200 2 0 0 0 0 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 67 8 9 10 1112 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q 2011 2012 2007 2008 2009 2010 2011 2012

Top 30 Issuers of Global Sukuk 12 Months Issuer Nationality Instrument Market US$ (mln) Iss Managers

1 State of Qatar Qatar Sukuk Euro market 4,000 9.1 Standard Chartered Bank, Deutsche Bank, HSBC, QInvest, public issue Barwa Bank 2 General Authority Saudi Sukuk Domestic market 4,000 9.1 HSBC for Civil Aviation Arabia private placement 3 Saudi Electricity Saudi Sukuk Euro market 1,750 4.0 Deutsche Bank, HSBC Company Arabia public issue 4 Celcom Malaysia Sukuk Domestic market 1,590 3.6 HSBC, CIMB Group, Maybank Investment Bank Transmission (M) Murabahah public issue 5 Republic of Turkey Turkey Sukuk Euro market 1,500 3.4 HSBC, Kuwait Finance House, Citigroup public issue 6 Tanjung Bin Power Malaysia Sukuk Domestic market 1,298 3.0 CIMB Group, Maybank Investment Bank private placement 7 Dubai DOF Sukuk UAE Sukuk Euro market 1,250 2.9 HSBC, National Bank of Abu Dhabi, Dubai Islamic Bank, public issue Citigroup 8 Turus Pesawat Malaysia Sukuk Domestic market 1,110 2.5 Lembaga Tabung Haji, RHB Capital, CIMB Group, Murabahah public issue AmInvestment Bank, Maybank Investment Bank 9 National Higher Malaysia Sukuk Domestic market 1,110 2.5 CIMB Group, Maybank Investment Bank Education Fund public issue 10 Tanjung Bin Energy Malaysia Sukuk Domestic market 1,089 2.5 HSBC, OCBC, RHB Capital, DRB-HICOM, CIMB Group, Issuer Tawaruq private placement Affi n Investment Bank, Maybank Investment Bank 11 Perusahaan Penerbit Indonesia Sukuk Ijarah Euro market 1,000 2.3 Standard Chartered Bank, Deutsche Bank, HSBC SBSN Indonesia III public issue 11 EIB Sukuk UAE Sukuk Euro market 1,000 2.3 Standard Chartered Bank, HSBC, RBS, National Bank of public issue Abu Dhabi, Citigroup, ICD 11 Abu Dhabi Islamic UAE Sukuk Euro market 1,000 2.3 Standard Chartered Bank, Morgan Stanley, HSBC, National Bank public issue Bank of Abu Dhabi, Abu Dhabi Islamic Bank 14 Johor Corporation Malaysia Sukuk Domestic market 939 2.1 CIMB Group, Affi n Investment Bank, AmInvestment Bank, public issue Maybank Investment Bank 15 Malaysia Malaysia Sukuk Domestic market 817 1.9 Maybank Investment Bank Murabahah public issue 16 Maxis Malaysia Sukuk Domestic market 805 1.8 CIMB Group, Maybank Investment Bank Musharakah public issue 17 IDB Trust Services Saudi Sukuk Euro market 800 1.8 Saudi National Commercial Bank, Standard Chartered Arabia public issue Bank, BNP Paribas, HSBC, CIMB Group 18 Sarawak Energy Malaysia Sukuk Domestic market 796 1.8 RHB Capital, Kenanga Investment Bank, AmInvestment public issue Bank 19 DanaInfra Nasional Malaysia Sukuk Domestic market 752 1.7 Lembaga Tabung Haji, RHB Capital, CIMB Group, public issue AmInvestment Bank, Maybank Investment Bank 20 Qatar Islamic Bank Qatar Sukuk Euro market 750 1.7 Standard Chartered Bank, Deutsche Bank, HSBC, QInvest public issue 20 BSF Sukuk Saudi Sukuk Euro market 750 1.7 Deutsche Bank, Citigroup, Credit Agricole Arabia public issue 22 Qatar International Qatar Sukuk Euro market 700 1.6 Standard Chartered Bank, HSBC, Qatar National Bank Islamic Bank public issue 23 Aman Sukuk Malaysia Sukuk Domestic market 700 1.6 Lembaga Tabung Haji, RHB Capital, CIMB Group, public issue AmInvestment Bank, Maybank Investment Bank 24 Khazanah Nasional Malaysia Sukuk Domestic market 652 1.5 Kenanga Investment Bank, DRB-HICOM, CIMB Group, private placement AmInvestment Bank 25 Jafz Sukuk UAE Sukuk Euro market 650 1.5 Standard Chartered Bank, Abu Dhabi Commercial Bank, public issue National Bank of Abu Dhabi, Dubai Islamic Bank, Abu Dhabi Islamic Bank, Citigroup, ICD 26 Syarikat Prasarana Malaysia Sukuk Domestic market 644 1.5 RHB Capital, Kenanga Investment Bank, CIMB Group Negara Murabahah public issue 27 Malakoff Malaysia Sukuk Domestic market 577 1.3 Maybank Investment Bank Corporation private placement 28 TASNEE Saudi Sukuk Domestic market 533 1.2 HSBC Arabia private placement 29 FGB Sukuk UAE Sukuk Euro market 500 1.1 Standard Chartered Bank, HSBC, National Bank of Abu Dhabi, Wakalah public issue Citigroup 29 Emaar Sukuk UAE Sukuk Euro market 500 1.1 Standard Chartered Bank, HSBC, Dubai Islamic Bank, Abu public issue Dhabi Islamic Bank, ICD, Noor Islamic Bank, Al Hilal Bank, Barwa Bank 29 DIB Sukuk UAE Sukuk Euro market 500 1.1 Deutsche Bank, HSBC, National Bank of Abu Dhabi, public issue Dubai Islamic Bank, ICD

Total 43,865 100

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

Manager US$ (mln) Iss % Malaysian ringgit 20.6 1 HSBC 10,690 31 24.4 US dollar 17.4 2 Maybank Investment Bank 6,366 39 14.5 3 CIMB Group 5,446 34 12.4 Saudi riyal 5.9

4 Standard Chartered Bank 2,830 18 6.5 Singapore dollar 0.0 5 RHB Capital 2,553 36 5.8 6 Deutsche Bank 2,546 6 5.8 Sukuk Volume by Issuer Nation US$ (billion) 12 Months 7 AmInvestment Bank 2,339 24 5.3 Malaysia 18.6 8 Citigroup 1,464 7 3.3 Saudi Arabia 9.2 9 QInvest 988 2 2.3 UAE 6.5 10 National Bank of Abu Dhabi 955 7 2.2 Qatar 5.5 11 Dubai Islamic Bank 868 7 2.0 Turkey 1.5 12 Barwa Bank 863 2 2.0 Indonesia 1.4 13 Kenanga Investment Bank 666 4 1.5 Singapore 0.5 14 Kuwait Finance House 568 3 1.3 15 Aﬃ n Investment Bank 517 5 1.2 Global Sukuk Volume by Sector 12 Months 16 Abu Dhabi Islamic Bank 455 4 1.0

17 ICD 439 5 1.0 15% 18 Lembaga Tabung Haji 431 4 1.0 31% Government 6% Finance 19 DRB-HICOM 353 9 0.8 Utility & Energy 8% 20 Credit Agricole 350 2 0.8 Transportation Telecommunications 21 Hong Leong Bank 279 2 0.6 15% Other 22 Qatar National Bank 233 1 0.5 25% 23 Morgan Stanley 200 1 0.5 24 Saudi Hollandi Bank 187 1 0.4 Global Sukuk Volume - US$ Analysis 25 OCBC 180 3 0.4 26 Saudi National Commercial Bank 160 1 0.4 US$bn US$m 26 BNP Paribas 160 1 0.4 18 600 16 Non-US$ US$ 500 28 Riyad Bank 153 2 0.4 14 12 400 29 RBS 99 2 0.2 10 300 8 30 Abu Dhabi Commercial Bank 93 1 0.2 6 200 4 100 Total 43,865 130 100.0 2 0 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q2Q 3Q 4Q Top Islamic Finance Related Project Finance Mandated Lead Arrangers 12 Months 2007 2008 2009 2010 2011 2012

Mandated Lead Arranger US$ (million) No % Top Islamic Finance Related Project Financing Legal Advisors 1 Public Investment Fund 548 2 15.7 Ranking 12 Months 2 SABB 548 2 15.7 Legal Advisor US$ (million) No % 3 Arab National Bank 398 1 11.4 1 Linklaters 684 2 18.5 4 Citigroup 225 1 6.5 2 Baker & McKenzie 417 2 11.3 5 Deutsche Bank 225 1 6.5 3 Al-Jadaan & Partners Law Firm 386 1 10.4 5 HSBC Holdings 225 1 6.5 3 Cliﬀ ord Chance 386 2 10.4 7 Saudi Hollandi Bank 182 2 5.2 3 Saudilegal 386 1 10.4 8 Al-Rajhi Banking & Investment 151 1 4.3 6 Law Oﬃ ce of Hassan Mahassni 298 1 8.1 8 Alinma Bank 151 1 4.3 8 Bank Al-Jazira 151 1 4.3 6 Norton Rose 298 1 8.1 8 Banque Saudi Fransi 151 1 4.3 6 White & Case 298 1 8.1 8 Riyad Bank 151 1 4.3 9 Hogan Lovells International 271 2 7.3 8 Samba Financial Group 151 1 4.3 10 Allen & Overy 200 1 5.4

Top Islamic Finance Related Loans Mandated Lead Arrangers Top Islamic Finance Related Loans Deal List 12 Months Ranking 12 Months

Mandated Lead Arranger US$ (mln) No % Credit Date Borrower Nationality US$ (mln) 1 SABB 1,465 5 7.9 12th Feb 2012 Mobily Saudi Arabia 2,667 2 Banque Saudi Fransi 1,013 4 5.4 25th Jul 2012 Zain Saudi Saudi Arabia 2,600 3 Al-Rajhi Banking & Investment 1,007 4 5.4 11th Jun 2012 DanaInfra Nasional Malaysia 2,525 4 Maybank Investment Bank 983 6 5.3 5 Samba Capital 938 5 5.0 4th Jul 2012 Dubai Duty Free UAE 1,749 6 AmInvestment Bank 868 4 4.7 14th Feb 2012 Power & Water Utility for Saudi Arabia 1,200 7 CIMB Group 842 3 4.5 Jubail & Yanbu th 8 RHB Capital 794 2 4.3 13 Jun 2012 JAFZA UAE 1,198 9 Saudi National Commercial Bank 772 4 4.1 30th Jun 2012 TIBAH Saudi Arabia 1,193

10 Arab National Bank 687 2 3.7 25th Jun 2012 Bawabat Al Shamal Real Qatar 1,154 11 ICD 661 7 3.5 Estate Company 12 Standard Chartered Bank 636 9 3.4 2nd Jun 2012 DIFC Investments UAE 862 13 Saudi Hollandi Bank 633 4 3.4 9th Oct 2012 Turus Pesawat Malaysia 816 14 Noor Islamic Bank 586 8 3.1 15 HSBC 584 6 3.1 Top Islamic Finance Related Loans by Country 12 Months 16 Riyad Bank 538 2 2.9 Nationality US$ (mln) No % 17 Dubai Islamic Bank 487 3 2.6 1 Saudi Arabia 8,417 8 45.1 2 Malaysia 3,851 6 20.6 18 Citigroup 437 4 2.3 3 UAE 3,506 8 18.8 19 Abu Dhabi Islamic Bank 397 6 2.1 4 Turkey 1,256 5 6.7 20 Standard Bank 289 1 1.6 5 Qatar 574 2 3.1 20 National Bank of Kuwait 289 1 1.6 6 Sri Lanka 350 2 1.9 20 Gulf Bank 289 1 1.6 7 Singapore 207 1 1.1 20 DBS 289 1 1.6 8 Indonesia 183 4 1.0 9 Brunei Darussalam 170 1 0.9 20 Credit Agricole 289 1 1.6 10 Pakistan 143 5 0.8 25 Mashreqbank 226 4 1.2 26 Al Hilal Bank 221 6 1.2 Top Islamic Finance Related Loans by Sector 12 Months 27 Arab Banking Corporation 210 4 1.1 Telecommunications 28 National Bank of Abu Dhabi 196 3 1.1 Construction/Building 29 QInvest 187 3 1.0 30 Barwa Bank 166 2 0.9 Transportation Finance Top Islamic Finance Related Loans Mandated Lead Arrangers 12 Months Utility & Energy Bookrunner US$ (mln) No % US$ bln0 126 3 4 5 1 Credit Agricole 867 1 11.2 Global Islamic Loans - Years to Maturity (YTD Comparison) 1 Banque Saudi Fransi 867 1 11.2 1 Al-Rajhi Banking & Investment 867 1 11.2 2012 4 QInvest 624 3 8.0 2011 2010 5 HSBC 500 4 6.4 2009 6 ICD 408 4 5.3 2008 7 Standard Chartered Bank 399 6 5.1 2007 8 Abu Dhabi Islamic Bank 373 3 4.8 2006 9 Citigroup 367 3 4.7 0% 20% 40% 60% 80% 100% 0-3yrs 3-5yrs 5-7yrs 7-10yrs 10+yrs 10 Samba Capital 362 2 4.7

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

4th — 5th February 2013 21st — 22nd May 2013 3rd September 2013 9th Middle East Insurance Forum (MEIF IFN Europe Forum IFN Turkey Roadshow 2013) London, UK (REDmoney Events) Istanbul, Turkey (REDmoney Events) Manama, Bahrain (Mega Events) 27th — 28th May 2013 5th September 2013 5th February 2013 9th Annual World Islamic Funds IFN Egypt Roadshow IFN Bangladesh Roadshow and Financial Markets Conference Cairo, Egypt (REDmoney Events) Dhaka, Bangladesh (REDmoney Events) (WIFFMC 2013) Manama, Bahrain (Mega Events) 11th September 2013 12th — 13th March 2013 IFN Thailand Roadshow 3rd Annual World Islamic Finance 4th — 5th June 2013 Bangkok, Thailand (REDmoney Events) Conference 4th Annual Workd Islamic Banking st nd Dubai, UAE (Fleming Gulf) Conference: Asia Summit (WIBC Asia 21 — 22 October 2013 2013) IFN Asia Forum nd 22 March 2013 Singapore (Mega Events) Kuala Lumpur, Malaysia (REDmoney IFN Singapore Roadshow Events) Singapore 12th June 2013 th th (REDmoney Events) IFN Japan Roadshow 18 — 19 November 2013 Tokyo, Japan IFN Saudi Arabia Forum th th 15 — 16 April 2013 (REDmoney Events) Riyadh, Saudi Arabia (REDmoney Events) IFN Indonesia Forum th Jakarta, Indonesia 25th June 2013 28 November 2013 (REDmoney Events) IFN Hong Kong Roadshow IFN Brunei Roadshow Brunei (REDmoney Events) Hong Kong (REDmoney Events) 17th April 2013 3rd Annual Middle East Islamic Finance 27th — 28th June 2013 and Investment Conference (MEIFIC Have you joined the leading Islamic IFN Africa Forum 2013) finance Linked-In Group yet? Dubai, UAE (REDmoney Events) Dubai, UAE (Mega Events) 27th August 2013 29th April 2013 IFN Pakistan Roadshow IFN Morocco Roadshow Karachi, Pakistan (REDmoney Events) Fez, Morocco (REDmoney Events) Come and join thousands of th other like-minded industry 7th May 2013 29 August 2013 practitioners now. IFN Australia Roadshow IFN Sri Lanka Roadshow Melbourne, Australia (REDmoney Events) Colombo, Sri Lanka (REDmoney Events)

Production Norzabidi Abdullah Ratna Sari Ya’acob Editor [email protected] [email protected] Tel: +603 2162 7800 x 38 Graphic Eumir Shazwan Kamal Bahrin Features Editor & Lauren Mcaughtry Designer [email protected] Admin & Support Nurazwa Rabuni Copy Editor [email protected] Executive [email protected] Senior Production Mohamad Rozman Besiri Tel: +603 2162 7800 x 68 Supplements/ Nazneen Halim Designer [email protected] Takaful Editor [email protected] Web Designer Aieda Zakaria Financial Faizah Hassan Controller [email protected] Senior Publications Sasikala Thiagaraja [email protected] Manager [email protected] Business Steve Stubbs Deputy Publisher Geraldine Chan Development [email protected] & Director [email protected] News Editor Ellina Badri Manager Direct Line: +603 2162 7800 ext 55 [email protected] Managing Director Andrew Tebbutt Subscriptions Musfaizal Mustafa Andrew.Tebbutt @REDmoneyGroup.com Journalist Lidiana Rosli Director [email protected] [email protected] Tel: +603 2162 7800 x 24 Managing Director Andrew Morgan & Publisher [email protected] Correspondents Kamal Bairamov, Shabbir Kazmi, Shirene Shan Subscriptions Adzli Arizal Ahmad Executives [email protected] Published By: Forum Editor Christina Morgan Tel: +603 2162 7800 x 63 21/F, Menara Park, 12, Jalan Yap Kwan Seng [email protected] 50450 Kuala Lumpur, Malaysia Kughashinee Dewarajan Tel: +603 2162 7800 Fax: +603 2162 7810 Production Hasnani Aspari [email protected] Manager [email protected] Tel: +603 2162 7800 x 23

DISCLAIMER All rights reserved. No part of this publication may be reproduced, duplicated or copied by any means without the prior consent of the holder of the copyright, requests for which should be addressed to the publisher. While every care is taken in the preparation of this publication, no responsibility can be accepted for any errors, however caused.

AAOIFI 11,17 Durham University UK 23 Nakheel 8 Absa 6 Edbiz Consulting 23 National Asset Management 9 Abu Dhabi Islamic Bank 5,18,22 Emaar Properties 18 National Bank of Abu Dhabi 8 Abu Dhabi National Energy Company 18 Emirates Islamic Bank 18 National Heart Institute 9 ACA Amanie 10 Emirates NBD 8 National Insurance Commission (Nigeria) 10 Al Madina Financial & Investment Company 13 Ernst & Young 6,7,20 National Sukuk Company 13 Al Tamimi & Company 12,13 Financial Reporting Foundation 10 Noor Islamic Bank 8 Alinma Bank 9 First Gulf Bank 18 Prudential BSN Takaful 9,10 Alizz Islamic Bank 7 Fitch 8,9 Qatar Central Bank 10,20 Alkhabeer Capital 9,25 Formabb 23 Qatar Development Bank 10 Al-Madina Finance and Investment Company 10 FWU Group 6 Amanie Advisors 10 Gulf Bond and Sukuk Association 10 Qatar Financial Centre Regulatory Authority 10 Asian Development Bank 7 HSBC 3 Qatar International Islamic Bank 3,6,18 Association of the Luxembourg Fund Industry 9 Hwang Investment Management 6 Qatar Islamic Bank 1,18,22 ATC Capital Markets 6 ICD 7 RölfsPartner 6 Autoriti Monetari Brunei Darussalam 10 IDB 1,18,22 Sadara Chemical Company 22 Axiata Group 18 IFSB 5,10 Safran Stratejik Yönetim ve Teknolojik Danışmanlık Hizmetleri 10 Bahrain Economic Development Board 17 IIFM 7,17,23 SATORP 1 Bahrain Mumtalakat Holding Company 9 IILM 19 Saudi Electricity Company 8,18 Bain & Company 9 IIRA 17 Saudi Hollandi 22 Bank Al-Maghrib 10 Ĳ N Capital 9 Securities and Exchange Organization (Iran) 11 Bank Asya 1,22 ING Public Takaful Ehsan 9 Shariyah Review Bureau 17 Bank Muamalat Malaysia 6 Institute of International Finance 20 Standard & Poor’s 3,10,14,15 Bank Nizwa 7 International Bank of Azerbaĳ an 3 Standard Chartered 7,19 BankDhofar 7,8 Iraq Microfi nance Network 11 Standard Chartered Bank 18 BankMuscat 7 Islamic Bank of Britain 3,6 Banque Saudi Fransi 6 Islamic Finance Council UK 17 Standard Chartered Saadiq 19 Blom Development Bank 13 Islamic Finance Knowledge Centre (Bahrain) 17 State Audit Bureau (Qatar) 10 Bloomberg 7,8 JAFZA 18 State Bank of Pakistan 12 Capital Markets Authority (Kuwait) 10 Jordan Dubai Capital 12 Swiss Re Retakaful 23 Central Bank of Bahrain 8,10,17 Jordan Dubai Islamic Bank 12 Takaful Ikhlas 9 Central Bank of Oman 7 Kasturi 9 Takaful Malaysia 9 Central Bank of the Turkish Republic of Northern Cyprus 10 King & Spalding (Middle East) 4 Tamkeen 17 Central Bank of the UAE 8 Korea Finance Corporation 10 Tamweel 18 CIMB Group 7 KPMG 1 The Investment Dar 13 CIMB Islamic 7,9 Kuveyt Türk Katılım Bankası 6 The Ott oman Group 17 Clyde & Co 21 LBS Bina Group 6 The Royal Bank of Scotland 7 Colombo Stock Exchange 9 Leeds United Football Club 7 Thomson Reuters 6,17,22 Committ ee for Banking Disputes (SAMA) 4 Liquidity Management Centre (Bahrain) 17 Turk Telekom 1 Crescent Wealth 9 Loyens & Loeff 6 Dana Gas 7 Majid Al Futt aim Group 18 Turkish Airlines 1 Dar Al Sharia 9 Maples FS 6 UEM Land 6 Deloitt e 4 MARC 9 USAID 11 Development Bank of Kazakhstan 3 Masraf Al Rayan 3,6 Vinson & Elkins 6 Dubai Islamic Bank 12 Moody’s 5 Warriors Aff airs Commission 8

Each subscription will receive:

ȊȱśŖȱȱȱ ȱȱnews available Yes! I would like to subscribe to: every Wednesday Ȋȱ¢ȱ ȱ INDIVIDUAL SUBSCRIPTION COMPANY WIDE SUBSCRIPTION Ȋȱ¡ȱȱȱȱȱ ŗȱȱȱǞşşśȱĴ ŗȱȱȱǞŚǰŚşśȱĴ ȊȱUnlimited access to entire archived library ŘȱȱȱǞŗǰŝşŖȱĴ ŘȱȱȱǞŝǰŝşśȱĴ ȊȱAll additional supplements, guides and reports (Max: 10 Individual Subscriptions) YOUR DETAILS

Full Name: (First Name) (Surname) Company Name: Job Title:

Address:

Postal/Zip: Country:

Work Email: Telephone: Fax:

The information you provide will be safeguarded by REDmoney, whose subsidiaries may use it to keep you informed of relevant products & services. TO INITIATE YOUR SUBSCRIPTION, RETURN FAX TO +603 2162 7810

Payment can be made in US$ by: How to subscribe: ȱȱȮȱ ȱȱ ǯę ǯȦǯ +603 2162 7800 +603 2162 7810 Check Telegraphic Transfer (T/T) [email protected] ȱȱ¢ȱȦȱȱ ȱ¢ȱȱȱȱȱȱ¢ȱȱȱ¡ǯȱȱęȱ ȱȱȱȱ¢ȱȱǯȱȱȱȱȱȱȱęȱȱ¢ȱ 21/F, Menara Park, 12, Jalan Yap Kwan Seng has been made in full. 50450 Kuala Lumpur Malaysia NE-IFN09/50