Sunday, February 21, 2010

Malaysian Islamic finance, Saudi Aramco/Total sukuk, real estate funds announced

Malaysian Islamic banks will see more competition in the next couple years as global banks enter the market, but Islamic bankers are confident they can handle the competition. This domestic competition may also lead to Malaysian Islamic banks to look elsewhere in the region and globally for new areas of business. The article provides a good summary of where the industry is in Malaysia and it is likely that the country will pass the 20% market share mark for Islamic banks as a total share of banking assets sometime this year. CIMB's Indonesian subsidiiary has seen strong growth in the past year.

Saudi Aramco and Total are reported to have hired bankers for a $1 billion sukuk, which would be the largest sukuk issued this year. The sukuk would help finance a $12 billion oil refinery the two companies expect to build in a joint venture.

A couple new real estate funds were announced. One is from Ajman Bank in the UAE. The other is Al Rajhi Bank and Arcapita Bank, who announced a $500 million real estate income fund.

Other News

  • The FT has an interesting article on the pinch that is hitting many Kuwaiti investment firms, both conventional and Islamic.
  • The Islamic financial industry should look towards alternative energy sukuk (among many areas) to cut the over-reliance on real estate-backed sukuk.
  • An article describes a brief history of Islamic banking and also has a good look of the different types of products which make up a typical Islamic bank's assets and liabilities.
  • Troubled Islamic mortgage lender in Dubai, Tamweel, says it will need AED1 billion ($272.3 million) in debt guaratees or equity at minimum, but will request a resumption of trading in its shares that have been suspended since 2008. The merger with Amlak Finance, another Islamic mortgage company is still "feasible" according to the chairman of Tamweel.
  • If pension funds in Muslim majority countries shifted 30% of their assets into Shari'ah-compliant investments, it could provide the industry with a "massive boost".

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