Kuveyt Turk's sukuk, other news

Kuveyt Turk Participation Bank's recent wakala sukuk was backed by a combination of murabaha receivables and ijara contracts. This is generally tradable so long as 33% of the contracts are ijara contracts. Most of the issuance of this type of sukuk (e.g. by Cagamas and the Islamic Development Bank) adopt a higher 50% level for ijara sukuk. It appears that sukuk backed by murabaha and ijara contracts is becoming more popular among financial institutions since the structure used for mudaraba and musharaka sukuk prior to a 2008 AAOIFI ruling were ruled impermissible.

Other News

• France passed a tax neutrality law for Islamic financial products recently that could encourage more Islamic finance in the country. An earlier law on Islamic financial products was struck down by the high court largely on procedural grounds.
  
• Zawya reviews sukuk activity during August. Much of the activity occurring in August and expected in September is from Malaysia.
  
• Kuwait Finance House, which has a Malaysian unit, is planning further expansion across Asia, including China and is reportedly in talks with Japanese financial institutions regarding a strategic partnership.
  
• An article describes the potential for growth in Islamic finance but notes--correctly in my opinion--that while Islamic financial institutions were less exposed to the financial crisis in general, they have not reacted as quickly as conventional institutions and have been slower to fully recover (particularly in the GCC).
  
• Sukuk returns trailed emerging market bonds in August for the fourth straight month because of continued restructuring talks around some GCC-based sukuk.
  
• Bloomberg describes briefly the Dubai-based institution, Millenium Private Equity, which subscribed for the entire sukuk from UK-based company IIT.
  
• The International Islamic Ratings Agency and Dinar Standard released a report, called "Pulse of OIC Islamic Capital Markets".
  
• Indonesia's government is planning to issue another 2 trllion rupiah ($222 million) in sukuk to the government's haj fund by private placement. Selling the sukuk to the haj fund may be a response to the several failed auctions previously. The previous auctions saw enough demand, but higher yields than conventional bond sales of comparable maturity because sukuk are less liquid than conventional bonds.
  
• Islamic finance in Indonesia has been growing, albeit from a small base of around 2.8% of total banking assets, compared with nearly 20% in Malaysia.
  

Indonesia sukuk, rules on forward currency transactions, ISRA to set up Shari'ah scholar org

Indonesia sold sukuk through a private placement for 336 billion rupiah ($37.45 million). There was an indication that the government would move away from the auction method towards private placements after several auctions where the yields demanded by investors were higher than the Ministry of Finance was willing to expect. The higher yields versus conventional bonds were attributed to lower liquidity in secondary markets for sukuk compared to conventional bonds in Indonesia, something that is common in other countries as well. The current issue is non-tradable sukuk with a yield of 7.3% maturing in 2014.

The Shari'ah Advisory Council of Bank Negara Malaysia, the country's central bank, ruled that no payment can be made in exchange for a forward currency transaction used for hedging (based on a binding promise, wa'ad). The basis for the ruling was that the upfront fee would turn the transaction into a bilateral wa'ad, which is viewed as a contract, which is not permissible. The unilateral (binding) promise is viewed as acceptable because it is a promise made without compensation. The issue of bilateral wa'ad also emerged as a stumbling block in the IIFM report on sukuk repo transactions.

The International Shari'ah Research Academy for Islamic Finance (ISRA) may set up an international body for Shari'ah scholars with the hope of creating a (self-)regulatory organization for Shari'ah scholars. Currently, there is no international body that regulates Shari'ah scholars, although the procedures for Shari'ah-compliance are standardized through AAOIFI and the IFSB. I think it is a good effort, but I agree with Muneer Khan, head of Islamic finance at the law firm Simmons & Simmons, who is quoted saying that "It's very difficult to set up an international body which actually has the power to effect these changes [...] It all depends on voluntary cooperation. A lot of work would have to take place behind the scenes to get regulators to sign up".

The editor of Arabian Business, Damian Reilly, wrote an opinion piece in the paper about Moody's recent downgrading of Bahrain's rating from A2 to A3. He says that, despite Moody's claim that the ratings downgrade was based on its budget deficits and dependence on higher oil prices of $80 to balance its budget, it was based on Moody's view that the outlook for Islamic banking in 2011 was diminished. The Moody's analysis also cited the size of Bahrain's banking sector--much of which is Islamic banks--that has assets of three times the country's GDP. Mr. Reilly counters that the large size of Islamic banking as a share of the country's banking sector--and that industry's better performance in the financial crisis--suggests that Moody's is becoming more cautious on Islamic banking. In my opinion, his point avoids the real detriment that a global recession can have on an Islamic banking system. Even if the Islamic banking system performs better than conventional banks, the government would find it hard to support the banking industry if things became worse. The budget deficit is currently 7.3% of GDP (expressed another way, 2.4% of total banking assets) and even a small requirement for cash from the government by the banking industry would have a disproportionally large share of the country's GDP and also a large increase in the budget deficit, which could make the country's creditors uneasy.

JP Morgan estimates that the tradable sukuk paid to Nakheel's creditors for 60 percent of what they were owed (with the remaining 40 percent paid in cash) are worth about 60% of their value if they made all principal and periodic payments. The estimates of their fair value is based on Nakheel being able to pay "almost all" coupon payments but JP Morgan doubts Nakheel's ability to repay the principal in 2015. The five-year sukuk have a coupon of 10% per year. The terms of Nakheel's payment to trade creditors was higher than their offer to debt holders of Dubai World, who extended maturities of debt with a 1% yield. The holders of Nakheel's 2009 and 2010 sukuk received redemption in full with funds from the Dubai Financial Stability Fund and the 2011 sukuk are expected to be repaid in full from the same source.

Other News

• The Islamic Development Bank's $3.5 billion sukuk program securities will be listed in Kuala Lumpur and London. So far $1.1 billion has been issued and another $1 billion will be issued by year end in 5-, 7-, and 10-year sukuk. This is separate from the RM1 billion sukuk that was listed on Bursa Malaysia yesterday.
  
• The bill to put sukuk on equal footing with conventional bonds in the tax code in South Korea has been held up by the (unfounded) concern that it could lead to money laundering and financing of terrorist groups. This is unfortunately not an isolated case where unfounded fears hamper the growth of Islamic finance.
  
• The East Asian region lead the Dow Jones Islamic Indices in August according to a report from Dow Jones.
  
• Affin Bank has applied for the first Islamic bank license in China, according to an article in Business Times. The Ningxia Hui Autonomous Region was working in 2009 to develop a pilot Islamic financial services institution in northwest China.
  
• Indonesian bank BNI Syariah wants to partner with foreign investors to expand its Islamic banking business.
  
• Another article discusses the dichotomy between the GCC and Malaysia in the state of their Islamic finance sectors, primarily new sukuk issuance.
  
• The CEO of the Qatar Exchange, Andre Went, says it is drafting new rules to cover trading in bonds and sukuk. Trading was expected to begin in September, but Mr. Went did not say when trading would begin.
  

Rushdi Siddiqui interviews four scholars, sukuk update

First, thank you to those who have responded with feedback about a possible email newsletter of blog postings (and maybe other commentary). I would appreciate any other feedback, either as a comment to this post or in an email to blake@sharingrisk.org.

I think that Rushdi Siddiqui's latest article, an interview with four prominent Shari'ah scholars, Dr. Hussain Hamid Hassan, Dr. Mohammad Daud Bakar, Yousuf Talal DeLorenzo and Dr. Mohammad Akram Laldin is one of the most important articles for everyone interested in Islamic finance to read. It contains insights into how Shari'ah scholars see their role, the role of Shari'ah governance and the integration of younger less well-known scholars into the Shari'ah advisory role. It contains the most candid reflections of Shari'ah scholars that I have seen published about their own role both as advisors to Islamic financial institutions and as teachers and mentors of the Shari'ah scholars who will someday fill their shoes.

There is a good chunk of news about sukuk from the last couple days. The forward looking news starts with a $1.9 billion sukuk issued by Saudi Electric Company, which was issued at 95 basis points over SIBOR. As I wrote about in July 2009, the last sukuk from SEC was at a significant premium (160 bps over SIBOR) compared to it's (pre-crisis) sukuk issuance which was priced at 45 bps over SIBOR. The current sukuk is still at a premium to its 2007 sukuk, but by a far smaller margin. The shrinking yield premium for highly-rated issuers could lead to other non-high-grade corporate issuers to re-enter the sukuk market. The last estimate I have seen of the sukuk pipeline (sukuk planned but not issued) from Standard & Poor's was $50 billion, which likely includes lower rated corporates waiting for yield spreads for new issuance to decline.

Issues of sovereign sukuk, both domestically and internationally, remains active with Malaysia issuing a three-year, $311 million (MYR 3 billion) Sukuk 1Malaysia 2010 for domestic investors. In the wake of the Greek debt crisis, Indonesia is trimming but not cancelling the sukuk issuance expected in June or July of this year, but reiterated guidance that it would be a "benchmark" size, which typically means at least $500 million. The previous announcement was that the sukuk would be for $750 million. The Dubai Multi Commodities Centre just redeemed its $200 million, five-year sukuk issued in May 2005 with a final $20 million repayment. The certificateholders of Nakheel's $980 million Nakheel Development 2 sukuk have been told informally that the sukuk will be repaid on time. The funds necessary to repay the sukuk are reported to have been provided by the Dubai Financial Support Fund. This could spark some controversy among other Dubai World subsidiaries' creditors groups who have not yet finalized a debt restructuring which could see the other debt maturities extended and a 1% interest rate paid to creditors.

An article tackling the oft-debated issue of standardization in Islamic finance provides a very interesting view on the issue and what the current issues raised by tawarruq and the TID v. Blom Bank case. Reuters adds a factbox about the regulation of Islamic finance globally.

PricewaterhouseCoopers raises the issue, likely to confront Asian issuers of sukuk, about whether the illiquidity (and possible fluctuations) in their currencies will hamper the development of their Islamic finance appeal outside of the region. The issue has been confronted to some degree with Indonesia's dollar-denominated global sukuk issue last year and talk about a 10-year Malaysian dollar-denominated sukuk. There should remain a focus on developing domestic markets for Islamic finance, particularly within Indonesia where Islamic finance remains less developed. However, the internationalization of Islamic finance within Southeast Asia (and potentially South Korea, Japan and China) will strengthen the industry as a whole by providing additional geographical diversification for investors in dollar (and euro and pound and yen) denominated sukuk.

Dubai World; Islamic 'lender of last resort'

News about possible options for Dubai World continue to surface in media reports and the latest is that Dubai World may seek to simply rollover its debts and lower the interest payments and repay over an eight to ten year period. The outcome for sukuk holders was not discussed specifically in the reports and I am still not sure whether the Dubai World restructuring will include specific accommodations to account for Shari'ah-compliance concerns. In my opinion, and I am not a scholar so I can't speak definitively about this, that any extension of maturity with continued lease or profit payments could be difficult because it would effectively exchange a delay in repayment for a higher level or repayment, which would probably raise some issues. However, I recall that the Nakheel sukuk incorporated defaults by extending the lease term and continuing the lease payments until repayment (analogous to what is being proposed), while retaining the lease as the source of the payments. This would probably be viewed more favorably because it would not include a delay in repayment in exchange for increasing the principal (by making periodic payments for a longer period). However, not all of the Dubai World Islamic debt is structured as ijara. One source in the FT article said that creditors could receive a share of future profits, which could be a way to extend the maturity by turning a murabaha or other facility into a mudaraba or musharaka. However, the lack of clarity on this issue in the media report suggests that there is either a minority of debt that is Shari'ah-compliant or the issue of Shari'ah-compliance is not at the forefront and is being viewed as a later issue when the general terms are agreed for something to be engineered to work around any issues. The National newspaper also offers its slightly different analysis. The Nakheel sukuk are discussed in another article as JP Morgan indicated in a note that sukuk holders could receive repayment at par.

The Union of Arab Banks says it is finalizing a way to allow Islamic banks to approach the central banks of the region for support. This is an important issue because without 'lender-of-last-resort' protection, Islamic banks are more vulnerable to runs. The lack of this support potentially can turn a liquidity crisis at Islamic banks into a solvency crisis if they are forced to unload assets at fire sale prices to meet depositors' withdrawals. This vulnerability should overshadow the more conservative lending standards in the pronouncements of Islamic banks' supposed immunity to crisis. The interbank market is important for banks to be able to have lower reliance on high levels of liquid assets that can reduce their profitability and thus the competitiveness with conventional banks. Following the launch of larger banks like Istikhlaf, which appears only to be an investment bank at the time being, there will need to be more attention paid to the systemic risk posed by larger Islamic banks. Without liquidity facilities at the central banks, investment banks and retail banks in the Islamic financial industry are extremely vulnerably. Beyond the fleeing of depositors in a 'classic' bank run, the demise of Lehman Brothers and Bear Stearns show how a run can start even without depositors if the wholesale funding partners of a bank withhold credit all at once. Both 'classic' and 'Lehman' runs should be considered in judging the urgency of establishing a 'lender of last resort' facility. When there is a new bank with $3 billion in capital expected, this could translate into $60 billion in assets (assuming a leverage ratio of 20:1). That would be a huge institution that would pose systemic risk to the Islamic financial system. It is an issue that deserves a lot of attention.

Other News

• The Dubai Financial Services Authority issued five Islamic finance handbooks for firms operating in the DIFC.
  
• Having announced last year investments in Chicago and a joint-venture with a publicly traded REIT, Kuwait Finance House is planning further expansion in the US, China and Canada. Other Islamic banks have urged China to consider Islamic banking as a way to attract capital from the Middle East.
  
• Indonesia raised 999 billion rupiah ($108.9 million) in its latest sukuk auction with a maturity range of 5 to 15 years sukuk. It had no winning bids for an 11-year sukuk auction. There have been several recent failed auctions for sukuk with investors demanding too high a yield to be accepted by the Ministry of Finance.
  
• Forbes has an article (written by Oxford Analytica) on the moves towards standardization in Islamic finance.
  
• The Islamic Development Bank will soon launch a roadshow to raise money for Istikhlaf, the 'Islamic Goldman Sachs' expected to begin operations later this year.
  
• Dar Al-Arkan redeemed a $600 million sukuk.
  
• The Jordanian government borrowed $100 million from Jordan Islamic Bank to finance a stockpile of wheat and barley.
  
• Centennial College in Toronto will offer an Islamic finance course starting in May.
  
• Has Islamic finance helped cushion Bahrain from the blow of the global recession? The finance minister thinks so.
  
• The Investment Dar continues to struggle on its restructuring and may seek protection under the country's financial stability law.
  
• Amana Takaful, a Sri Lankan takaful provider received an insurance license in the Maldives. The takaful industry continues to struggle over the lack of sufficient supply of appropriate investments, like sukuk, and a shortage of talent.
  

Sukuk in default, Amlak and Tamweel resolved?, Islamic law firm

Malaysian ratings agency RAM Ratings Service has a very detailed overview of how sukuk function in cases of default comparing both the asset-based and asset-backed sukuk, as well as the differences between the Gulf and Malaysia. In asset-based sukuk, the asset is used to structure the transaction, but is not actually transferred to investors. The sukuk investors therefore become unsecured creditors of the issuer through a purchase undertaking that compels the issuer to repurchase the assets in cases of default. In asset-backed sukuk, the assets are sold to the SPV used to structure the transaction and the investors have recourse to this asset, which the sale to the SPV protects from the claims of the issuer's other creditors.

The problems at Amlak and Tamweel, two Dubai-based Islamic finance companies could be close to a resolution that sees them merged together into an Islamic bank that is partially government-owned. The two companies have not been providing any financing as their fate has been determined largely by the government of Dubai and the United Arab Emirates. The resolution proposed in some way resembles the conservatorship that was the end result of Freddie Mac and Fannie Mae in the U.S. with partial government ownership of the combined companies that would support the two companies' debt load.

An article provides greater detail about the workings of a Shari'ah-compliant law firm. In a time when law firms along with their financial clients are tightening it is interesting that there is a law firm that is beginning with a self-imposed limitation on the types of clients it will accept.

Other News

• The Investment Dar announces that it has appointed a Chief Restructuring Officer following the Standstill Agreement with its creditors.
  
• DIFC and the World Bank's Multilateral Investment Guarantee Agency are working together to develop the GCC's bond and sukuk markets. A more detailed summary of the issue is available from Emirates Business 24-7.
  
• Malaysia continues to plan for a 20% market share for Islamic banking and takaful in 2010. The share for Islamic banks is currently about 17% and for takaful 7%.
  
• China could be the next large market for Islamic finance, although regulatory hurdles remain.
  
• The Islamic Bank of Britain is offering 2-year Islamic CD's yielding 4.5%, which will be fund the bank's Shari'ah-compliant financing. The bank recently revealed it had faced increases losses because of low interest rates that decreased the net interest margin on its financing activities.
  
• QFinance launched an online reference guide to finance, including Islamic finance.
  
• An Islamic cooperative bank has been opened in India. It marks another step on the slow development of the Islamic finance industry in India.
  
• Islamic banking has begun to grow in Kazakhstan eight months after it changed laws to accommodate the industry.
  
• The most recent issue of sukuk al-salam from the Central Bank of Bahrain were 100% oversubscribed with BD12m in subscriptions for the the BD6m issued.
  
• Dow Jones has released the performance for September of its Islamic indices.
  
• In an interview, the CEO of Hilal Bank is asked about the need for central regulation of Shari'ah-compliance, as well as the fallout from the credit crisis and the potential conflict of interest caused by Shari'ah boards being employed by the institutions they oversee.
  
• Abu Dhabi's Tourism Development and Investment Company issued a $1.45 billion sukuk al-ijara that will have a AA rating from S&P.
  

Canadian company sukuk, Islamic finance in China, faith-based ETFs in the U.S.

The wave of sukuk defaults will test the industry as well as the prospect for investors to receive judgements in English courts that govern the sukuk SPVs. The next step will be to try and enforce these judgements in the GCC, according to an article in Euromoney.

Bear Market Resorts is planning a $380 million sukuk that will be issued in August. It would be the first sukuk in Canada and one of few by North American issuers. Siraj Capital is working with the company on the sukuk having previously worked on the East Cameron sukuk which is currently being affected by the issuer's bankruptcy. Following the East Cameron sukuk issue, Siraj Capital announced it was nearing a commitment to work on a sukuk for a NYSE-listed oil and gas company that was never issued.

A research economist at the Qatar Central Bank, Syed A. Basher, writes in an article published in Gulf News that despite the growth of Islamic finance throughout the GCC, the level of government support for the industry has varied widely with Bahrain and Kuwait being the most supportive and Oman and Saudi Arabia lagging behind.

Following the launch of the first U.S.-based Islamic ETF, The Dow Jones Islamic Market International Index Fund (NYSE: JVS), another companies, FaithShares, there is an article about FaithShares which requested approval in April to launch its own ETFs to meet screening criteria of other faith groups including Baptist, Catholic, Christian, Lutheran and Methodist.

The Bank of Ningxia plans a pilot project to test the offering of Islamic financial products in the region which would be the first within China.

Other News

• Islamic microfinance industry is being encouraged in Pakistan by a group, the Alhuda Centre of Islamic Banking and Economics which has launched a helpdesk to help microfinance institutions that want to shift form coonventional to Islamic finance.
  
• Moody's says that Islamic banks in the GCC should 'change their business model' to adapt to the post-financial crisis world.
  
• The joint-Islamic Development Bank/Asian Development Bank Islamic Infrastructure Fund announced that it had raised $266 million towards the $500 million it expects to begin with, most of which came from the Islamic Development Bank and the Asian Development Bank.
  
• As part of its regulatory reforms, France plans on changing laws to ensure that Islamic financial products can be offered in the country which has one of the largest Muslim population in Europe.
  
• The Central Bank of Bahrain redeemed its $250 million ijara sukuk that was issued in 2004 following its maturity.
  
• Islamic banking could grow in Africa following Al Baraka's listing on the Johannesburg Stock Exchange according to an article in African Banker.
  
• Malaysia and Singapore have both been making regulatory changes to encourage inflows of capital from the Middle East, including through Islamic finance.
  

Update on Islamic banking applications in Canada; more on Islamic finance 'immunity' to the economic crisis

There is a very detailed article about the hold-up of Islamic banking license applications in Canada which includes details that the Department of Finance has returned applications to the regulator responsible for approving them "for normal processing".

An interesting article describes the ways in which the Islamic finance industry has reacted in the wake of the credit crisis but contains a few points which are not entirely true and again raise the issue of whether Islamic finance is 'immune' from financial crisis. I have discussed at length (here, here, here, and here, for example) several cases in which this claimed immunity from crisis is not true and that Islamic financial institutions face challenges that are in some ways similar to those facing conventional financial institutions. One paragraph which cites Rodney Wilson of Durham University attributes to him:

"claims that in the current crisis no Islamic bank has failed, and in contrast to conventional banks, none have needed government funds to save them from collapsing"

The first part of the statement may be true (so far) from if looking strictly at banking institutions, but if the crisis has taught us anything it is that non-bank financial institutions may be more vulnerable than banks. One needs to only look to The Investment Dar, an Islamic investment company based in Kuwait, which recently defaulted on $100 million in sukuk as well as the Saad Group, which are now pricing in a future default according to ING Investment Management, to find counter examples. As for the assertion that Islamic financial institutions are not reliant on government bailouts, the cases of Nakheel, Amlak and Tamweel serve as counter examples.

In my mind, however, the fact that some Islamic banks are having difficulties is not an indictment of the industry in any way. Islamic finance is a business operating in difficult economic times and the whole principal of sharing risks and rewards should lead to some banks failing if they make investments which go sour. Continuing to promote the idea that Islamic finance is somehow 'immune' from the economic crisis does a grave disservice in my opinion to the industry and especially the people who work long hours to move the industry more towards profit-and-loss sharing models.

In other news, the Bahrain $500 million sukuk which was raised to $750 million and priced at 350 basis points over 5-year US Treasuries was 8 times oversubscribed with total subscriptions coming in at a whopping $4 billion for the sukuk. A press release from the Central Bank of Bahrain notes that "This issue reaffirmed the market's appetite to invest Bahrain's debt securities and was well received internationally, with a major portion of subscriptions coming from outside the GCC". This oversubscription probably comes from an unfreezing of global credit markets, the shortage of sovereign sukuk and an underlying latent demand for sukuk that had been suppressed in part because low oil prices put off potential investors in GCC issuers.

Other News

• Nakheel will provide a test case to see how state-affiliated companies manage to roll over their debt including sukuk. Nakheel has $3.52 billion in sukuk that mature in December this year.
  
• The Investment Dar met with investors to update them on restructuring, according to a press release from the company. On June 8, 2009, the sukuk investors passed a resolution stating that "the Certificateholders would in due course like to further consider the potential of asserting priority claims in respect of the Sukuk Assets"
  
• Saudi Electricity, the region's largest utility, plans $1.33 billion in sukuk.
  
• Malaysia is confident it can retain its leading position in the Islamic finance industry according to national news agency Bernama.
  
• Amara Holdings, a Dubai based Islamic investment company will partner with New China Trust to identify Shari'ah-compliant investment opportunities in China. This is one of the first cases where Shari'ah-compliant investents will be made in China.
  

Islamic finance globalizes, receives growing attention as a 'safer' alternative to conventional finance

The governor of the Central Bank of Bahrain met with his counterpart from the Monetary Authority of Singapore, the city-state's central bank, to discuss ways that Bahrain can help Singapore develop its Islamic finance industry. Singapore is planning to issue a sukuk soon. Meanwhile, Dubai will work with Hong Kong to develop Islamic finance in China. A Shari'ah-compliant ETF will be launched in the second half of 2008 on the Taiwan stock exchange. The Financial Times discusses new efforts from policymakers in Paris to rival London as the European center of Islamic finance.

The most recent article I wrote is in the current issue of Islamic Business & Finance. The article focused on Islamic microfinance.

Islamic finance is becoming viewed as a 'safer' alternative to conventional finance in the wake of the subprime crisis. The Islamic Bank of Asia is seeing similar growth in demand for Islamic finance from both Muslims and non-Muslims because of its perceived status as 'safer'. The same idea is one of a number discussed in a Washington Post article on the growth in Islamic home finance in the United States, even as the mortgage market shrinks.

The African Development Center in Minneapolis has been providing small business loans with the city's Community Planning and Economic Development agency. The loans provided through ADC are the first in the U.S. to be provided from a public agency and also be Shari'ah-compliant. The CPED description does not provide a description of the structure of the finance that makes it Shari'ah-compliant.

An interview with the head of Praesidium Consulting covers continuing fall out from the questions over Shari'ah-compliance of sukuk.

A paper in Sri Lanka discusses the differences in treatment of Islamic finance by the country's tax authorities.

An article from Reuters highlights the continued push for 'standardization' of Islamic finance.

Toyota plans to issue its first sukuk in Malaysia.

Special report on Islamic Banking, Islamic accounting qualification from U.K. body

The Pakistani newspaper The News has a special section on Islamic banking.

• "Shari'ah-compliant credit cards"
• "Is Islamic banking in Pakistan really Islamic?"
• "Islamic investment instruments"
• "Interviews on Islamic banking"
• "Special report on Islamic banking"

Malaysia plans on helping neighboring Hong Kong with Islamic finance and opened the door to new sukuk issues from Japan and China

Pakistani bank Meezan Bank is exploring microfinance.

The International Islamic Trade Finance Corporation (ITFC), a part of the Islamic Development Bank will launch on January 10, 2008. The ITFC will provide Shari'ah-compliant trade financing to IDB member countries.

The U.K. Chartered Institute of Management Accountants (CIMA) will provide training in Islamic finance.

Islamic hedge funds, Malaysia & newspaper supplements in China

An interesting take on the possibility of Islamic hedge funds. One issue though is to determine whether hedge funds attaching the 'Islamic' label are "using markets wisely" and not "speculate, play passing the parcel as long as it's someone else" and deal with the fact that many of the interpretations used by many of the Malaysian firms are not accepted widely outside of Malaysia.

Malaysia is "losing a lot of experts in Islamic banking and finance" to other countries, says PM Badawi

Malaysia will cease to issue Islamic banking licenses to foreign investors. New foreign entrants will need to partner with local firms.

Indian Banks Association waiting on Reserve Bank of India to decide on the "regulatory framework for introducing sharia- compliant products"

A supplement in today's China Post promoting Malaysia as a center of Islamic finance.

Awqaf, Islamic financing of a Chinese energy city, conference on Islamic development finance

The Dubai International Financial Centre (DIFC) and the Dubai Islamic Bank (DIB) are working together to provide Shari'ah-compliant trusts (awqaf).

Gulf Finance House is building a $5 billion residential & industrial city in China. Similar projects are underway in Qatar and India.

A Malaysian government minister encourages Japanese firms to gain exposure to Islamic banking through Malaysian banks.

A conference is planned by the Central Bank of Bahrain (CBB) and the UN Economic & Social Commission for Western Asia (UN-ESCWA) focusing on the role Islamic financial institutions can play in development finance.

IF in China, Takaful & Retakaful, diminishing musharaka & Anwar Ibrahim interview

London Asia Capital creates Islamic finance division in Western China

London Asia Capital plc, a British merchant banking group, is opening an Islamic finance division in Xinjiang, China in partnership with Xinjiang Investment Corp. The Xinjiang region is home to most of China's estimated 20 million Muslims. The Islamic finance division will offer credit guarantee services to Islamic and Shari'ah-compliant companies.

Lloyd's of London 'very interested' in takaful

Lloyd's of London, the U.K.-based insurance company, expressed continued interest in expanding to serve the takaful markets in the Middle East and Malaysia. Chairman Peter Levene said he believed that takaful "could be a much more acceptable way for individuals and corporations in that area to take out insurance, which they have been unable or unwilling to do in the past" and said Lloyds was "very interested" in entering takaful markets. In a press release from Lloyds on March 1st, Peter Levene expressed that Lloyds believed "there are some potentially strong business opportunities in the Retakaful [Islamic reinsurance] sector and that Lloyd's could become an attractive platform for capital providers wishing to invest in this area."

Citigroup offers home finance in Malaysia

Citibank Bhd now offers a diminishing musharaka home financing co-ownership product where payments are broken into a rental share and a buyback share, which is used to increase the client's share of ownership in his house.

Interview with Anwar Ibrahim

There is an interview with Anwar Ibrahim on Islamic finance. He was recently announced as a speaker at the International Islamic Finance Forum (IIFF) in Dubai in April 2007 recently.