July 2009 Issue

Establishment of Islamic Financial System in China

EEO China - June 18, 2009

With encouragement from the China Banking Regulatory Commission (CBRC), Ningxia Hui Autonomous Region is set to take the lead in trialling Islamic financial services in China.
If the pilot project is successful, policy makers hope that Islamic financial services will gradually become available throughout North West China. Lu Suping, Chairman of the Bank of Ningxia's board of directors, confirmed that the regulatory bodies had given the bank preliminary approval to go ahead with an Islamic Finance trial.

Australian Minister to Attract Islamic Finance

Bloomberg - June 8, 2009

Australia may seek to attract more Islamic financing to Sydney to beat the global recession, the Sydney Morning Herald said, citing new Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen. Australia, which has the fourth-largest pool of superannuation funds under management in the world, could create jobs and wealth by attracting a percentage of the Islamic finance market, the paper said, citing Bowen, 36. He was formerly assistant treasurer, the paper said.

Pakistan Banks Set up an Islamic Inter-Bank Price Market

Islam Online - June 19, 2009

Pakistan’s six Islamic banks are going to set up an Islamic inter-bank price market in order to stop relying on interest-based conventional banks in meeting their short-term funds requirements. "Things are almost finalized and an official announcement in this regard will soon be made," Ahmed Ali Siddiqui, head of Product Development Shari`ah Compliance at Meezan Islamic Bank, Pakistan's first full-fledged Islamic bank.
There is already a conventional inter-bank price market for interest-based conventional banks in the South Asian Muslim country. "Though, the exiting inter-bank price market is not completely haram, our customers and religious scholars feel awkward about that because of the involvement of interest-based banking sector. Therefore, the Shari`ah advisory boards of the six Islamic banks sat together a few months back and decided to set up their own interest-free price market"

Luxembourg Strengthens Islamic Finance Sector

Global Custodian - June 25, 2009

The Luxembourg Ministry of Finance sent a strong message of support for the Islamic finance sector in a recently held two day conference in Luxembourg. The conference, attended by Islamic scholars and experts from Europe, the Middle East and Asia, was ...

Waiting for Islamic Banking (by Nigeria Central Bank Governor)

Next - June 14, 2009

Lamido Sanusi, the new Central Bank governor said of Islamic banking: “It is important we make sure that people don’t say they are offering Islamic banking while they are actually running conventional banking. You need the knowledge of the modern banking and of Islamic banking in Malaysia, the Arab World, and Pakistan to be on the committee. “The services would be available to Muslims and non-Muslims. It is not a religion, it is a product available to the public. If things are set in place, I would be in support”.
The Central Bank of Nigeria (CBN) terms Islamic banking, “non-interest banking”. According to the CBN, a non-interest bank means a bank which transacts banking business, engages in trading, investments and commercial activities, as well as the provision of financial products and services, in accordance with the principles and rules of Islamic commercial jurisprudence.

Gulf investors may set up bank in Turkey

Daily News Hurriyet - June 24, 2009

A delegation of Qatari and Syrian investors, led by Sheikh Khalid bin Abdullah bin Thani Al Thani, visited Ankara recently to discuss plans to set up the Islamic bank, called a "participation bank" in Turkey, the newspaper reported over the weekend. Discussions are at an initial stage for the proposal, the newspaper said, reporting that "Dr. Sheikh Khalid bin Abdullah bin Thani Al Thani was welcomed in Ankara by Tevfik Bilgin, chairman of the Turkish Banking Regulation and Supervision Agency."
According to the story, the possibility of involving prominent Qatari and Syrian investors with expertise and skills in Islamic banking in the proposed project was discussed at the meeting. "It was mutually agreed upon to continue with follow-up meetings on setting up the proposed Islamic bank," The Peninsula wrote. "Bilgin assured Khalid of all possible cooperation and support for establishing a joint venture Islamic bank in Turkey."

Europe banks eye IPO brief for $10 bln Islamic bank

Guardian UK - June 25, 2009

European banks are showing interest in investing in and providing initial public offering advice to a planned $10 billion Islamic bank, the chairman of the Union of Arab Banks told Reuters on Thursday.
Adnan Ahmed Yousif said the bank, which would be the first Islamic bank of its size and which is to be launched by year-end, is attracting foreign investors. "The good thing is that in the past two months we have received a good interest level from European banks, they want to contribute both capital and do the IPO for us," he said.
The emerging Islamic finance industry has boomed over the past years, with its assets being estimated at between $700 million and $1 billion, but is yet to produce a bank large enough to compete with the Islamic subsidiaries of Western banks. Most Islamic banks are also focussing on only one of the three regions, in which the industry has established itself, South East Asia, the Gulf Arab region and Europe.

Islamic Banking in Africa

African Banker - June 15, 2009

Islamic banking, with its emphasis on ethics and its employment of capital solely as a factor of production rather than as a means of gain, is now the politically correct banking system. It has remained largely insulated from the global credit crisis. It is expanding not only in the Muslim world, but also in other countries where Muslims are a minority, such as Britain, France, the US and even Japan. The industry has grown at the prodigious rate of 15-20% annually over the past decade. This growth is likely to continue, albeit at reduced rates, as more corporates and companies look increasingly to Islamic banks for trade and project finance. Islamic banking has established a firm foothold in Africa but the potential is still enormous. This Special Report examines what Islamic banking is really all about and the role it now plays in Africa.

Russell Investments USA, launches Sharia indexes

Reuters UK - June 29, 2009

U.S. fund manager Russell Investments [RML.UL] has launched its first range of Islamic compliant indexes with Saudi investment services group Jadwa, responding to growing demand in the Middle East. The Russell-Jadwa Sharia index range includes a suite of 10 indexes involving companies all over the world which comply with Islamic finance requirements.
Islamic finance avoids interest, excessive leverage and regards sectors such as mainstream finance, alcohol and weapons production as forbidden. Mainstream financial companies are also excluded, a choice which has partially protected Islamic funds from the heavy market downturn. A group of Islamic scholars screen the compliant companies in the indexes every quarter.

Four Islamic banks may open in Kazakhstan

Reuters - June 12, 2009

Kazakhstan expects three or four Islamic banks to set up operations in the former Soviet republic this year, central bank head Grigory Marchenko said on Friday. The mainly Muslim nation passed legislation in February allowing Islamic banking -- which operates under the principles of Islamic law.
"All the necessary documents have been adopted by the FSA (Kazakh financial supervisory authority) in Kazakhstan and on the side of accounting, all the documents have been adopted by the central bank," Marchenko said. "Overall we are expecting that maybe three or four Islamic banking licences will be extended in the next 12 months," ....

First Islamic leasing company starts operating in Azerbaijan

ABC Azerbaijan - June 4, 2009

A leasing company founded by Islamic Corporation for the Development of the Private Sector (ICD) has announced the beginning of its work on Islamic principles in Azerbaijan. Company’s general director Jeyhun Nagiyev says that registered as Azerbaijan Leasing Company they will operate under trademark Ansar Leasing.
“Ansar translated from Arab means “helper”, “protector”. Besides, there is religious meaning of this word. ICD established this leasing company in Azerbaijan for the purpose to invest in private business entities in Islamic countries in accordance with shariat principles. Company’s current capital makes now AZN 5 million that will allow it participation in financing for large projects,” Nagiyev said.

Doctors of law needed to take Islamic finance forward

Emirates Business 24/7 - June 21, 2009

With the global financial crisis exposing the limitations of traditional banking systems, there is now a big push in the banking sector worldwide to incorporate Islamic banking, the total assets of which are expected to reach $2 trillion (Dh7.34trn) in 2015, according to experts. However, Islamic banking is not without its challenges, the most prominent of which is to find adequately qualified Islamic scholars for the Shariah governance boards of Islamic banks and financial institutions.
Two experts that Emirates Business spoke to said a PhD in Shariah law should be a mandatory requirement for any member of a governing board of an Islamic bank. They also proposed a system of issuing operating licences for the scholars after testing them to ensure they met all the required criteria.

First Islamic leasing company starts operating in Azerbaijan

ABC Azerbaijan - June 4, 2009

A leasing company founded by Islamic Corporation for the Development of the Private Sector (ICD) has announced the beginning of its work on Islamic principles in Azerbaijan. Company’s general director Jeyhun Nagiyev says that registered as Azerbaijan Leasing Company they will operate under trademark Ansar Leasing.
“Ansar translated from Arab means “helper”, “protector”. Besides, there is religious meaning of this word. ICD established this leasing company in Azerbaijan for the purpose to invest in private business entities in Islamic countries in accordance with shariat principles. Company’s current capital makes now AZN 5 million that will allow it participation in financing for large projects,” Nagiyev said.

Islamic Banking Gains Momentum

Al Bawaba - June 26, 2009

Governments trying to set framework for establishing Islamic Banking. Conventional banks trying to extend their line of service by Islamic Banking. And Islamic banks are expanding their network globally. Islamic Banking is on the rise! But despite that impressive growth standards have to be set in order to not dilute the quality of Islamic Banking.
Recently there is a lot of talk about Islamic Banking as it seems to have proofed more resilient than conventional banking. However the total number of Islamic banks is still small and according to online-researches conducted by Shariah-Fortune estimated at around 350-400 institutions worldwide. Compared to around 9,500 banks located in the USA the Islamic Banking sector still seems pretty small.

Javelin launches first U.S.-listed Islamic ETF

Reuters - June 30, 2009

Investment adviser Javelin Investment Management has launched the first U.S.-listed Islamic exchange traded fund, the fund's index provider said.The fund tracks the Dow Jones Islamic Market International Titans 100 index, which measures the stock performance of 100 top Islamic ex-U.S. companies, Dow Jones said in a statement.
So far this year, the index is up 10.34 percent through June 30, 2009, the statement said. The index excludes stocks of companies involved in alcohol, tobacco, pork-related products, financial services, weapons and entertainment, Dow Jones said.

Islamic markets fret as regulators revamp bank rules

Reuters - June 24, 2009

Islamic financial markets heaved a sigh of relief after dodging the securitisation crisis which hit traditional banks, but the fallout may spark a global regulatory overhaul that could stifle the $1 trillion industry. As Western governments and regulators look to tighten supervision of banks in the wake of the worst financial crisis in decades, reforms could be launched which may also discourage the use of Islamic finance instruments and check the sector's growth.

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