INDONESIA: Gatehouse Bank signed a MoU with Bank Syariah Mandiri and Bank Negara Indonesia to undertake Islamic banking initiatives to strengthen key alliances and develop relationships with both of its Indonesian counterparts. Gatehouse Bank chairman Fahed Boodai said: “We look forward to a productive working future with these banks and will stay committed in our efforts to engage and advance transaction activities that will deliver real rewards to all parties involved.”

On par

MALAYSIA: The country plans to impose a goods and services tax effective next year, which could potentially raise the cost of Islamic financing transactions as these require more legal steps than conventional finance. Hence, the tax issue had raised concerns that Malaysia would fall out of favor with Islamic finance investors because they would have to pay more tax on deals. In view of this, PricewaterhouseCoopers (PwC) said the government has indicated in industry discussions that Islamic finance would be given equal tax treatment with conventional financial transactions when the tax is levied. PwC senior executive director Jennifer Chang said: “The government is basically saying that these transactions are there just to facilitate, for example the issuance of Sukuk, and it just so happens that underlying this there are all these transactions.”

On safe ground

INDIA: Reserve Bank of India deputy governor K C Chakrabarty said the exposure of Indian banks to crisis-hit Dubai World is in the range of US$275 million to US$300 million. Hence, the banking sector’s performance will not be impacted. Dubai World rocked global markets last November when it sought a delay for repaying US$26 billion in debt linked to its main property units Nakheel and Limitless World. It staved off default on a US$4.1 billion Sukuk linked to Nakheel after a last minute bailout by Abu Dhabi.

Big plans for SMEs

MALAYSIA: Standard Chartered Saadiq aims to maintain a double digit compounded annual growth rate for its small- and medium-sized enterprise (SME) business over the next couple of years. To fuel the growth of the SME business, StanChart Saadiq CEO Azrulnizam Abdul Aziz said, the bank seeks to promote alternative Shariah compliant solutions. the bank, according to him, plans to introduce three SME products by the first quarter of this year, covering trade working capital, foreign exchange contracts and investment, to its existing six SME products. StanChart Saadiq also plans to open more branches this year to strengthen its position in the SME market.

Solid feat

MALAYSIA: RHB Capital Group posted an 8% rise in pre-tax profit to RM1.5 billion (US$441 million) for 2009, attributed largely to income from its Islamic banking business, which rose 16% to RM326 million (US$96 million). The group’s net non-performing loan ratio remained stable at 2.21%.

Legal changes

HONG KONG: The country is changing its tax laws to facilitate the development of Islamic products like Sukuk, said financial secretary John Tsang Chun-wah. These amendments would enable Islamic products to be on par with conventional products, he added. Tsang is confident that the Sukuk activity in Hong Kong will develop and thrive, given the strong financial infrastructure for conventional business.

Sukuk in the pipeline

INDONESIA: The country plans to issue a global Sukuk this September, according to the finance ministry’s head of debt management Rahmat Waluyanto. He said the Sukuk may be issued after the Eid al-Fitr festival, but gave no further details.

Shariah business

UAE: United Arab Bank (UAB) has launched a Shariah compliant banking and financial service. CEO Paul Trowbridge said it will address the growing demand of its clients for Shariah compliant transactions. UAB’s initial products include current accounts, investment, and goods Murabahah. The range will later have vehicle Murabahah and Islamic credit card.

Eye on BRIC countries

MALAYSIA: TA Investment Management (TAIM) has launched the TA BRIC and Emerging Markets Fund, which will invest in Shariah compliant equities and equity-related securities of firms with businesses in Brazil, Russia, India and China (BRIC). It aims to provide investors with investment exposure to Islamic-based equities in these markets and with medium- to long-term capital growth opportunities. TAIM chief investment officer Choo Swee Kee reasoned that BRIC countries are rich in natural resources and have good economic growth prospects. The investment strategy is to place a minimum of 70% of the fund’s net asset value in Shariah compliant equities and equity related securities and a maximum of 30% into domestic Sukuk. The fund has an approved size of 400 million units. It was offered at 50 sen (US$0.15) per unit with a minimum investment of RM1,000 (US$294).

No to Sukuk

PHILIPPINES: Treasurer Roberto Tan said the government has no plans to sell Sukuk this year, citing the numerous hurdles in the legal system. First Metro Investment Corporation executive vice president Roberto Juanchito T Dispo had previously said the Philippines planned to issue a US$500 million Sukuk this year through state enterprises like the National Power Corporation, which is raising PHP15 billion (US$325 million) for its small power utilities group project.

Shariah offshore fund

INDIA: UTI International, a subsidiary of India-based UTI Asset Management Company, plans to launch an offshore Shariah compliant fund for retail and institutional investors based in the UAE and the Gulf in the next three months, said CEO Tarun Ghulati. He said this is due to strong demand for Shariah-based investment products from retail as well as institutional investors from the Middle East.

Rebranding exercise

MALAYSIA: Crédit Agricole Asset Management Islamic Malaysia will change its name to Amundi Islamic Malaysia to align itself with its parent company Amundi Group. Managing director Mohamad Damshal Awang Damit said the rebranding effort will not in any way affect the company’s commitment towards its customers. He added that the company’s address and that of its branches will remain the same.

Momentous celebration

UAE: Islamic Finance news hosted its 2010 Islamic Finance news Awards Ceremony and Dinner at the Jumeirah Emirates Towers in Dubai. Over 250 guests attended the event which honored the winners of the 2009 Islamic Finance news Poll and Deals of the Year awards. The winners included Path Solutions (represented by chairman and CEO Mohammed Kateeb) which walked away with the “Best Islamic Technology Provider” award; Gulf Finance House (represented by head of marketing and strategy Jinesh Patel) which bagged the award for “Equity Deal of the Year”; and Norton Rose (represented by head of banking and Islamic finance Middle East Neil D Miller) which won for “Best Law Firm of the Year”.

Name change

UAE: The Mashreq Group has launched its Islamic banking division — Mashreq Al Islami. The unit was formerly known as Badr Al Islami. The move applies to all of its 58 branches in the country. Mashreq Al Islami CEO Moinuddin Malim said the move to rebrand the unit was part of the natural evolution of the business. Malim said that under its new name, customers will directly benefit from Mashreqbank’s wide network of branches and strong reputation in both retail and corporate finance.

A win-win deal

UAE: The Gulf Bond and Sukuk Association and the Middle East Investor Relations Society have signed a MoU to actively promote and improve investor relations practices and fixed income markets in the Middle East. Under the agreement, the two organizations will cooperate with each other through joint activities, events, studies and publications and will offer reciprocal advantages to members of each organization.

Sukuk dilemma

JORDAN: The government may need to issue new legislation or find new measures to speed up the issuance of Sukuk, said finance minister Mohammad Abu Hammour. He said that amending the relevant legislation will take time, but gave an assurance that the government will work out a legal solution as soon as possible. Last year, the ministry and the International Monetary Fund undertook a review of financial legislations in Jordan to facilitate the issuing of Sukuk.

Last resort

KUWAIT: A number of Kuwaiti banks have decided to launch legal proceedings against the troubled Saudi business groups Saad Group and Ahmad Hamad Al Gossaibi and Brothers over debts estimated at US$1.5 billion. The decision was taken after months of negotiations with the two groups ended in a deadlock. The creditor banks involved are Gulf Bank, Commercial Bank of Kuwait and Burgan Bank, in addition to Kuwait Finance House.

Sukuk financing

UAE: Waha Capital is in talks to buy controlling stakes in global aviation and maritime firms, and expects to conclude up to two deals this year, said CEO Salem Rashid Al Noaimi. The acquisitions are part of the company’s plan to grow its business over the next few years. Al Noaimi said the company would use the proceeds from a planned AED1 billion (US$272 million) Sukuk to fund the acquisitions.

Mutual funds online

SAUDI ARABIA: Al Rajhi Capital, the investment arm of Al Rajhi Bank, has signed a distribution agreement with Derayah Financial. This enables its Shariah compliant mutual funds to be available to individual investors through its website. Al Rajhi Capital sales and distribution vice-president Modker Al Mutairi said the deal represents the company’s aim to widen the distribution channels of its investment funds, to meet the growing needs of its customers.

Legal support

KUWAIT: A Kuwaiti court has granted The Investment Dar (TID) legal protection from its creditors. TID, which has more than US$3 billion of debt, applied to come under the country’s financial protection law, making it the first company to do so since the introduction of the law last year. The move came after TID failed to convince the minority of its creditors to accept its debt restructuring plan, which is backed by more than 80% of its creditors. According to TID, the company will repay in full its financial arrangements to all banks and investors. It added that it will not seek financial support from the government by coming under the stability law, but wants a legal framework to implement the restructuring plan.