SEBI okay may see Islamic funds enter Indian realty

27 Feb, 2008, 0358 hrs IST, TNN

MUMBAI: Booming Islamic finance is likely to acquire assets in India through Islamic Real Estate Investment Trusts. According to a report by Moody's although IREITs are not in existence in India, the draft IREIT guidelines issued by SEBI may pave the way for these funds into the Indian property market.

With high oil prices funnelling billions of dollars to the Middle East, there is an increased demands for Sharia-compliant finance products. According to Moody's, Islamic finance is now estimated to be worth around $700 billion globally while Sukuk, or Islamic bonds, are the fastest-growing segment, with volumes worldwide reaching $97.3 billion till 2007.

Moody's pointed out that the property boom in the Middle East makes IREITs a much-needed product and a useful investment tool, given the existing favourable investment and regulation environment. Moreover, there has been a growing appetite for the real estate asset class among regional institutional investors as the region boasts of world's highest concentration of high net worth individuals and family businesses, which in the GCC alone is estimated at over $1.3 trillion.

In terms of the money raised through Sharia-compliant instruments, Sukuk bonds continue to remain at the centre stage, with more than $19 billion in Sukuk issuances in '07 in the GCC region. The UAE and Saudi Arabia have accounted for more than 87% of the total.

The just-released report on Islamic Finance is authored by Dominique Gribot-Carroz, a Moody's assistant vice-president in Hong Kong, and Faisal Hijazi, an Analyst in London. "From a global point of view, we anticipate that overall Sukuk issuance should continue to increase in '08 by approximately 30-35% per annum," said Gribot-Carroz, adding that new funds would be raised mostly in Gulf Cooperation Council countries, North Africa and Asia-Pacific.

More specifically, Moody's new report pointed out that Asian currency-denominated Sukuk outstanding grew by close to 50% to $65.3 billion in '07 from $43.6 billion in '06, adding that growth has become even more sustained since the summer of 2007.

Malaysia continues to lead the way in terms of offering an attractive environment for Islamic finance and remains the biggest domestic market worldwide. Ringgit-denominated Sukuk issued in '07 amounted to the equivalent of $64.4 billion, or 66% of the global outstanding as on December 31, 2007. The prospects for Islamic finance in Asia-Pacific are generally good, the report said. For example, the Japanese government is planning its first sovereign Islamic Sukuk in 2008, valued at between $300 million and $500 million.

Moreover, in the rest of Asia, economies such as Singapore are contemplating issuing their first Sukuk in 2008, while in Hong Kong the authorities are fully supportive of the development of Islamic finance. At the same time, Moody's expects the small, but growing Sukuk markets in Pakistan and Indonesia to grow significantly over the coming years.

Even though the total assets of Islamic banks in Indonesia may still only represent a minor portion of the country's total banking assets, Moody's believes they are expected to grow significantly, and that this could also encourage Sukuk issuance.

Darling To Back Sharia Money Bonds

Updated:10:50, Sunday February 17, 2008
Britain could become the first Western country to issue so-called Islamic bonds in line with Sharia law which scorns interest payments on loans.

In next month's Budget, the Chancellor Alistair Darling is expected to back the bonds, which would attract money from the Middle East.
The Treasury announced last April that it was interested in exploring the possibility of borrowing funds via such Islamic law-compliant bonds, known as sukuk.

A consultation exercise on the issue, launched in November, ends on Thursday.
A Treasury spokesman said that the feasibility study has been looking at whether or not the bonds would be practical and MPs are expected to be updated on progress in the Budget.

Islamic law forbids making money from interest, making conventional loans unacceptable to the devout.
But specially-designed bonds have been designed to comply with the demands of Sharia, and sukuk is now estimated to be worth £5.5bn in a £125bn global Islamic financial market.

Most Islamic financial products work on the principle of investing in a fixed asset which generates a rate of return, such as rental income on property or an asset repays a larger capital sum on redemption.

A Treasury spokesman said: "We want the City of London to be one of the gateways globally for Islamic financial products and we want it to be competitive on all products you can imagine, so we should be competitive on Islamic finance as well as any other.
"Just because of your faith, there shouldn't be any issue about your access to financial services in the UK."
But Edward Leigh, chairman of the House of Commons Public Accounts Committee, told the Mail on Sunday: "I am concerned about the signal this would send - it could be the thin end of the wedge.
"British Common Law must be supreme and should apply to everyone," he added.

Sharia laws and theories vary among world's Muslims

Tue 12 Feb 2008, 15:41 GMT

By Tom Heneghan, Religion Editor

PARIS (Reuters) - Sharia law is understood and applied in such varied ways across the Muslim world that it is difficult to say exactly what it is and how it could fit into a western legal context, according to experts on Islam.

Full Islamic criminal law, the harsh code most non-Muslims think of when they hear the word sharia, is applied in very few countries, such as Saudi Arabia. Islamic "personal law" for issues like marriage and inheritance is much more common.

Archbishop of Canterbury Rowan Williams sparked off a storm last week by suggesting Britain adopt some sharia law. British Muslims defending him stressed most of the Islamic world also rejected the ultra-orthodox model that he clearly ruled out.

"There are 57 Muslim countries in the world and only two or three of them impose full sharia criminal law. Why on earth would we want to have that here?" asked Sheikh Suhaib Hasan, secretary of the Islamic Sharia Council in Britain.

There are also widely differing interpretations of sharia, both within the four classical Sunni and one Shi'ite schools of jurisprudence and between traditional and modern thinkers.

"In the Muslim world these days, 'sharia' means a whole variety of different things," said John Voll, professor of Islamic history at Georgetown University in Washington.

Williams apparently had in mind a modern school of Muslim thinking that sees sharia as a system of essential Islamic values rather than a fixed code of harsh punishments, he said.

LIMITED USE

Most Muslim states limit the use of sharia to "personal law" on issues such as marriage, divorce, inheritance and child custody. Western critics say most Muslim personal law limits women's rights and introduces inequality before the law.

Egypt says sharia is the main source of its legislation but has penal and civil codes based mostly on 19th century French law. Hudoud, the corporal and capital punishment outlined in the Koran, has not been applied there in modern times.

Muslims cannot convert to other faiths and non-Muslims who convert to Islam are not supposed to leave it, but a court allowed this for 12 people in a landmark case last week.

Pakistan has a similar split between civil and penal codes carried over from the British colonial period and Muslim personal law. It also has a Federal Sharia Court to decide if laws passed by parliament conform to Islam.

Apart from a few public lashings since Islamisation started in the 1980s, harsh physical punishments have not been imposed. Nobody has been executed under a law banning blasphemy against Islam, but some accused blasphemers have been killed by mobs.

Lebanon has 18 recognised religious denominations among its Muslims, Christians and Druze and all have religious courts for personal law and civil courts for everything else.

In India, Hindus, Muslims, Sikhs, Jains and followers of other faiths can decide whether they want to be bound by secular personal law or their own religious code.

SHARIA-COMPLIANT

Indonesia is the world's largest Muslim nation and quite moderate in Islamic terms. Its western province of Aceh uses sharia law as part of a local autonomy deal granted by Jakarta and people have been caned for adultery, gambling and stealing.

Nigeria's northern states adopted a harsh sharia code in 2000, but punishments have been rare. A woman convicted of adultery, Amina Laval, was freed on appeal after her sentence of stoning to death caused an international uproar.

About a dozen other women convicted of adultery have also been freed on appeal.

In contrast to this traditional jurisdiction, modern Muslim scholars such as Swiss-born Tariq Ramadan interpret sharia more broadly as "the expression of the universal principles of Islam" and a way of thinking that helps express them in daily life.

This approach can accept secular laws as "sharia-compliant" if they reflect Islamic values. "Even simply by trying to respect Muslim ethics, one is already in the process of applying the sharia," Ramadan has written.

Thus Williams, who cited Ramadan in his speech, said Britain already had sharia in its legal system through laws that allowed Islamic no-interest mortgages and contracts.

Another leading thinker, French imam Tareq Oubrou, advocates a "sharia for minorities" respecting Islamic values as ethical guidelines for Muslims and civil jurisprudence as the law for all citizens in a country.

MFs make beeline for shariah products

13 Feb 2008, 0024 hrs IST,Sobia Khan,TNN

KOLKATA: With the Islamic investments in global markets on the rise, Indian asset management companies are gearing up to get a pie of the corpus. Frontline mutual funds such as UTI AMC, SBI MF, Birla Sunlife and Kotak MF are all making a beeline to launch Shariah-compliant products in the domestic market.

The reason: In India, 61% of listed companies are Shariah-compliant compared to 57% in Malaysia and 51% in Pakistan. In terms of the number of stocks, a total in excess of 450 BSE scrips, including 23 Sensex stocks, and 39 of the NSE-50 (Nifty) scrips are Shariah-compliant.

While SBI MF has already introduced a Shariah compliant offshore fund under SBI Resurgent India Opportunities Fund (RIOF), Taurus has applied to the market regulator Sebi to come out with a similar product.

SBI MF chief investment officer Sanjay Sinha said the AMC is planning to come out with more variants of RIOF and one of this will be another shariah compliant scheme. "Later, we may come out with a domestic Shariah compliant fund," he said.

UTI MF chief marketing officer Joydeep Bhattacharya said the MF already has an offshore Shariah compliant fund. "Now, we are planning to launch a domestic fund," he added.

Aditya Birla group deputy CEO (financial services) Pankaj Razdan said Shariah-compliant scheme is a good concept in India. "We already have over 460 Shariah-compliant scrips. So, a Shariah compliant equity scheme could be launched," he added.

Taurus managing director R K Gupta said Islamic investments are on the rise in India and expected to cross the $1-billion mark by 2009. "Islamic finances are growing at a rapid pace and the opportunities seem limitless. Muslims in India are not participating in the stock markets and are missing out on opportunities. Islamic investments worth nearly $750 million have already been made in the capital market," he added.

Parsoli Corporation CMD Zafar Sareshwala also said Shariah-compliant products offer great scope.

Emirates Islamic Bank continues its rapid growth by opening a new branch in Al Twar

Emirates Islamic Bank (EIB) took another step in line with its rapid growth by opening its 22nd branch in the country.

United Arab Emirates: February 13, 2008

The new branch, located in Al Twar, Al Nahda Road (Al Qusais 2), near Al Twar Centre, was officially inaugurated 13th of February.

The ribbon cutting ceremony was graced by the CEO of the bank in the presence of senior dignitaries, bank board members and other officials.

The CEO of Emirates Islamic Bank, Ebrahim Fayez Al Shamsi stated, 'Right since our inception, it has been our aim to be a frontrunner in providing personalized dynamic and efficient services to our customers. Branch expansion is a key element of this strategic priority. I am pleased to say that we have even more grand plans to increase our footprint in all the locations that our customers need us and consequently increase the reach of Islamic banking services. This is also our way of keeping pace with the immense progress that the nation is making.'

Like all EIB branches, Al Twar branch has been designed to cater to a wide variety of banking needs of customers and in the most customer friendly way possible. The branch will have all of EIB's retail banking products and services, 24-hour ATM withdrawal and deposit services, 'Al Reem' ladies banking as a separate section, as well as the Ethmar priority banking service that enables affluent customers at Al Twar and the surrounding areas to benefit from a host of privileges.

Photo caption: The ribbon cutting ceremony was graced by the CEO of the bank in the presence of senior dignitaries, bank board members and other officials.

 

Risk Management in Islamic Banking: an integrated approach

The Global Association of Risk Professionals (GARP) UAE chapter, in association with IRIS integrated risk management, organize the seminar 'Risk Management in Islamic Banking: an integrated approach'.

United Arab Emirates: Monday, February 11 - 2008

The event will be held on February 21 at the Taj Palace Hotel, Dubai.

Mr. Sohail Zubairi, AVP and Head of the Shariah Coordination Department at the Dubai Islamic Bank, will provide an insight into 'The fascinating aspect of self-mitigation of risks in Sharia structures for finance and investment'.

The event will also feature authors of the book, 'Financial Risk Management for Islamic Banking and Finance', Dr. Sunil Kumar and Dr. Ioannis Akkizidis, who will share their views on integrated risk management in Islamic Banking. Mr. Hung Wong, Senior Manager Insurance and Investments at HSBC Bank Middle East Ltd., will represent the conventional banker's perspective on risk management in Islamic Banking and Mr. Horst Simon, Head of Operational Risk at the Group Risk Management, UAE and Co-Regional Director at GARP, will approach Operational Risk issues specific to Islamic Banking.

The program will begin at 4 PM. Presentations will conclude at 7 PM followed by a dinner reception.

The event may be attended by GARP members.

Turk Islamic banks see stellar growth, more deals

# Reuters
# Wednesday February 6 2008

By Emma Ross-Thomas
ISTANBUL, Feb 6 (Reuters) - Poor markets forced Islamic bank Kuveyt Turk to pull its IPO in Turkey this month, but prospects for Sharia-compliant banks remain bright as growth is set to outstrip conventional rivals.
Turkey's Islamic banks, which do not charge or pay interest but reward depositors with a share of their profits, saw assets grow 27 percent in the first nine months of last year, albeit from a low base.
By comparison Turkey's top conventional lenders Akbank and Isbank increased their assets by 13 and 2 percent respectively.
Islamic banks only control 3 percent of Turkey's overall banking assets, but this is expected to more than treble, according to Mustafa Boydak, deputy head of the company which sold Islamic lender Turkiye Finans for a record price last year.
"We want it to reach 10 percent, of course that's possible. As a first target we want to reach 5 and then 10 percent," Boydak told Reuters. He expects the sector's assets to grow more than 2.5 times in the next five or six years.
This year, Boydak said he expects Turkiye Finans, whose 60-percent sale to Saudi National Commercial Bank (NCB) is awaiting watchdog approval, to see asset growth at least match last year's 36 percent.
Among other restrictions, Islam bans the receipt of interest, equating it with usury, and instead requires banks to invest with its customers, sharing the risk.
For instance, rather than lend money to a customer to buy a car, the bank buys the car and rents it back to the customer until the cost -- and a profit for the bank -- is paid.

FOREIGN INTEREST GROWS
Boydak Holding and industrial group Ulker set a record in Turkish banking when they sold their stake in Turkiye Finans to NCB at 5.8 times book value after strong interest from Gulf and Asian institutions.
Analysts and bankers reckon another buyer could come into the sector and No.1 lender Bank Asya could be a target, although its fragmented shareholding made up of textile manufacturers and industrialists would make negotiation tricky. Hostile bids are rare in Turkey and its free float is some 40 percent.
The conventional banking sector has also seen a string of foreign purchases as investors seek exposure to Turkey's economic growth story and young, fast-expanding population. Meanwhile, the government has courted potential Gulf investors.
"I would think if a commercial bank was interested in acquiring, for example Bank Asya, I would not be surprised," said Huseyin Ozkaya, deputy head of HSBC in Turkey. HSBC advised Turkiye Finans on its sale and was lead manager with Finans Invest for the postponed Kuveyt Turk IPO.
Bank Asya is more expensive than listed rival Albaraka Turk , trading at a price to book ratio of 3.0 versus Albaraka's 2.2 times, which Finans Invest analyst Sadrettin Bagci said reflected its status as a target. It is also the only non-interest bank to offer credit cards, giving it an edge.
A Bank Asya official said no offers were being discussed.
Albaraka Turk is owned by Bahrain-based Albaraka Banking Group and Kuveyt Turk is controlled by Kuwait Finance House.

CONVERTS?
The boom in Islamic banking comes as Turkey's strong economic growth has increased wealth in the mainly Muslim but secular country and provincial businessmen have become successful but held onto conservative religious values.
The centre-right, pro-business AK Party government, which has roots in political Islam, has also helped the lenders by giving them fully-fledged banking status in 2006. Islamic banking sector executives deny receiving any special treatment.
The other plus is that as these banks pay depositors a share of their profits instead of interest, it protects them from the maturity mismatches which have hit mainstream banks hard in Turkey's volatile interest rate environment.
"The major advantage is there's less competition, it's a relatively untapped market and ... they are to a certain extent shielded from interest rate variation," said TEB analyst Volkan Kurt.
Boydak says while other banks were relying on high-yielding Treasury bonds to make money until the early 2000s, non-interest banks were chasing clients because they had no option.
The banks have at least 10 years of strong growth ahead, but the risk is that it will eventually hit a limit. TEB's Kurt expects growth to be 60 to 70 percent above growth in the regular banking sector for the next five to 10 years. But he says the slice of the population likely to prefer Islamic banking is only 10 to 15 percent.
Before the growth spurt slows, some bankers and analysts expect at least one conventional bank to push into the sector by acquiring an Islamic banking licence.
"I'm expecting one or two conversions," said one banker, who declined to be named.

NIB and MasterCard announce alliance

12 February 2008

DUBAI — Noor Islamic Bank (NIB) and MasterCard Worldwide yesterday announced an exclusive relationship for NIB to issue only MasterCard credit and debit cards to the bank's customers.

According to the agreement, Noor Islamic Bank and MasterCard will also develop Shariah-compliant payment solutions that are innovative, technologically advanced and customer focused.

Launched in 2008, NIB aims to become a global leader in Islamic banking by offering contemporary banking solutions that meet the current market needs.

Khaleej times

HSBC and Deutsche Bank given Malaysian green light

by Richard Kilner

HSBC Malaysia and Deutsche Bank have both been given the green light by the Malaysian authorities to set up dedicated Islamic banking subsidiaries.

The two banks have been optimistic in their views of the potential for expansion in south-east Asia for their Islamic banking branches.

Deutsche Bank has appointed Mohammed Safri, a big hitter in Malaysian banking, to lead its Malaysian operations. To begin with Safri will be stationed in Dubai, but will later head for Kuala Lumpur to take control of the bank's activities there.

HSBC believes that Malaysia will become a strong launchpad for its Islamic banking in the region, with a view to expanding into India, Pakistan, Hong Kong, China and Indonesia.

First Leasing Bank named ‘Best Islamic Leasing Provider’

Posted: 10-02-2008 , 14:34 GMT

First Leasing Bank (FLB), the first bank in specialising in equipment leasing throughout the GCC, has been named 'Best Islamic Leasing Provider' for 2007 by leading Islamic banking publication, Islamic Finance News.

The Islamic Finance News Awards 2007, which honour outstanding achievements in the Islamic financial industry, set the benchmark for excellence in the Islamic banking and finance industry.

"While some commercial banks in the region offer finance leases as secondary products, FLB is the only institution focusing on equipment leasing. It is gratifying that the value added by our specialist approach has been recognised by our industry peers and associates," said James Cracco, CEO, First Leasing Bank.

"Our award for 'Best Islamic Leasing Provider' reflects international recognition for the strong customer response and operational and technical skill of our team. Over the past year First Leasing Bank has funded equipment worth more than US$54 million, with more opportunities on the way as we continue to expand the market for equipment leasing," added Cracco.

FLB, which is an affiliate of the Ithmaar banking group, provides finance and operating leases to the industrial, manufacturing, medical, printing and publishing, construction, telecommunications, IT, transportation and marine industries. Operating leases, virtually unheard of in the Gulf prior to the establishment of FLB in 2004, allow companies to lease their equipment rather than purchase it out right. This allows them to free up cash to be used in developing their higher returning core businesses.

The Islamic Finance News Annual Poll, which determines the award winners, is widely considered to be one of the industry's most comprehensive surveys. Members of the global Islamic finance industry, including Islamic finance issuers, investors, non-banking financial intermediaries and government bodies, are invited by Islamic Finance News to vote in a total of 35 categories. A record 1,502 votes were cast during the December 2007 polling period, which represented a 22 per cent increase over the previous year.

About First Leasing Bank:
Established in August 2004, FLB has a paid-up capital of US$100 million, and is the first bank in the GCC dedicated exclusively to the introduction and expansion of equipment leasing throughout the region. The Bank provides finance and operating leases for most asset classes, including industrial, manufacturing, medical, printing and publishing, construction, telecommunications, IT, transportation and marine.

About Ithmaar banking group
The Ithmaar banking group consists of: Ithmaar Bank, Shamil Bank, Solidarity (an Islamic insurance company), Faisal Private Bank (Switzerland), Faysal Bank Limited (Pakistan), First Leasing Bank and Ithmaar Development Company. The group's services, including investment, private, retail, and commercial banking, private equity, mergers & acquisition advice, takaful, leasing, and real estate development, form a 360 degrees value chain that embraces the entire spectrum of banking and financial services.

© 2008 Al Bawaba (www.albawaba.com)

Emirates Islamic Bank continues its rapid growth by opening a new branch in Al Twar

Emirates Islamic Bank (EIB) took another step in line with its rapid growth by opening its 22nd branch in the country.

United Arab Emirates: February 13, 2008

 

The new branch, located in Al Twar, Al Nahda Road (Al Qusais 2), near Al Twar Centre, was officially inaugurated 13th of February.

 

The ribbon cutting ceremony was graced by the CEO of the bank in the presence of senior dignitaries, bank board members and other officials.

 

The CEO of Emirates Islamic Bank, Ebrahim Fayez Al Shamsi stated, 'Right since our inception, it has been our aim to be a frontrunner in providing personalized dynamic and efficient services to our customers. Branch expansion is a key element of this strategic priority. I am pleased to say that we have even more grand plans to increase our footprint in all the locations that our customers need us and consequently increase the reach of Islamic banking services. This is also our way of keeping pace with the immense progress that the nation is making.'

 

Like all EIB branches, Al Twar branch has been designed to cater to a wide variety of banking needs of customers and in the most customer friendly way possible. The branch will have all of EIB's retail banking products and services, 24-hour ATM withdrawal and deposit services, 'Al Reem' ladies banking as a separate section, as well as the Ethmar priority banking service that enables affluent customers at Al Twar and the surrounding areas to benefit from a host of privileges.


Photo caption: The ribbon cutting ceremony was graced by the CEO of the bank in the presence of senior dignitaries, bank board members and other officials.

Seminar on corporate governance in Islamic finance

KUALA LUMPUR: A seminar aimed at increasing awareness of corporate governance issues in Islamic finance including banking, insurance and capital markets will be held on March 11 and 12 in Manama, Bahrain.

To be jointly organised by the Islamic Financial Services Board (IFSB), the World Bank's Group Corporate Governance Department and the IFC Global Corporate Governance Forum, the seminar will particularly look at collective investment schemes among financial regulators and market participants.

It will be structured around the corporate governance standards developed by the IFSB with insights from regulatory officials, corporate governance specialists from international multilateral agencies and industry practitioners.

Bahrain central bank governor Rasheed Mohammed Al Maraj and IFSB secretary general Professor Rifaat Ahmad Abdel Karim will deliver the opening and welcoming remarks.

Peter Dey, chairman of IFC's Private Sector Advisory Group, will deliver his keynote address on Cross-Sectoral Approach toward Good Governance.

Dey served as chairman of the Toronto Stock Exchange Committee on Corporate Governance in Canada that was responsible for the release of a report entitled Where Were the Directors, also known as Dey Report, in December 1994.

The seminar's main objectives are to highlight corporate governance issues specific to institutions that provide Islamic financial services and to help regulators and market participants improve their understanding of these especially as the Islamic financial services7 industry continues to grow rapidly within the global financial system, it said. – Bernama

The Bank of New York Mellon appointed corporate trustee for Tamweel Sukuk

Author: BI-ME staff
Source: BI-ME
Published: 11 February 2008

UAE. The Bank of New York Mellon has been appointed by Tamweel, the largest real estate finance provider in the UAE, to provide multiple corporate trust services for a US$300 million exchangeable Sukuk issue to finance the company's mortgage finance business in the region. Sukuk issues are securities that comply with Islamic law and its investment principles.

As corporate trustee, The Bank of New York Mellon will act as delegate trustee, principal paying agent, exchange agent, transfer agent, replacement agent, calculation agent and registrar.

Feras Kalthoum, Head of Investments at Tamweel, said: "The Bank of New York Mellon is developing a strong record in Islamic finance transactions. We were pleased to have its comprehensive support as corporate trustee for this important issue."

"Our work for Tamweel highlights the important role our company plays in supporting Islamic transactions and other complex structured finance deals globally," said Samir Pandiri, Managing Director and Head of the International Division for The Bank of New York Mellon's corporate trust business. "The sophistication of our technology platform, combined with the experience of our people, will distinguish us as the industry leader as we continue to expand our presence in the region."

Corporate trust providers are appointed by corporations, municipal governments and other entities issuing debt to perform a variety of duties, including servicing and maintaining the debt issue, processing payments for investors, representing investors in defaults, and providing value-added services for complex debt structures.

Tamweel, the highest rated non-banking financial institution in the region (A by Fitch & A3 by Moody's) and the largest provider of real estate finance in the UAE, was established in March 2004 and became a public joint stock company in June 2006. A provider of a wide range of customer-service solutions and innovative home finance products, Tamweel works with 300 partners across country. The company, which aims to become the regional home finance leader, currently has branches in Dubai, Sharjah and Abu Dhabi.

For more information visit www.tamweel.ae and www.bnymellon.com

Ajman Bank (under formation) to list on the Dubai Financial Market in AED550 million public offer

Ajman Bank PJSC (under formation) ("Ajman Bank" or "The Bank") has announced its intention to list on the Dubai Financial Market ("DFM") by way of a Public Offer which will see it valued at AED1 billion.

Ajman Bank will be the first Shariah bank incorporated and headquartered in the Emirate of Ajman and it intends to become the favourite financial services brand in the UAE and the GCC region.  The Bank's strategy is to target the rapidly expanding Shariah financial services market with innovative products and services, designed to meet customers' needs, supported with outstanding levels of customer service.

Sheikh Ammar bin Humaid Al Nuaimi, Crown Prince of Ajman and Chairman of Ajman Bank, commented, "Ajman Bank will play a significant role in the economic development of Ajman and of the UAE.  Its unique offer to the market will help to change the way customers experience banking.  Ours is a long-term vision to create a business and a brand that will become the UAE's, and in the future, the GCC's favourite financial services brand.  Through this vision we will generate sustainable value for shareholders, outstanding customer service for banking services and play our role in the growth of Ajman and the UAE."

Yousif Khalaf, CEO of Ajman Bank, said, "Ajman Bank is going to offer a new level of customer service to the financial services market in the UAE.  We aim to start with the customer, taking the time to understand their financial needs, designing products that meet these needs and offering them with market leading customer service.

"The UAE's Shariah banking market offers significant potential to the organization which can change the current financial services model and create a strong customer focused brand offering choice and high levels of customer service to everyone in the UAE, and ultimately the GCC.  We believe Ajman Bank has the strategy and management experience to seize this opportunity and create value for customers and shareholders alike.

"We already have the support of the Government of Ajman, which holds 25% of our shares, as well as significant financial institutions and private investors from across the UAE.  We are now seeking to open up the growth potential we offer to investors in the UAE and the GCC by offering 55% of our equity through a public offering on the Dubai Financial Market.  This is the first stage of our ambitious growth plan which aims to create the UAE's favourite financial services brand.  The proceeds from the listing will fund an aggressive roll-out of branches and services across the UAE," Khalaf concluded.

© 2008 Mena Report (www.menareport.com)

'Islamic' hotel opens in Dubai

ABU DHABI: Hotel management group Millennium is planning to open a 163-room Sharia-compliant property in Dubai.

The hotel will not serve alcohol and have separate timings for men and women using the swimming pool.

Copthorne Hotel general manager Reda Mukhtar said the hotel, opening today, will serve people looking for a 'more decent treatment' in services.

"The hotel is dry. The background music is inspired by nature (in the form of chirping of birds, waterfalls sounds, beach wave sounds), men and women have different timings to enjoy the covered swimming pool," he added.

Mukhtar said the hotel is open to families and individuals, but it will not try to find out the relationship between a couple when they check in. "We are not going to check on couples. We will just register their identities," he said.

The duties of female employees working as receptionists, waitresses and housekeepers will be the same as in any other hotel, Mukhtar said, adding that "they will not be covered up, but have to dress decently."

Mukhtar said Gulf investors are showing more interest in Islamic hotels because of demand for this accommodation.

The Copthorne Hotel is owned by Abu Dhabi Islamic Bank.

Gulf Daily News

Shariah-compliant investments bode well for investors in the MENA region, say experts at HSBC Amanah seminar

Leading Islamic finance experts recently drew a positive outlook for the Islamic investments and capital markets in the region during a seminar held in Dubai by HSBC Amanah Wealth Management on the prospects and opportunities of Shariah-compliant investments. Opening the seminar, Ishrat Kiyani, Regional Head of Wealth Management, HSBC Bank Middle East said: 'There is a growing need for Islamic investment products in our core markets. Working with best-in-class investment managers, HSBC Amanah customer groups and the HSBC Amanah Central Shariah Committee, we are well placed to deliver a wide and growing range of Shariah- compliant investment products and solutions to our clients in 13 countries and beyond.' 'To capture the growth in emerging markets and Asia Pacific we are currently developing new funds such as HSBC Global Emerging Market Fund and HSBC Amanah Hangseng Index Fund. We are also developing HSBC Amanah structured notes. Our ultimate goal is to offer our clients attractive investment opportunities and the assurance of uncompromising Shariah authenticity,' Kiyani added. Commenting on investments and Shariah, Sheikh Dr. Mohamed Ali Elgari, member of HSBC Amanah Shariah Committee and Professor at King Abdul Aziz University, Riyadh said: 'Wealth creation and management lies at the heart of Islam's economic philosophy. Growing one's wealth in line with the tenets of Islam is not only permissible but desirable. Islam has a much wider vision for investments, which goes beyond simply returns to embrace the good of society and the community at large.' Rushdi Siddiqui, Global Director of Dow Jones Islamic Market Index Group said: 'Dow Jones Islamic Indexes have outperformed most of their conventional peers worldwide in 2007. New instruments are gaining ground such as Islamic exchange traded funds (ETFs), which allow investors to diversify investment opportunities and benefit from an interim alternative for short-term Islamic liquidity. The trend in Islamic finance is towards new asset classes and I see the Halal industry, including food, finance, medicine and cosmetics as very promising asset class for investors going forward.' Amin El-Kholy, Chief Investment Officer, Shuaa Asset Management said: 'The investment outlook for the GCC countries is promising. The recent strong growth has been structural and sustainable due mainly to increased consumer spending, economy diversification, structural reforms and sustained high oil prices. Compared to expected GDP growth, stock market price/earnings multiple for GCC is more attractive for investors compared to BRIC countries. Equally interesting, GCC equity market is uncorrelated with S&P 500, which provides investors with unique diversification benefits and protects them from global downturns.' HSBC Amanah Wealth Management is an integral component of HSBC Amanah's Islamic banking proposition. Its products and solutions are developed, structured and executed through a dedicated team of professionals in New York, London, Riyadh and Dubai. Clients include institutional investors, corporate bodies, family offices, high net worth individuals and retail investors. At present, HSBC Amanah Wealth Management has over $6bn under management. AME Info

Halal Industry Masterplan To Be Presented To Government By End February

KUALA LUMPUR, Feb 5 (Bernama) -- A masterplan for the halal industry will be presented to the government by end of this month, the chief executive officer of Halal Industry Development Corporation, Datuk Jamil Bidin, said today.

"We have completed the masterplan and we are ready to submit to the government through the Economic Planning Unit (EPU).

"We are waiting for a date from EPU now to make presentation to the National Implementation Directorate (NID) and the National Implementation Task Force (NITF)," he told reporters after the official launch of World Halal Forum 2008 here.

Jamil said the masterplan was a comprehensive blueprint encompassing a three-year roadmap for the development of the country's halal industry which is rapidly expanding.

One of its main agenda is to help boost the country's gross domestic product from 5.8 percent to 8.7 percent by 2020 through export value, human capital development and added resources in various key disciplines, besides providing value-added services and products.

Besides that, the masterplan will focus on industries related to agriculture, food-processing and manufacturing, cosmetics and skin-care, halal ingredients, together with downstream activities like branding and promotions.

In addition, the blueprint will also focus on strengthening the services sector such as international halal certificate, halal training and research and development (R&D).

On market access to the European market, Jamil said the HDC will be having industry dialogue in Netherland with government officials and industry players to find out on how Malaysia can gain market access into the market, particularly for food-related items.

The promoter of the World Halal Forum 2008, KasehDia Sdn Bhd together with industry players recently suggested that HDC seeks an annual tariff rate quota (TRQ) of between 1,500 tonnes and 2,000 tonnes of processed poultry meat from the European Commission (EC).

Jamil said having the TRQ, Malaysian companies will not only get access to the European market but at the same time improve their quality and safety standards to be in compliance with the European Union (EU).

Currently, there is only one Malaysian company which is already approved by the EC to export processed poultry meat products to the EU, exporting only about 50 tonnes per annum.

In June 2006, the EC introduced the TRQ to limit the import of frozen poultry meat products and only Brazil and Thailand received the quota after completing their negotiations with EC.

The World Halal Forum which is to be held on May 12 and 13, is expected to attract some 1,200 participants from 55 countries.

-- BERNAMA

Sarawak to develop halal industry

By SHARON LING

KUCHING: The state government will develop the halal industry in Sarawak to strengthen the economy and boost growth.

It has identified several areas for this purpose, including Tanjung Manis for deep-sea fishing, kilometre 15 Jalan Samarahan-Siburan for abbatoirs and Bario for halal meat production.

"Sarawak has the potential to become a hub for the halal industry. We have a large land area, natural resources, an improving transport network and the Sarawak Biodiversity Centre which can conduct research and development," Chief Minister Tan Sri Abdul Taib Mahmud said Tuesday when opening a halal industry seminar organised by Halal Industry Development Corporation Sdn Bhd (HDC) here.

His speech was read by Housing Minister Datuk Abang Johari Tun Abang Openg.

Taib said the halal industry could act as a catalyst for economic growth by encouraging the development of related industries such as logistics, agriculture and tourism.

He added that the state government welcomed opportunities to work together with various parties to develop the industry.

"We will also provide incentives including special grants and tax allowances to encourage entrepreneurs to get involved in the industry," he said.

HDC chief executive Datuk Jamil Bidin said the halal industry offered great commercial opportunities to entrepreneurs, with the global halal market worth over US$600bil (RM1.9 trillion).

"Through our seminars and roadshows, local entrepreneurs can find out more about the opportunities and incentives available to get started in the industry," he said.

Star Online, Malaysia

Prudential unit raises $96 million for Sharia funds

By Rita Raagas De Ramos  |  11 February 2008 

Prudential Fund Management Berhad raises $96 million for a range of eight Sharia funds in Malaysia, bringing the firm's Sharia portfolio to $242 million.

Malaysian retail investors have committed $96 million to a range of eight Sharia funds managed by Prudential Fund Management Berhad (PFMB), a unit of Prudential Asset Management.

PFMB, which is among the largest foreign players in Malaysia's fund management industry, is the newly established worldwide hub for all of Prudential's Islamic investments. PFMB manages over $242 million in both domestic and offshore Sharia funds.

The eight Sharia funds include: Prudana al ilham, Prudana al-islah, Prudana dinamik, Prudana wafi, PruIslamic fixed income wholesale fund, PruIslamic income fund, PruShariah FX fund, and the PruAsia-Pacific Shariah fund.
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The Prudana al ilham or Islamic equity fund invests in a diversified portfolio of Sharia-compliant equity and equity-related securities that are considered to be undervalued, with good growth potential.

The Prudana al-islah or Islamic fixed income fund invests in a portfolio of Islamic fixed income and Sharia-compliant equity securities, with more bonds than equities at all times.

The Prudana dinamik or Islamic asset allocation fund invests in a diversified portfolio of Sharia-compliant equity and equity-related securities. For defensive considerations, the fund invests in a mix of Sharia-compliant equities, Islamic debentures, and Islamic money market instruments depending on the short-term and long-term market outlook.

The Prudana wafi or Islamic bond fund invests in a portfolio of Islamic fixed income securities, primarily in a portfolio of Islamic debentures with a minimum credit rating of BBB or P3 by rating agency Malaysia or its equivalent.

The PruIslamic fixed income wholesale fund invests in a portfolio of Islamic fixed income securities, specifically for individual clients.

The PruIslamic income fund invests in a portfolio of Islamic money market instruments and other short-term Islamic debt instruments.

The PruShariah FX fund is a structured product that invests at least 90% of the capital raised during the offer period in a Malaysian ringgit-denominated Islamic structured product issued by OCBC Bank Malaysia. The balance of the capital raised during the offer period is held in the form of cash and other liquid assets to meet the fund's operating expenses. The structured product consists of two components – ringgit-denominated, Sharia-compliant financial instruments such as Islamic money market instruments or Islamic fixed income securities; and Arboon-based over the counter Islamic options on a set of Sharia-compliant stocks linked to the performance of three baskets of foreign currencies. Arboon refers to a sale agreement in which a security deposit is provided in advance as part payment towards the price of the commodity; the deposit is forfeited if the buyer does not meet his obligation.

The PruAsia-Pacific Shariah fund seeks medium- to long-term capital appreciation by investing primarily in undervalued companies with potential for re-rating in the Asia-Pacific ex-Japan region. A company may be re-rated for example, when it secures a large/substantial contract or a likelihood of an expansion of price-earning ratio. The Fund has the flexibility to pick stocks across countries and industries that comply with the Sharia requirements and include, but are not limited to, Sharia-compliant Asia Pacific equities quoted on recognized Asia Pacific ex-Japan exchanges.

"Having fund management operations in 10 countries in Asia-Pacific allows us to leverage our network to obtain local market insight and select and invest
in companies with good fundamentals," says PFMB chief executive Mark Toh, referring to the PruAsia-Pacific Shariah fund.

Prudential Asset Management is the Asia fund management business of Prudential plc. It manages assets on behalf of retail and institutional investors across the region, as well as for life and pension products sold by Prudential plc and Prudential Corporation Asia. With $66 billion in assets under management, Prudential Asset Management operates in 10 markets in Asia: China, Hong Kong, India, Japan, Korea, Malaysia, Singapore, Taiwan, Vietnam and the United Arab Emirates.

Copyright AsianInvestor.net, a subsidiary of Haymarket

Shariah-compliant fund raises $600mn

Published: Monday, 11 February, 2008, 11:26 PM Doha Time

UNITED Development Company (UDC) has completed the fundraising for the first fully Shariah-compliant closed-ended $600mn real estate development fund in Qatar. The fund raised $600mn in debt and equity on a matching basis which will be used for Shariah-compliant investments exclusively in Qanat Quartier, a residential and retail development at The Pearl Qatar.
Commercialbank is the fund manager while Cb, National Bank of Abu Dhabi, QIB and Standard Chartered Bank are the joint mandated lead arrangers for the financing. QIB is acting as investment agent.
Morgan Stanley and Clifford Chance advised on the structuring of the fund and debt documentation. Morgan Stanley acted as the exclusive placement agent for the equity fund.
Qanat Quartier is strategically located on The Pearl Qatar, a man-made island 350m off the shore of Doha. The Pearl has been created by UDC through land reclamation.
On this island, a residential community is being developed, consisting of beachfront villas, town homes, luxury apartments, penthouses, luxury hotels, marinas and schools with related infrastructure and community facilities, UDC said.
The Pearl Qatar will eventually house more than 41,000 residents in an up-scale, multi-cultural residential community.
Qanat Quartier is one of the most upscale residential and retail developments on The Pearl Qatar and will enjoy a unique position on the island. It is located in the north-western section of the Pearl and comprises approximately 200,000sqm of reclaimed land, 5% of the island total land area.
The total built-up area of Qanat Quartier amounts to 480,000sq m, or 8% of The Pearl Qatar.
“Qanat Quartier will be a luxuriously landscaped area whose residents will enjoy a true Riviera lifestyle in beautiful town houses with lush private gardens and apartment buildings around landscaped areas and Venetian style piazzas and canals. It will epitomise old world elegance, luxury and tranquility within the modern setting of The Pearl Qatar, UDC said.
UDC managing director and president Khalil B Sholy said: We are very much satisfied with this extremely successful outcome. The interest from institutional and private investors has well exceeded our expectations and we have received more subscriptions than we could accommodate.
We are very happy and proud to have the Kuwait Investment Authority and other leading regional government investment bodies amongst our lead investors.
We are confident those far-sighted investors who have committed themselves early to this prestigious and ground-breaking development will fully enjoy the dynamics of Qatar's most exciting property market.
The market has clearly moved ahead of the business plan since we started to market the fund so we expect the project to be indeed very attractive for our investors.
Salman al-Mohannadi, Commercialbank deputy chief corporate banking officer and head of International and public sector banking, said: This fund certainly is a milestone for the Qatari financial community. It is the first real estate private equity fund of this size and scope in Qatar.
It is fully Shariah-compliant and documents very clearly the strong demand from sophisticated international investors for a Qatari private equity product.
A key takeaway from this successful fundraising is that investors now naturally request a Middle East investment product to be in compliance with Shariah.
Its ground-breaking Shariah-compliant structure permits unmatched flexibility for the fund and will contribute significantly to maximise investor returns.
Jean Marc Riegel, QIB general manager (Investment Banking and Development Group), said: QIB is delighted to be part of the first Shariah-compliant financing for UDC.
On top of the financing, QIB will also play an active role being the investment agent of the facility. QIB holds the biggest participation with 1/3 of the debt facility and this fits totally with our strategy and commitment to finance leading Qatari companies.
The fund's sponsor, UDC is responsible for the execution of the business plan and acts as the fund's development manager as well.
UDC board member Omar Alfardan, Morgan Stanley managing director Richard Stockton, Commercialbank deputy CEO Michael Azmi-Loe, Commercialbank executive general manager Azza Fotouh, James Hopkinson and Thomas Aaaker from Standard Chartered, UDC executive vice-president (Finance) Abdullah Araj and Rola Abu Manneh from National Bank of Abu Dhabi were among those attending the presentation.

Gult Times

ABE in Partnership With IIBI Launch Shari'ah Compliant Banking & Finance Modules

LONDON, February 12 /PRNewswire/ -- The Association of Business Executives (ABE) has worked closely with the Institute of Islamic Banking & Insurance (IIBI), one of the world's leading independent academic and research organisations solely dedicated to the promotion and implementation of Islamic Finance, to develop two optional modules within the existing ABE Business Management qualification. 'Concepts and Principles of Islamic Economics' will be available at Diploma level (level 5), and 'Islamic Finance' will be available at Advanced Diploma level (level 6). Both modules will be examined for the first time in June 2008 and are accredited by the UK regulatory authorities for qualifications.
Jason Raife, Director of Business Development at ABE commented "Since the turn of the century demand for Shari'ah-compliant financial products and services has been growing, which has resulted in the establishment of a large number of Islamic financial institutions as well as large multinational banks diversifying into Islamic banking. This has naturally led to an international demand for employees who are well versed in the principles and operations of Islamic finance. As an examination board ABE is well positioned to react to this demand and working closely with IIBI to develop Shari'ah compliant modules was a natural progression for ABE."
Students who pass these two units are eligible for exemptions from certain units of the IIBI's Post Graduate Diploma course subject to meeting the entry criteria and subsequently, IIBI students can go on to a Masters programme at the University of Durham. Students who complete the full ABE Business Management Advanced Diploma have the option to progress directly on to the third year of a bachelor's programme or directly on to an MBA programme at one of 50 universities world wide (subject to entry requirements).
ABE is an examination board and members association with a presence in over 70 countries world wide. Currently over 40,000 members are studying for an ABE qualification through a network of over 500 accredited tuition providers or via self study. ABE will be promoting its business & management qualifications including the two new Shari'ah compliant modules at this year's Careers & Jobs live and HRD events in April at London's ExCeL.
For more information on ABE, or to view syllabus and support material for any ABE qualifications visit: http://www.abeuk.com. If you have any queries regarding these modules please email laurenb@abeuk.com or call ABE on +44(0)20-8329-2930. For further information about the Institute of Islamic Banking and Insurance visit: http://www.islamic-banking.com
The Association of Business Executives 5th Floor CI Tower St. George's Square High Street New Malden Surrey KT3 4TT

Qatar to host US-Islamic World Forum

(MENAFN) The Qatari capital is scheduled to host the fifth US-Islamic World Forum starting from February 16 and ending on the 18 at the Ritz-Carlton Hotel, The Peninsula Qatar reported.

Several speakers from across the globe will address audiences at the forum and will cover a number of topics related to the relationship between the US and the Islamic world.

The meeting is geared to cover issues such as the present status of the relationship, addressing the conflicts that exist and how to promote better cooperation between the two regions.

The Forum has been set up to draw together prominent leaders in the fields of politics, business, media and academia, from across the Muslim world and the US.

Meezan launches Islamic banking info portal

KARACHI: Meezan Bank has launched its new corporate website with a new user-friendly outlook and customer centric functionality that makes it complete information portal for Islamic banking on the Internet.

The website has been re-designed to facilitate and provide further convenience to bank customers, keeping in view both local demands and international standards. In line with the bank's commitment to provide a one-stop shop for innovative value added products and services, the website has been made in a way to be recognized as the complete information portal for Islamic banking on the Internet.

New Sharia-compliant hotel in Dubai

United Arab Emirates: Saturday, January 19 - 2008 at 11:33

Hotel management group Millennium is opening a 163-room Sharia-compliant property in Dubai that does not serve alcohol and has separate timings for men and women using the swimming pool, reported Gulf News. Reda Mukhtar, general manager of the Copthorne Hotel, said the hotel, opening on Sunday, will serve people looking for a 'more decent treatment' in services. Mukhtar said the hotel is open to families and individuals, but it will not try to find out the relationship between a couple when they check in.

UAE's NBAD bank sees Islamic profit in year one

Tue Feb 5, 2008 8:42am EST

By James Cordahi

DUBAI (Reuters) - National Bank of Abu Dhabi NBAD.AD (NBAD) expects its Islamic finance unit, which will start operations next month, to be profitable in its first year of business as demand for sharia-compliant services surges.

Abu Dhabi National Islamic Finance (ADNIF), a unit of the second-largest lender in the United Arab Emirates, will offer a full range of banking services, with its initial focus on corporate and retail finance, General Manager Aref al-Khouri told the Reuters Islamic Finance Summit in Dubai on Tuesday.

"The market demand is huge," said Khouri, who helped start the emirate's first sharia-compliant lender, Abu Dhabi Islamic Bank ADIB.AD. The unit plans to hire another 30 people before the end of the year, taking the total to 75, Khouri said.

About 14 percent of the UAE banking market -- measured by loans and advances -- complies with Islamic law and is growing by as much as 20 percent a year, compared with growth of between 10 and 12 percent in the conventional market, said Khouri.

Among other restrictions, Islam bans the receipt of interest, equating it with usury, and instead requires banks to invest with its customers, sharing the risk.

For instance, rather than lend money to a customer to buy a car, the bank buys the car and rents it back to the customer until the cost -- and a profit for the bank -- is paid.

Khouri had said in September, the month he joined ADNIF, it would take him two years to be profitable. ID:nL25509914

NBAD, which is controlled by the government of Abu Dhabi, is competing with other conventional lenders in the emirate, such as First Gulf Bank FGB.AD and Union National Bank UNB.AD, which are growing their sharia-compliant businesses.

The government of Abu Dhabi also plans to set up a second dedicated Islamic bank and the UAE's seventh, Al Hilal, in June.

"It's tough out there," Khouri said of the competition, declining to say how much revenue he would contribute to NBAD.

NBAD Chief Executive Officer Michael Tomalin told Reuters in 2006 that the Islamic unit would generate as much as 5 percent of the bank's revenue within five years.

(Editing by Will Waterman)

A solution just in time

Reuters
Published: February 09, 2008, 01:04

While conventional finance in Western Europe and North America is wracked with turmoil and many market participants filled with gloom, in the world of Islamic finance there is a refreshing burst of optimism.

Speakers at the Reuters Islamic Banking and Finance Summit last week in London sprinkled their comments liberally with words like "positive", "growth", and "opportunity".

Recent conventional finance events, by contrast, have featured muted conversations laden with doom.

Some recent credit strategy notes from Societe Generale have referred to "catastrophe" and "the daily dross of bad news that has beset the ... markets since July last year".

Largely shielded from the subprime crisis, although not entirely immune - credit spreads have widened and issuance has slowed - Islamic financiers are upbeat.

Opportunity

"As the conventional banking system goes into the credit crunch there will be an opportunity for the Islamic financial system to expand and to offset the deduction in credit and liquidity in the Western system," said Nor Mohammad Yakcop, second finance minister of Malaysia.

"Ten years ago during the Asian financial crisis there was a flow of funds from the Western financial system in Asia ... that helped in some way to overcome the crisis. Interestingly this time around this flow is reverse.

"The flow is now from Asia and the Middle East," he said.

Issuance of sukuk, or Islamic bonds, is still expected to grow this year, albeit not at the breakneck pace of recent years. There is talk of growing use of Islamic securitisation, and work on Islamic derivatives markets. Companies spoke of pressing ahead with merger and acquisition plans.

"There is a great opportunity for the Islamic industry generally, not to take advantage, but to play their due role in providing capital where capital is required," said Afaq Khan, head of Islamic banking at Standard Chartered.

Khan suggested that Islamic principles would help the industry avoid the problems that Western bankers are wrestling with: among them excessive use of leverage and the increased use of derivative instruments for speculation rather than investment in underlying economies. Both would be banned by Sharia law.

Principles

Islam bans interest and stipulates that deals must be based on tangible assets - money cannot be made from money alone.

"I'm not saying it can never ever be abused, but to create a bubble in the Islamic industry is much more difficult," Khan said.

If there is a banner deal that shows what Islamic finance can achieve, it is the $300 million convertible bond for Tamweel, the second-largest mortgage lender in the UAE, launched in December last year.

As mortgage lenders from the United States reeled and many Western companies untouched by subprime found that financing markets were shut, Tamweel said its bond, earmarked to fund expansion, was oversubscribed "within hours of launch".

Growth

Speaker after speaker at the summit pointed to the issue as evidence of how Islamic finance could power forward.

"The perfect example is Tamweel," said Rossitza Haritova, European convertibles analyst at Nomura.

She noted that the company had been able to raise funding at a rate below Libor, the inter-bank rate, just as planned, despite the turmoil.

"I certainly think it's going to be a strong year," she said.

All of that could lure international investors to the Islamic finance market, seeking stability from the subprime storm and in need of some relief.

"We are getting positive vibes from international investors about Middle Eastern credit, such as Tamweel," said Arul Kandasamy, head of Islamic finance at Barclays Capital.

Islamic banking - too Islamic for some?

Wed Feb 6, 2008 11:23am EST

By Mohammed Abbas

MANAMA (Reuters) - Islamic finance has surged as more of the world's 1.3 billion Muslims demand services that comply with their beliefs, but the religious link may also be a barrier to growth in non-Muslim and even secular-leaning Islamic states.

The industry not only faces barriers in the West, but even in some Muslim states which may have an interest in appearing more secular.

"One barrier of entry is the link with Islam. Islam in the West has a negative connotation. That is the feeling within the retail market that we are targeting," Ashraf Bseisu, a general manager at Islamic insurer Solidarity, told the Reuters Islamic Banking and Finance Summit.

Islamic law, or sharia, bans charging interest and prohibits investment in sectors such as alcohol and gambling. Solidarity said this could attract non-Muslims looking for ethical financial services, a market it aims to tap in the West.

From Islamic banking's origins in the Gulf and Malaysia, there are now over 300 Islamic financial institutions spread among 75 countries, up from almost nothing 30 years ago, Kuwait's Global Investment House said in a January report.

But even in some Islamic states the sector faces hurdles.

In Egypt, Islamic bankers say the government, which is facing a political challenge from the Islamist group Muslim Brotherhood, has not been as keen to promote the industry as Gulf countries, or even Britain.

Mainly Muslim Turkey is secular and is aiming to join the European Union. Tens of thousands of Turks rallied on Saturday in protest at a plan to lift a ban on women students wearing the Muslim headscarf at university.

"One of the difficulties facing Islamic finance in some countries is that if you were to designate some banks as Islamic and others not, you could be seen to be ... overly promoting an Islamic identity, which in today's age could lose some influential friends," said Harris Irfan, a director at Deutsche Bank in Dubai.

MISCONCEPTION RISK

Business between Islamic and Western financial institutions is far less subject to the kind of hostility found in the retail sector, bankers said. The bulk of Gulf Islamic bond sales were snapped by Western and Asian institutions.

But many bankers added that they played down their Islamic credentials to focus on their business abilities.

"Unicorn's business model has always been 'don't play the sharia card first' ... We say we're a professional investment bank," said David Pace, chief financial officer of Bahrain-based Unicorn Investment Bank, which recently acquired two U.S. firms.

"We never hide it. We're not ashamed to be an Islamic institution, but that's not our only selling point," he added.

Even then, institutions with seemingly little outward connection to Islamic finance, such as Bahrain-based Arcapita, have attracted the vitriol of some who see its compliance with sharia law as suspect.

The firm, which owns Northern Ireland's largest utility Viridian, also owns 60 percent of U.S.-based Caribou Coffee (CBOU.O: Quote, Profile, Research), triggering negative comments on several Web sites.

"I suspect that most Americans would not want to support sharia law, from both the right (Christians) and the left (Feminists) ... Do I want the profits generated from Caribou to support sharia law, and Islamic charities?" reads one Web site.

In a January report on risk factors facing Islamic banking, ratings agency Moody's said risk might stem from the misconception that banks following Islam's requirement that Muslims donate some of their earnings to charity, or zakat, could be "close to violent militant groups".

(Editing by David Holmes)