Qatar Islamic Bank to buy IBQ's Islamic assets

Dec 28 (Reuters) – Qatar Islamic Bank will acquire the sharia-compliant corporate portfolio of International Bank of Qatar(IBQ), the Islamic lender said on Wednesday.

The agreement will see IBQ’s Islamic corporate financing facilities and its deposit accounts transferred to Qatar’s largest sharia-compliant bank by assets, according to a statement.

No value for the acquisition was given.The move comes ahead of the Dec. 31 deadline, imposed by the Qatar central bank, for conventional banks to stop offering sharia-compliant banking services amid worries of overlaps between the two.

The ban, announced in February, calls for conventional institutions to close their Islamic banking arms – although they could continue to manage existing assets beyond the deadline.

In August, IBQ sold the retail portion of its Islamic banking operations to Barwa Bank, the first such sale of assets by a conventional bank since the edict.

IBQ is 30 percent owned by the National Bank of Kuwait , Kuwait’s biggest lender.QIB’s shares closed down 0.1 percent, before the announcement came.

Islamic finance continues to evolve in East Africa

By BusinessWeek Correspondent

Dar es Salaam. The launch of Tanzania’s first Islamic bank, Amana Bank, last monht is the latest development in Tanzania and East Africa’s emerging Islamic finance industry. With about half the population being Muslims there is a huge potential for Shariah-compliant financial services in Tanzania.

The headquarters of the bank are in the Kariakoo trade centre in the city, the hub of commerce in Tanzania, where a significant portion of merchants are Muslims.

The area is so important that another bank, the People’s Bank of Zanzibar (PBZ) has this month launched a branch specializing on Islamic banking.

Launching the PBZ branch last week Zanzibar President Ali Mohammed Shein urged the Bank of Tanzania to create a conducive atmosphere for positive service delivery in Islamic finance.

“This is a non-religious bank open to those who abhor interest rates as it is prohibited in the holy book, the Qur’an but if you love interest rates, this bank is not for you,” said Shein.

The chairman of the Amana bank Haroon Pirmohamed said that the bank is the result of a need for an alternative to a conventional banking system that provides ethical and fair modes of banking for all.

He said that the bank will offer products and services that meet the needs of not just the Muslim community but all citizens and corporate bodies in the country.

“Amana Bank is well aware of its responsibility and being the pioneer of dynamic Islamic banking system, we intend to have a stable and a dynamic bank that employs modern technologies.”

Asad Ahmed, Chief Executive Officer of Gulf African Bank, the first Islamic bank in Kenya, explained to Islamic Business & Finance that Islamic finance is evolving fast in East Africa.

“A new constitution has just been passed in Kenya; Tanzania is opening up its first Islamic bank; Uganda has passed its laws and three institutions there have applied for a licence. I think when you have the regional mix coming together there will be a much greater critical mass.”

He explained that Gulf African Bank would look at expanding into Tanzania and Uganda once it had strengthened its position in Kenya. “Islamic finance in East Africa is an opportunity to show that even in a region where Islam is a minority religion, an ethical form of banking can survive and do well,” he said.

Pirmohamed also emphasised that Amana Bank is targeting customers of all faiths. “The bank would not hoard interests as other banks do, we would split our surplus to our customers as stipulated in the Shari’ah,” he said, adding that non Muslim customers are welcome to join the bank.

Ahmed explained that Islamic banking in East Africa cannot be exclusive to the minority Muslim population. “The customer is interested in whether you can provide a service that is better or equal to a conventional bank, at rates that are better or equal to a conventional bank, and if you can do that there is no reason that they wouldn’t bank with an Islamic bank. We do banking – we don’t sell faith.”

Amana Bank’s Managing Director, Idris Rashidi, said that the financial institution will provide services to customers by abiding by the country’s laws without any discrimination. He said that the bank will provide services including personal saving accounts, term deposits, current accounts and Ihsan accounts.

In 2010 Absa launched Islamic banking in Tanzania through its subsidiary the National Bank of Commerce (NBC), marking its expansion into Africa. Following its success, in August this year it introduced corporate Islamic and business accounts to finance businesses wishing to operate under Shari’ah principles.

Statistics show that less than five million Tanzanians have access to banking facilities, which calls for robust awareness creation and innovation, the President explained. “These indicators point to the tremendous potential of this market niche which has previously been untapped,” he said.

Islamic banks advised to capitalise on inherent strengths

KARACHI: Acting Governor State Bank of Pakistan, Yaseen Anwar, said Islamic financial system has potential to provide better banking and financial services than the conventional system.

However, he added, the Islamic system would have to capitalise on its own inherent strengths and avoid following the conventional system, he said while addressing the inaugural session of Islamic Financial News Roadshow on Islamic Banking held at SBP Headquarters here on Thursday

Islamic banks advised to capitalise on inherent strengths

Anwar Yaseen said that the current Islamic banking paradigm, both in Pakistan and elsewhere, is based on replication of conventional banking products. While the replication of conventional products to make them Shariah compliant does pass the Shariah permissibility test, they are insufficient to achieve the larger objectives of Islamic financial system, particularly the broad-based and equitable distribution of economic gains. Continue reading

Islamic finance growing and running parallel to conventional finance

Research shows that conventional finance will not hold for long and one alternative is Islamic finance, said Sumith Adhihetty, Managing Director, LB Finance at the company’s launch of Islamic Finance Unit in Colombo this week.

He said that it is the right time with the country recovering from a prolonged civil war and the financial market getting back to normal after the recession to launch this scheme. They also see a great potential for’Al Salamah’ Islamic finance in Sri Lanka in the future.

Islamic finance growing and running parallel to conventional finance

He said that they believe that as a responsible corporate citizen they have a responsibility to the people in the North and East to help them recover their lost pride. With this in mind, to go along with the government’s Reawakening the North and the East programme they have massive expansion plans for the area.

He said that they have identified particularly in the East, a high demand for Islamic finance. In fact recent research they have done in the area shows that conventional banks will not be able to hold on their own, particularly in those areas where there is a predominantly Muslim population. Even in other parts of the country, Islamic Finance is catching up fast.

As an organization sensitive to market changes this paved the way for their entry in to Islamic finance market.LB Finance has been doing well in the last few decades and there is a growing demand for Islamic Finance and it has become more prominent during the recent years after the global financial crisis. And thus it is right time now to get into Islamic Financing after the prolonged civil war as the financial market in the country is settling to normalcy.

At this launch LB Finance introduced four Islamic Finance products such as Ar Rahnu, Shari’a Compliance Gold Loan; Mudarabah Investment Accounts; Murabaha, Trade Financing and Ijarah, Islamic Shari’a Compliant Leasing.