Dubai's Ridge Capital buys Egypt asset firm Rashad

Dubai-based regional investment bank Ridge Capital has bought 100 percent of Egyptian asset management firm El Rashad Holding, which is expanding its Islamic financing business, its financial adviser said on Tuesday.

Rashad manages two funds, one for Misr Iran Bank and the other for National Bank of Egypt, and last month launched a third in Bahrain that specialises in Islamic investments, Karim Amin of Sempra Capital, which acted as Ridge’s adviser on the deal, told Reuters.

The new $100 million Bahraini fund has been licensed to raise money in Bahraini dinars. It will take money from funds in the Middle East and North Africa for investment in Sharia-compliant funds in Bahrain and elsewhere in the region, Amin said.

Dubai's Ridge Capital buys Egypt asset firm Rashad


An emailed Sempra statement quoted Ridge official José Ferreira Ramos as saying: “We are optimistic about the prospects of the Egyptian economy and the financial services sector in Egypt, especially Islamic finance.”

Amin declined to provide other financial details on the transaction.

El Rashad Holding, which was formed in the early 1990s, sold its securities group earlier this year to another Dubai company, Arqaam Capital.


Islamic NBFC Alternative Investments and Credits to move court against Reserve Bank of India

The cold tussle between advocates of Islamic finance, which forbids the use of interest rate, and the Indian banking regulator, which is adamant that local laws prohibit such funding, is headed for a climax.

Alternative Investments and Credits (AICL), the Kerala-based firm that has been stripped of its licence to carry out non-banking finance activities by the Reserve Bank of India, is planning to move court against the central bank. AICL, which is among the very few Islamic finance entities in the country, will also take up its case with the finance ministry.

A director of the company told ET that the board is weighing legal options to obtain a stay on the regulator’s decision to cancel the certificate of registration.

Till now there was a widely shared perception that while commercial banks planning to offer Islamic banking products will run into legal hurdles, non-banking finance companies will face no restrictions. That has now changed, with RBI directing AICL to stop financing business almost a decade after it was founded.

Earlier, the central bank had pointed out that the NBFC was not complying with the fair practices code under which the financier has to lay down the terms and conditions of funding, including the interest charged.

“Basically, the Indian banking and finance system runs on the interest concept and Islamic finance is based on profit-sharing,” said an RBI spokesperson on Thursday, a day after the regulator revoked AICL’s registration.

As a genre of financial services, Islamic finance abhors the idea of making money out of money and upholds the belief that wealth is generated through actual trade and investment. Across markets, funding structures of Islamic finance institutions have to be compliant with Sharia’h, the sacred law of Islam.

Islamic NBFC Alternative Investments and Credits to move court against Reserve Bank of India.


While RBI’s directions will have to be complied with by all NBFCs – irrespective of whether or not it’s operating as per Sharia’h – the question is what constitutes “interest” for the purpose of especially in the present context of RBI’s NBFC Fair Practice guidelines.

“In our view, there are no stipulations under the regulations issued by the RBI which prevents a non-deposit accepting NBFC from carrying out interest-free or participative financing,” said Suprio Bose of the law firm JurisCorp, which has advised AICL in the past.

In the conventional sense, “interest” means a fixed rate of return on the principal loan amount or a floating rate linked to a pre-specified benchmark. But commercially, various financing structures operate on the model of expected or internal rate of return, which would qualify as “interest” for the purpose of the RBI guidelines. Bose and his colleagues at JurisCorp think it should be possible for NBFCs looking at Sharia’h-based financing to take a middle path. NBFCs, they feel, can consider utilising the concept of net return and disclose the same to ensure compliance with the RBI directions on Fair Practice Code and the Sharia’h principles. But it now appears that the regulator is unwilling to accept this.


Frontier Stocks Lose in Best Rally Since '91 as Growth Slows

The best start to a year for stocks in two decades is leaving the smallest markets behind, a sign of reduced investor confidence in the least-developed economies.

All eight of the world’s worst-performing equity indexes this year are in frontier countries, where the average stock- market value of $30 billion is about 95 percent less than in emerging nations.

While the MSCI All-Country World Index jumped 11 percent, gauges in Bangladesh and Sri Lanka sank at least 9 percent as interest rates increased. Nigeria’s stock index fell 1.8 percent after union strikes and attacks by Islamic militants. Frontier-nation stocks trade at the lowest valuations since at least 2008 versus emerging-market shares.

Falling valuations reflect concern that growth in the smallest economies, which expanded about 20 percent slower than larger developing nations on average during the past three years, won’t accelerate in 2012. Bank Julius Baer & Co. says the losses create buying opportunities for long-term investors. Ashmore EMM LLC has been cutting frontier-market holdings and Oversea-Chinese Banking Corp. is avoiding the stocks.

“On a purely tactical basis, we have actually reduced exposure in frontier markets,” said Antoine van Agtmael, who coined the term “emerging markets” in 1981 and now oversees about $7.1 billion as chairman of Ashmore EMM in Arlington, Virginia. “The larger, more liquid markets offered relatively more compelling investment opportunities.”

Emerging-Market Rally

The 25-country MSCI Frontier Markets Index increased 2.8 percent this year, trailing the emerging-market measure by about 13 percentage points. Nigeria’s Union Bank of Nigeria, Bangladesh’s Dhaka Electric Supply Co. and Sri Lanka’s Lanka Orix Finance Co. declined more than 29 percent, countering gains in Vietnamese shares including Bao Viet Holdings and Vietnam Dairy Products Joint-Stock Co.

MSCI Inc.’s gauge of shares in 21 emerging countries, which have an average stock-market capitalization of $603 billion, surged 15 percent this year as Brazil reduced its benchmark interest rate to the lowest level in 18 months and China cut banks’ reserve requirements.

A new three-year lending program from the European Central Bank and data showing a rebound in the U.S. job market eased concern that developing-nation exports will slow.

The price-to-reported earnings ratio for the frontier index, comprised of companies with an average market value of $2.6 billion, dropped to 10.7 from 16 a year ago and trades at a 10 percent discount to the emerging-market measure, made up of companies with a mean market capitalization of $12 billion.

‘Macro Risk’

“I would go for quality as opposed to underperformance,” said Vasu Menon, a vice-president of wealth management at Oversea-Chinese Banking, the second-largest financial services group in Southeast Asia. “It’s a year you don’t want to add on another layer of risk on top of macro risk.”

Frontier markets have smaller economies and worse rankings on gauges of business climate and corruption than emerging markets. They also have lower trading volumes, which make it more difficult for investors to sell shares.

The average annual gross domestic product for nations in the frontier index is $118 billion, compared with $994 billion for the emerging-market gauge, according to data compiled by Bloomberg and the International Monetary Fund. Frontier countries have an average ranking of 74 in the World Bank’s ease of doing business index, compared with 70 for emerging markets.

Their mean ranking of 82 in Transparency International’s corruption perceptions index is worse than the 75 average for emerging countries.

Liquidity Trap

Less than $15 million of shares changed hands each day on Sri Lanka’s Colombo Stock Exchange during the past month, compared with $12 billion on the Shanghai Stock Exchange in China, the biggest emerging market, according to data compiled by Bloomberg.

Bahrain banks 'on solid economic fundamentals'

Solid fundamentals will support a resumption of strong long-term economic growth and secure Bahrain’s long-term future as a wealth management centre of excellence, said a top government official.

‘Bahrain remains committed to ensuring that the same core business fundamentals remain in place,’ remarked Economic Development Board (EDB) chief executive Shaikh Mohammed bin Essa Al Khalifa ahead of the Euromoney GCC Private Banking Conference at the Ritz-Carlton Bahrain Hotel and Spa on March 7, which will put wealth management and private banking in the spotlight.

Euromoney, the specialist financial publisher and conference organiser, is returning to Bahrain for the first time in a decade to host a major financial event, which is supported by the EDB and the Central Cank of Bahrain.

‘These are stable and transparent regulation, an open business environment and sustainable growth, exploiting our location between East and West and offering a base from which to access the GCC’s trillion-dollar market.

‘Clearly this event will provide a strong platform to engage with the private banking and wealth management business community and highlight the benefits and opportunities presented by establishing operations in Bahrain.

‘More broadly, the EDB has an extremely active business development programme to attract businesses to Bahrain, including international road shows and hosting events in Bahrain to allow people to see the kingdom for themselves.’

The quality of growth depends more than anything else on the sustainability of the workforce and quality of people and Bahrain’s business sector is supported by the most productive, highly-skilled bilingual national work force in the GCC, he argued.

‘Bahrain is home to a well-educated, able local financial services workforce and of the total workforce of more than 14,300 in the financial services sector 67 per cent are Bahraini, of which 37pc are Bahraini women.

‘In addition to the strength of the regulatory framework and the skilled workforce, we also have a track record of more than 40 years of managing wealth in our financial system,’ he said.

‘We also offer platforms for investment through our thriving funds industry, with more than 2,800 registered funds in Bahrain,’ he said and added we are global leaders in Islamic finance, and this means we can support a broader range of private wealth management needs in the kingdom.

‘We felt that now was the right time and Bahrain the right venue to attract an international audience and we already have around 250 delegates signed up,’ said Euromoney Conferences director of private banking Richard Banks.

‘This is not a big conference but it is an event which will attract quality people and we have representation from as far away as Malaysia, Singapore and Switzerland.

‘We chose Bahrain for this event as the kingdom remains a centre of excellence for wealth management in the Middle East,’ he added.-TradeArabia News Service

Sharjah Islamic Bank's website wins Best Structure Award

Sharjah Islamic Bank has won recently the ‘Best Structure Award’ under the Islamic banks category and received a Certificate of Excellence by Pan Arab Web Awards 2012.

Pan Arab Web Awards was created to recognize excellence in web design, development and web ownership skills to showcase their creativity in a competition for the best website in the Pan Arab Region.

Sharjah Islamic Bank had been entered into the competition with many prominent banks from the region including Kuwait, Egypt, Jordan, Bahrain, Lebanon and Oman. The banks hope their participation will open up a gateway to the global banking community, and allow them to market their services globally and thus foster cooperation with international banks, increase employees’ knowledge and work capacity as well as build greater liaison with customers

Head of Retail Banking Group Jassem Al Bloushi said: “We are honoured to receive this award, which reflects the banks positive approach of keeping abreast of developments in technology aimed to project and promote our services to our clients, and ensuring we reach a wider audience. Development through technology is the future and businesses today are mainly conducted through computers and websites. Therefore we take our website very seriously continually updating it with latest information of our services and have structured it so it’s easy to access”.

He also said that winning the award has many benefits, the main one being that it will enhance the reputation of the bank and enable it to market its services to a more international arena.

The Competition is part of Pan Arab Web Awards Academy which is in association with AYNA, MICROSOFT, BSA and MSN and their aim is to promote banks and financial institution’s websites along with improving creativity in web design and web development in constructing a banking e-world that is easily accessible and delivers banking and financial services.

The competition aims to create a global proactive banking community that encourages communication and interaction in the banking finance sectors as well as providing advanced and latest data along with services to meet customers’ needs.

Sharjah Islamic Bank has been going from strength to strength; it was awarded the Sharjah Economic Excellence Award 2008 for the finance sector of large enterprises. In the same year it was awarded the Mohammed bin Rashid Al Maktoum Business Award organized by the Dubai Chamber of Commerce and Industry and also the Dubai Quality Award organized by Dubai Economic Development Department.

The bank’s most recent awards include being named “Best Islamic Bank in UAE” for the fifth consecutive year by Islamic Finance News; “Best Islamic Bank” in the UAE for 2010 by NY-based Global Finance magazine; “Best Islamic Bank in the UAE” by Asiamoney Magazine, and being named winner of the first-ever Pan-Arab EMEA Finance award for corporate social responsibility.

Sukuk issuance surpasses pre-crisis levels

Islamic bond issuance last year surpassed pre-crisis levels for the first time – after more than doubling in volume – while one bookrunner predicted momentum will continue with a further 50% rise in 2012.

The volume of sukuks, or bonds that are Shariah-compliant, issued during the year rose to $32.6bn, from $14.9bn in 2010, with roughly half the volume of deals occurring in the fourth quarter, according to data from Dealogic. It was the first time volume surpassed pre-crisis levels.

The bonds benefitted from uncertainty in the global market, which drove investors to more stable issuances, according to HSBC Amanah, which was the fourth largest bookrunner last year. The firm said it expected the momentum to continue into 2012, anticipating a total of $44bn in deals this year.

Despite a rise in the number and volume of deals in the Middle East last year, Malaysia remained the dominant nationality of deals, with the year’s five largest sukuks issued by the country’s government or corporates.

There were $25.4bn of Malaysian sukuks issued during the year, while Malaysian financial services firm CIMB Group was the top bookrunner with $7.9bn in proceeds.The largest deal last year was a $6.1bn sukuk issued by an investment holding company owned by the Malaysian government treasury, Khazanah Nasional.

The United Arab Emirates represented the second most popular country for bond issuance with $2.6bn in deals during 2011, according to Dealogic.

Government-related sukuks will continue to dominate the market in 2012, according to a year-end HSBC Amanah forecast, with Asian and Middle Eastern infrastructure projects acting as major drivers. Malaysian toll and highway firm Projek Lebuhraya Usahasama Berhad kicked off the year by announcing that it would issue a massive $9.7bn sukuk.

Middle East banking group Emirates NBD and First Gulf Bank both had $500m issuances in the first two weeks of January. Dubai Islamic Bank had a $300m issuance.

Mohammed Dawood, managing director of Islamic global markets for Emea at HSBC Amanah said demand has continued outstrip supply in January, which has been the busiest start to the year he’s seen.

“Sukuk is favoured by investors because it has been less volatile than conventional issuances, especially in the last four months of 2011. Issuers on the other hand, like sukuk because it gives them access to a new investor base,” Dawood said in HSBC’s projections for the new year.

GIB named best sukuk arranger

Bahrain-based Gulf International Bank (GIB) was recently named the “Best Sukuk Arranger” for the year 2011 by Dubai’s Islamic Business & Finance magazine.

According to the magazine, which conducted a survey of the world’s best Sukuk arrangers, nominees for the awards were short-listed from hundreds of top Islamic financial services providers and professionals.

Tens of thousands of votes were cast by the readers of the magazine and the registered users of its website.

The magazine distributed its annual Islamic banking awards to the winning banks during a ceremony held recently in Dubai.

GIB has developed considerable expertise in originating and placing regional Sukuk issuances in the GCC, a statement said.

GIB’s strength in this area originates from long standing relationships with regional issuers and investors, experience of structuring Shariah-compliant instruments and the ability to distribute transactions regionally, it added.

Dr Yahya Abdullah Alyahya, GIB’s chief executive officer, said: “We are pleased to receive this prestigious award that recognizes our leadership and achievements in the field of Sukuk arrangement and issuance.

We are committed to further strengthen GIB’s status as a leading investment bank in the GCC.”“This new award comes as an addition to other awards the Bank has received during the past 12 months.

This reflects GIB’s leadership and the market’s confidence in its capability to provide innovative debt and corporate advisory solutions,” he added.


BankMuscat, the largest financial services provider in the sultanate, has won the first place in the Corporate Governance Excellence Award 2011, which was organised by the Oman Centre for Corporate Governance of the Capital Market Authority (CMA).

BankMuscat was the overall winner in all the three sectors – Financial, Industrial and Services. In the Financial sector, BankMuscat bagged the top prize followed by National Bank of Oman and Oman Arab Bank.

Oman Cables Industry led the race in the Industrial sector while Oman Fisheries Company and Majan Glass Company bagged the second and third positions, respectively. In the Services sector, Shell Oman Marketing won the top accolade followed by Oman Oil Marketing and Al Ahlia InsuranceCompany.

The awards ceremony was held at the Grand Hyatt last week and H E Sheikh Sa’ad bin Mohammed bin Said al Sa’adi, Minister of Commerce and Industry, presented the honours to the winners.

Speaking to Muscat Daily, Abdullah bin Salem al Salmi, executive vice president of CMA said that most of the listed Omani companies are in full compliance with the code of corporate governance and some of them are equipped to exceed the current requirements.

“It is not the end of corporate governance requirements; we are going to the next stage now and we need to upgrade the code of corporate governance. I also think some companies are capable of doing more than the current requirements.”

Salmi added that the award encourages companies to adhere and increasingly adopt the code of corporate governance. “This competition encourages non-listed companies also to come ahead and compete with the listed companies.”

After receiving the award, AbdulRazak Ali Issa, CEO of BankMuscat said, “Our board of directors and the management pay full attention to be compliant with corporate governance requirements. We are the market leader in the business and we would like to remain market leader in corporate governance as well.

“The year 2011 has been a good year for the banking sector. We are ready to start Islamic banking services once we get a green signal from the regulator.”

Banks to benefit from loan growth next year

MUSCAT: Local banks are likely to benefit from a robust growth in loan book next year, although challenges are ahead due to the imminent entry of two Islamic institutions, said a brokerage house in a research report released yesterday.

With spending on mega projects, over RO10.4 billion investment planned in construction sector by 2014 and investments worth RO386 million in oil and gas projects in the pipeline, banks will comfortably show healthy loan books, said Al Maha Financial Services in its ‘banking sector – performance overview.’

“We believe that favourable demographics would continue to act as a key driver for growth in consumer lending segment and expect the banks to benefit from higher disposable income levels of the youth population,” noted the report.

However, Al Maha said next year is likely to be a challenging period for local banks as two new banks are expected to start Islamic banking services. “However, banks are gearing up and take this as an opportunity to offer new variety of products and services,” noted the report, which was jointly prepared by Suresh Kumar, Radhika Gadhia and Kushboo Badlani.

Though the expected reduction in the interest rates and the ceiling on consumer loans are likely to impact the banks’ interest income, it is likely to help the banks to minimise the default risk and in turn improve the asset quality.

Al Maha also noted that half of the listed banks are expected to raise new capital in order to comply with the regulatory capital requirement of RO100 million.

“The banks are also likely to raise additional capital through other means such as rights issue, private placements and subordinated debt to fund the growing credit demand.”

Al Maha report said the total loans and advances of the six listed banks stood at RO10.36 billion by end-September, 2011 as compared to RO9.07 billion a year ago, registering an increase of 14.2 per cent year-on-year. BankMuscat continued to remain as the market leader in terms of gross loans and advances.

The bank’s market share grew from 45.3 per cent by end-September 2010 to 45.8 per cent for the same period this year. Oman International Bank underwent a challenging phase during this time with its market share declining to 7 per cent from 7.65 per cent a year ago.

Healthy growth

The loan book of the banking sector witnessed a healthy growth, both in the corporate and consumer segments, during the last one year.

The corporate credit grew by 16.5 per cent year on year from RO5.22 billion to RO6.08 billion during the period under review, with major companies like Oman Cement, Raysut Cement, Renaissance Services, A’Saffa Foods availing credit to fund their capital expenditure programmes.

The consumer segment witnessed a growth of 12.9 per cent, year on year to reach RO4.28 billion by end-September 2011.

The increase in disposable incomes owing to the hike in remunerations of employees was one of the major drivers for the incremental demand in the retail segment.

Referring to liquidity, Al Maha report said the customer deposits, including certificates of deposits, of the six listed banks stood at RO10.24 billion by end-September 2011 from RO8.22 billion for the same period a year ago, showing a growth of 24.6 per cent year on year.

The banking sector witnessed marginal improvement in the interest spread irrespective of the drop in yield, as a result of the decline in interest rate. Cost of funds also showed a drop during the first nine months of this financial year compared to the same period last year as a result of banks’ endeavour to access low cost funds.

This has resulted in improvement of the spread from 2.73 per cent in the first nine months of 2010 to 2.85 per cent for the same period this year.

Omani banks showed an impressive performance in the first nine months of this financial year by improving their profitability, the report said, adding; “The six listed Omani banks together have achieved a year-on-year growth of 19 per cent in net profits in the first nine months of this year.”

“Total profits of the listed banks reached RO179.6 million during the nine months ended September, 2011 from RO150.8 million reported during the same period last year.” Also, all the three quarters of this year witnessed better profitability compared to their respective quarters in the last year.

“Total profits of the listed banks reached RO179.6 million during the nine months ended September, 2011 from RO150.8 million reported during the same period last year.” Also, all the three quarters of this year witnessed better profitability compared to their respective quarters in the last year.

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.