Islamic bonds: then there was light

Islamic bonds: then there was light

It’s no fun being a bond investor these days. You either invest in safe havens like US and German bonds and get a negative return, or go on adventure in countries like Spain and can’t be sure you’ll get your money back.

So the emergence of Shariah compliant sukuk offers an appealing middle way. With the London 2012 Sukuk Summit being held on June 6 and 7, beyondbrics reviews the latest developments in the market.

First to catch the eye is a steady rise in sukuk indices in the last few months. The Dow Jones Sukuk Index, for example, which measures the total return on US dollar denominated Islamic bonds, ended higher in May for the sixth time in as many months. Since 2009, the index has performed twice as well as the Barclays Capital Bond Composite Global Index, a benchmark for bonds.

The amount of sukuk outstanding is at an all-time high. In the first quarter of this year, $40bn was added to the pile, an increase of 48 per cent in new issuance compared with the same period last year.

Islamic bonds: then there was light


Demand is strong for both corporate and sovereign sukuk, according to Tariq Al-Rifai, Dow Jones’ director of Islamic market indexes. A recent $4bn issuance by the Kingdom of Saudi Arabia was three times oversubscribed. A $1.75bn issue from the Saudi Electricity Company, the largest corporate sukuk of 2012, was ten times oversubscribed.

What explains this surge in popularity?

Since it was first re-introduced in Malaysia in the early 90s, the Shariah compliant bond type has enjoyed a steady rise in popularity in the Islamic world, both for issuers and for buyers. In the six years since its inception, the HSBC/Nasdaq Dubai US Dollar Sukuk Index has returned on average more than 5 per cent a year, notwithstanding the severe debt crisis in Dubai in 2009 which destroyed the value of many sukuks.

Until recently, the market was dominated by Malaysia. Now, a small sukuk renaissance is taking place in the Middle East. First banks and then companies in the Gulf region have started embracing sukuk issuance, explaining a large chunk of the increase in supply. Saudi Arabia is leading the way.

According to Nick Stadtmiller, head of fixed income research at the Emirates NBD bank, the roots for this remarkable sukuk awakening lie in the financial crisis in the developed world.

“About this time last year, a lot of Gulf-based issuers couldn’t get their traditional bonds sold because the markets in Europe were drying up,” he says.

This led some key institutions to rethink their attitude towards sukuk issuance. Before, the strict rules on sukuk made many of them conclude the game wasn’t worth the candle. Unlike bonds, sukuk have to be based on underlying assets, and they must be approved by Shariah scholars.

But the exceptional market circumstances made some issuers think again. Last year, conventional Arab banks like the First Gulf Bank and the Abu Dhabi Islamic Bank began issuing sukuk with success.

The same became true for some major Arab companies this year, such as Saudi Electricity ($1.75bn), the Saudi General Authority of Civil Aviation ($4bn) and recently the shopping mall operator Majid Al Futtaim ($400m).

The result is that sukuk supply is slowly catching up with demand, which had been increasing at the speed of sound in recent years – or better, at the speed of oil pumped out of Islamic soil.

For Stadtmiller, the fact that sukuk are now used as a replacement for a corporate loans means the market is at a “watershed moment”.

“I think we’ll see a lot more of these corporate sukuk in the future, many with a longer duration,” he says. (Sukuk can run for up to 10 years, whereas bank loans are often restricted to two or three years.)

There is no reason why the sukuk’s rise should stop at the borders of the Islamic world.

“There is also a strong appetite for sukuk among corporates in developed markets, such as GE Capital,” says Al-Rifai at Dow Jones. “If more western companies look to issue sukuk, they are bound to find a lot of interest from investors.”

That’s indeed very likely, as recent oversubscriptions suggest. Many wealthy investors in the Middle East can buy only sukuk as they want to comply with the Islamic ban on receiving interest. Western investors, from their side, don’t mind buying sukuk either. As sukuk are asset-based and many Islamic funds hold them to maturity, they are seen as a relatively safe investment.

But those looks can nevertheless be deceiving. Among all the optimism, you could almost forget that sukuk is a whole class of assets, not a homogenous product like US Treasuries.

Whether the issuers chose sukuk or regular bonds, their own creditworthiness is in the end what makes the difference. Investors who bought Dubai issued sukuk before 2009 will know what that means.

But in these uncertain times, sukuk remain highly valued among investors. With an average yield of 3.8 per cent, it is not hard to see why. Chances are the Sukuk Summit that started on Wednesday in London will only solidify that reputation.


Islamic investment industry predicts exponential growth

Islamic investment industry predicts exponential growthThe Islamic investment sector is focused on “expanding the global footprint” of the industry, according to discussions at the 8th Annual World Islamic Funds and Financial Markets Conference (WIFFMC 2012) last month.

With an estimated yearly growth between 15-20%, the sector is one of the biggest growers in the financial world, and delegates at the conference, which took place in Manama, Bahrain, in May, picked out the socially responsible investment (SRI) model as something for the Islamic investment industry to aspire to.

On the face of it, the two investment styles are similar. But whilst the investments made by SRI funds are selected based on a predetermined criteria, Islamic funds look to Sharia law – Islam’s legal system.

The law prohibits Muslims from investing in such areas as tobacco, pornography and financial services, which is where the similarity with SRI comes up.

And officials at WIFFMC 2012 recently said the industry is set for exponential growth.

Sharia-compliant capital markets activity currently still remains a niche market; but certainly can and will build international reach and scale”, said Fernand Grulms, CEO of Luxembourg for Finance.

Islamic finance is no longer limited to the countries in which it began, or to the early adopters and one of the key hurdles to achieving international reach and scale is a lack of transparency in the product development area.

“The absence of a consistent published set of legal rules can be perceived by the market as uncertainty, inefficiency, increased time to market and increased costs, which are elements that markets dislike.”

In March, Blue & Green Tomorrow spoke with Craig Bonthron, manager of the SWIP Islamic Global Equity Fund. And on the back of WIFFMC 2012, Bonthron’s colleague, and co-manager of the fund, Johnny Russell offered his own perspective on the Islamic investment industry.

In the UK, the number of Muslims who take out Islamic-based savings products is pretty low”, says Russell.

But if you compare this to the size of the conventional savings industry, there’s quite a significant potential for growth within the community.”

One of the main drawbacks for funds of this kind, though, Russell says, is the naming convention of Islamic funds.

A lot of people will see the word Islamic and immediately think that they don’t want to invest in it”, he explains.

But actually, if they looked at the principles that an Islamic fund might follow, such as the exclusion of tobacco and pornography, then they are very closely aligned to quite a lot of the principles that are followed within ethical funds.

The naming convention is important and people won’t necessarily look at an Islamic fund because of its name, but actually, it does a lot of what an ethical fund  would do.”

There is an estimated $58 billion tied up in Islamic funds worldwide – a figure that is rising as the sector begins to attract more mainstream attention.


Fajr Capital welcomes new chairman

He joined the international Islamic investment firm at its sixteenth Board of Directors Meeting, on 19 May 2012.

Fajr Capital welcomes new chairman.


AlZamil is a senior member of the Zamil Group, which represents the interests of one of Saudi Arabia’s leading business families. He serves as Managing Director of Finance and Investments as well as on the group’s Board of Directors and Executive Committee.

Adib AlZamil will serve for three years and replaces the firm’s founding Chairman, Sheikh Ebrahim Al-Khalifa.

AlZamil said, “I am pleased to join such a visionary firm and a stellar set of peers on the Fajr Capital Board of Directors. I look forward to contributing to Fajr Capital’s aspirations.”

Iqbal Khan, CEO Fajr Capital, added, “Adib AlZamil is a widely respected business leader in the GCC region. He combines financial services with real economy expertise in the companies he leads in and outside Zamil Group, and he brings a strong execution focus at a critical phase of Fajr Capital’s growth.”

The Fajr Capital Board of Directors now comprises ten members from seven countries:

• Adib AlZamil, Chairman

• Abdulaziz Alsubeaei, Alsubeaei Group representative and HR Committee Chairman

• Nasser Alsubeaei, Alsubeaei Group representative

• Khalid Al-Sweilem

• Iqbal Khan, CEO

• Mohd Izani Ghani, Khazanah Nasional representative

• M. Atilla Kurama, Audit & Risk Committee Chairman

• Junaidi Masri, Government of Brunei representative

• Chris Masterson, Investment Committee Chairman

• Mike Powell


Egypt Prepares to Sell $2 Billion Islamic Bonds – Scholar

DUBAI – The Egyptian government, seeking to head off a funding crisis, is preparing to raise about $2 billion through its first issue of Islamic bonds, an Islamic scholar familiar with its planning said on Tuesday.

“The Egyptian government is convinced that a foreign currency sukuk will fund the country’s development projects and can also bridge the gap in its currency reserves,” Sheikh Hussein Hamid Hassan told Reuters.

“The sukuk will be in dollars or euros or maybe a combination. It will be around $2 billion, issued in several tranches targeting mainly Egyptians living outside Egypt.”  Sheikh Hussein is one of the leading scholars in the Islamic finance industry, which is built around religious principles such as the avoidance of interest payments. Based in Dubai, he chairs a series of boards which evaluate Islamic financial instruments.

He is not an official adviser to the Egyptian government but has been discussing the possibility of a sukuk issue with it. Sheikh Hussein said he had proposed four structures for the sukuk and the government would choose one.

Asked when the debt might be issued, he said: “The date of issue is not final yet but Egypt is in urgent need of funding.”  Hit by declines in foreign investment and tourism, the Egyptian central bank’s foreign reserves fell $1.77 billion to $16.35 billion in January and are down by more than half since the uprising which ousted Hosni Mubarak in February last year.

That threatens a sharp slide in the value of Egypt’s currency. The government is also grappling with a large budget deficit that it is financing at high cost by issuing short-term Treasury bills to local banks at yields above 15 percent.

Last month Egypt said it was asking the International Monetary Fund for $3.2 billion in emergency loans; a deal could encourage other foreign donors to aid Cairo. But the IMF said it expected talks on an agreement to take two or three months.

Islamic finance was not encouraged under Mubarak’s secular government but it is expected to grow in Egypt after Islamist parties won well over half of the seats in parliamentary elections last month. The government has drafted legislation that would facilitate issues of sukuk.

Because they attract pools of conservative Islamic investment money, sukuk have often proved to be more stable than conventional bonds during the global financial crisis, and they might be an effective way to attract some of the savings of millions of Egyptians living abroad. They might also be bought by Islamic investment funds in the wealthy Arab Gulf

A Saudi Arabian newspaper, Asharq Al-Awsat, reported this week that Egypt’s finance ministry had asked National Bank of Egypt, the country’s largest bank, to study ways in which a sovereign sukuk could be issued in the near future. Marketing could start as soon as next week if the government approves, the newspaper said.

BRUNEI – EDUCATION – Centre for Islamic Banking, Finance & Management launched – Her Royal Highness Princess Hajah Hafizah Sururul Bolkiah yesterday attended the official launching of the Centre for Islamic Banking, Finance and Management (CIBFM) and its first flagship, the Fiqh Mu’amalat Professional programme.

Held at the Indera Kayangan Ballroom of The Empire Hotel and Country Club, the launch opened with recitations of surah al-Fatihah and doa led by Pehin Orang Kaya Paduka Seri Raja Dato Paduka Seri Setia Ustaz Hj Awg Suhaili Hj Mohiddin. (source)

On hand to officiate the launch of the centre and the programme was Acting Minister of Finance II at the Prime Minister’s Office Dato Paduka Awg Hj Bahrin Abdullah.

In his opening remarks, Permanent Secretary (Policy) at the Ministry of Finance cum Chairman of the Board of Directors for the Centre for Islamic Banking, Finance and Management c, in his capacity as chairman of the event, highlighted the objective of the establishment, function and roles of CIBFM, as well as the unique features of the Fiqh Mu’amalat Professional programme.

He emphasised on the centre’s role towards providing continuous learning and development programmes through a balanced mix of Islamic and conventional focus including the required soft skills.

He also shared future plans of the centre, which expects to offer and conduct some 50 programmes targeted for about 800 participants this year.

The launch saw the attendance of members of the Syariah Financial Supervisory Board, senior government officials, CEOs, managing directors and representatives of financial institutions and the first batch of the flagship.

In conjunction with the launching, a seminar in the form of special presentations and penal discussions by both local and well-known Syariah scholars and speakers were also held.

Following the opening ceremony, a special presentation was presented on Syariah Advisors for Islamic Financial Institutions – ‘Expectations and Challenges’ by a leading shariah scholar in Islamic Finance, Dr Mohamed Ali Elgari.

This was then followed by panel discussions on ‘Effective Human Capital Development – Mitigating the Gap on Applied Syariah Knowledge and Finance’ and another special presentation on ‘Value Propositions of Syariah Board in Contemporary Islamic Financial Market.’

The presentation delivered by founder and chairman of Amanie Advisors (Kuala Lumpur, Dubai, Luxembourg and Cairo), Dr Mohd Daud Bakar, concluded the morning event.

Later in the afternoon the event saw a continuation of panel discussions on Development of Islamic Investment Products and Services – A Local and Global Perspective and ‘Syariah Compliance Review – An Art or Science?’

Islamic Index Launches on Australian stock market


Following last year’s launch of Australia’s first Islamic Australian equity fund, Thomson Reuters and Crescent Wealth have announced the launch of a specialised index that will give investors the means to build an Islamic-compliant Australian equities portfolio.

Crescent Wealth stated that the Thomson Reuters Crescent Wealth Islamic Australian index is the only such benchmarking tool used in the Australian market and a key step towards Islamic investment in Australia, which the investment manager expects will grow to as much as $13 billion in funds under management by 2019.

“Australian markets are stable and have attractive growth fundamentals that Islamic investors are looking for in today’s challenging macro-environment,” said Thomson Reuters global head of Islamic finance and OIC Countries Rushdi Siddiqui.

The index screens Australian Securities Exchange-listed companies for compliance with Islamic investment principles and will initially span 143 securities with a combined market capitalisation of more than $160 billion.

The index excludes banks, conventional financial stocks and companies with high levels of debt or leverage.

According to Crescent Wealth, compliant companies are reviewed on a quarterly basis for continued compliance with the Accounting and Auditing Organisation for Islamic Financial Institutions standards.

Crescent Wealth managing director Talal Yassine said that the index will help to sell the Australian Islamic investment proposition to investors offshore.

“There is a huge untapped potential to grow Islamic-compliant investment in Australia from investors here and in Asia and the Middle East,” he said.

Yassine added that the investment theme of the index has broad appeal to conventional investors, particularly those with an ‘ultra-ethical’ investment strategy.

He said such investors will be attracted to the index’s weighting towards low levels of debt and leverage, low account receivables and the fact that compliant companies invest a greater proportion of their funds back into the business rather than letting it rest in cash or short-term investments.

Thomson Reuters, Crescent Wealth to launch Islamic Australia Index

Starting in early February, Thomson Reuters and Australia’s Crescent Wealth are jointly launching Islamic Australia Index – a research-based index that will offer local and international investors a tool to help invest in the Australian market in accordance with Islamic investment principles.

The initiative comes ahead of an expected government proposal to change tax guidelines to help open up the local market for Islamic investment products, though there remains some concern about the market’s growth potential.

Called the Thomson Reuters Crescent Wealth Islamic Australia Index, the measure will cover 143 stocks with combined market capitalisation of $160 billion. The companies are screened to ensure they adhere to sharia law.

Islamic finance prohibits the earning of interest, choosing to focus instead on the buying and selling of tangible assets such as property under the principles outlined within sharia law.Thomson and Crescent Wealth said in a joint statement.

“Creation of the index is a key step toward positioning Australia as an attractive destination for global Islamic investment funds. It is estimated Islamic banking assets globally now exceed $US1 trillion, and that there is $US50 billion in managed funds investing in equities according to Islamic principles.”

Parsoli shuts broking unit to cut costs, to shift to advisory business

MUMBAI: Caught in a web of legal wrangles and business losses, listed NBFC-cum-broking firm Parsoli Corporation, has decided to shut its core stock broking business.

The company will, from now on, confine to investment advisory, Zafar Sareshwala, managing director of Parsoli Corporation, told ET.

“It’s difficult to work in such rigid regulatory environment… Also, it’s not worth the while to do broking anymore. We’d earn more money if we just withdrew all our guarantee money, margins and security deposits and put them in bank fixed deposits,” said Sareshwala, managing director of Parsoli Corporation, which got listed on the BSE in 1995.

Besides broking, Parsoli specialised in Shariah-based investment advisory business. Over 39% of Parsoli shares are held by the Sareshwala family, as on June 2011. Germany’s Baader Wertpapierhandersbank, Gulf Investment Services and Oman Commercial Services top the list of non-promoter shareholders – with 24.8%, 19.2% and 4.9%, respectively, – in Parsoli Corporation. Retail investors hold over 7%. The company suffered a loss of 88 lakh in Q2 on a turnover of 36 lakh.

“There’s nothing left in broking anymore… Turnover has been a big problem for most brokers; No one is making money doing broking these days as commissions have gone below floor-levels. Shutting our broking vertical is more of a business decision,” Sareshwala said.

Parsoli intends to cut costs by shutting its broking business. It will continue to function as an Islamic investment advisory business. The decision was taken in consultation with major shareholders of the company, Sareshwala said.

“We’ll be saving huge costs by shutting our broking business. We’ve got mandates to advise a few Islamic banks on investments in Indian companies. We’ve shut broking to be away from any regulatory system,” Sareshwala said.

But besides a dismal market, the company’s latest decision may be attributed to its brush with the capital market regulator, Sebi. In 2008, Sebi auditors unearthed instances of fraudulent transfer of shares and price manipulation. In June 2010, it restrained Parsoli from dealing in shares and acting as a broker.

The charge against the broking firm was that Parsoli promoters had transferred 9.61 lakh shares held by them to unrelated persons. This corporate action and the resultant change in shareholding pattern were not disclosed to the BSE. Another charge against Parsoli, according to Sebi judgment, is its failure to report an earlier dividend announcement.

“This transfer of shares happened in 2005; but the Sebi booked us first in 2008. In fact, there was no investor complaint against us with regards to the transfer of shares. We had paid investors the damage (money) when we spotted the mistake in transfer of shares,” Sareshwala said.

Parsoli Corporation and main promoters Zafar and Uves Sareshwala appealed to SAT for a reprieve against the Sebi order. The tribunal, however, upheld the Sebi order and ruled against Parsoli. The promoters went on to challenge Sebi in the Supreme Court but dropped the case mid-way.

“There was no point in pursuing the case any further. It’s not worth to spend so much money on legal recourse. If we had won, we’d still be doing broking which, in any case, is not ringing in any money. What’s the point in fighting for a lost cause?” he said.

Parsoli has not decided if it wants to give investors an exit route. The company’s shares touched a peak of 259 per share in January 2008, when banking and NBFC shares were the flavour. The exchange suspended trading in Parsoli shares in July 2010, when the stock was trading at 18 and the company’s m-cap was 50.5 crore.

“We’re cutting our losses as of now… We’ll be profitable in two years’ time. We’ll put our capital to better use from now on,” Sareshwala said.

Competitors and other practitioners of Islamic finance are not surprised at the turn of events at Parsoli. The group was doing too many things rashly, said one of them. “Parsoli lost a lot of clients because of portfolio losses in 2008 and 2009.

They were trying to do a lot many things too fast,” said the head of another investment firm specialising in Islamic finance.

Building Islamic Bonds – Bahrain’s Economy to Receive a Welcome Boost

Global Arab Network – With recent news of a planned new Islamic bond issue, Bahrain’s economy may be set to receive a welcome boost. The issuance may also come as a boon for the Gulf state’s financial services sector, which is a central part of its Economic Vision 2030, the long-term plan to promote the country as a leading regional and international financial centre, Global Arab Network reports according to OBG.

Bahrain faced ratings downgrades after civil unrest in February, followed a month later by the delay of a planned $1bn sovereign bond issue after debt insurance costs hit 18-month highs.

However, on September 19, state news agency BNA reported the government had set up a framework to issue up to BD3.5bn ($9.3bn) in bonds, earmarking the proceeds of the bond sale to help bridge its budget deficit, which stands at about 5% of GDP.

“The finance minister is authorised to issue in accord with Bahrain’s Central Bank up to BD3.5bn ($9.3bn) in public treasury bonds … called development bonds and Islamic sharia-compliant instrument in the kingdom or abroad,” said a decree issued by Bahrain’s King Hamad bin Isa Al Khalifa, BNA reported.

Indeed, Islamic bond issuances in particular could prove to be the strong point of Bahrain’s efforts to attract financing.

The king gave no timeframe for the issuance, but during a September 25 interview at the International Monetary Fund (IMF) in New York, Central Bank governor Rasheed Al Maraj said that Bahrain had hired Standard Chartered, Citigroup and BNP Paribas to advise on a $1bn sukuk (Islamic bond) sale, scheduled for October.

Global sales of sukuk climbed to more than $17bn in 2011, compared with more than $10bn in 2010, according to data compiled by Bloomberg.

“Our reading into the market is that there is still growing demand for sukuk, especially from Asian markets, regional markets in the Middle East and possibly European markets,” Al Maraj said. “There has been an absence of sovereign issuances of sukuk for quite some time. Now the market is ready to have a new issuance.”

According to Al Maraj, Bahrain has received positive feedback from investors for the planned sukuk issue, whose maturity could range from seven to 10 years.

Following fast on the heels of the government’s announcement of the bond sale, too, Albaraka Banking Group – Bahrain’s biggest publicly traded Islamic lender – and its Turkish unit unveiled a plan to raise a total $500m in sukuk this year, its CEO, Adnan Ahmed Yousif, said in a September 24 interview with Bloomberg.

Albaraka Turk Katilim Bankasi is in the process of hiring banks to manage the sale of about $200m in Islamic bonds by November, Yousif said. He also added that the parent bank may sell about $300m by the end of 2011.

Yousif predicted strong demand after Albaraka Turk raised $350m in a syndicated loan in September. “There are many institutions that [would] like to diversify their portfolio to include sukuk,” he said. “We asked for $150m and we got $350m.”

Albaraka is looking to expand its presence in countries such as Algeria, Egypt, Tunisia and Pakistan, as well as Indonesia, where Yousif said an acquisition is planned. The proceeds from the bond sale will be used to finance these planned expansions. Albaraka is currently targeting about three institutions. “Most banks available for sale are very small and they are traditional banks that we are going to acquire and convert into Islamic banking,” he said.

Not to be outdone, Bahraini Islamic investment bank Elaf Bank has revealed that it has sukuk mandates worth $1.5bn. During an October 10 conference, Elaf Bank’s chief executive, Jamil Jaroudi, told reporters the mandates were from three Malaysian firms. Although Jaroudi declined to name the issuers, he did reveal that the sukuk are being planned for the first quarter of 2012 and are of varying sizes, ranging from $100m to $1.2bn.

Initially, Elaf Bank will be the exclusive arranger of the three sukuk in Malaysia, but it is possible that other banks could be allowed to join the deal at a later date. The company secured a licence to open a branch in Malaysia in June.

These and other positive developments in the kingdom’s banking sector were highlighted during an October 9 reception hosted by the Bahrain Association of Banks (BAB) for Bahrain’s delegation to the annual IMF/World Bank conference in Washington.

“The kingdom of Bahrain is indisputably a regional leader in the financial sector and BAB has played an important role in consolidating this position, despite the downturn of the global economy,” BAB chairman Abdulkarim Bucheery said in a press release after the gathering.

No matter how the bond issuances fare, Al Maraj thinks investors should not write off Bahrain’s economic and financial prospects. “Bahrain has been a financial centre for almost four decades. We have gone through many crises before,” he said. (OBG)

Elaf Bank forms joint venture with Ohad Trust in Malaysia

Elaf Bank B.S.C. ‘Elaf’, licensed by the Central Bank of Bahrain ‘CBB’ to operate as a wholesale Islamic bank, and Ohad Trust B.S.C. ‘Ohad’ — a Fund administration, Custodian and Trust services provider also licensed by the CBB — have formed a joint venture in Labuan, Malaysia.

As a result of this joint venture, the Labuan Financial Services Authorities (LFSA) has granted a ‘trust’ license under the name Ohad Trust (Labuan) Bhd ‘Ohad Labuan’, during a private ceremony held in Malaysia and attended by representatives from all parties to commemorate this event.

The LFSA granted trustee license will allow Ohad Labuan to work on trust, foundations, fund administration, registrar and custody assignments in Malaysia.

Dr. Jamil El Jaroudi, CEO of Elaf Bank, commented on the significance of this joint venture with regards to the Bank’s strategy to generate business opportunities in both markets. “Ever since its inception, Elaf Bank has been actively sourcing and developing business in the two strong and well regulated Islamic Finance hubs, Bahrain and Malaysia.

When we sought a branch office license in Malaysia, it was because we believed that having presence in South East Asia in addition to our headquarters in Bahrain will create more business opportunities, and our belief was right.

Having a branch office in Malaysia has definitely opened more doors not only for our Bank, but also for other Bahrain-based entities, and has allowed us to fulfill our promise to better serve our wide range of Islamic finance client needs in both the GCC and SEA regions.”

Mr. Stefan Cnoops, CEO of Ohad Trust, commenting on the importance of this step, stated: “As the first ever licensed trustee in the Middle East, Ohad Trust has been present in Bahrain since 2005. We are proud to expand our presence and business prospects into South East Asia by obtaining a license in Malaysia.

There can be no doubt that Elaf Bank and Ohad Trust share common objectives and we are very happy to have joined forces through this strategic partnership in such an important market. We are confident Ohad Labuan, which is backed by a comprehensive regulatory framework and legal environment in Malaysia, will be able to capture significant trust related work, particularly in relation to Sukuk.

We are equally confident that Ohad Labuan will become a leader, as it already is in Bahrain, in the administration and custody work of the increasingly important Labuan Islamic Investment Funds market.”