GLOBAL:
The third-largest banking group in France by assets, Societe Generale
(SocGen), last year announced intentions to auction a RM1 billion
(US$311.49 million) Sukuk in Malaysia. The Sukuk will be issued by
Societe Generale Bank and Trust (SGBT)'s wholly-owned subsidiary, ALEF
II SA, an SPV set up as a funding conduit for SGBT. SGBT in turn is a
wholly-owned subsidiary of Societe Generale Group. Proceeds from the
issuance will be used to diversify the bank’s funding sources as well
as for the purchase of assets in Dubai.
Malaysian
rating agency RAM has recently assigned an ‘AAA(s)/Stable’ rating to
the proposed multi-currency Islamic medium-term notes program.
Reflecting the group's sound capitalization, strong franchise in retail
banking as well as corporate and investment banking in Europe, RAM also
reaffirmed SocGen's ‘AAA/Stable/P1’ financial institution ratings.
The
Sukuk structure features back-to-back Shariah compliant contracts with
its wholly-owned subsidiaries, SGBT (the obligor) and ALEF (the issuer),
according to RAM. While SGBT is the immediate counterparty to ALEF, the
transaction structure also provides the Sukukholders legal recourse to
SocGen.
In
an emailed statement to Islamic Finance news Foo Su Yin, CEO of RAM, said:
“SocGen's maiden Sukuk also has the distinction of being Malaysia's
first Sukuk to be issued by a French bank. This milestone is a notable
achievement for the global Sukuk market and reinforces Malaysia's
position as an international Islamic financial center.”
The
French bank recently revealed its plans to capitalize on upcoming
infrastructure projects in the Middle East by leveraging on its lending
capacity and advisory services. This marks the potential for SocGen,
who has in recent times announced intentions to enhance its presence in
the Islamic financial markets, to raise funds in a Shariah compliant
manner. The issuance would be the second major European institution to
issue Islamically (following the US$500 million HSBC Middle East
issuance in 2011) and the first ever in Asia.
For
the 2013 fiscal year, the bank reported a net profit of GBP2.18 billion
(US$3.65 billion), triple its 2012 figures. The bank first announced
its Sukuk plans in August 2013 with a view to issue by the end of that
year. Though a few months behind schedule, the issuance is nonetheless
believed to provide a valuable precedent for others to enter the
market.
For
an insight into SocGen’s Middle East push, see IFN Vol. 11 Iss. 4.
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