Friday, June 12, 2015

Europe reaffirms commitment to Islamic finance


Islamic Finance news Alert

Thursday, 11th June 2015

S&P 500 Shariah
Dow Jones Islamic World
FTSE Shariah All World
Russell - IdealRatings Islamic Global
1,846.66
2,975.93
2,090.15
1,935.85
23.73 (1.30%)
42.98 ( 1.47%)
30.99 ( 1.50%)
23.39 ( 1.22%)

HIGHLIGHTS: Kuveyt Turk Germany confirms euro Sukuk plans – Hong Kong corporates exploring Sukuk possibilities – Portillion Capital to launch new Shariah SEIS fund this week – Maldives’s second Islamic bank expects full license in the next few months


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LUXEMBOURG: European leaders, decision-makers, practitioners and regulators came together this week in a united drive to define, develop and diffuse Islamic financial values and practices throughout the region. Over 250 delegates from more than 15 countries met at the IFN Europe Forum held at the Chamber of Commerce in Luxembourg, in an event that was unique in its positivity and enthusiasm for the opportunities that Islamic finance can offer not only its core market, but the wider community.

Finance minister Pierre Gramegna highlighted the strides forward that both Luxembourg itself and the wider European community have taken in the past 12 months, focusing not only on the opportunities in the investment management and private banking arena; but retail banking, commercial opportunities and corporate Sukuk, among others – and these were areas keenly debated during the event, with panels looking at topics such as ‘Key Growth Markets for Islamic Finance in Europe’, ‘Trends in European Asset Management’, ‘New Assets and Structures in Shariah Compliant Capital Financing’, and much more.

The industry has undoubtedly been propelled forward by the inaugural sovereign issuances last year from both the UK and Luxembourg, and Minister Gramegna also confirmed Luxembourg’s intention to return to the Sukuk market in 2016 with potentially a new and innovative asset structure. Players highlighted the strong support that these issuances have given the industry. “Europe introducing two sovereign Sukuk is materially important for investors like us,” said Alex Armstrong, the managing director of QInvest. “Now, Sukuk is relatively common parlance within Europe – and that’s hugely helpful for a GCC investor trying to deploy capital in the region.”

The launch of continental Europe’s first Islamic bank, set for the 1st July by Kuveyt Turk subsidiary KT Turk, should go a long way towards not only meeting but developing Muslim demand in the region, and chief representative Ugurlu Soylu told IFN exclusively that the bank, which is launching with EUR35 million (US$39.56 million) in capital, received over 1,000 enquiries in the first week and expects to see between EUR20-30 million (US$22.6-33.91 million) in retail deposits, with the very real intention of a EUR100 million (US$113.02 million) Sukuk within its first two years of operation.

Socially responsible investing (SRI), alternative finance (crowdfunding) and social entrepreneurship were hot topics, and here the emphasis was on the opportunity for ethical and Islamic finance to learn from, support and expand each other. “It is not that Islamic finance can teach us how to do SRI, it is the other way round. If we want to succeed we have to offer better products and top the existing standards, and this is an interesting challenge. SRI is more sophisticated in the conventional industry and we should learn from that,” said Dr Volker Nienhaus, a visiting professor at the Henley School of Business, Reading University, UK.

Property was of course another focus, and one trend for Europe could be a proliferation of new REIT launches, as high-level discussions for a cross-border REIT structure in Luxembourg look set to attract more Islamic investors. “Big tax developments in several European countries are upsetting the traditional way of investing in property, so we should see more alternative avenues such as REITs,” confirmed one panelist. This is indicative of a wider trend of international Islamic investors looking further afield for returns, and the European industry is keen to capitalize on that. “If I want to obtain [a] higher yield in a risk framework I’m comfortable with, I have to look to wider geographical markets,” said another delegate.

However, there are undeniable challenges that remain in the European market – not least those of positioning, education and branding. “It’s the quality of the product. In developed Islamic markets where clients can differentiate between the technical attributes of the product, and Islamic products can come very close to conventional. In Europe, clients are perhaps not so well disposed towards the word Islamic, so we need to differentiate it through quality,” said one delegate. And it’s not only the investor awareness that is the issue. “Education on consumer sentiment is one thing, but it is also the education of regulators,” warned another.

Nevertheless, the overall sentiment is one of support, positivity and enthusiasm for the future: with an exceptionally diverse spread of delegates from both the Islamic and conventional sectors demonstrating the keen interest that continues to flourish in the European market.






Company Focus


KING & SPALDING: A global islamic finance and investment practice (in every sense)
Last week, IFN discussed the expansion and growth strategies of new law firms into the MENA region to take advantage of the exceptional opportunities in the Islamic finance space, with multiple firms jockeying for both regional and professional advantage and a plethora of new moves highlighting the increased activity in the arena. This week, LAUREN MCAUGHTRY takes a look the other way: shining the spotlight on one of the original pioneers – and granddaddy of the Islamic finance legal landscape.







Today's IFN Alerts


GERMANY: KT Bank expects to issue euro Sukuk within first two years of operation

HONG KONG: Hong Kong corporates exploring Sukuk possibilities

UAE: Drake & Scull International sets initial price thoughts for dollar Sukuk in 9% area

MALDIVES: The Maldives’s second Islamic bank expects full banking license in the next few months; plans to open doors before the end of 2015

GLOBAL: Bank Islam Brunei Darussalam eyes overseas expansion; targets institutional clients of Dubai and Singapore

UK: Portillion Capital to launch new Shariah SEIS fund this week

NEW ZEALAND: Demand for New Zealand’s only Shariah compliant KiwiSaver scheme to drop following government’s removal of incentive

KUWAIT: Kuwait International Bank mandates banks for debut US$100 million syndicated Murabahah facility

GLOBAL: Dubai International Financial Center begins criminal court proceedings against former GFH deputy CEO David Haigh

UAE: Dubai International Financial Center to bolster Islamic finance center position by aligning 10-year strategy with Dubai Plan 2021

US: Arcapita exits one of the largest stand-alone portfolios of continuing care retirement communities in the US for US$640 million

MALAWI: Muslim Association of Malawi to offer Shariah compliant financing to youths

SAUDI ARABIA: RAM maintains negative outlook on Dar Al Arkan due to weaker performance and increased debt level

PAKISTAN: Securities and Exchange Commission of Pakistan re-introduces more streamlined Shariah board

































REDmoney events


IFN Issuers Forum 2015
13th September 2015 (Dubai)

IFN Kuwait Forum 2015
5th October 2015 (Kuwait City)

IFN Egypt Forum 2015
27th October 2015 (Cairo)

IFN Turkey Forum 2015
17th November 2015 (Istanbul)

IFN Saudi Arabia Forum 2015
30th November 2015 (Jeddah)


REDmoney training


Funds Transfer Pricing
6th - 8th July 2015 (Hong Kong)

Managing Counterparty Credit Risk, Basel III and Recent Regulatory Issues
9th - 10th July 2015 (Hong Kong)

Understanding Islamic Contracts: Structuring & Legal Issues
17th - 19th August 2015 (Dubai)

Islamic Financial Services Act (IFSA) 2013 & Islamic Banking Products
18th & 25th August 2015 (Istanbul)

Shariah Audit & Governance for Islamic Banking
20th - 21st August 2015 (Kuala Lumpur)

Islamic Finance Qualification
23rd - 25th August 2015 (Dubai)

Advanced Sukuk & Islamic Securitization
24th - 26th August 2015 (Istanbul)

Undertaking Effective Litigation & Recovery in Islamic Finance Facilities
7th - 8th September 2015 (Kuala Lumpur)

Sharia’a Compliance & Audit for Islamic Banks
10th - 11th September 2015 (Dubai)

Islamic Finance Qualification
5th - 7th October 2015 (Kuala Lumpur)

Funds Transfer Pricing
5th - 7th October 2015 (Kuala Lumpur)

Trading Book Market Risk Management for Financial Institutions
8th - 9th October 2015 (Kuala Lumpur)

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