BoE studying Islamic finance options; to make announcement in the next few months

Tuesday, 14th July 2015

S&P 500 Shariah Dow Jones Islamic World FTSE Shariah All World Russell - IdealRatings Islamic Global 1,834.17 2,937.73 2,048.07 1,913.18 ▲ 22.10 (1.22%) ▲ 30.36(1.04%) ▲ 19.11 (0.94%) ▲ 43.95 (2.35%)

HIGHLIGHTS: Kenyan county introduces Islamic revolving fund – Pakistani microfinance institution receives approval for Islamic banking activities – New CEOs for PruBSN and Emirates NBD Asset Management

This week's poll question: Which state in the CIS region has the most potential for Islamic finance?

BoE studying Islamic finance options; to make announcement in the next few months Daily Cover UK: The Bank of England (BoE) has commenced assessing the feasibility of using Islamic financial instruments to bolster its liquidity insurance framework and is expecting to reveal further details in the next few months. “All banks must hold an adequate stock of liquid assets to meet prudential regulations and, as most liquid assets in the economy are the reserves held by banks and building societies on account at the bank, it would be beneficial to Shariah compliant banks to have access to our balance sheet,” explained Chris Salmon, the executive director of markets at the UK apex bank yesterday speaking at the Money Markets Liaison Committee meeting. The BoE has on several occasions reaffirmed its commitment to consider the option of providing Shariah compliant facilities to broaden liquidity provision for Islamic banks; however, it has also noted significant challenges in doing so. These include identifying Shariah compliant collateral to support financing facilities and the challenge of engineering a deposit account in compliance with Shariah without compromising the economic properties of interest-paying reserve accounts. Salmon, however, confirmed that the regulator is actively working on addressing the issues and is hopeful of furnishing the market with more information at the turn of the year. Mulling this proposition since last year following the government’s debut sovereign Sukuk offering as part of the country’s bid to become the western hub for Islamic finance, the central bank’s move would be instrumental in lowering concentration risks in the Islamic financial industry and would support the liquidity needs of over 20 institutions providing Shariah compliant financial products in the UK. Presently, only Sukuk issued by the IDB are eligible as liquid assets buffer for Islamic banks and the Prudential Regulation Authority has proposed to widen the range of permissible assets to include Islamic bonds by top-rated sovereigns and lower-rated Shariah sovereign papers (subject to haircuts) as buffer in line with Basel III requirements. Mergers & Acquisitions: An IFN Correspondent Report The questions behind mergers and acquisitions in Islamic finance “Sometimes your best investments are the ones you don’t make”. Donald John Trump Sr, an American business magnate, investor, television personality, author, and politician, made this thoughtful statement. Today's IFN Alerts OMAN: Meethaq’s Shariah Supervisory Board approves certificates for Sukuk and new products; plans expansion KENYA: The county government of Wajir launches Shariah compliant revolving fund to help women, youth and the disabled EGYPT: Evergrow for Specialty Fertilizers to raise funds through Islamic and conventional syndicated financing facility IVORY COAST: The prime minister of Cote d’Ivoire confirms participation in ICD’s inaugural Africa Islamic Finance Forum this September PAKISTAN: State Bank of Pakistan grants Islamic banking license to microfinance institution on pilot basis TANZANIA: National Bank of Commerce’s Islamic window extends banking products in Zanzibar SAUDI ARABIA: Saudi Arabia’s Zain asked to pay additional Zakat and withholding tax QATAR: Masraf Al Rayan sees 10.46% growth in the first half of 2015 to QAR998 million (US$273.59 million) PAKISTAN: UBL Fund Managers launches the Al-Ameen Islamic Active Allocation Plan-II MALAYSIA: SI Capital maintains ‘AAA’ rating on Islamic facility GLOBAL: Moody’s reaffrims Asian Development Bank at ‘Aaa’ with a stable outlook UAE: Emirates NBD Asset Management names Tariq Hendi as CEO MALAYSIA: Prudential BSN Takaful welcomes Aman Chowla as new CEO as Azim Mithani takes over as COO of Prudential Corporation Asia TURKEY: Turkiye Finans shows full support for IFN Turkey Forum 2015 as lead partner GLOBAL: IFN Asia Forum breaks 1,000-delegate mark yet again – dates for next year confirmed SAUDI ARABIA: Islamic Corporation for the Development of the Private Sector chief to deliver keynote address at the IFN Saudi Arabia Forum MALAYSIA: Industry leaders address Islamic finance investment opportunities at IFN Asia Investors Day Forum 2015 SAUDI ARABIA: Saudi British Bank supports IFN Saudi Forum 2015 as lead partner

IFN Issuers Forum 2015 13th September 2015 (Dubai) Africa Islamic Finance Forum 2015 17th & 18th September 2015 (Abidjan, Cote d’Ivoire) IFN Kuwait Forum 2015 5th October 2015 (Kuwait City) IFN Turkey Forum 2015 17th November 2015 (Istanbul) IFN Saudi Arabia Forum 2015 30th November 2015 (Jeddah) Understanding Islamic Contracts: Structuring & Legal Issues 17th - 19th August 2015 (Dubai) Islamic Financial Services Act (IFSA) 2013 & Islamic Banking Products 18th & 25th August 2015 (Kuala Lumpur) 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 8th - 9th September 2015 (Dubai) Funds Transfer Pricing 5th - 7th October 2015 (Kuala Lumpur) Trading Book Market Risk Management for Financial Institutions 8th - 9th October 2015 (Kuala Lumpur)