V12i31: Is the industry ready for Islamic repos?

Rapids • Deals • News • Takaful • Asset Management • Ratings • Moves
5th August 2015 (Volume 12 Issue 31)
Ringing the changes Progress is made through innovation and change, and here at IFN we constantly strive to move forward in every area we cover. This week we welcome our latest editorial development, with the first cover story from one of our most valued journalists, Vineeta Tan – who writes on the latest updates in the Islamic repo market. Our IFN reports this week look at the potential in social impact collaboration and capital market activities in the GCC as well as two upcoming Islamic deals involving a Chinese state-owned enterprise while our IFN Correspondents cover Indonesia, South Africa, Japan Pakistan and regulation. Our features come to you from Linklaters on Basel III and Sterling Bank on standardization while we also bring you an event report on the recent KazanSummit as well as in-house analyses on Brunei and standardization. We hope you enjoy this exciting new issue: A step forward in our ever-evolving onward journey. Cover Story Is the industry ready for Islamic repos? Liquidity management is a perennial issue of the Islamic financial world and out of the many (or rather limited) instruments to manage liquidity, Islamic repurchase agreements (repos) are undoubtedly one of the trickier products. Controversial in nature, Islamic repos have been slow to take off. VINEETA TAN, however, writes that the landscape is changing as market participants increasingly recognize the fundamental role this seemingly controversial product could play in closing the liquidity gaps of our rapidly-expanding industry. IFN Reports • Ringgit Sukuk market share shrinks as the currency spirals downwards and US dollar strengthens • Islamic investors parking money in education sector • Big potential in social impact collaboration • Improved geopolitical conditions spark capital market activity in GCC • Chinese state-owned enterprise chooses Islamic finance to fund infrastructure projects • Sovereign Sukuk: Ivory Coast and the usual suspects • Sukuk market in Turkey is still active despite uncertainty concerns • IFN Weekly Poll: What is the most cost-effective way to increase Islamic retail banking customers? IFN Country Correspondents • Islamic repurchase agreement launched in Indonesia • Revolutionary steps in Islamic banking in Japan • Entrenching Sukuk into the fabric of the South African economy • Non-banking Islamic financial institutions are flourishing in Pakistan IFN Sector Correspondent • Truth In Lending Act disclosure changes are looming IFN Country Analysis • Brunei: Determined to boost Islamic finance IFN Sector Analysis • Standardization in Islamic finance: A common goal Case Study Al Rayan Bank’s FTD: Testament to a growing appetite for Islamic products In a bid to capture customers on either side of the spectrum, Al Rayan Bank on the 19th June 2015 launched a 36-month fixed term deposit (FTD) account. With an expected profit rate of 2.6%, the bank estimates that this product will attract people of all faiths based on the fact that 83% of all its FTD savings customers who joined last year were non-Muslims. Speaking to Tim Sinclair, the senior head of marketing and retail sales at the UK bank, NABILAH ANNUAR takes a closer look at this product. Event Report KazanSummit 2015 The annual International Economic Summit of Russia and the OIC countries — the KazanSummit — was held on the 15th-16th June in Russia in the city of Kazan. The chief organizer of the KazanSummit is the Islamic Business and Finance Development Fund (IBFD Fund) which acts as a center of competence in Islamic business and finance in Russia. Special Report Islamic finance in the UK: Recent developments building on strong foundations The UK has sought to put itself at the forefront of Islamic finance and made a loud statement of intent in 2014 with the issuance of its GBP200 million (US$312.4 million) Sukuk – the first to be issued by a European government. Features The standardization of Islamic finance industry There is no doubt that the Islamic finance industry is growing fast but may even be much faster where there is overall standardization. The opinion of Shariah scholars in many jurisdictions may, however, be quite different. Developments in the application of Basel III The frequency of announced Sukuk offerings by Islamic financial institutions, structured in order to comply with additional Tier 1 requirements under Basel III, is increasing.  CONTACTS Editorial: Sasikala Thiagaraja Direct Line: +603 2162 7800 ext 34 Finance: Faizah Hassan Direct Line: +603 2162 7800 ext 26 Sales: Dubai: Geraldine Chan Direct Line: +971 4 427 3628 Kuala Lumpur: Steve Stubbs Direct Line: +603 2162 7800 ext 55 Subscriptions: Dubai: Geraldine Chan Direct Line: +971 4 427 3628 Kuala Lumpur: Siti Amilia Amir Amzah Direct Line: +603 2162 7800 ext 27