Islamic Banking

Monthly Bulletin
April 2010

Islamic Stock Markets

GCC Region 2
Far East Region 3
MENA Region 4
Rest of the World 5
Sukuk Market 6
Commodities 7
Recent Developments
Global Developments 8
Developments by country
UAE 10
Bahrain 14
Qatar 15
Saudi Arabia 17
Egypt, Turkey, Jordan 19
Malaysia, Indonesia, Pakistan 20
 Ιslamic Indices

GCC Markets

Shariah compliant indices exclude indus-

tries whose lines of businesses include GCC Markets (MTM % Change)

forbidden goods or where debt/assets ra-

UAE
tios exceed 33%. As a result of Islamic S. Arabia
finance’s increasing popularity over the Qatar

past few years, stock indices that abide Oman

by Shariah rules have been in-troduced Kuwait

Bahrain
in many stock markets across the world,
-5.0% 0.0% 5.0% 10.0% 15.0% 20.0%
even where the Muslim population is
not significant (e.g. China, Japan etc).
GCC Markets (Volatility)

March has seen positive returns in most UAE

S. Arabia
GCC stock markets. The announcement
Qatar
of the 2009 company results shows that Oman
the GCC economy shrank by 5% in 2009 Kuwait

(Source: IFIS). Corporate profitability in Bahrain

Saudi Arabia witnessed a 26% rise while 0.0% 0.5% 1.0% 1.5% 2.0% 2.5%

the UAE suffered a 32% decline. A boost

in liquidity was observed as banks eased GCC Markets (VaR 95)

credit restrictions by giving loans with UAE

portfolios of stocks accepted as collat- S. Arabia

eral (Source: IFIS) Kuwait, which had Qatar

the greatest return on its stock index last Oman

Kuwait
month, recorded positive gains of 5%; an Bahrain
indication of a continuing favourable eco-
-3.5% -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0%
nomic climate. The UAE remains highly
volatile (although on March the recorded
returns exceeded by 17%) (last month re- Figure 1: GCC Stock Markets. Bahrain: S&P Bahrain
turns of the Dubai stock exchange recorded Shariah; Kuwait: S&P Kuwait Shariah; Oman: S&P
Oman Shariah; Qatar: FTSE Nasdaq Dubai Qatar 10
a drop of 5%). Dubai World is very close Shariah; Saudi Arabia: S&P Saudi Arabia Shariah;
to a successful re-negotiation of its debt UAE: FTSE Nasdaq Dubai UAE 20
Volatility is a measure of trading activity. Higher
which, if secured, would have a favour- volatility is observed during periods of financial crisis.
able consequential impact on the perform- Higher volatility is also associated with speculative
trading. Value at Risk (VaR) estimates what is the
ance of regional stock markets. In terms of worst possible return that can happen tomorrow with
risk management, Saudi Arabia and Qatar a given confidence (here 95%). Source: Datastream
are consistently among the safest places
with Saudi Arabia having the lowest VaR
of all GCC countries in March. The rise in
Qatar’s stock market volatility compared
to the previous month is likely to be af-
fected by the fact that banks were allowed
to resume trading of stocks (Source: IFIS)

Page 2
Islamic Banking
Monthly Bulletin
Far East Markets

Malaysia remains the safest investment

destination in the Far East due to higher Far East Markets (MTM % Change)
levels of regulation and greater diversity Thailand
of Islamic financial products. However, Taiwan

returns for March were at a modest 1.5% Singapore

(much lower than other countries in the Philippines

region and GCC countries). Nevertheless, Indonesia

Malaysia (H)
volatility (0.5%) and VaR (-0.55%) indi-
Malaysia (E)
ces remain consistently low.
-4.0% -2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

Thailand recorded high positive returns

(5%) on its stock market for March and its Far East Markets (Volatility)
low VaR (-0.6%) indicates it is a relatively Thailand
safe investment option with potentially Taiwan

good returns. Singapore

Philippines
Last month the Indonesian stock market Indonesia

recorded losses of -2.1%. However, the Malaysia (H)

largest gains in this period were recorded Malaysia (E)

in Indonesia (7%), a sign of a very volatile 0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2% 1.4%
market (VaR -1.25% and volatility 0.9%).

Taiwan (2%) and Singapore (1%) per- Far East Markets (VaR 95)

formed better in March than in February Thailand

in terms of risk management. Both vola- Taiwan

tility and VaR indices remained at lower Singapore

Philippines
levels than those of February (VaR -0.6% Indonesia
and -1.2% in March compared to -3.4% Malaysia (H)

and 2.1% in February for Taiwan and Sin- Malaysia (E)

gapore respectively). For Taiwan, positive -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0%
returns in March were expected (follow-
ing February returns of -2.1%) to lead the
country’s stock market back into high re- Figure 2: Far East Stock Markets. Malaysia: FTSE
turns and profitability. Singapore’s returns Bursa Malaysia Emas, FTSE Bursa Malaysia Hijrah;
Indonesia: Jakarta SE Islamic; Philippines: SPGI
were at the same levels as those in Febru- BMI Philippines Shariah; Singapore: SPGI BMI
ary indicating a good level of stability. Singapore Shariah; Taiwan: SPGI BMI Taiwan
Shariah; Thailand: SPGI BMI Thailand Shariah.
Source: Datastream
The Philippines recorded further negative
returns (-2.1%) in this period, unable to re-
cover from February. Of course the Islam-
ic banking industry in this country is still
in its infancy and this could affect stock
market returns to a significant degree.

Page 3
 Ιslamic Indices

MENA Region Markets

Middle East and North Africa

(MENA) region markets are less de- MENA Markets (MTM % Change)

veloped than the GCC and some of

Egypt
the Far East group. However, good
investment opportunities exist within Tunisia

Egypt and Lebanon with recorded re- Morocco

turns surpassed most other indices in Lebanon

March, continuing the favourable in- Jordan

vestment conditions of the previous -4.0% -2.0% 0.0% 2.0% 4.0% 6.0%
month. Returns were 4.2% and 4.3%
for Egypt and Lebanon respectively.
MENA Markets (Volatility)
Risk indicators show lower volatility
and lower VaR for March than February Egypt

indicating that the investment climate Tunisia

and regulation in these countries is be- Morocco

ginning to raise investor confidence. Lebanon

However, in March other MENA Jordan

countries outperformed Egypt’s
0.0% 0.5% 1.0% 1.5% 2.0%
(1.5%) and Lebanon’s (1.25%) volatil-
ity scores of February. Jordan (0.7%),
Tunisia and Morocco (both 0.8%) had MENA Markets (VaR 95)

lower volatilities for March. The Jor- Egypt

danian stock market failed to recover Tunisia
fully from last month’s -8.4% despite
Morocco
expanding foreign demand and the
Lebanon
easing of restrictions on bank credit to
Jordan
traders (Source: IFIS). The Jordanian
stock market fell by -2% in March. -3.0% -2.5% -2.0% -1.5% -1.0% -0.5% 0.0%

However, as some of these countries

do not have the necessary breadth
and depth in their stock markets, re-
sults between two time periods are
very likely to differ significantly,
especially in terms of risk indica-
tors. As a result, we should be cau-
tious when interpreting these results.
Figure 3: MENA Region Stock Markets. Egypt:
MSCI Egypt Islamic; Tunisia: S&P Tunisia Shariah;
Morocco: S&P Morocco Shariah; Lebanon: S&P
Lebanon Shariah; Jordan: S&P Jordan Shariah.
Source: Datastream

Page 4
Islamic Banking
Monthly Bulletin

Rest of the World

China recorded negative results in March

(-1%) instead of the positive 3% recorded Rest of World (MTM % Change)

in February. It is the most volatile coun- Korea

try both in terms of volatility and VaR. Ja pa n

South Africa

All the other countries recorded posi- Hong Kong

tive returns in March. Specifically, South

India

China

Korea (6.2%), India (6.5%) and Ja- DJ Isla mic

pan (6.5%) recorded the highest stock FTSE World

mar¬ket gains, followed by South Af- -2.0% 0.0% 2.0% 4.0% 6.0% 8.0%

rica (4.6%) and Hong Kong (1.1%).

Rest of World (Volatility)
In terms of riskiness, excluding Chi-
na, South Korea and South Africa were Korea

the most volatile (1.1% and 0.9% re- Ja pa n

spectively). The least volatile coun-

South Africa

Hong Kong

try in March was Japan (0.8%). India

China

The two global Islamic indices record- DJ Isla mic

ed positive returns of 3.2% while shar-

FTSE World

0.0% 0.2% 0.4% 0.6% 0.8% 1.0% 1.2%

ing the lowest risk among the other
countries of the sample. The superior
performance of these indices can be at- Rest of World (VaR 95)

tributed to their larger investment uni- Korea

verse (which is Shariah compliant). Ja pa n

South Africa

When compared to other groups of Hong Kong

India
countries all the indices in the Rest of China

the World category (with the exception DJ Isla mic

of the two global ones) are more vola- FTSE World

tile than the GCC and Malaysia – both -1.6% -1.4% -1.2% -1.0% -0.8% -0.6% -0.4% -0.2% 0.0%

of which are considered to be the most

advanced Islamic financial markets.
Figure 4: Rest of the World Indices. Korea:
SPGI BMI Republic of Korea Shariah; Japan:
S&P Japan 500 Shariah; South Africa: FTSE
South Africa Shariah; Hong Kong: SPGI
Hong Kong Shariah; India: FTSE Shariah
India; China: FTSE Shariah China; Global:
DJ Islamic Average; FTSE Shariah All World.
Source: Datastream

Page 5
 Sukuk Market

Sukuk Market

The Dow Jones Citigroup Sukuk Index was

launched by Dow Jones Indexes and Citi-
group Index LLC in 2006. It measures the
performance of global bonds that comply
with Islamic investment guidelines. The in-
dex is made up of investment-grade, U.S.
dollar-denominated Islamic bonds—also
known as Sukuk. The index was created
as a benchmark for investors seeking ex-
posure to Shariah-compliant fixed-income
investments. It shares design criteria and
calculation assumptions with the broader Figure 5 (top): The Dow Jones Citigroup Sukuk
Citigroup fixed-income index family, and Index (DJCSI). It measures the performance of sukuk
bonds around the world. Source: Djindexes
its screens for Shariah compliance are con-
sistent with those of the Dow Jones Islamic
Market (DJIM) Indexes. The bond issues
included in the index must comply with the Dubai World debacle, from which GCC markets
both Shariah Law and the Bahrain-based are still recuperating.
Auditing & Accounting Organization of
Observing the Sukuk based activity around the globe,
Islamic Financial Institutions (AAOIFI)
Bahrain and Malaysia were in the forefront of issu-
standards for tradable Sukuk. Bonds also
ing both corporate and sovereign issue in the month
must have a minimum maturity of one year,
of March. The Murabaha based Sukuk announced by
a minimum issue size of US$200 million,
the Bank of Negara, Malaysia had the highest value
and an explicit or implicit rating of at least
of US $ 301.28 million.
BBB-/Baa3 by leading rating agencies.

The Dow Jones Citigroup Sukuk Index,

which measures the performance of glo-
bal bonds complying with Islamic invest-
ment guidelines, decreased by 0.15% with
a closing price of 116.32. This behaviour
is attributed to the constituents of the in-
dex. The majority of the bond issues in this
index are from the UAE (46%). It should
be noted that the index also has issues by
Islamic banks which are based in UAE and
Malaysia and thus, the relatively stable
month-to-month change is due to the supe-
rior results posted by these banks despite

Page 6
Islamic Banking
Monthly Bulletin
Commodities
The upward trend in oil prices continued during
March and oil prices broke free of the US $70-
US $78 a barrel price range of the preceding six
months by surging to the level of US $80 a barrel.
The continued rise created increased confidence
and profitability in GCC stock markets. Similarly
commodities such as copper and palm oil also ral-
lied, bolstered mainly by signs of strong growth
in manufacturing across the world, particularly in
China and India.
Natural gas prices dropped to 4$/MMBTU con-
tinuing the downward trend seen since Decem-
ber. The value of natural gas has dropped 34% so
far in 2010, trending down on lower demand and
abundant supply. However, according to analysts
the drop in price could see natural gas displace
abundant, cheap coal as the fuel of choice ahead
of any climate change legislation, and thus natural
gas prices may rise in the second half of the year.
The price of gold and sugar dropped sharply due
to different factors. Unsubstantiated ru-
mours of central bank selling, redemptions
from gold exchange-traded funds and liqui-
dation of long positions by hedge funds were
cited as factors contributing to the drop in
the price of gold. The sugar market contin-
ued to weaken after sharp falls this month,
following reports of an improving outlook
for India’s production. Traders described
sentiment as “fragile” and cautioned that
the market could be vulnerable to further
weak-ness as buyers waited to see if prices
would fall further. This view is affirmed by
Egypt’s sugar purchasing behaviour. Egypt’s
state-owned Sugar and Integrated Industries
Company cancelled a 300,000 tonne tender
for raw sugar and said it would wait for pric-
es to stabilize before buying for domestic
consumption.
Source: Ft.com, Business Week and IFIS

Oil Prices (USD/barrel) Natural Gas (USD/MMBTU)

82
6
80
78 5
76
4
74
72 3
70
2
68
66 1
October November December Ja nua ry Februa ry Ma rch
0
October November December Ja nua ry Februa ry Ma rch
Brent Duba i WTI

Gold Bullion (USD/Troy Ounce) Copper (USD/MT)

1200 7400

7200
1150
7000
1100 6800

6600
1050
6400
1000
6200

950 6000
October November December Ja nua ry Februa ry Ma rch October November December Ja nua ry Februa ry Ma rch

Palm Oil (USD/MT) Sugar (USD cents/lb)

850 35
30
800
25
750 20

700 15
10
650
5
600 0
October November December Ja nua ry Februa ry Ma rch October November December Ja nua ry Februa ry Ma rch

Figure 7: Price evolution of Important Commodities since October 2009. Source: Datastream

Page 7

Recent Developments in the Islamic Finance Industry
GLOBAL DEVELOPMENTS
“ISDA/IIFM Tahawwut (Hedging)
Master Agreement” launched
The International Islamic Financial Mar-
ket (IIFM) and the International Swaps
and Derivatives Association, Inc. (ISDA)
jointly issued the first Shariah-compliant
master agreement for over-the-counter
(OTC) derivatives entitled the ‘ISDA/
IIFM Tahawwut (Hedging) Master Agree-
ment’.
The development is a breakthrough in Is-
lamic finance and risk management and
marks the introduction of the first globally
standardized documentation for privately
negotiated Islamic hedging products. The
ISDA/IIFM Tahawwut (Hedging) Master
Agreement is the first financial industry
framework document that is applicable
across all jurisdictions where Islamic fi-
nance is practiced. IIFM and ISDA joint-
ly developed the Tahawwut documenta-
tion under the guidance and approval of
the IIFM Shariah Advisory Panel and in
consultation with market participants.
The published document consists of the
Tahawwut Master Agreement and an Ex-
planatory Memorandum, both of which
are part of the official Shariah Pronounce-
ment.
The ISDA/IIFM Tahawwut Master
Agreement provides the structure under
which institutions can transact Islamic
hedging transactions such as profit-rate
and currency swaps, which are estimated
to represent most of today’s Islamic hedg-
ing transactions. It is designed to be used
between two principal counterparties as a
master agreement. Parties understand that
no interest shall be payable or receivable
and no settlement based on valuation or
Page 8
Recent
Developments
without tangible assets is allowed. Moreover,
the counterparties to the Tahawwut Master
Agreement make representations that they
only enter into Shariah-compliant transac-
tions.
Although it is a completely new framework
document, the document structure is similar
to the conventional ISDA Master Agreement.
However, the key mechanisms and provision-
ing such as early termination events, closeout
and netting are developed based on Islamic
Shariah principles.
Dr Ahmad Rufai, IIFM Shari’ah Head, said:
“The IIFM Shari’ah Advisory Panel have
considered the Tahawwut Master Agreement
to be a necessary step forward for promot-
ing global standardization for Islamic finan-
cial product standards, because the absence
of a global Shariah compliant standardized
agreement may lead to negative effect in the
industry.”
In addition to developing documentation for
Islamic transactions, ISDA (in coordination
with IIFM) is in contact with various regula-
tors in a number of Islamic jurisdictions to
improve the local legal framework for hedg-
ing products and close-out netting provision-
ing. These countries include the UAE, Bah-
rain and Qatar and Pakistan. The ISDA/IIFM
Tahawwut Master Agreement will be avail-
able at IIFM’s or ISDA’s website.
Source: Isda.org; iifm.net
London to launch the first Islamic Ex-
change
The first electronic trading platform allow-
ing Shariah-compliant companies to raise
money will be launched in London in May,
the venture capital firm behind the project an-
nounced.
The Shariah Ummah Securities Information
Islamic Banking
Monthly Bulletin
Exchange (UMEX) is designed to provide a
platform for companies with a capital value of
at least £20 million (US $31million) and look-
ing to raise the equivalent of at least 20 % of
their market value.
Mahesh Jayanarayan, chairman of Halal Indus-
tries, which will manage the exchange said it
would operate as a Multilateral Trading Facility
(MTF). MTFs are low-cost electronic trading
platforms created after the Markets in Financial
Instruments Directive opened up exchanges
to competition. It would be the only MTF in
Eu¬rope so far to help companies raise funds.
“UMEX has lined up 10 Islamic Enterprises
and more than 100 Shariah compliant securi-
ties to be traded when it goes live,” said Jay-
anarayan.
Shariah UMEX will also offer the Islamic ver-
sion of American and global depository re-
ceipts, the Islamic Shariah Depository Receipt
(ISDR). IS¬DRs represent ownership of a
number of shares, issued by Shariah-complaint
or Islamic firms, traded on a foreign stock ex-
change.
Source: IFIS
The Oxford Centre for Islamic Studies
(OCIS) and the Securities Commission Ma-
laysia (SC) partner to foster the growth of
Islamic finance
The Securities Commission Malaysia (SC) and
the Oxford Centre for Islamic Studies (OCIS)
have teamed up to create an international plat-
form for debate, dialogue and study on contem-
porary issues and challenges faced in Islamic
finance.
The inaugural collaboration with the OCIS will
help further facilitate intellectual discourse
among Islamic finance experts, Shariah advis-
ers and scholars from around the world. The
OCIS is well known for its research and aca-
demic excellence.
“The collaboration reflects our commitment
to building knowledge and encouraging re-
search and discourse in Islamic finance,”
SC Chairman, Tan Sri Zarinah Anwar said.
OCIS Director, Dr Farhan Nizami said it
had embarked on the study of Islamic fi-
nance, in a move to promote a more com-
prehensive understanding of Islamic culture
and civilisation. “The OCIS is dedicated to
achieving by academic means, a better un-
derstanding of Islam and the needs of Mus-
lim societies. As part of this objective, it is
embarking on the study of Islamic finance,”
he explained. “Given Malaysia’s success in
the development of Islamic capital markets,
the OCIS welcomes the opportunity to work
in partnership with the SC in this important
area of study,” he added.
Source: Gulf Base
Islamic Microfinance - Business Proposal
Competition
CGAP, Deutsche Bank, Islamic Develop-
ment Bank, and Grameen-Jameel announced
the Islamic Microfinance Challenge 2010:
Innovating Sustainable, Scalable, and Mar-
ket-Driven Models. The contest is a joint
initiative to promote the innovative design
of Shariah-compliant products for Islamic
microfinance clients.
The organizers are seeking original Islamic
microfinance business proposals which are
profitable, sustainable, scalable, and Shari-
ah-compliant. Finalists of this competition
will be awarded grants as well as need-
based technical support to launch a pilot
project of their proposed business idea. It
offers a unique opportunity to showcase in-
novative business ideas, gain industry-wide
recognition, and benefit from the funds and
Page 9

technical expertise of leading institutions
in the microfinance and Islamic finance
sectors.
Source: IFIS
Kazakhstan joins the Islamic Finance
bandwagon
The first Islamic bank in Kazakhstan was
established recently by Al-Hilal Bank of
Abu Dhabi. The Kazakh Government is a
proactive supporter of Islamic finance in a
ready-made market with 60% of Muslim
population. Kazakhstan has also set up
the Regional Financial Centre of Almaty
(RFCA) which includes the first academy
in the CIS to offer education and training
in Islamic finance.
Kazakhstan’s Finance Minister, Bolat
Zhamishev said that Kazakhstan intended
to begin selling Islamic bonds this year as
the country seeks to establish itself as a
major player on the Islamic finance mar-
ket. Kazakhstan has drafted legislation to
allow it to sell the so-called Sukuk, Islam-
ic bonds, which will be used to fund the
budget deficit.
UAE
Another multibillion sum to rescue the
debt-hit firm Dubai World.
Dubai’s government announced it will
pump up to $9.5 billion into Dubai World,
outlining a long-awaited restructuring plan
aimed at rescuing its debt-saddled chief
conglomerate and recapturing the Emir-
ate’s image as a business friendly oasis in
the Gulf.
The plan offers creditors full repayment
on the principal of their outstanding loans
over a five to eight year period by issuing
Page 10
Recent
Developments
new debt. It was not clear how much interest,
if any, is being offered, but officials said the
debt would not be backed by the government of
Dubai, one of the seven semi-autonomous city-
states making up the United Arab Emirates.
The plan calls for the restructuring of $23.5 bil-
lion of Dubai World’s total debt, including $14.2
billion owed to creditors other than the govern-
ment. The government made it clear that the
newly-announced funds are the last it will of-
fer for the conglomerate. As part of the deal, the
government plans to recapitalize the conglomer-
ate by offering as equity an $8.9 billion claim in
the company, while also pumping in $1.5 billion
in new funds.
The proposal is also heavily focused on Na-
kheel, the Dubai World property development
unit behind the manmade islands that helped put
the emirate on the map.
Under its plan, the Dubai government would
inject roughly US $8 billion in new funds and
recapitalize Nakheel by converting what it de-
scribed as a US $1.2 billion loan to the com-
pany into an equity stake. Another Dubai World
property developer, Limitless LLC, is holding
separate talks with creditors. The emphasis on
Nakheel is significant because property devel-
opment was a linchpin in Dubai’s growth.
Nakheel - many of whose manmade islands sit
empty - said its plan calls on banks to restructure
their debt “at commercial rates,” while other
creditors, “will be offered a significant cash pay-
ment shortly and a tradable security,” according
to a statement by the company.
The company also plans to restart some develop-
ment projects to reassure investors who incurred
losses when the Dubai real estate bubble burst in
2008. Also key in the Nakheel plan was that the
company’s outstanding Islamic bonds would be
paid on maturity this year and in 2011. Nakheel
in December paid roughly $4 billion on a matur-
ing bond, tapping into bailout funds provided by
Islamic Banking
Monthly Bulletin
Abu Dhabi in what was seen as the first key test of
Dubai World’s debt crisis.
The overall plan was warmly greeted in the mar-
ket, with the benchmark index on the Dubai Finan-
cial Market - the emirate’s biggest bourse - closing
4.3% higher on the previous month.
Source: Arab News
UAE group keen to invest in Indian infrastruc-
ture
Dubai-based Signature Group, a finance and in-
vestment company with more than $1 billion of
assets under management, has identified India’s
infrastructure sector as an attractive and safe in-
vestment haven. Signature’s particular focus on
infrastructure-related investment in India is a sec-
tor which has doubled from 4 to 8 % of gross do-
mestic product over the past five years, according
to government figures. In addition to managing as-
sets and acting as strategic advisors for major in-
vestments in infrastructure and the media sector,
transactions in energy, healthcare, education, food
and agriculture are also under process.
The country is said to be on course to achieve a
$500 billion infrastructure investment five-year
target by 2012, Umesh Chandra, CEO of Signature
group pointed out.
Source: IFIS
NBAD & ADX Launch and List the First ETF
in the GCC Region- to new beginnings
The National Bank of Abu Dhabi (NBAD) and
Abu Dhabi Securities Exchange (ADX) announced
the launch and listing of the first Exchange Trad-
ed Fund (ETF) in the Gulf region in the last week
of March 2010. The new fund, NBAD OneShare
Dow Jones UAE 25 ETF inaugurates the new ETF
market in Abu Dhabi.
The new fund will follow the performance of the
‘Dow Jones UAE 25 Total Return Index’ and pro-
vide investors with exposure to 25 blue-chip com-
panies from across the UAE. Listing the ETF at
ADX, will offer investors the opportunity to
buy and sell as is the case with any other share.
Michael A. Petronella, President of Dow
Jones Indexes said: “The Dow Jones UAE
25 Index is a strictly rules-based index that
measures the performance of 25 of the larg-
est, most frequently traded and liquid equity
securities trading in the United Arab Emirates.
With these index qualities underlying the ETF
by National Bank of Abu Dhabi, local and in-
ternational investors are offered a transparent
and liquid vehicle that provides passive expo-
sure to this attractive market.”
The constituents of the new fund will change
over time in line with the Dow Jones UAE 25
Total Return Index but initially will have expo-
sure, through the swap, to such heavy weights
as Etisalat, First Gulf Bank, Emaar Proper-
ties and National Bank of Abu Dhabi amongst
its top holdings. The index itself is subject to
strict liquidity criteria as well as international
best practice restrictions on diversification,
which limits any stock to a maximum of 8%
weighting each time the index is recomposed.
Alan Durrant, the Chief Investment Officer of
NBAD’s Asset Management Group said: “The
NBAD OneShare Dow Jones UAE 25 ETF
will give investors the opportunity to gain real
time, cost-effective exposure to a broad basket
of UAE shares. It has the diversification ben-
efits of a mutual fund and the instant liquidity
of a share.” He added that ETFs are fast be-
coming the product of choice for international
investors and that ‘NBAD OneShare Dow
Jones UAE 25 ETF’ as being an ideal platform
for global investors to access the exciting op-
portunities available in local companies in the
GCC region.
Source: IFIS
Emirates NBD launches Emirates Islamic
Money Market Fund
Page 11

Emirates NBD, have announced the launch
of Emirates Islamic Money Market Fund,
a daily dealing Shariah-compliant open
ended fund domiciled in Jersey. The Fund
aims to achieve higher profit returns than
comparative Shariah-compliant bank de-
posits, predominantly from a diversified
portfolio of Shariah-compliant money
market instruments.
The Fund will seek to access growing
range of Islamic cash or near cash invest-
ments. It will also seek to benefit from the
yield pick-up in USD-pegged currencies
and the current cost of funding for corpo-
rate and banks. The Fund provides diver-
sification from traditional equity and real
estate investments and can form part of
an investor’s portfolio irrespective of the
investment horizon. Further, the Fund can
also be used as a parking facility during
periods of surplus liquidity.
The Fund will acquire a diversified portfo-
lio, including but not limited to, Islamic de-
posits, Murabaha, Sukuk and international
trade contracts. The Fund will be managed
by Emirates NBD Asset Management.
Source: WAM - UAE News Agency
UAE’s Waha Capital eyes two buys in
2010
Abu Dhabi’s Waha Capital is in talks to buy
controlling stakes in global aviation and
maritime firms, and expects to conclude
up to two deals in 2010, its chief executive
said in an interview. The holding firm is in
dis¬cussions with up to 10 companies in
the aircraft leasing business and maritime.
The diversified investment holding firm
has interests in aircraft leasing, maritime,
land development and financial services.
Waha is eyeing growth internationally
through acquisitions, mergers and projects,
and plans to invest up to $20 billion in the
Page 12
Recent
Developments
next few years.
“We are in discussions, some advanced, some ear-
ly stages, with different companies globally,” its
chief executive Salem Al-Noaimi said, adding that
the strategy intended to acquire controlling stakes
in firms.
Waha owns a 50% stake in AerVenture, a unit of
Dutch aircraft leasing firm AerCap, with an invest-
ment of $135 million. Through its subsidiary, Waha
Leasing, Waha owns or manages, around 100 com-
mercial aircraft, worth up to 16 billion Dirhams. Its
clients include Etihad Airways, Emirates airline,
Russia’s biggest carrier Aeroflot, Qatar Airways,
Air Canada and Malaysia Airlines.
The firm achieved a net profit of 217 million
Dirhams last year, up from 40 million Dirhams in
2008.
Waha, formerly known as Oasis International
Leasing Co, changed from a solely leasing compa-
ny into an investment company in 2008 with four
subsidiaries, including real estate, financial serv-
ices, leasing and maritime.
Source: Reuters
Mashreq expands scope of Islamic banking
services
Mashreq Group announced the introduction of its
Islamic banking division, Mashreq Al Islami, made
available to customers throughout all of its 58
branches in the UAE. Initially established in 2006
as Badr Al Islami, the Islamic banking division of
Mashreq bank has been advised by the respected
Shariah Supervisory Board, whose members will
continue to guide Mashreq Al Islami, the official
Islamic service provider for all Mashreq Group-
related instruments.
“Islamic banking is expected to contribute around
30 % of the total banking sector in the next three
years in the UAE, underpinning the importance
of this market segment,” Abdul Aziz Al Ghurair,
CEO of Mashreq, said in a press release.
Islamic Banking
Monthly Bulletin
Mashreq Al Islami will be offering a full suite of
Shariah-compliant products and services, with a
host of new products to be rolled out during 2010
to both retail and corporate customers. Mashreq
Al Islami will also provide Islamic advisory serv-
ices, structuring finance solutions, Sukuk advi-
sory, Islamic investment products and Islamic
treasury products, among others.
As the Islamic products and services will be mar-
keted throughout all existing Mashreq outlets,
existing Mashreq personnel are being trained and
Shariah-certified. All staff operating in Mashreq
branches will be qualified to advise on Shariah-
compliant products and services.
Source: Gulf News
Launch of an international Islamic finance
journal from Dubai
Islamic finance media entity Yasaar Media has
launched a journal dedicated to Islamic finance.
The journal, called “So Far?” - the Journal of
Strategic Thinking in Islamic Fi-nance, is writ-
ten and edited by members of an Islamic finance
think tank and is modelled on traditional academ-
ic journals. The difference with So Far?, is that
the members of the think tank are predominantly
practitioners rather than academics. Members of
the think tank are drawn from the ranks of com-
mitted Islamic finance professionals around the
world from the Gulf and the Far East to the USA
and Europe.
Each issue of So Far?, is dedicated to a single top-
ic of core importance to the Islamic finance indus-
try - and the launch issue looks at the thorny issue
of the problems facing the Sukuk market. Unlike
many other journals, So Far?, is distributed free
in PDF format and is available from a variety of
sources including Yasaar Media.
Source: www.Ameinfo.com
Dubai Islamic Bank signs Dhs790m financing
deal with Kuwaiti company Kharafi National
in Abu Dhabi
Dubai Islamic Bank (DIB) announced a
multi-purpose financing deal of 790 million
Dirhams for Kharafi National, a Kuwait-
based leading construction group in the Mid-
dle East and Africa. Under the agreement,
DIB will cover the banking requirements for
Kharafi National’s subcontract with JGC -
Tecnimont Joint Venture to construct the Hab-
shan 5 Process Plant, an integrated gas devel-
opment project for Gasco, in Abu Dhabi. The
project, with a value of $728m (equivalent to
around 2.7 billion Dirhams) aims to increase
Abu Dhabi’s offshore gas production capac-
ity by 1 billion cubic feet per day.
Source: www.Ameinfo.com
ICAEW (the Institute of Chartered Ac-
countants in England and Wales) moves
into in the DIFC (Dubai International Fi-
nancial Centre)
The world leader of the accountancy and fi-
nance profession, ICAEW, strengthens its
position in the Middle East region by mov-
ing into its office in the Dubai International
Financial Centre (DIFC).
The ICAEW, a professional body headquar-
tered in the UK with more than 132,000
mem-bers in over 160 countries, has estab-
lished its DIFC office as part of its campaign
to set up regional offices around the world
to work more closely with key stakehold-
ers globally and to offer better support to its
members and students around the world. The
DIFC presence will bring enhanced knowl-
edge transfer and training expertise in inter-
national accounting standards and practices,
not only to firms within DIFC, but to the wid-
er UAE and Middle East region. The move
will also facilitate the institution in attracting
more member firms.
The ICAEW Middle East office which is
based at the DIFC will cover the following
countries including, the UAE, Bahrain, Saudi
Arabia, Qatar, Kuwait, Oman, Egypt, Iran,
Page 13

Lebanon, Iraq and Jordan.
Source: IFIS
Bahrain
GFH trying to stay afloat by signing the
new Liquidity Management Centre’s syndi-
cate facility.
Gulf Finance House (GFH) reached an
agreement with the Liquidity Management
Centre (LMC) syndicate to rearrange the
Wakala facility.
Under the terms of the new arrangement,
the existing payment obligations of US $50
million in March 2010 and US $50 million
in March 2011 have been amended such
that US $20 million will be made in March
2010 with the remaining US $80 million
paid over 4 instalments of US $20 million
each every six months until the full amount
has been paid in 2012.
It has also been reported that GFH, expects
to sell its stake in Khaleeji Commercial Bank
this year. According to the chairman, Esam
Janahi, “We’re selling the whole stake, at
the right price and we are in high-level dis-
cussions to probably sell it this year.” The
bank has identified $420 million of assets
for sale, $190 million of which are related
to infrastructure and real estate, and the rest
linked to stakes in financial companies.
Another positive development is that GFH
is in an advanced stage of establishing one
of the largest Islamic banks in Syria under
the name of Syria Finance House (SFH).
GFH along with a number of prominent
Syrian business partners is working to posi-
tion the bank as one of the largest and most
important Islamic banks in Syria, with a
capital of 15 billion Syrian Pound (US $333
million).
Once the final stage of approval has been
secured from the Central Bank of Syria, the
Page 14
Recent
Developments
bank will conduct an initial public offer for 30
% of its capital whilst 10% will be funded by the
local partners and the remaining 60% by GFH,
strategic financial institutions and its investors.
Source: IFIS and businessweek.com
Bahrain to promote the training of Islamic
Banking professionals
The WAQF Fund for research, education and
training is continuing with the second phase of
its programme. The programme aims to develop
Bahraini graduates, both academically and pro-
fessionally, to ensure a constant supply of quali-
fied professionals for the Islamic finance indus-
try in Bahrain.
Chaired by Central Bank of Bahrain (CBB) ex-
ecutive director banking supervision Khalid Ha-
mad, the WAQF Fund is comprised of the CBB,
and 18 prominent Islamic and conventional
banks with Islamic finance operations in Bah-
rain.
The first batch of 18 Bahraini graduates, spon-
sored by the fund, completed their diploma in
Islamic finance in June last year, and also com-
pleted their six month internships at various
banks. Several of these graduates now hold full-
time employment with Islamic banks and other
companies.
Source: IFIS
Bahrain’s Unicorn Islamic Investment bank
near Saudi asset management deal
Bahrain-based Islamic investment bank Unicorn
is close to signing a “big” mandate for asset
management services in Saudi Arabia, accord-
ing to a senior executive.
“We hope to sign it in the next days,” said Ik-
bal Daredia, head of the capital markets, institu-
tional banking and treasury unit at the Manama-
based bank. He declined to identify the firm or
value of the deal. Asset management is a focus
for Unicorn in the Kingdom as well as corporate
finance, he said. He also disclosed the bank is
Islamic Banking
Monthly Bulletin
also in talks with unspecified Saudi family firms
to restructure debt.
Globally, Unicorn wants to arrange Islamic bonds,
or Sukuk, worth between $1.5 billion and $2 bil-
lion this year, among them a sovereign bond in
Asia. Unicorn arranged for Saudi real estate de-
veloper Dar Al-Arkan a Sukuk worth $450 mil-
lion in February and is also active in Asia through
a separate unit.
Source: Arab News
Bahrain’s Ithmaar Bank plans $400m capital
hike
Bahrain-based bank Ithmaar has announced plans
to raise its capital by $400m to fund expansion,
Reuters has reported. The bank aims to raise up
to $200m by selling shares at $0.25 to existing
shareholders, in addition to selling a mandatory
convertible Islamic bond. Ithmaar plans to con-
vert itself into a retail bank by integrating with its
fully owned Shamil Bank, a Bahraini retail bank.
Source: Reuters
Solidarity signs key bank deal
Solidarity Group Holding, one of the largest Taka-
ful companies in the world, has signed an agree-
ment to offer life cover to customers of Family
Bank. Family Bank is a pioneering Islamic mi-
cro finance programme that was created earlier
this year by the Social Development Ministry in
co-operation with Bangladesh’s Grameen Bank.
The agreement was signed by Solidarity Group
Holding acting chief executive Ashraf Bseisu
and Social Development Minister Dr Fatima Al
Balooshi. Family Bank offers finances ranging
from BD 500 to BD 7, 000 without collateral or
guarantees to Bahrainis to help set up businesses.
Under the agreement, in the event of a customer’s
death or permanent disability, Solidarity Group
Holding will cover the outstanding amount of the
customer’s finance with Family Bank.
Source: Gulf Daily News – Local
BNH Bahrain National Holding (BNH)
planning to invest $21.2m in expansion
Bahrain National Holding (BNH), the parent
company of Bahrain National Insurance and
Bahrain National Life Assurance, is planning
to invest up to BD 8 million (US $21.22 mil-
lion) this year in further expansion. The com-
pany is preparing to move into the Takaful
Shariah-compliant market, though it will re-
main committed to its core insurance business
where it is believed to hold about 20 % of the
market share in Bahrain. Further regional ex-
pansion on the back of its recent investment
in Saudi-based Arabian Shield is also planned.
Qatar
Qatar’s Masraf Al-Rayaan launches $1.1bn
GCC fund
Qatari Islamic lender Masraf Al-Rayan
launched a new GCC-wide fund with a man-
date to manage up to US $1.1 billion; the fund
will focus on Gulf equities, as well as fixed
in-come instruments. “We believe the time is
ripe to launch a fund to tap into the region’s
enormous potential, especially as valuations
remain very attractive,” said Hussain Ali Al
Abdulla, chairman and managing director of
Masraf Al-Rayan, in a statement on the Qa-
tar bourse website. The fund, “Al Rayan GCC
Fund” will comply with Islamic principles,
and will be managed by Al Rayan Investment.
Source: IFIS
Qatar Islamic Bank (QIB) and a South Ko-
rean firm sign agreement on investment ve-
hicle
Qatar Islamic Bank (QIB) has partnered with
South Koreas Woori Investment and Securi-
ties to explore possibilities on investing in lo-
cal, Asian and Korean markets.
The Memorandum of Understanding called
for exploration of Shariah compliant invest-
Page 15

ment opportunities in many areas includ-
ing financing, direct investments and Su-
kuk. This will also include possibilities of
investment banking opportunities, as well
as financial transactions in equity and debt
capital markets in South Korea. Both QIB
and Woori seek to raise equity through Is-
lamic financial instruments that are compli-
ant with Shariah regulations, according to
the spokesman for QIB.
The move by QIB also stemmed from the
strong commercial relations between Qatar
and South Korea, which is one of the major
importers of Qatari liquefied gas. Sung-Ho
Hwang, president and CEO of Woori In-
vestments considered the Gulf region, in-
cluding Qatar as a very important market,
and will strategically foster many areas of
co-operation and development between
Woori and QIB.
Woori Investment and Securities is a sub-
sidiary of Woori Financial Group, which is
the largest financial institution in South Ko-
rea, and is composed of a number of com-
mercial banking and financial institutions.
Source: IFIS
Qatar Islamic Bank joint venture with
French banking group
France’s second largest banking group,
BPCE, and QIB have signed a memoran-
dum of understanding (MoU) to establish
a joint venture financial institution that will
develop and market Shariah-based retail
banking products in the European country.
The joint venture (JV) will look at devel-
oping and marketing mortgage, vehicle and
consumer goods finance and deposits and
structured and investment products.
For the first time, about 4 million Muslims
living in France will be able to choose al-
ternative banking products from numer-
ous outlets of the QIB-BPCE joint venture,
scheduled open across Europe later this
Page 16
Recent
Developments
year.
BPCE and QIB say they believed they could take
advantage of working together in this field by
pooling their respective experiences and expertise.
BPCE became fully operational in August 2009 af-
ter a merger between Banque Fédérale des Banques
Populaires (BFBP) and the Caisse Nationale des
Caisses D’Epagne (CNCE). It has approximately
37 million customers, an extensive network of
8,200 branches throughout France and a corporate
and investment banking affiliate, Natixis. BPCE is
a key player in the French banking and finance in-
dustry and accounts for 22% of total deposits held
by French banks, and serves a diverse range of
customers including individuals, small and medi-
um-sized enterprises, and large corporations.
Source: IFIS
Al Jazeera Finance gets makeover
Al Jazeera Finance (JF) has developed a new or-
ganisational structure and adopted a policy and pro-
cedure manual to execute different functions and
tasks. It has also introduced a practical instruction
manual of unified standards for performing differ-
ent functions and tasks. The project was developed
in co-operation with the consulting house KPMG.
JF then adopted it by implementing the projects
policy and procedure manual. With the adoption of
the new organisational structure, the company has
completed an advanced management development
project that keeps pace with its advanced finance
services. JF is committed to improving its services
and performance according to the highest, world-
class standards. The project is consistent with the
company’s vision to be a leader in Qatar’s Islamic
finance. In addition to financing residential and
commercial properties, land and building materi-
als, and the company offers other types of financ-
ing including factory construction and equipment,
purchase of vehicles and heavy equipment for in-
dividuals and companies, commercial projects and
working capital for private enterprises and com-
panies
Islamic Banking
Monthly Bulletin
Saudi Arabia
The Islamic Corporation for the Development
of the Private Sector (ICD) signs agreement to
promote SMEs in Libya
ICD has signed a deal to develop small and me-
dium enterprises (SMEs) in Libya. ICD, the
private sector arm of the Islamic Development
Bank Group (IDB), will be working with Libya’s
National Council for Economic Development
(NCED) to implement the deal.
Khaled bin Mohammed Al-Aboodi, CEO and gen-
eral manager of ICD, said the program had been
limited to financing medium and large projects.
But the new special fund, to be created as a result
of the agreement, would operate for the benefit
of SMEs. The proposed fund is to be supported
by incubators (premises with staff and equipment
made available at low rent to new small business-
es), which the NCED will create and sponsor. The
incubators will be responsible for creating micro-
enterprises and helping businessmen to own vi-
able projects that will be financed by banks.
The fund would provide finance opportunities
for these projects in line with the aspirations of
their sponsors. The objective of this initiative is
not limited to financing but also considers the po-
tential for success for SMEs, while encouraging
them to benefit from this opportunity.
Source:IFIS
Saudi Arab Bourse attracting foreigners by
the launch of an ETF
Saudi Arabia’s Tadawul has successfully launched
their first ETF (exchange traded fund) Saudi Eq-
uity ETF (Falcom 30). As per Tadawul’s descrip-
tion, FALCOM Saudi Equity ETF aims to pro-
vide investors with long-term capital appreciation
and growth. The fund passively invests in listed
Saudi equities in order to achieve the results that
correspond to the performance, before fees and
expenses, of the Saudi Tadawul benchmark index.
The fund has its own index with 30 stocks that
have the following criteria:
• Sharia-compliant as per Falcom’s Shariah
screening.
•For each stock to be eligible, non-trading days
in the Saudi Stock Exchange (Tad¬awul) must
not exceed 7 trading days during the past quar-
ter.
• Top 30 floating market capitalization stocks.
The stocks should also be members of Tadawul
public indices.
Falcom won approval to list a Saudi Equity
ETF on the bourse at a time when the world’s
top oil exporter is trying to attract more foreign
money to its bourse, having already allowed
indirect foreign share ownership via so-called
swap agreements in 2008.
At a later stage, Saudi exchange traded funds
will be allowed to include Islamic bond and
commodity instruments in addition to Saudi
shares, the bourse said.
Source: Reuters and Arab News
Saudis attracting more foreign money by
listing ETFs in foreign bourses
As Islamic finance is growing very rapidly
in the United States, the US-based Florentez
Investment Management Inc. (ShariahShares
ETF) is set to launch a family of Shariah-com-
pliant exchange traded funds (ETFs) on the
NYSE (New York Stock Exchange).
“The company has already received an ex-
emptive relief order from the Securities and
Exchange Commission (SEC), the US regula-
tor, to launch the funds on the US exchanges,”
Saeid Hamedanchi, CFA, president & CEO of
Florentez (ShariahShares ETF), said in an ex-
clusive interview with Arab News.
He added that Amanah funds have had spectac-
ular asset growth in the US. “More and more
investors want to invest according to Shariah
in the US. There are seven to ten mil-lion
Muslims in the US. The majority are affluent
immigrants from Southeast Asia, the Indian
Page 17

Subcontinent and the Arab world,” he said,
adding that even non-Muslims are buying
these Shariah-compliant funds due to strong
performance. Non-Muslims are also invest-
ing in Shariah-compliant ETFs because these
ETFs have better financial ratios and Shari-
ah indexes are financially conservative than
their conventional counterparts. Highly in-
debted companies get into financial distress
when their debt reaches a certain level. In
those circumstances, they are no longer held
by Shariah indexes. For Example: Enron,
Worldcom and others as evidenced in the
2001-2003 recession, he said. This causes
the Shariah indexes to outperform the con-
ventional indexes during market downturns.
Shariah compliant indexes have also per-
formed better because of their limited invest-
ment exposure to the conventional bank and
financial institutions, whose performance has
been severely affected after the subprime cri-
ses. He added that Shariah-compliant indexes
have outperformed conventional indexes in
the developed markets for the past five years.
Hamedanchi said after the NYSE listing they
will move to the London Stock Exchange
(LSE). The LSE will serve as a gateway to
the Gulf region.
Source: Gulf News
Islamic Development Bank approves 333.9
million dollars in new grants
The board of executive directors of the Is-
lamic Development Bank (IDB) approved
$333.9 million for financing new projects.
The beneficiaries include Pakistan, Bahrain,
Yemen, Benin, Sierra Leone and Saudi Ara-
bia. The board also approved a $1 million
grant for the Syria-Turkey Inter-Regional
Cooperation Program. Similar grants were
also approved for Muslim communities in
non-member countries, including India, Fiji
Islands, Kenya, Nepal, Thailand and the
United States.
Source:IFIS
Page 18
Recent
Developments
Shuaa Hospitality Fund acquires land in Jed-
dah
Shuaa Capital Saudi Arabia, concluded a land
acquisition on behalf of the Shuaa Saudi Hospi-
tality Fund. The Shuaa Saudi Hospitality Fund’s
acquisition marks the first private equity fund in-
vestment of its kind in Saudi Arabia. The Shuaa
Hospitality fund has a target size of Saudi Riyal
2 billion. The acquired property is situated in a
prime location on the Jeddah Corniche. It boasts
spectacular views of the Red Sea and offers easy
access to the city centre. The land will be de-
veloped into a luxury hotel tower with affiliated
serviced hotel apartments of a total built-up area
of around 40,000 sqm, to be managed by Rotana
Hotel Management Corporation, the leading hotel
management company in the MENA region.
The 35-storey, 140m tower will house 250 hotel
rooms in addition to 150 serviced apartments.
The Project total cost is estimated at SR500m.
Source: Ameinfo.com
Opportunities abound in SMEs in Saudi Ara-
bia
Saudi Arabia is one of the world’s most exciting
and emerging markets, according to Siraj Capi-
tal’s CEO Ibrahim Mardam-Bey. He foresees ex-
citing opportunities supported by strong emerging
market fundamentals, specifically in the telecom,
media, technology, consumer goods, food and
beverage, real estate, and health care sectors.
Mardam-Bey said Siraj aims to be recognized as
a leading regulated boutique merchant investment
and finance company, focusing on delivering and
managing greenfield projects in partnership with
leading international groups, early stage growth
capital investments.
The company also aims to manage Islamic finance
transactions for partners, clients and sharehold-
ers. Siraj Capital is a leading Saudi-based private
equity group focusing on op-portunities in the
Middle East-Gulf region. The company operates
out of offices in Riyadh, Jeddah, Dubai (Dubai
Islamic Banking
Monthly Bulletin
International Financial Centre) and Beirut. Being a
financial solutions provider, Siraj Capital provides
Shariah-compliant and conventional debt and eq-
uity financial services to its international clients.
Source: IFIS
Dar Al-Arkan successfully redeems first Sukuk
issue
Dar Al-Arkan Real Estate Development Company,
a residential real estate developer in Saudi Arabia,
announced it has successfully redeemed its inau-
gural Sukuk issue of March 2007.
Issued by DAAR International Sukuk Company,
the landmark three-year $600 million issue marked
the first Sukuk by a Saudi company in internation-
al capital markets. Launched as a US $425 million
issue, it received an overwhelming response from
financial institutions across Europe, South East
Asia and the GCC region.
Source: Arab News
Egypt, Turkey and Jordan
Egypt’s National Bank for Development (NBD)
launches new Islamic retail products
In fulfilment of its promises to launch new bank-
ing products conforming to Islamic Shariah reg-
ulations, the National Bank for Development
(NBD) for the first time in the Egyptian banking
sector, launched two new products, namely: “Yosr
Murabha” a personal finance programme and the
“Islamic Sukuk” using Wakala contracts, Egypt’s
“Al-Ahram” daily reported.
The “Yosr Murabha” personal finance programme
will offer loans ranging between L.E.10,000-L.E.
200,000, to be repaid in equal instalments from
over 12 months up till 60 months. The “Yosr Mura-
bha” is unique in possessing “Takaful Insurance”,
which adds a small amount to the instalment cost,
and in return provides the client with a life insur-
ance scheme, whereby the Shariah-compliant in-
surance companies that the bank deals with take
on the burden of meeting instalments in the event
of the client’s death. Under the “Islamic Su-
kuk” programme, the Bank will provide, for
the first time in Egypt, a one-year “Suk” to
both individuals and companies with a com-
petitive interest rate, ranging between 7-7.25
% monthly.
Source:IFIS
Turkey
IDB to lend Turkey $2 billion over 3 years
Turkey and the Islamic Development Bank
(IDB) have signed a memorandum of under-
standing to prepare a member country part-
nership strategy (MCPS) under which Turkey
will receive a $1.5 billion to $2 billion loan
over the next three years. Turkey will be the
first country among IDB member countries
to have an MCPS. The funds will be used in
various fields, including transportation, edu-
cation, energy, disaster management and im-
provement of the private sector, in line with
the country’s development strategy.
The MCPS is expected to be ready in June
2010.
Source:IFIS
Turkey, Lebanon urged to create ‘Islamic
market’
Turkey and Lebanon should work to create a
larger Islamic market in the Middle East and
eastern Mediterranean, Lebanon’s Parliament
Speaker Nabih Berry said during March.
Visiting Istanbul along with a delegation of
Lebanese businessmen, Berry said Turkey
and Lebanon should also aim to enter Euro-
pean markets together. “We have to create a
large joint Islamic market in the region. First
with other countries nearby and then with the
countries of the Organization of the Islamic
Conference, or OIC. A joint market would
increase opportunities in production and
exports to all countries in the world,” Ber-
Page 19

ry said. Turkey and Lebanon signed a new
visa-free travel agreement during the visit of
Lebanese Prime Minister Saad Hariri to Tur-
key in January. Discussion also related to in-
creasing bilateral trade with a goal of US $1
billion in trade volume for 2010. At present
the trade balance between Turkey and Leba-
non is largely in Turkey’s favour. Turkey ex-
ported goods worth $686 million to Lebanon,
while Lebanese imports to Turkey stood at
$107 million. However, in recent years the
overall trade volume has experienced a no-
table increase from $381 million in 2004 to
$794 million in 2009. Turkey is currently the
sixth largest importer of Lebanese goods af-
ter the United States, France, China, Italy and
Germany.
Source:IFIS
Central Bank of Jordan to study applying
special criteria for Islamic banks
The Central Bank of Jordan (CBJ) will study
criteria issued by the Islamic Financial Serv-
ices Board (IFSB) to apply them to Islamic
Banks in Jordan, bank’s top official an-
nounced.
CBJ Deputy Governor Khulud Saqqaf gave
a briefing at the Islamic Finance and Invest-
ment Forum for the Middle East 2010 about
the CBJ supervisory and regulatory duties,
that it applies a single regulatory framework
to both conventional and Islamic banks. The
CBJ adapted the Accounting, Auditing and
Governance Standards for Islamic Financial
Institutions.
Saqqaf noted the challenges and difficulties
faced by Jordanian Islamic banks, including
the absence of the secondary market for Is-
lamic financial instruments, the lack of lender
of last resort, and a shortage of qualified and
trained personnel to work in Islamic banks.
Source: IFIS
Page 20
Recent
Developments
Jordan looks to speed up sukuk issuance
Jordan’s finance minister, Mohammad Abu Ham-
mour has said that his government may need to
issue new legislation or find a new mechanism to
speed up the issuance of Islamic Sukuk. “We are
very interested in Islamic Sukuk especially that
the Islamic banks were less affected by the global
financial crisis than commercial banks,” the min-
ister said.
Source: IFIS
Malaysia, Pakistan and Indonesia
Columbia Asia receives 250 million Malaysian
Ringgit through Islamic facility
Regional healthcare provider, Columbia Asia
Group of Companies, will spend about RM 1.5
billion to build 15 new hospitals in the region.
Vice president, treasury services, Kahar Moham-
ed, said it would include three hospitals in Malay-
sia currently under development. Columbia Asia
Sdn Bhd today secured RM250 million in syndi-
cated funding based on the Islamic principle of
Ijarah Muntahiah Bitamlik from Bank Muamalat
Malaysia Bhd and Bank Kerjasama Rakyat Ma-
laysia Bhd.
Source:IFIS
Danajamin to guarantee Kencana’s RM250
mln Sukuk Mudharabah programme
Danajamin Nasional Bhd has entered into an
agreement to guarantee Kencana Petroleum Bhd’s
RM250 million Sukuk Mudharabah programme.
The agreement marks a key milestone for the
country’s first financial guarantee insurer, estab-
lished to help financially viable Malaysian com-
panies tap the Sukuk or bond market for capital
raising.
To date, Danajamin has approved a total of
RM1.4 billion guarantees for companies in vari-
ous industries such as oil and gas, property and
construction, plantation and infrastructure. Under
the agreement, Danajamin will provide an Al-Ka-
Islamic Banking
Monthly Bulletin
falah Guarantee for Kencana’s seven-year Sukuk
Mudharabah Medium Term Note programme.
With Danajamin’s guarantee, the issue will be
rated AAA, allowing Kencana to raise funds from
the sukuk market at a competitive rate. Funds
raised would be utilised by Kencana to acquire
at least three off-shore support vessels, including
two anchor handling tug supply vessels, for char-
ter to the oil and gas industry.
Source:IFIS
Malaysian AmBank on Islamic banking
growth path
AmBank Group plans to bolster its Islamic bank-
ing and financial services in the region as part of
its expansion drive. Chairman, Tan Sri Azman
Hashim, said the banking group was looking to
enhance growth this year and in coming years as it
expects profits to keep improving with new prod-
ucts and its low non-performing loan ratio. “The
bank will continue to focus on domestic bank-
ing and do businesses as usual, keep improving
and be more competitive in the marketplace from
quarter to quarter. I am happy with the progress.”
On mergers and acquisitions, Azman said it had
not approached nor had it been approached by
other banks. “Size is not that important because
you only need a suf-ficient size to be able to com-
pete. Some big banks in the world have already
collapsed.” AMMB Holdings’ net profit rose to
RM268.4 million in the third quarter ended De-
cember 31 2009 from RM247.9 million in the
previous corresponding quarter.
Source: Business times
Malayasia’s Petra Perdana unit secures Islam-
ic loan
Petra Perdana Bhd’s wholly owned unit Intra Oil
Services Bhd has secured a US$14.48 million Is-
lamic loan from HSBC Amanah Malaysia Bhd.
It is available for up to five years from the first
drawdown. In its filing to the stock exchange,
Petra Perdana said the money will be used to pay
for the purchase of one work boat. Its gearing will
rise to 0.88 times from 0.79 upon full draw-
down.
Source: Business Times
Malaysian Insurance firm Takaful ikhlas to
offer three new schemes next year
Takaful Ikhlas Sdn Bhd plans to introduce at
least three new takaful schemes by next year
for individual and corporate customers in line
with the growing demand for takaful products.
Executive vice president Wan Mohd Fadzlull-
ah Wan Abdullah said the company, a sub-
sidiary of MNRB Holdings, was constantly
innovating products to tap the robust 20 % an-
nual growth of the local takaful industry. “The
awareness among the public, especially Mus-
lims, is increasing and we are always looking
for an opportunity to offer takaful products that
meet the Malaysian needs, especially involv-
ing death, critical illness and permanent dis-
ability,” he told reporters. Wan Mohd Fadzlull-
ah said with the takaful industry projected to
grow even more rapidly, Takaful Ikhlas was in
a position to tap the market as it offered a com-
plete range of takaful products for individual
and corporate customers.
Takaful products were not just about religion-
based insurance but were premised on ethical
values. Takaful Ikhlas offers takaful services
which include more than 80 products to over
1.4 million certificate holders to date. Its prod-
uct portfolio consists of 76% family takaful
and 24 % general takaful.
Source:IFIS
Hong Kong to use Malaysia’s expertise to
bring Islamic Finance to Mainland China
Hong Kong expects to leverage on Malaysia’s
strong framework and expertise to bring Islam-
ic finance into mainland China. Hong Kong
Secretary of Finance, John C Tsang said Islam-
ic finance was still new for Hong Kong. “We
are at a very preliminary stage in Hong Kong.
Page 21

As you know we don’t have a big Muslim
population in Hong Kong, but we see that
Hong Kong could develop into a platform
for Islamic finance in the region,” he said.
He also said that Hong Kong had a very
strong financial infrastructure for conven-
tional business and that it was currently in
the process of developing a strong bond
programme in Hong Kong. Therefore, the
development of Sukuk in Hong Kong will
be a natural development.
A number of Malaysian banks includ-
ing Hong Leong and CIMB Bank have
already set up Islamic windows in Hong
Kong. Tsang added that, “We have Islamic
indices, different Islamic funds, and also a
couple of bonds have been issued in Hong
Kong. I think the potential is great par-
ticularly Hong Kong as the platform for
a lot of (Islamic) products to move into
the mainland of China. The potential is
huge.” Malaysia has a strong and well-de-
veloped infrastructure in terms of Islamic
Finance, from the Islamic Council to all
the different structures. “We have actually
worked with Malaysia the past two years
and they have helped us a lot including
sending people from the central bank”
Tsang said, adding that they had already
signed several memoranda of understand-
ing on joint cooperation.
Source: IFIS
National University of Science & Tech-
nology (NUST), Pakistan to receive
grant from Islamic development Bank
(IDB)
The Islamic Development Bank will pro-
vide the National University of Science &
Technology (NUST) with USD $62 mil-
lion Istisna’a Facility to contribute in es-
tablishing and equipping a modern teach-
ing hospital with a capacity of 510 beds to
provide advanced health care to residents
of Islamabad and Rawalpindi and adja-
Section
cent areas.
Source: IFIS
Pakistan International Airlines Corporation
(PIAC) Sukuk declared as approved security
The State Bank of Pakistan has declared Sukuk
Certificates issued by Pakistan International Air-
lines Corporation (PIAC) as an approved security.
PIAC Sukuk Certificates can be used for mini-
mum paid-up capital and reserves requirement.
These certificates can also be used for mainte-
nance of liquid assets for Islamic banks and Is-
lamic banking branches only to the extent of 5 %
of their demand and time liabilities.
Source: IFIS
Titan unit in Indonesia plans to issue RM¬180
million bonds including Sukuk
Titan Chemicals Corp Bhd subsidiary in Indone-
sia, PT Titan Petrokimia Nusantara (TPN), is con-
sidering issuing two bonds amounting to 500 bil-
lion rupiah (RM180.4mil) via a public offering.
In a filing with Bursa Malaysia, Titan said the
two proposed bonds – Obligasi Titan Petrokimia
Nusantara I Tahun 2010 and Sukuk Ijarah Titan
Petrokimia Nusantara I Tahun 2010 – were for
amounts of 300 billion and 200 billion rupiah
respectively. Fitch Ratings has assigned A+(idn)
national long-term rating for TPN and also as-
signed expected ratings of A+(idn) to TPN’s pro-
posed bonds. TPN has also submitted applica-
tions to Capital Market and Financial Institution
Supervisory Agency of Indonesia in relation to
the proposed bonds.
Source: IFIS
Indonesia: Retail Sukuk proves a hit, bids
reach US$853 million
Investors snapped up Indonesia’s retail Sukuk
offering in February with bids reaching Rp8.03
trillion (US$853 million) - almost tripling initial
targets of Rp 3 trillion, according to the country’s
local daily newspaper, citing the Finance Minis-
Islamic Banking
Monthly Bulletin
try.

This is the second retail Sukuk issued in Indone-

sia, offering an 8.7% yield and maturing in 2013.
The first retail Sukuk issued in February last year
was well-received, absorbing a total order of Rp
5.56 trillion, about three times its initial target of
Rp 1.77 trillion.

The Finance Ministry’s Director General of

Debt Management, Mr Rahmat Waluyanto, said
the government still has an option to sell Sukuk
worth about Rp17 trillion to help finance the state
budget.

He did not specify when the next sale of retail

Sukuk would be conducted, but said the global
Sukuk would be launched early in the second half
of this year to cope with the budget deficit.

Source: IFIS

Bank Indonesia studies capital incentive for

Shariah bank; Asset target to grow 30% an-
nually

Bank Indonesia (BI) studied the incentive to al-

low Shariah banking so as to allow a more ag-
gressive industry expansion.

Shariah Banking director of BI Ramzi A Zuhdi

claimed BI has been studying the policy compo-
nents relating to Shariah banking to cut down on
capitalization and operational costs.

“We are considering what to cut down for Shariah

banking cost without leaving prudence principles
for better performance in the future,” he said last
week. Ramzi said one of the components stud-
ied here deals with the risk-based assets (ATMR)
which does not differ from the conventional
banking. However, the study is underway and the
component which might lessen the cost to Shariah
banking is not fixed yet. BI projected the Shariah
banking asset to grow at least 30 % every year
particularly amidst better economic conditions.
Growth this year is supported by the existence of
new Shariah commercial banks.

Source: IFIS
 The Gulf One Lancaster Centre for Economic Research (GOLCER) was  established
in May 2008 by Lancaster University Management School and Gulf One Investment
Bank. The centre is funded by a donation from Gulf One Bank. 
The main purpose of the Centre is to conduct empirical research focused on key economic
and financial developments in the Middle East and North Africa (MENA) region, with
special emphasis on the Gulf region. This  region includes Bahrain, Kuwait, Oman,
Qatar, Saudi Arabia and United Arab Emirates, countries that form the Gulf Cooperation
Council.   
GOLCER’s research agenda will include, as primary topics, energy economics,
Islamic banking and finance, telecommunication and infrastructure economics. Recent
developments in these fields will be assessed in the light of their impact on the economy
of the Gulf region.   
In addition to its research activities, GOLCER will  provide tailored training courses
in specialised areas, including quantitative methods and applications of state-of-the-art
econometric and statistical software packages to economic and financial phenomena.
GOLCER will also provide consultancy services. 

Research Team
Professor David Peel Mr Vasileios Pappas
General Director, GOLCER PhD Student (GOLCER)
@: d.peel@lancaster.ac.uk @: v.pappas@lancaster.ac.uk
Dr Marwan Izzeldin Ms Momna Saeed
Executive Director, GOLCER PhD Student (GOLCER)
@: m.izzeldin@lancaster.ac.uk @: saeedm@exchange.lancs.ac.uk

We would like to thank GR Steele for his comments and contribution.

DISCLAIMER
This report was prepared by Gulf One Lancaster Centre for Economic Research (GOLCER)
and is of a general nature and is not intended to provide specific advice on any matter, nor is
it intended to be comprehensive or to address the circumstances of any particular individual or
entity. This material is based on current public information that we consider reliable at the time
of publication, but it does not provide tailored investment advice or recommendations. It has
been prepared without regard to the financial circumstances and objectives of persons and/or
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or damages incurred or suffered in connection with this report including, without limitation, any
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do not necessarily represent the views of Gulf One or Lancaster University. Redistribution,
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