Posts Tagged ‘finance hub’
JEDDAH – The Bahrain Financial Exchange, scheduled to open in October, will start trading in Islamic debt next year, Chief Executive Officer Arshad Khan said on Monday.
Eight Sukuk valued at about $2.9 billion trade on the existing Bahrain Stock Exchange, compared with 20 at a face amount of $16 billion listed on Nasdaq Dubai, data on exchange websites show.
The London Stock Exchange has attracted $17.7 billion from 26 securities.
LONDON: Kenya is fast developing as the Islamic finance hub of East Africa. The Central Bank of Kenya (CBK) has already licensed two Islamic banks – Gulf African Bank (GAB) and First Community Bank (FCB) – under CAP 488 of the Banking Act of Kenya.
In terms of capital and deposits, FCB, whose CEO is the experienced Islamic banker, Nathif Adam, formerly with Qatar Islamic Bank and Sharjah Islamic Bank, is the largest Islamic bank in Kenya. With a capital of 1 billion Kenya shillings (KSh), FCB is ahead of many of the 44 Kenyan banks who are required by the CBK to have the new minimum capital of 1 billion shillings by 2011. Since starting operations in June 2008, FCB has surpassed the targets in its business plan for the year ending December 2009, in some cases by 50 percent.
Luxembourg took an important first step toward developing the Duchy into the latest European hub for Islamic finance, especially Islamic capital markets, when it published last week a new tax circular on the treatment of a whole range of Islamic finance products including murabaha, musharaka, mudarabah, istisna, ijarah, ijarah wa Iktina and sukuk (Islamic bonds).
A circular from the Director of Contributions, the Luxembourg tax authority, describes the major principles and contracts of Islamic finance and their respective tax treatment. According to the preamble of the Circular, Islamic finance involves financial instruments used by investors who wish to manage their investments observing the values of Islam. The objective of Islamic finance is to share profits and losses between those who provide the capital and those who use it.
DESPITE the postponement by South Koreas National Assemblys Strategy and Finance Committee of pushing through a vote to approve a bill aimed at facilitating tax neutrality for the issuance of sukuk at end December 2009, local supporters of the introduction of Islamic finance products are confident that the delay is a minor setback.
They stress that the postponement was more due to the timing of the vote which comes amid increasing political squabbling between the Grand National Party and Democratic Party, especially over controversial policy issues relating to the introduction of tough new income and corporation taxes which have been opposed by trade union leaders. Bankers in Korea stress that the vote stands a better chance of taking place in February 2010 when Parliament reconvenes.
AUSTRALIA is the latest country that is currently reviewing its tax laws relating to financial transactions to ensure neutrality for the treatment of Shariah-compliant equivalent products especially bonds (sukuk) and home financing.
Earlier this month, Australia played host to a high-level Malaysian Islamic finance delegation led by assistant governor of Bank Negara Malaysia (BNM), the central bank, Muhammad Ibrahim, and comprising not only representatives of the Malaysian regulatory authorities, but also senior members of the Islamic fund management industry, Islamic banks, legal and professional services firms, and academic institutions.
A number of Mediterranean Basin countries are promoting themselves as Islamic finance hubs in an effort to attract sukuk, trust and investment funds business. In Gibraltar, for instance, the first Shariah-compliant fund the CL Global Property Fund was launched in November 2009 with the aim of providing shareholders capital appreciation by investing in a diversified portfolio of real estate assets and projects, primarily student accommodation located in the major university cities of the United Kingdom.
Similarly, last year, the Malta Financial Services Authority (MFSA) launched a consultation document on Islamic Finance in Malta Application to Banking and Securities. At an Islamic finance conference held in October this year in St. Julians, the government confirmed that Malta may become the first European Union country to introduce an Islamic finance legislative framework an agenda being pushed by several professional bodies including the Malta Institute of Management, the Malta Employers Association and the Malta Union of Bank Employees. State aspirations for developing the Mediterranean island into an Islamic finance hub has been articulated no less by President George Abela during an official visit to Qatar in September 2009.
THE Luxembourg office of PricewaterhouseCoopers (PWC) in a report on Islamic finance published at the end of October 2009, has urged greater involvement and visibility from the Luxembourg government and regulators if it is serious about establishing the principality as a European Islamic finance hub especially for Islamic funds and sukuk.
Compared to regulators in the UK, Ireland and France, the Luxembourg regulators have never approached their counterparties in target countries such as Saudi Arabia, the UAE, Kuwait, Bahrain and Malaysia to seek cooperation on Islamic finance.
The Chinese island enclave of Hong Kong, the worlds third largest financial center after New York and London, has consolidated its ambition of becoming a regional if not global Islamic capital markets hub with the signing of a memorandum of understanding (MoU) between the Hong Kong Monetary Authority (HKMA) and Bank Negara Malaysia, the central bank, on Sept. 28 to cooperate in the development of the financial services industry, especially in Islamic finance.
Hong Kong was one of the first non-Muslim regulators to join the Kuala Lumpur-based Islamic Financial Services Board (IFSB) as an associate member. To many pundits, the rise of Islamic finance is inextricably linked to the renaissance of the Silk Road. In ancient times, the famous Silk Road was Chinas link to the outside world and a route for trade and exchange of art, music, culture and religion. In a speech last year, Zeti Akhtar Aziz, governor of Bank Negara Malaysia, alluded to the New Silk Road being spearheaded by the globalization of Islamic finance especially eastward. Chinese politicians similarly have stressed this ambition, and now Hong Kong sees itself right at the heart of the New Silk Road providing a gateway to business and financial opportunities.
POTENTIALLY the largest domestic market for Islamic finance in Europe, France recently took a step nearer to developing Paris as a hub for Islamic finance. The move was made with the adoption in late September by the French National Assembly to amend Article 2011 of the French Civil Code relating to the formation of trusts. The amendment is generally regarded as a positive step toward facilitating the origination of Sukuk (Islamic securities) out of France.
France hopes that this amendment, first approved by the Senate in June, will help the sukuk market take off in France, which has an estimated Muslim population of between 8 million to 10 million. French President Nicolas Sarkozy earlier this year publicly declared that his government supports the facilitation of Islamic finance products in France under the country’s financial inclusion policy and is keen to make Paris the other Islamic finance hub in Europe.
LONDON: The French government has overhauled its tax laws to facilitate Islamic financial transactions such as Murabaha (cost-plus-financing) used primarily in commodity finance; and for Sukuk (Islamic bonds). This move has been on the cards since the summer of 2008 when Paris announced that it had started its tax neutrality review to facilitate Islamic financial products.
Islamic bankers in the Middle East and in Southeast Asia have welcomed the French initiative, especially after the disappointment of the postponement of a UK debut sovereign Sukuk issuance announced by the UK Treasury last November. Judging by the series of Islamic finance conferences held in Paris over the last few months, including a recent seminar by the Kuala Lumpur-based Islamic Financial Services Board (IFSB), whose mandate is to set prudential and supervisory standards for the global Islamic finance industry, France could overtake the UK in pushing the Islamic finance agenda in the European Union. France under President Nicolas Sarkozy is promoting Islamic finance for several reasons. These include financial inclusion policies to give access to its Muslim population to financial products according to their faith. France is also keen to attract Islamic investment both at home and through joint ventures in third countries. Islamic finance could also be attractive to French corporates and all those interested in ethical finance.