Tuesday, March 31, 2009

KFH MD believed to be stepping down: The Star

PETALING JAYA: Kuwait Finance House (KFH) Malaysia managing director and CEO Datuk Salman Younis is believed to be stepping down soon, apparently following a board meeting of the bank last week.
Sources said Salman, who was seconded from the bank’s headquarters in Kuwait to set up the Malaysian operations, will likely be assigned back to Kuwait.
Meanwhile, KFH Malaysia deputy CEO Ab Jabar Ab Rahman will be acting CEO as the hunt is on, possibly among local bankers, for a suitable head.
Contrary to market talk, the sources said KFH Malaysia was not downsizing.
But due to the difficult operating environment, it will be slowing down on expansion of new business in Malaysia, Salman had indicated in an interview early last month.
A pioneer among foreign Islamic banks in the country, KFH Malaysia had been slated to jointly develop property projects in Kuala Lumpur and Iskandar Malaysia.
Two weeks ago, Salman was quoted in a news report saying that real estate only formed less than 15% of its total investment portfolio. He had expressed his intention to diversify the bank’s investments into the healthcare and food industries.
In its December ratings outlook, RAM Ratings had maintained a stable outlook (AA2/P1) on the bank for which gross non-performing financing ratio stood at only 0.64% at the end of the third quarter of last year.
The bank recorded pre-tax profit of RM37.9mil for the same period compared with RM30.46mil in the previous corresponding period. For the 14 months of financial year 2005, KFH Malaysia had registered a pre-tax profit of just RM1.84mil.
Shareholders’ funds stood at RM1.09bil for the third quarter compared with RM747.16mil previously. (THE STAR, Wednesday April 1, 2009)

Monday, March 30, 2009

Islamic banks grapple with liquidity risk profile issues

By Habhajan Singh
Islamic banks are grappling to figure out the actual state of their liquidity risk profiles, an area that has shaken banks in more advanced economies under the current financial market downturn.
Bank Negara Malaysia (BNM) has admitted that local Islamic banks have a challenge before them. It commented on this matter in the Financial Stability and Payment Systems 2008 report released on March 25 with its annual report.
It also noted that the lack of empirical evidence to support behavioural assumptions has posed a challenge for Islamic banks to accurately estimate the extent to which the unique contract features of Islamic financial transactions may affect their liquidity risk profiles.
The key word here is the unique mix of risks due to the different nature of Islamic finance products. Liquidity risk — defined as the failure of a financial institution to meet expected and unexpected cash flow needs as they arise — is inherent within the financial intermediation function assumed by banking institutions and is a central component of the prudential regulation and supervisory framework, the central bank said in the report.
The sound management of liquidity risk is both critical to avert a threat to the solvency of a banking institution, as well as a loss of confidence in the broader financial system which can amplify the systemic nature of liquidity risk, it added. Naturally, the situation is not peculiar to Islamic banks in any one jurisdiction.
Studies on risk management for Islamic banks have acknowledged the presence of the unique mix of risks. In his work entitled 'Risk characteristics of Islamic products: Implications for risk measurement and supervision', Dr V Sundararajan said Islamic financial institutions have to put in place appropriate risk measurements that recognise the specific mix of factors within Islamic financial contracts and the extent of risk sharing embedded in the contracts.
During an Islamic finance conference in Kuala Lumpur in 2007, he said that liquidity risk management of Islamic financial institutions is constrained due to the limited availability of tradable Islamic money market instruments and a weak systemic liquidity infrastructure.
Sundararajan is currently the director and head of financial sector practice at the Washinton based Centennial Group. He was previously the deputy director of the International Monetary Fund's monetary and capital markets department.
In providing an example, BNM pointed out the use of mudharabah contracts. Here, principal amounts are not guaranteed and returns are dependent on the performance of underlying assets. This should, in principle, reduce the funding liquidity risks faced by Islamic banks.
"However, in practice, Islamic banks face a considerable level of competitive pressure on the profit rates of the mudharabah accounts which are being offered.
"The dominance of trade based financing contracts involving assets being held in the form of fixed and illiquid assets or inventories, such as through the murabahah, ijarah, or istisna' contracts, also potentially reduce the balance sheet liquidity," it said in a special report entitled 'Liquidity Risk Supervision and Challenges in Liquidity Risk Management.'
It was one of the several special commentaries in BNM's Financial Stability and Payment Systems Report, which aims to provide an assessment of the risks and challenges faced by the Malaysian financial system.
On the liquidity challenge, the central bank said that it is being addressed 'through ongoing initiatives to better understand the behavioural characteristics of cash flows for different Shariah contracts and their impact on balance sheet liquidity, towards supporting the more effective identification, measurement and management of liquidity risk'.
The development of a wide range of funding options in the Malaysian Islamic Interbank Money Market have also been instrumental in supporting the liquidity needs of Islamic banking institutions, it added.
These include interbank placements based on mudharabah type contracts, selland-buy-back agreements as an alternative to repurchase agreements, and the Islamic derivatives such as the Islamic rate swaps and the Islamic FX forwards.
Providing some figures, the central bank report said total outstanding instruments increased from RM55.2 billion in 2001 to RM211 billion in 2008, while the turnover of securities traded on the Islamic Interbank Money Market increased from RM39.7 billion in 2001 to RM185.2 billion in 2008.
"The growing acceptance of Islamic finance as well as the emergence of more Islamic institutional investors such as takaful operators and Islamic fund managers in recent years have also widened sources for Islamic funding, thus facilitating the diversification of funding strategies for Islamic banks," it said.
During the year, BNM noted that the Islamic finance sector 'continued to record strong performance', with the Islamic banking sector achieving an average annual growth of 20% over an eightyear period.

(This story appeared in The Malaysian Reserve on Mar 30, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

What now for local legal firms with Middle East operations?

What is the fate of legal firm which have recently made inroads into the Middle East market in search of a slice of the pie within the Islamic finance business?
The main factors persuading firms to leap toward the Middle East are the proximity to the large client base and the region's importance for new industry developments, says the Asia Legal Business magazine.
It noted that Islamic finance practices of firms within East Asia have been eyeing the Gulf as a growth strategy for some time and asked if recent global financial events will put their ambitions on hold.
As Asian authorities have intensified their pursuit of a larger slice of the Islamic finance market, the region's law firms have followed suit — some of them even establishing offices in the Gulf region, it noted.
"The Middle East will recover from the economic downturn faster than other parts of the world, and this alone provides enough incentive for forward-thinking law firms to relocate or expand," said Farid Hussain, partner heading the Dubai office of Zaid Ibrahim & Co.
"Here, the business communities' exposure to and knowledge of Islamic finance is growing, so this will also create demand for work," he told the magazine.
Last year, it noted Zaid Ibrahim & Co became the first law firm within Asia approved to operate in the region's leading finance hub, the Dubai International Financial Centre.
In the article entitled 'Islamic finance: Gulf strategies vary in uncertain times', the magazine reports that another firm keen on expanding to the Middle East, but taking a steadier approach, is Azmi & Associates.
"We will do so only after consolidating and enhancing our position here in Malaysia and within the South-East Asian region, something we intend to pursue in the next two years," the firm's managing partner, Azmi Mohd Ali was quoted saying.
Muthanna Abdullah
, managing partner of Lee Hishammuddin Allen & Gledhill was also quoted in the magazine as saying: "[Expansion] meets the need to be close to the Gulf clients — who require far more personal contact. It is their high liquidity which drives the Islamic finance market. Certainly, proximity to the Gulf is also needed to understand the developments of Islamic finance better."

(The Malaysian Reserve, Mar 30, 2009, p31)

CIMB to raise US$2.5bil sukuk

CIMB Islamic, the global Islamic banking and finance franchise of the CIMB Banking Group, has 19 mandates from clients in Asia, including the Middle East, to raise nearly US$2.5bil from Islamic capital markets.
It is also set to launch an infrastructure fund worth nearly US$500mil in the region in the next three months.
With equity markets shaken by the global financial crisis, growth segments such as Islamic finance are being tapped globally and Malaysia is seen as a stable place to raise Islamic funds.
“One deal is for a RM5bil sukuk issue and this is for a sovereign-related entity in the Gulf States.
“The other fund-raising is for US$1bil for a multi-currency Islamic bond issue, also by an issuer from the Middle East,” CIMB Islamic chief executive officer Badlisyah Abdul Ghani told StarBiz.
He added that the remainder were predominantly Malaysian and regional mandates.
Badlisyah declined to name the clients for the 19 mandates, merely saying they had good credit ratings to meet investors’ thirst for quality issues.
He expects to launch all the issues this year.
“There is ample demand for quality sukuk issues. Subject to market conditions, we intend to launch them this year in Malaysia, including the RM5bil sukuk and US$1bil multi-currency issues by the foreign entities,” he said.
Last year, CIMB Islamic raised a RM1bil sukuk for the International Development Bank (IDB).
It has been one of the more prolific and successful investment banks in bringing in foreign issuers to tap the Malaysian Islamic debt capital market.
CIMB Islamic also did the World Bank and International Financial Corporation issuances, which set credible benchmark for the market.
In Singapore, together with CIMB-GK Securities, CIMB Islamic raised S$1bil for City Development Ltd (CDL) in Islamic multi-currency medium-term notes, setting in motion the establishment of an indigenous corporate sukuk market in the island state.
Raising funds such as sukuk was part of the firm’s debt origination business, Badlisyah said, adding that CIMB Islamic was the largest issuer of sukuk in the world, commanding about 20% market share.
Badlisyah believed there was a lot of liquidity in the ringgit market and a big appetite for Islamic issues, given the turmoil in equity markets.
He dismissed the notion that oil-rich Middle Eastern countries did not need funding.
“There is a need for funding everywhere, including the Middle East. With a huge liquidity crunch in US dollar bonds, which are their traditional market, many are now looking at alternatives including the ringgit,’’ he said.
Apart from debt origination, CIMB Islamic has been active in the fund management business.
It won awards and accolades for its creative structuring of products in this field, with the latest being the Best Islamic Fund Management House from Asia Asset Management magazine.
CIMB Islamic operates in 10 countries through CIMB Group’s regional offices such as London, Singapore, Brunei and the Middle East.
Asked why Malaysia was favoured over other countries as a issuance hub for Islamic papers, Badlisyah said: “Malaysia is recognised globally as an Islamic finance hub because we have all the necessary infrastructure needed for the industry to operate efficiently and effectively.
“Sukuk issuers always find Malaysia a sound and easy place to issue their Islamic papers. Kudos to the Government for developing and promoting the industry.”
On the infrastructure fund, Badlisyah said: “The seed capital for the fund is from regional and Middle Eastern institutional investors and it will invest in infrastructure projects in Muslim countries in Asia.”
However, he declined to elaborate on the fund but simply quipped: “Just watch this space.”

(The Star, Mar 30, 2009)

Unicorn Malaysia eyes regional opportunities

By Alfean Hardy
Unicorn International Islamic Bank Malaysia Bhd (Unicorn Malaysia), which generated a profit for its first year of operation, is confident of building on this success in 2009 as it seeks to position itself as a hub for its parent's Asia Pacific expansion strategy.
The bank, a unit of Bahrain's Unicorn Investment Bank BSC, was granted an international Islamic bank licence by Bank Negara Malaysia in December 2007 to conduct a full range of nonringgit investment activities under the Malaysia International Financial Centre (MIFC) initiative.
For its fiscal year ended December 2008, the bank posted a net profit of RM812,546 at bank level, while at group level, it posted a net profit of RM777,572.
At a media briefing in Kuala Lumpur on Mar 26, Unicorn Malaysia chairman Datuk Vaseehar Hassan said, although the profit is not big, it is a morale booster given the fact that 2008 was the bank's start-up year.
"We started operations in January 2008 and, for the first eight months to nine months, we were still recruiting people," he said. "In fact, if it wasn't for the financial meltdown, we had some signed mandates on hand and we would have ended 2008 with a much better result. Some of these mandates had to be either deferred or aborted.
"Moving on to 2009, we have some work in the pipeline and we feel our 2009 results will be even better. We're in a resonably good position in spite of the financial crisis," he added.
Vaseehar said Unicorn Malaysia's 2008 performance was driven by its financial advisory, cross-border transactions and placement. This year, he said the bank would be focusing on the medium-sized — US$50 million (RM181.24 million) to US$100 million — sukuk issues and cross-border transactions.
"There's plenty of demand for these kinds of transactions from the SMEs (small-to-medium enterprises) and mediumsized corporations," he said, adding that it was its parent's strategy to make its Malaysian operation as a hub to penetrate the Asia Pacific market.
Unicorn Malaysia CEO Khalid Bhaimia said under the MIFC initiative, international business rather than domestic business was encouraged and that being able to do both cross-border transactions and placements in its first year was encouraging. On whether the current global situation would be a stumbling block to such operations, he said that international transactions were still on-going.
"The scale may be different, there may be not very many large-scale transactions because of the liquidity situation," he said. "However, we're not a very large bank for that purpose but, so far, in our segment of the market we believe that there are opportunities and we're seeing such opportunities now.
"But you won't see the billion US dollar cross-border transaction that you saw in 2007," he added.
Reuters adds: Unicorn expects to do US$400-US$500 million of transactions this year, with a strong market projected for medium-sized deals.
"Treasury is key element for our business here. Without funding support, it's difficult to go out and do business.

(This story appeared in The Malaysian Reserve on Mar 27, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Thailand lures Middle East investment with companies free of pork, booze and usury

BANGKOK — To court Muslim investors, Thailand’s business world is showcasing firms the prophet Mohammed could condone.
The Stock Exchange of Thailand, currently in a tailspin, is hoping to attract moneyed Muslims in the Middle East and in its own backyard. Their pitch, however, doesn’t just rely on promises of high returns. These firms, the exchange says, will benefit Muslims’ bottom line — and their conscience as well.
Debuting next month, Thailand’s “Sharia Index” is a selection of firms vetted by scholars who can navigate both the Qur’an and a balance sheet. Each has been deemed free from violations of Sharia, or Islamic holy law. Companies connected to pork, tobacco, booze — or even the defense industry — are immediately disqualified.
Then comes the hard part. Real expertise is needed to weed out businesses that violate the Sharia’s prohibition on excessive interest. Known as “riba” in the Qur’an, it’s comparable to the Judeo-Christian concept of “usury.” Avoiding interest is the foundation of Islamic financing.
“Dabbling with ‘riba’ is a large sin,” said Habhajan Singh, who tracks Islamic finance trends for The Malaysian Reserve newspaper, where he is associate editor. “For Muslims to partake in the modern financial world, they have to remove that element of interest.”
The vetting process eliminates any business that profits from interest — such as banks — in favor of companies profiting from concrete assets.
The idea has made its way into the modern financial world. Thailand’s stock exchange follows exchanges in Singapore and Hong Kong in offering an Islam-vetted stock index. Its new Sharia index will be calculated by the U.K.-based FTSE group.
Santi Kiranand, who heads market development for Thailand’s stock exchange, said the Sharia index is mostly a push for more wealthy Middle East investors. But it also opens doors for investors in Muslim-majority Malaysia and Indonesia.
Though predominately Buddhist, Thailand also is home to many Muslims, though most are concentrated in poorer southern provinces along Malaysia’s border.
“Even though we have a lot of Muslims, and they should be our targets too, we have to diversify our investor base into those other regions of the world,” Santi said. “The Middle East doesn’t invest enough in our capital market.”
Santi and a small team are currently planning a “road show” through the Middle Eastern financial centers Qatar, Abu Dhabi and Dubai, he said.

REST of the story, see GlobalPost (March 5, 2009)

i-VCAP to launch four Islamic funds this year

i-VCAP Management Sdn Bhd, now a full-fledged Islamic fund management company, plans to launch three to four Shariah compliant funds this year. This is to add to its flagship fund, MyETF-DJIM25 (MyETF Dow Jones Islamic Market Malaysia Titans 25), Asia's first Shariah compliant Exchange Traded Fund.
i-VCAP has recently obtained approval from the Securities Commission to operate as an Islamic fund management company in line with its business objective.
The company had been operating under the licence for general fund management services even though the company has been undertaking exclusively Islamic fund management activities since its establishment in 2007.
i-VCAP CEO Zainal Izlan Zainal Abidin said in a statement on Mar 26the company's business objective to provide Islamic fund management services is driven by its aspiration to fulfil the demand within a segment of the fund management industry which the company believes is still under-served.
"It reflects the company's confidence in the potential size and growth of the Shariah compliant fund management segment, in which i-VCAP intends to play a significant role", he added.
At the same time, its focus on developing an Islamic fund management business is consistent with the Government's efforts to enhance Malaysia's position as a leading Islamic financial centre.
In this regard, the infrastructure and regulations supporting the Islamic financial and capital markets in Malaysia are relatively well developed, with work for further enhancement being done on an ongoing basis, thereby creating a conducive environment for i-VCAP to develop its business.
MyETF-DJIM25, listed on Bursa Malaysia on Jan 31, 2008, allows investors to gain simultaneous exposure to 25 leading Shariah compliant companies listed on the local bourse. The fund is currently the largest Shariah ETF in the world in terms of net asset value, which is about US$140 million (RM507.44 million).

(The Malaysian Reserve, Mar 27, 2009, P9)

THAI: IBT to raise up to RM724m via Sukuk

BANGKOK • The Islamic Bank of Thailand (IBT) plans to raise between US$70 million to US$200 million (RM724.82 million) via Sukuk Islamic bonds in Malaysia and Middle East countries by this year.
Malaysia's second largest banking group CIMB, and its newly acquired BankThai, had approached the IBT to launch the Sukuk bond in Malaysia.
IBT chairman Professor Somchai Virunhapol said this would be the first time Thailand was issuing Sukuk bonds, adding that other targeted countries besides Malaysia were Kuwait, Bahrain and the United Arab Emirates (UAE).
"We have already held talks with CIMB on the scope of cooperation, but no figures have been discussed as yet. Similarly, we received very good response from the Middle East countries during our visit there a month ago," he said on the sidelines of the Third Thailand Islamic Finance Conference on Mar 26.
According to reports, in 2007 alone, CIMB arranged more than US$4.96 billion worth of Islamic bonds globally, equivalent to 16% of the world market, and of which US$4.67 billion was issued in Malaysia.
The global Islamic financing products are estimated at US$1 trillion (RM trillion), with annual growth of between 10% to 15%. Somchai said there was big potential for Sukuk bonds and other Shariah compliant financing products in the country.
The Thai government, he added, had estimated that about 20% of financing for a projected US$100 billion investment in mega projects over the next ten years, would come from such financing products.
About 50% of the investment is expected to go towards the transportation sector, namely for the construction of new railway tracks and trains, subway lines and airport, as well as 25% each for the energy and other sectors. According to Somchai, even though the world was experiencing an economic crisis which had affected the conventional financing system, the Islamic bond market remained strong, especially in the cash-rich Middle East countries.
He also said that the IBT planned to open three new branches this year from its current 26, adding that it currently has over 100,000 savings account holders.
"There are about eight million Muslims in Thailand and we are tapping a niche market with very big potential," he explained.
Somchai, however, said that the Thai Finance Ministry had to waive taxes such as the specific business tax and capital gains tax before Sukuk bonds could be issued.
The IBT was established in 2003 to offer financial services in compliance with Islamic law and to serve the country's Muslim population. The Thai Finance Ministry is the largest shareholder with a 48.54% stake in the bank. — Bernama (Mar 26, 2009)

MARC to offer syariah ratings soon, reports Star

KUALA LUMPUR: Malaysian Rating Corp Bhd (MARC) will introduce syariah-compliant rating services in the second half of this year as part of its diversification plan. Chief executive officer Mohd Razlan Mohamed said the service had not yet been offered anywhere in the world, except Bahrain.
MARC invested a 5.7% stake in a syariah-compliant rating agency in Bahrain in January 2008. “This service will contribute significantly (to company earnings) in five years.
“We are targeting more syariah governance for Islamic entities such fund management and fund broking, as more investors want additional level of comfort (though rating from independent party),” Razlan told reporters after MARC AGM on Mar 26.
Currently, the company derives about 90% of its income from rating services for private debt securities and the remainder from the ratings of foreign currency, financial institution and takaful as well as from the provision of educational courses. The agency has about 35% share of the domestic bond rating market, according to Razlan.
MARC’s move is in line with Malaysia’s aim to be a global Islamic financial hub. Early this year, the Securities Commission granted an additional three Islamic finance licences to foreign fund managers Aberdeen Islamic Asset Management Sdn Bhd, Nomura Islamic Asset Management Sdn Bhd and BNP Paribas Islamic Asset Management Malaysia Sdn Bhd.
Razlan said MARC expected new issuances of ringgit-denominated bonds to drop to between RM25bil and RM30bil this year. However, with the setting up of the Financial Guarantee Institution, expected to be fully operational in May, borrowers with ratings lower than “A” – which comprise 40% of the domestic bond market – might make a return, he said.
In addition, he said, the reactivated Corporate Debt Restructuring Committee would help borrowers with funding requirements of below RM100mil.
MARC group vice-president for fixed income research ratings, Wan Murezani Wan Mohamad, sees corporate bond defaults rising this year to a worst-case scenario of 4.1% from 1.98% last year. In 2007, the default rate was 4.8%. On gross domestic product growth this year, group chief economist Nor Zahidi Alias said he expected a 1.5% contraction. (The Star, Mar 27, 2009)

Bank Islam eyes RM300m deposits from Al-Awfar

Bank Islam Malaysia Bhd expects to rake in RM300 million in deposits for its latest product, Al-Awfar savings and investment account, by financial year ending Dec 31, 2009.
Its general manager of consumer banking division, Khairul Kamarudin, said the bank believed the product would be well received by Malaysians as it was the first of its kind savings-i and investment-i account that offered account holders a chance to win cash prizes of up to RM100,000.
"The product is in accordance with the Shariah requirements and the processes are highly transparent as there are no elements of interest (riba). "There are no participating fees and the prizes are fully funded by the bank," he told reporters after the launch of the Al-Awfar product in Kuala Lumpur on Mar 25.
Khairul said the bank aimed to attract 200,000 depositors for the Al-Awfar product.
"We also hope to reach out to customers of all races, reflecting Bank Islam as a bank for all," he said.
The bank's retail deposits currently stood at RM5.8 billion. Al-Awfar, which means "prosperous investment", is based on the Mudharabah concept, a contract of profit sharing.
The profit sharing ratio for the Al-Awfar savings account is 98% for the bank and 2% for the customer, while that for Al-Awfar investment account is 70%:30%.
For savings account, the minimum deposit is RM100 while the minimum deposit for investment account is RM1,000 for onemonth tenure and a minimum of RM500 for a three to six month tenure.
Bank Islam will arrange for cash prize draws every quarter. The customers would be entitled to one opportunity for a prize draw with every RM100 deposited into the account.
Established in 1983, the country's first Islamic bank has to date, a network of 93 branches and more than 500 self serviced terminals nationwide. Its consumers base currently stood at 2.3 million. — Bernama (Mar 25, 2009)

INDONESIA: Late 2009 Target for OCBC’s Islamic Unit

By Yessar RosendarPT Bank OCBC NISP Tbk expects to launch a Shariah banking unit in the second half of 2009, with full operation expected to start next year in three branches in Jakarta, Surabaya, East Java Province, and Bandung, West Java Province. Parwati Surjaudaja, the bank’s president director, said on Monday that OCBC NISP, which is 74.73 percent controlled by Singapore’s OCBC Bank, had allocated Rp 100 billion ($8.7 million) for the Shariah unit and projected capital expenditures of Rp 2 billion to Rp 3 billion.
“The process is quite long,” Parwati told a press conference.
“We predict that it will take six months to prepare and probably will be fully operational next year.”
The Rp 100 billion to be injected is in line with a new central bank regulation on Shariah banking issued on Friday that requires a minimum capital level of at least that amount. The regulation also requires that Shariah directors and monitoring council members be approved by the central bank.
Parwati said that OCBC NISP’s Islamic banking unit would be the 20th launched in Indonesia and would be focused on developing consumer products.
Discussing the bank’s overall performance, Parwati said that tough macroeconomic conditions would probably limit 2009 credit growth to between 5 percent and 15 percent.
“That’s lower than last year’s target of 20 percent, the pace is slowing,” she said.
“We hope economic conditions will recover in the second quarter.”
OCBC NISP cut interest rates twice in February and is now offering consumer and commercial loans at between 14 percent and 15 percent. Parwati said the bank would try to lower rates further following Bank Indonesia’s recommendation that commercial lending rates fall to 12 percent, against the 7.75 percent BI rate.

(The Jakarta Globe, March 24, 2009)

RUSSIA: Islamic finance best option for global recovery

Islamic financial system is the best option to bring back the global economy to the right track, says Prof Datuk Dr Sudin Haron, chairman of the Russian Centre For Islamic Economic and Finance international advisory panel.
"As a result of the global economic crisis, people don't believe in the conventional system anymore. People believe that as a result of speculation, manipulation and interest rates, the global financial crisis happened.
"Islamic banking does not believe in these things. We prohibit manipulation and speculation. Interest rate is totally condemned by Shariah (Islamic principles).
"So, now people start looking at what is the best alternative to substitute the conventional system," said Sudin, a scholar with vast experience in banking and finance, management and business management, told Bernama in an interview.
Islamic financial system was one of the options, he said, adding that "it is the only option to study." Dr Sudin said many countries have started to acknowledge the importance of Islamic banking and finance.
For instance, he said, French Finance Minister Christine Lagarde had announced in December last year that she wanted to see whether regulations or the legal system in France could accommodate Islamic finance.
Russian Prime Minister Vladimir Putin had said at the World Economic Forum in Davos, Switzerland, that the world needs to have a new dimension in the financial system, he said.
Putin had said Russia, being the centre between the West and the East, was the best country to study "what is the best system to replace the existing system."
"I can see a huge potential for Islamic banking and finance," said Dr Sudin, who is also president of the Kuala Lumpur Business School and executive chairman of Vision Bridge Sdn Bhd. — Bernama (Mar 23, 2009)

Mohamad Safri appointed as deputy CEO at MIDF

Malaysian Industrial Development Finance Bhd (MIDF) announced the appointment of Mohamad Safri Shahul Hamid as its new deputy chief executive officer of MIDF Amanah Investment Bank Bhd, confirming a recent report by The Malaysian Reserve. (The Malaysian Reserve, p9, Mar 23, 2009)

MUKHTAR: ‘Sharia Finance Provides Bridge Between Middle East and Indonesia’

A Jakarta-based HSBC Amanah banker agrees with the sugestion of Indonesian Vice President Jusuf Kalla that Islamic banking has proven that it can weather the global crisis.
The banker said there is inherent discipline in Islamic banking, given the fact that it focuses on the real economy. It focuses on real, asset-based financing, which means that you know it is less involved in speculative activity.
"I also think that Islamic banking has very clear criteria on the amount of leverage that can be made available in transactions," said Mukhtar Hussain is global chief executive of HSBC Amanah and CEO of Global Banking and Markets Middle East and North Africa in an interview with Jakarta Globe on Mar 3.
Therefore, he said it doesn’t promote the use of high leverage — this being one of the reasons the conventional banks have encountered the problems they have.
"The other reason is that conventional banks invested heavily in toxic assets. Many of those assets would not have been permissible in Shariah banking," he said.

Compared to the conventional sector, just how big is Shariah banking worldwide? The comparison is a difficult one to make, because in reality the Islamic financial services market is still relatively small compared with the conventional industry. But, of course, we need to acknowledge that the conventional industry has developed over two centuries, whereas the Islamic financial services industry is probably only 40 years old. So it’s a young industry that’s growing quickly, but it’s still relatively small in proportion to the overall financial services industry.

Monday, March 23, 2009

Islamic banks may not be insulated from ‘aftershocks’

By Habhajan Singh
MALAYSIAN Islamic banks have escaped subprime related banking troubles but may not be insulated from the aftershocks of an economic contraction, says a senior central banker.
"We may be insulated from the toxic assets, but we may not be insulated from the second round effects," said Bank Negara Malaysia (BNM) deputy govenor Datuk Mohd Razif Abd Kadir, making reference to a potential impact on Islamic banks in the event of the economy slowing down.
"We don't have a banking problem. What we have is an economic problem, more so since we have an open economy," he said at the soft launch of the new premises of the International Islamic University of Malaysia's (IIUM) Islamic banking institute in Kuala Lumpur on Mar .
The soft launch of IIUM Institute of Islamic Banking and Finance (IIIBF) was officiated by IIUM rector Prof Datuk Dr Syed Arabi Idid. The institute is headed by Prof Dr Ahamed Kameel Mydin Meera as its dean.
In his presentation, Mohd Razif echoed sentiments expressed earlier by central bank govenor Tan Sri Dr Zeti Akhtar Aziz who had said that the second round effects will be felt as the economic contraction produces further strain on the financial sector, and that the Islamic financial system will not be immune to these developments.
In a recent speech at an Islamic finance conference in London, Zeti noted that in the current global financial crisis, the initial tightening of liquidity and the subsequent breakdown of the functioning of the financial markets precipitated stress and insolvency in the financial sector. She added that the credit crunch that followed has resulted in catastrophic damage to the global economy.
Under the current challenging environment, Mohd Razif said that Malaysia can play a role in educating the global financial community with regards to Islamic finance, especially by highlighting key Shariah principles at work in Islamic finance.
"People are looking at us, to learn from us," he told the audience made up of Islamic finance industry executives, Shariah scholars and teaching staffers from IIUM.
Mohd Razif noted that many countries, including those without a large Muslim population like Singapore, Hong Kong and Japan, are joining the Islamic finance bandwagon and instruments like sukuk are becoming more and more popular.
"Sukuk has become an important asset class, not just for issuers, but also for investors. Islamic papers are now much sought after," he said.
Malaysia remains the world's largest sukuk market, accounting for more than 37% of global sukuk issuances in 2008. On the local front, BNM statistics show that the Islamic banking sector recorded double digit growth over the last eight years with an average annual growth rate of 20% in terms of assets.
As at the end of 2008, Islamic banking had a 17.4% share of the banking sector. The assets share of the takaful industry grew at 23% per annum in the past five years, with family and general takaful capturing 11% and 7% respectively, of the overall insurance sector.

PHOTOGRAPH, from left to right: Dr Syed Arabi, Dr Ahamed Kameel and BNM's Mohd Rafiz.
(This story appeared in The Malaysian Reserve on Mar 23, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

IKBAL: Ijarah sukuk to remain popular with risk-averse investors

It is Bahrain-based Islamic investment bank Unicorn belief that 2009 will be characterised primarily by the increasing popularity of ijarah as a mode of financing in the sukuk market. At Unicorn, it has already been focusing on ijarah, primarily because of its actual and perceived stability among alternatives in the Islamic bond market, writes Ikbal Daredia is head of capital markets and institutional banking at Bahrain-based Islamic investment bank Unicorn.
In an article written for news agency Reuters, he said that the sukuk market was already showing indications of contraction in the period between 2007 and 2008 mainly due to global economic conditions.
According to the Islamic Finance Information Service, he writes, in 2007 total sukuk issuance stood at approximately US$46 billion but this contracted to $15 billion in 2008. Expectations in the market this year mark the total sukuk issuance to be less than $10 billion.
"This is not a huge surprise considering the massive turbulence every sector and market experienced last year, but what is surprising is the percentage of this total which was based on the ijarah mode of financing," he wrote.
At Unicorn,e Ikbal says they believe ijarah products will therefore continue to grow and we expect to see an even higher percentage of sukuk issuance based on it, adding that it could also be the case that the rise of ijarah sukuk is due to the debate surrounding the compliance of other forms of sukuk with shariah, or Islamic law.
"Governing directives on mudarabah and musharakah sukuk suggest that there could be technicalities involved in these structures implying that they are more akin to equity-like issuances and therefore there cannot be a par value assurance that the face value is paid back at maturity.
"In Unicorn's experience, we have found that the tendency of investors is to veer towards stability and longevity, and this is proving to be a welcome development for issuers given the climate in which we find ourselves.
"Although 2008 saw a contraction in the sukuk market, it is important to recognise the growing importance of ijarah based products, as this highlights the market's lower risk profile. Other riskier products will return to the market, but at the moment risk is something investors want to reduce," he wrote.

Four Dubai banks placed on ratings watch

By Habhajan Singh
Four Dubai-based banks have been put under ratings watch due to "growing concerns regarding the impact on the banking sector of the economic downturn in Dubai".
Standard & Poor's Ratings Services have placed on credit watch with negative implications its longterm counterparty credit ratings on Emirates Bank International PJSC (EBI), National Bank of Dubai (NBD), Mashreqbank and Dubai Islamic Bank (DIB).
The rating agency said the "A-1" short-term ratings on EBI, NBD, and Mashreqbank were also put on credit watch with negative implications, while the "A-2" short-term rating on DIB was affirmed.
"This action reflects our growing concerns regarding the impact on the banking sector of the economic downturn in Dubai," it said in a statement. These banks have a hand in Islamic banking.
MashreqBank, the largest private bank in the United Arab Emirates (UAE), is involved in Islamic finance via its subsidiary Badr Al-Islami. DIB badges itself as the world’s first full Islamic bank.
S&P said the outlook for Dubai's economy has worsened relative to last year and the global economic downturn has been hurting some of Dubai's key economic sectors including trade, tourism, and commerce.
"Demand in the all-important real estate sector also continues to show clear signs of stress, with indications that a sharp correction is underway.
"As a result, we expect Dubai's economy to contract between 2% and 4% in real terms in 2009, putting pressure on banks' asset quality and profitability.
"Dubai is a small open economy that can do little to shield its key sectors from the impact of a fall in external demand in the coming months," it said.
S&P said the rating actions on EBI, NBD, and DIB also reflect its concerns that the government may use these banks to support the refinancing that is soon coming due of the debt of other government-related entities (GREs).
"We have already noticed that these banks are important participants to the refinancing of Borse Dubai's debt that matured in February 2009.
"We understand that these banks received deposits to neutralise the impact on their liquidity profile," the ratings firm said. Taking into account the important amount of Dubai GRE debt that is soon coming due, S&P believes that additional directed lending to these entities would increase credit and concentration risk.
On a positive note, it said Dubai's establishment of a US$20 billion (RM72.91 billion) bond programme at the government level and issuance of US$10 billion that was fully subscribed by the UAE central bank somewhat alleviate liquidity pressure.
"We are concerned about Dubaibased banks' exposure to the real estate sector — about 20% of total loans at year-end 2008 — in light of the marked deterioration of this sector," it said.

(This story appeared in The Malaysian Reserve on Mar 23, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Temenos Adding Software Clients, Chairman Koukis Says

Temenos Group AG, the Swiss maker of banking software whose clients include the Bank of England, says it has added new clients this quarter and expects 'signs of recovery' in the financial industry toward the year’s end, reports Bloomberg.
"The life-line of our business is new sales and that is going better than the environment would indicate," Chairman Georgios Koukis said in an interview at company headquarters in Geneva. "We’re signing deals."
The agency reported that on Jan 14 Temenos fell the most in more than six years in Zurich trading after full-year profit missed the company’s forecast. More than 10 deals slated for the final quarter were delayed as clients, reeling from the collapse of Lehman Brothers Holdings Inc., learnt of restructuring at Merrill Lynch & Co., Morgan Stanley and Goldman Sachs Group Inc.

Unicorn Investment Bank Announces 2008 Net Profit of US$35

Unicorn Investment Bank BSC (Unicorn) announced a record 2008 operating profit of US$73.8 million before impairments and fair value write-downs, an increase of 46% from US$50.4 million in 2007, it said in a statement on Mar 16. Net profit after impairments and fair value write-downs was US$35.0 million while earnings per share were 18.7 US cents. It said the results are the culmination of a strong year for Unicorn, in which the bank also further strengthened its capital and funding base. In January, it said the bank successfully closed a three-year syndicated commodity murabahah facility that was 'significantly oversubscribed' to raise US$125 million. It added that as a 'very conservatively-run' Islamic bank, Unicorn has no exposure to the toxic assets that have caused major losses to be incurred across the global banking industry. It added that the Bank has also deliberately avoided the real estate and listed equity markets and so has avoided the market losses that are affecting some institutions.

Saturday, March 21, 2009

IIIBF makes progress with 8 MOUs

KUALA LUMPUR, March 20 (Bernama) -- In less than four years of its inception, the IIUM Institute of Islamic Banking and Finance (IIiBF), has made tremendous progress.
This includes inking eight memorandum of understandings (MoUs) and collaboration with local, international private and governmental entities.
The International Islamic University of Malaysia (IIUM) rector, Datuk Seri Dr Syed Arabi Idid said today the areas of interest were mostly in training, research and consultancy, with some of the MOUs offering PhD programmes in Islamic banking and finance overseas, such as Bahrain.
The IIiBF would also introduce here a home financing scheme based on Musharakah Mutanaqisah, using the cooperative model in collaboration with Canada's Ansar Financing and Malaysia's Angkatan Koperasi Kebangsaan Malaysia Bhd.
"The IIiBF's vision is to aspire to become an international centre of excellence for education, research in Islamic banking and finance and this is in view of the rapid global growth and expansion of the industry.
"It is also due to the urgent need for capacity building, particularly in relation to balanced, knowledgeable, human resource and expertise as well as the mission of reviving the Ummah's competitive edge in economics and finance," he said in his speech at the soft launch of the IIiBF here.
The event was graced by Bank Negara Malaysia deputy governor, Datuk Mohd Razif Abdul Kadir.
Citing the McKinsey's World Islamic Banking Competitiveness Report 2007/08, Syed Arabi said the industry had been expanding at an annual rate of 15-20 percent and was at present in more than 75 countries with over 300 Islamic institutions worldwide.
Islamic assets are set to hit US$1.4 trillion by 2010 and a 25 percent growth for the same period, he said.
"Based on the asset employee ratio, the estimated global employment needs of the industry in 2007 was 91,995 and in 2020, it will be close to two million.This is an average of 135,000 staff per year," he highlighted.
Meanwhile, he said the growth rate of the Islamic banking industry was enormous in Malaysia at 18-20 percent.
He added that Bank Negara envisaged a 20 percent increase in the market share of Islamic banking institutions by 2010.
Syed Arabi said the IIiBF had recently come up with its five-year strategic plan until 2015, including offering academic courses like the PhD, professional certificate programmes, joint masters, as well as publications such as student dissertations and joint publications among academicians and practitioners.
He added that the IIiBF was also looking to innovate and develop new products, find joint research to commercialise new products and evaluate existing products for re-engineering.
Meanwhile, Mohd Razif said it was important for the industry to come up with a differentiation in products to attract customers and that the IIiBF could play a role in enhancing its development.
"This is where scholars come in. If we don't start now, it will not happen," he said, adding that, Malaysia had a comprehensive Islamic finance system with banks having an Islamic window while five more are full fledged Islamic institutions. -- BERNAMA

IIUM helping to build up Islamic finance talent pool

By Roziana Hamsawi
International Islamic University Malaysia (IIUM) is helping to build up the pool of skilled professionals to serve in the Islamic finance sector, reports Business Times.
Its Institute of Islamic Banking and Finance (IIiBF) has so far signed eight memorandums of understanding (MOUs) and collaborations with local and foreign institutions in the areas of training and research since its inception four years ago, said the business section of the New Straits Times.
One of the MOUs involved IIiBF offering a PhD programme in Islamic banking and finance in Bahrain to develop Syariah manuals and banking products.
The MOU will also offer training and consultancy in Malaysia and abroad, IIUM rector Professor Datuk Seri Dr Syed Arabi Idid (picture) said at the soft launch ceremony of IIiBF Damansara campus in Kuala Lumpur yesterday [Mar 21] by Bank Negara Malaysia deputy governor Datuk Mohd Razif Abd Kadir.
Syed Arabi said since 2005, IIiBF has offered postgraduate diploma in Islamic banking and PhD in Islamic Banking and Finance. It will soon offer Master of Science in Islamic Banking and Finance.
He said certificate programmes in Sri Lanka and a joint programme with an institution in Singapore have also been conducted.
Within the next five years, five more academic programmes and professional certificate courses are in the pipeline involving institutions from countries such as China, India, Maldives, Kazakhstan, Indonesia and the UK, he said.
IIiBF currently has 78 students, where 30 of them are foreigners from 15 countries.
Syed Arabi said with the new campus, student population is expected to increase by two third to 130 within the next two years.
He added that IIiBF aspires to become an international centre of excellence for education and research in Islamic banking and finance, in line with Malaysia's position to be the international Islamic financial hub.
He said Bank Negara Malaysia's encouragement that institutions of higher learning get more involved to meet the manpower needs of the Islamic finance industry is highly welcomed. (Business Times, Mar 21, 2009)

Thursday, March 19, 2009

SALMAN: Sukuk mart’s prospects ‘very encouraging’

Malaysia is expected to further cement its leading position in the Islamic finance industry, particularly in the face of the present economic crisis, as it has laid a strong foundation after being one of the earliest entrants into the sector.
The long-term prospects for the sukuk market — being one of the core components of Islamic finance — remain "very encouraging", said Kuwait Finance House (M) Bhd managing director Datuk K Salman Younis.
He told a media roundtable discussion in conjunction with the celebration of the Dow Jones Islamic Market (DJIM) Indexes' 10th anniversary in Kuala Lumpur yesterday that the local Islamic finance industry is growing at a much faster pace as compared to 2005, when KFH first started its operations here.
This is due to the wealthy regulatory framework that has created great flexibility for players in the industry here. Salman said: "We see a great deal of potential in the asset management business, not only in Malaysia, but in the region."
According to him, in view of the global financial crisis, KFH will strive to capitalise on its regional presence and knowledge of the market by seeking opportunities to invest in assets at valuations not previously made available to general investors.
Meanwhile, Dow Jones Indexes Asia-Pacific and the Middle East sales senior director Sumeet Nihalani said, "The 10th anniversary of of the Dow Jones Islamic Market Indexes is an important milestone for Dow Jones Indexes, which pioneered the space of Islamic indexes and has been providing institutions with a tool to benchmark the performance of Shariah-compliant portfolios."
The DJIM Indexes serves as a benchmark for institutional investors for portfolio construction and performance comparison and is now utilised as a basis for many investment products.
It was launched in February 1999 as the first benchmark to measure the performance of Shariah-compliant investable equities. Since then, it has expanded to more than 100 indexes for all major establishes and emerging financial markets, regions and sectors.
These Islamic indexes are from the Asean, Brazil, Russia, India and China (BRIC) and Gulf Cooperation Council (GCC) regions, as well as for global and Malaysian blue-chips.
In a statement, Dow Jones Indexes president, Michael A Petronella said that the company has continuously expanded the DJIM index series and is also the first in sukuk indexing and combining Islamic with sustainability criteria in the DJIM Sustainability Index.

(This story appeared in The Malaysian Reserve on Mar 19, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

KFH: Less than 15% exposure to property

Although Kuwait Finance House (Malaysia) Bhd (KFH) gained prominence through its participation in some high profile property development projects, real estate only forms less than 15% of its total investment portfolio, reports Financial Dialy.
KFH managing director and chief executive officer Datuk Salman Younis said the group was in fact well diversified, and the impression that KFH's assets were concentrated on property investments was mainly due to them being involved in high profile commercial property projects in prime locations.
"In view of the slowdown in the property development sector, KFH now sees the opportunities to expand further into healthcare and food industries. We want to take the lead in supporting the domestic economy, particularly sectors that would benefit from the stimulus package,” Younis said during a briefing by Dow Jones Indexes on economic and Islamic finance outlook for Malaysia and the region here on Mar 17, the newspaper reported.
The report said some of the more prominent property investment and financing projects involving KFH include being a shareholder in the entity that is the master concessionaire and land developer for the Cultural Cluster of Medini in Iskandar Malaysia. KFH was also the joint lead arranger for a syndicated facility of up to RM250 million for Al-'Aqar KPJ REIT's acquisition of nine properties. In addition to financing facilities for property projects, KFH has lead arranged a syndicated US dollar financing facility for AirAsia Bhd to purchase three new A-320 aircraft from Airbus.

JOB: Senior Islamic finance structurer in Malaysia

A bank is looking to hire a senior person to head up their structuring and product development team in Malaysia, covering South East Asia, according to an undated advertisement.
Among the responsibilities that comes with the job are structuring and originating sukuk products within debt capital market and covering exchangables and convertibles.
The person will also be structuring multi asset Shariah-compliant hedging solutions across interest rates, foreign exchange and commodities for regional clients, including Malaysia, Singapore and Indonesia.
The ideal candidate, according to the advertisement, will be from a capital markets background or an Islamic Finance structuring team covering multi asset derivatives for hedging solutions, preferably from vice president level.

Wednesday, March 18, 2009

Islamic investors snap up sukuk ijara as risks grow

KUALA LUMPUR: As the global downturn drags on, battering investor confidence and asset values, Islamic finance markets are expected to increasingly favour the certainty of lease-based bonds over profit-sharing structures to minimise risks, reports Reuters.
With key sectors such as Dubai property and Malaysian manufacturing in a slump, Islamic banks have grown wary about financing through the once-popular musyarakah structure that requires lenders to share a project's risks and rewards, it added.
The report, dated Mar 17, quoted Rodney Wilson, an Islamic finance specialist with the Qatar Foundation, as saying: "Musyarakah-based sukuk involves market exposure and not solely exposure to default risk as with ijara sukuk.
"Given the current uncertainty in equity markets, I do not believe many potential sukuk investors would want musyarakah sukuk in present circumstances. If the market revives and confidence is restored, this may change, but this is unlikely in 2009."
Issuers and investors are expected to lean towards ijarah or rental-based financing where possible, or look to create new lending structures in the US$100 billion (RM370 billion) sukuk, or Islamic bonds, market, it added.
In musyarakah, parties contribute capital to a venture with profits to be shared according to an agreed ratio, while losses are generally divided as per the capital contribution ratio. Sukuk ijarah, rental bonds that are embraced by syariah scholars worldwide, were the most popular form of Islamic bond last year, according to rating agency Moody's.
The report also said Standard & Poor's estimated that more than 45% of Islamic bonds issued in 2008 were structured according to the ijarah principle.
Ijarah is a lease where a bank buys an asset and rents it to its client for a fee that includes the purchase price and the profit rate to be earned by the bank during the rental period.
Favoured for its relatively simple structure and widespread endorsement by syariah scholars, the popularity of sukuk ijarah received a boost after an industry regulator cast doubt on the validity of sukuk mudharabah and musyarakah.

Tuesday, March 17, 2009

Amanie lends a hand in maiden Kazakh sukuk

By Habhajan Singh
A Malaysian based consulting firm is involved in launching the maiden Shariah-compliant fund and sukuk in Kazakhstan, a former Soviet republic which had just recently passed the legislations necessary for the development of Islamic finance.
Amanie Business Solution Sdn Bhd, an Islamic finance consulting outfit based in Kuala Lumpur, is working closely with Kausar Consulting from Kazakhstan in structuring the two products in what is surely one of the first few Islamic finance instruments being developed in the Commonwealth of Independent States (CIS) region.
CIS' countries include former Soviet Republics, including Armenia, Azerbaijan, Kazakhstan, Kyrgyzstan, Turkmenistan, and Uzbekistan.
Together with Western China, the region is said to be home to some 100 million Muslims. "Some of the work may be done out of Kuala Lumpur," said Amanie consultant Razi Pahlavi Abdul Aziz.
Amanie, led by respected Islamic finance scholar Dr Mohd Daud Bakar who also chairs the Shariah Advisory Council of Bank Negara Malaysia, has been involved in assisting Kazakhstan in putting in place its Islamic finance regulations.
On Feb 12, Kazakhstan president Nursultan Abishuly Nazarbayev signed into law amendments to allow for the introduction of the Islamic banking system in the republic.
The document is called "On introduction of amendments and supplements to certain legislative acts of the Republic of Kazakhstan concerning the issues of organisation and activity of the Islamic banks and organisation of Islamic financing".
"The working group for developing this law was created in mid-2007," said Kausar Consulting managing partner Yedige Alpysbay.
It consisted of representatives from local banks, the Agency for Regulation and Supervision of Financial Markets and Financial Organisations (FSA), National Bank of Kazakhstan (the central bank) and consulting firms specialising in Islamic finance including Kausar Consulting.
The Malaysian delegation consisting Amanie consultants and delegates from the Asian Islamic Investment Management (AIIMAN) attended the last sitting of the working group to review the draft of the law before it was presented to the Kazakhstan parliament.
"Kausar has a strategic partnership with Amanie," Alpysbay told The Malaysian Reserve in an email response. Kazakhstan is the first former Soviet Union republic to develop a legal framework for Islamic finance and at least three Islamic banks are expected to be launched.
In a statement released in Kuala Lumpur on March 5, the Kazakhstan embassy said the republic is the first of the Commomwealth of Independent States (CIS) country to develop a legal framework for Islamic finance.
"The importance of a legal framework for Islamic finance in Kazakhstan emerged a few years ago and was well supported by government bodies and the private sector," it said.
A number of Malaysian experts in Islamic finance, including the country's largest law firm, are said to be involved in the process of crafting the regulations.
On Nov 27, last year, The Malaysian Reserve reported that Zaid Ibrahim & Co had been appointed to ensure Kazakhstan's proposed Islamic banking laws are in line with prevailing international standards.

(This story appeared in The Malaysian Reserve on Mar 16, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Nigeria climbs on Shariah banking bandwagon

The Central Bank of Nigeria (CBN) has released a draft framework for the regulation and supervision of the Shariah banking system.
It is understood that the regulator has said that all licensed banks offering Shariah-compliant financial products or services should have a Shariah compliance review mechanism and a Bank Shariah Advisory Committee (SAC) as part of their governance structure, All Africa Global Media said in a report dated March 11.
The CBN guidelines stated: "In line with the provisions of Section 39 (1) of BOFIA 1991 (as amended), banks offering non-interest banking products and services shall not include the word 'Islamic' as part of their registered or licensed name."
"They shall, however, be recognised by a uniform logo to be designed and approved by the CBN. "The CBN shall require all the banks' signages and promotional materials to carry the logo to facilitate recognition by consumers," All Africa Global Media quoted the CBN as saying.
According to the wire's economic intelligence, the guidelines state that non-interest banks shall be licensed in accordance with the requirements for a new banking licence to be issued by CBN from time to time, including a non-refundable application fee of N500,000 (RM12,680) and deposit of minimum capital of N25 billion with the CBN.
According to the guidelines, six months after the grant of approval-in-principle (AIP), the promoters of a proposed bank must also submit application for the grant of a final banking licence with a non-refundable licensing fee of N5 million payable to CBN, the report added.
The report added that all licensed banks or promoters wishing to offer non-interest banking products and services, according to the apex bank, may operate using models such as full-fledged non-interest bank or subsidiary which shall be licensed in accordance with the current guidelines for licensing of banks issued by the CBN.

BRITAIN: Islamic finance firms in Britain sitting pretty

Neill Gibson, a partner in Trowers & Hamlins who works on many Islamic finance matters, told The Times in a recent article that Islamic finance would not have touched the subprime markets "but it won’t have been protected from other badly hit sectors, such as real estate".
The article entitled "Crossing over to Islamic banking: Shariah-compliant finance is prospering in Britain", quoted a lawyer dabbling in Islamic finance as saying that Shariah can permit certain futures and options structures, such as the "salaam" (sale contract with a deferred delivery) and "arboun" (sale contract with a non refundable deposit), it prohibits convoluted derivative products.
"An asset has to be visible. If you can’t see it, it’s unlikely to be Shariah-compliant," Hamid Yunis, the head of the law firm Taylor Wessing’s Islamic finance practice, said in the report. The article began by saying that as the credit crunch has mutated inexorably into a recession, with bankers having eclipsed politicians, lawyers and even journalists as public enemy number one, the growing number of Islamic finance institutions in Britain might just be sitting pretty.
It noted that UK now has five fully Shariah-compliant banks and another 17 financial institutions have set up special branches or firms.
They include the Qatar Islamic Bank (QIB), with its London-based European Finance House in Berkeley Square, and the Islamic Bank of Britain, which has headquarters in Birmingham. The report also quoted an Islamic bank marketeer as to why Shariah banking would have survived the onslaught of the credit crisis. "Our core business will always be Muslims but the number of non-Muslims are really picking up.
"We’ve had massive interest — and that’s down to a number of reasons, all of which have kept us insulated from the credit crunch," said Steve Amos who heads marketing at Islamic Bank of Britain. He alludes to the nuances of Islamic banking — specifically that Islamic finance has to be Shariah, or Islamic law, compliant.

VATICAN: ‘Islamic finance may help Western banks in crisis’

Vatican City: The Vatican said banks should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis, reports Bloomberg.
"The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service," the Vatican’s official newspaper Osservatore Romano said in an article in its latest issue on March 3, it said.
The news agency reported that author Loretta Napoleoni and Abaxbank Spa fixed income strategist, Claudia Segre, say in the article that "Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral". Sukuk may be used to fund the "car industry or the next Olympic Games in London," they say.
Pope Benedict XVI in an Oct 7, 2007, speech reflected on crashing financial markets saying that "money vanishes, it is nothing" and concluded that "the only solid reality is the word of God."The Vatican has been paying attention to the global financial meltdown and ran articles in its official newspaper that criticise the free-market model for having "grown too much and badly in the past two decades."

Friday, March 13, 2009

MIDF Investment to tap local talent

By Habhajan Singh
MIDF Amanah Investment Bank Bhd (MIDF Investment) is pinching back a local talent in Islamic finance from the Middle East as its new deputy chief executive officer, sources says.
Mohamad Safri Shahul Hamid, currently with Deutsche Bank Dubai and previously at CIMB Islamic Bank Bhd, is understood to have accepted MIDF Investment's offer and is in the final stages of getting Bank Negara Malaysia's (BNM) clearance.
It is understood that the appointment signals MIDF Investment's move to tap the growing Shariah-approved financing, including cutting sukuk deals.
For 2008, Malaysia remained the world's largest sukuk market, accounting for more than 37% of global sukuk issuances in that year.
Safri, 37, is currently the director of global markets and head of Islamic structuring at Deutsche Bank Dubai.
He left CIMB Islamic almost a year ago as the director and head of debt capital market.
He was involved in groundbreaking and complex sukuk transactions, both onshore and offshore, including Khazanah Nasional Bhd's exchangeable sukuk.
"Some time ago, the talk was that he may be coming back to spearhead Deutsche Bank's Islamic operations in Malaysia," said an industry executive.
This was most likely in reference to newsreports in February 2008 that HSBC Malaysia and Deutsche Bank had received the go ahead by regulators to set up dedicated Islamic banking subsidiaries.
It had been reported then that Deutsche Bank had appointed Safri to lead its Malaysian operations. The idea was for him to be stationed in Dubai first before moving back to Kuala Lumpur.
Since then, HSBC has unveiled its Islamic subsidiary, HSBC Amanah Malaysia Bhd. Other foreign banks that have followed suit are Standard Chartered Saadiq Bhd and OCBC Al-Amin Bank Bhd.
Deutsche Bank has yet to do so.
Malaysia is the first South-East Asian country in which Deutsche Bank has opened an office.
In 2006, it was the lead arranger of foreign currency bonds for local corporations following Penerbangan Malaysia Bhd's US$1 billion (RM3.69 billion) transaction.
At MIDF Investment, Safri will report to its chief executive officer Datuk Megat Hisham Megat Mahmud.
MIDF Investment is the rebadged investment bank setup in 2007 following an internal restructuring at Malaysian Industrial Development Finance Bhd (MIDF), a subsidiary of Permodalan Nasional Bhd (PNB).
It is an integration of four companies within MIDF’s investment banking division — Amanah Short Deposits Bhd, Malaysia Discounts Bhd, MIDF Sisma Securities Sdn Bhd and the former Utama Merchant Bank Bhd.
On the Islamic front, MIDF Investment was the principal adviser and lead arranger in a RM350 million debt capital market transaction for Tanjung Langsat Port Sdn Bhd.
It involved a RM250 million sukuk musyarakah and up to RM135 million musyarakah commercial papers/musyarakah medium term notes programme.
It also acted as the joint lead arranger and underwriter for Sabah Ports Sdn Bhd's RM150 million Islamic securities comprising RM80 million bai bithaman ajil Islamic debt securities and RM70 million murabahah underwritten notes issuance facility.

(This article appeared in The Malaysian Reserve, page 1, Mar 13, 2009. the business/financial daily has a dedicated sector page on Islamic finance on Mondays, edited by Habhajan Singh)

Bursa Malaysia to launch the Commodity Murabahah House

Bursa Malaysia Bhd plans to launch the Commodity Murabahah House (CMH), an international spot commodity platform which operates under Shariah requirements, by middle of this year.
"Currently, Islamic financial institutions are using commodities which are traded on the London Metal Exchange (LME). So, we are creating an alternative platform for Islamic banks," Bursa's chief executive officer Datuk Yusli Mohamed Yusoff said on Mar 12.
He was speaking at a press conference at the 20th Annual Palm and Lauric Oils Conference and Exhibition 2009: Price Outlook 2009/2010 which ended in Kuala Lumpur.
The CMH infrastructure will be developed as a spot commodity market that uses crude palm oil (CPO) as the underlying commodity to facilitate Islamic financing based on the Murabahah concept. Yusli said the commodity-based Murabahah transactions would be the first for Malaysia that used CPO-based contracts.
"It has never been done and we are creating it here. We are combining Islamic finance and commodity which are our areas of strength in Malaysia," he said.
According to Yusli, CMH has received good support from palm oil producers who have committed substantial value of crude palm oil to be used as the underlying commodity. — Bernama

Thursday, March 12, 2009

KFH slows down expansion

Islamic banking outfit Kuwait Finance House (KFH) will be slowing down the expansion of enw business in Malaysia owing to the more difficult operating environment at present, reports weekly The Edge.
Datuk Salman K Younis, managing director of KFH (Malaysia) Bhd and regional head for Asia Pacific, told the weekly in an email statement that factors such as higher cost funding have affected its profits and the 'viability' of some of its funding structures.
He told the weekly that as "Islamic banking is based on profit sharing, this requires due diligence, risk sharing and the standards of transparency and disclosure are definitely higher. Therefore, we have to be more stringent and prudent in our due diligence exercises."
Despite the slowdown in business, he report quoted Salman as saying that KFH will still be on the lookout for potential acquisitions, particularly small to medium companies in financial trouble.
"For the local ringgit market, the problem, if any, woudl be credit crunch as opposed to a liquidity crunch," he told the weekly.

Tuesday, March 10, 2009

Huge potential in Islamic estate planning

By Dafizeck Daud
The potential for Islamic estate planning business in the country remains positive due to the huge number of Malaysian Muslims who have not made their "wasiat" — a declaration made during a person's lifetime with respect to his/her property to be carried out for the purpose of charity or other purposes permissible under the Shariah law after his/her death.
The number is estimated to stand at five million Muslims.
"Of these five million Muslims, only 2% of them have made their wasiat. A lot of us tend to think 'there's always tomorrow' and procrastinate (when it comes to making a wasiat) because we sometimes forget that we don't determine when we should 'go'... we just don't know," as-Salihin chief executive officer Abdul Aziz Peru Mohamed said.
The main issue now is about creating awareness, he said adding that: "If we keep disseminating the information, sooner or later Muslims will realise the importance of having their wasiat done.
"We need to have an instrument to safeguard the welfare of our children and grandchildren once we are gone from this world".
Industry experts stressed the importance for Muslims to have an effective distribution method for their property upon their demise.
"Whatever (assets) that you have, you'll need to have an instrument for how to go about distributing it when you're not around, so it's a tieup to their (present) financial planning concepts" more so for high net worth individuals, they said.
"Faraid" is the Islamic Law of Succession, which concerns the entitlement of beneficiaries in a deceased Muslim estate and not its distribution.
The concept of faraid has been generally misunderstood by a number of Muslims who fail to appreciate the twin roles of faraid and wasiat in Islam. When a person who dies leaving everything he has to be distributed in accordance with faraid, it may not have appreciated, such as the economic significance of his decision action.
For example, a person dies intestate (without having a wasiat or will) leaving a wife and five daughters and a brother as heirs, with a house and a car as the only assets. Faraid would then determine the respective shareholdings of each of the heirs.
To obtain the benefit of their inheritance, the properties would have to be sold before the proceeds can be divided accordingly. However, each beneficiary must agree to actually have the assets sold, otherwise the property would be left stagnant.
The position would be different if the deceased has made a wasiat, Abdul Aziz said.
The deceased can still decide in his wasiat to divide the assets according to faraid but the wasiat will provide the executor with wide discretion to sell the assets without the necessity of having to obtain any consent from the beneficiaries. From the proceeds of sale, division of the estate can be done without much delay.
Under the Islamic Law of Inheritance, assets of a deceased Muslim are apportioned among designated heirs in pre-ordained shares. For example, if a husband dies leaving only his father, a wife, a daughter and a son, his assets after payment of all his debts, would be divided according to the faraid rules with the father getting a one-sixth share, the wife one-eighth, while the son and daughter receiving the residue in the ratio of two shares for the son and one share for the daughter.
That being the case, many Muslims tend to be under the impression that writing a wasiat, that is a Muslim will, is unnecessary and a waste of time. But a wasiat is not merely doing what Muslims are encouraged to do by no other than the Prophet Muhammad himself.
Neither is it simply the putting into words of how one wishes to distribute one’s estate to specific beneficiaries in the event of one’s death.
More importantly, the mechanism of a wasiat makes it possible for the deceased, while still alive, to choose a trusted person as an executor for the purpose of administering his estate in accordance with his wishes once he leaves for the hereafter.
Furthermore, in the case of a male testator, he is empowered by Muslim law to appoint a person whom he trusts most as a guardian of the property of his minor children. According to experts, the existence of faraid or Islamic Law of Inheritance does not mean that a person entitled under it can obtain his entitlement under a deceased estate immediately upon the occurrence of the death of the deceased person.
The assets and liabilities of a deceased person fall under the generic term of "estate". The estate of a person who dies without leaving a wasiat is called an intestate estate (as opposed to a "testate estate" where a person dies leaving a wasiat). Many steps would have to be taken before a beneficiary of an intestate estate can enjoy the fruits of his inheritance.
Various provisions of the Probate and Administration Act 1959, the Small Estates (Distribution) Act 1955, the relevant Administration of Islamic Law Enactment in addition to the Rules of the High Court 1980 need to be complied. Abdul Aziz noted that the various obstacles described above can be greatly lightened if the deceased has, during his lifetime, made his wasiat and appointed a trustee company as executor.

(This story appeared in The Malaysian Reserve on Mar 11, 2009 in the Wealth Squared section. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

as-Salihin stays positive despite global financial crunch

By Dafizeck Daud
as-Salihin Trustee Bhd, the first "one-stop" Islamic estate planning corporation in Malaysia, expects its business to continue growing despite the present global economic crunch, said its chief executive officer Abdul Aziz Peru Mohamed.
The company, which commenced business barely three years ago, is set to expand its services beyond the Malaysian shores, with its eyes on Singapore. Operations should start within the first half of this year, Abdul Aziz said in an interview with The Malaysian Reserve recently.
In Singapore, the Islamic estate planning products will be distributed through individual agents and tie-up with a "big party there".
However, Abdul Aziz said as-Salihin has not decided whether it should set up its own office in the republic. In addition, the company is exploring opportunities in oil-rich Brunei.
With over 200,000 Muslims and widely known for its wealth, the country represents a potentially good market for as-Salihin. Abdul Aziz disclosed that the company has also tied up with two other banks — Kuwait Finance House (Malaysia) Bhd and United Overseas Bank (Malaysia) Bhd — in addition to RHB Islamic Bank Bhd for the distribution of its Islamic estate planning products.
"We are also waiting for the finalisation of tie-ups with two other banks which will be announced in due course," said Abdul Aziz.
He explained: "What we are doing now is not competing but rather complementing the banks' basket of products. For example, they are already offering deposit, insurance or takaful products and here (with as-Salihin Islamic estate planning instruments) they are looking at the distribution side of it."
Abdul Aziz added that with the challenging investment environment, banks are also looking at how to increase their fee-based income.
The arrangement to distribute as-Salihin's instruments is one way of doing this. According to him, the arrangements with these banks are to serve the local market even though the products can be exported as they are based on the universal Shariah law.
"But we also have to look at each country's civil laws so as to enable the company to administer the estate in accordance to the laws of a specific country," he added.
On the prospects for the company's business, Abdul Aziz noted that last year, as-Salihin's business grew 45% from that of 2007. This year, he expects revenue to grow by another 45%-50%, as the business "is not impacted by the current economic scenario".
Abdul Aziz is optimistic 2009 will be another good year for as-Salihin with the bank tie-ups and steady growth of its agents base.
The number of agents is expected to grow by about 800 to 1,000 people from its current base of 1,300.
Abdul Aziz said "Our main focus will remain the Klang Valley, Johor and Penang as we already have good strongholds in these locations. "While for the banks, we can leverage on their channels of distribution located all over the country."
To cater to its growing operations, as-Salihin will be moving to a new office at the Glomac Business Centre in Kelana Jaya by April or May this year.

(This story appeared in The Malaysian Reserve on Mar 11, 2009 in the Wealth Squared section. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Bank Muamalat completes RM500m capital-raising exercise

Bank Muamalat Malaysia Bhd announced on Mar 10 that it has completed a capital-raising exercise amounting to RM500 million of Tier-1 capital.
The exercise relates to the issuance of 500 million ordinary shares to its shareholders, DRB-Hicom Bhd (70%) and Khazanah Nasional Bhd (30%), effectively raising the bank's total capital to RM1 billion.
Following the exercise, the bank's risk weighted capital ratio has strengthened to an estimated 18.2% compared to 12.6% as at Dec 31, 2008, the bank said in a statement.
"This has put the bank in a strong capital position with capital ratios above the minimum regulatory requirements," it said.
Bank Muamalat said its core capital ratio has been similarly improved, increasing to an estimated 14.3% from 8.5% in the same period under review.
According to the bank, the exercise will further strengthened its balance sheet at a period where preference has shifted towards Islamic financial institutions.
"Bank Muamalat's enhanced capital position will provide the bank with a competitive advantage to strengthen existing relationships, seek out new markets and selectively expand the business," it said. — Bernama

BNM appoints 2 assistant governors

Bank Negara Malaysia (BNM) recently announced the appointment of Bakarudin Ishak (left) and Dr Sukhdave Singh (right) as assistant governors, effective March 5.
Bakarudin has served the central bank since 1985 and has held several senior positions, including as director of foreign exchange administration department and director of the Islamic banking and takaful department.
On Dec 1, 2008, he was appointed as the chief executive officer of Malaysian Electronic Clearing Corporation Sdn Bhd (MyClear).
"As Director of Islamic Banking and Takaful Department, Bakarudin had an important role in the Bank's efforts in the development of Islamic finance and in promoting Malaysia as an Islamic financial hub," BNM said in a statement.
Dr Sukhdave, who joined the bank in 1986 and holds a PhD in Monetary and International Economics from Vanderbilt University, USA, has served in the bank's economics department and headed monetary policy research. In 2005, he became the director of the monetary assessment and strategy department.
"He has chaired the Monetary Policy Working Group at the Bank in these recent years and has had a key role in the support provided to the Monetary Policy Committee at the bank," the bank said in the same statement.

(This story appeared in The Malaysian Reserve on Mar 11, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

OCBC Al-Amin expects double digit growth

OCBC Al-Amin Bank Bhd is expecting a double digit growth this year despite the gloomy economic outlook.
"Generally, it will be in the low end of double digit growth for both assets and income. This target is achievable due to our current base which is relatively small," said the bank's director and chief executive officer Syed Abdull Aziz Syed Kechik at the opening of a second branch and introduction of three Shariah compliant unit trust products.
For the financial year ended Dec 31, 2008, the bank's asset size was at RM3.7 billion. He also stated that the bank would open three more branches this year at a cost of RM3 million each.
"We will focus on efforts in opening the three branches, along with initiatives to develop innovative financial solutions for our customers," said Syed Abdull.
The unit trust products launched on Mar 10 are PRUdana al-islah, PRUdana Dinamik and HLG Islamic Income Management Fund, which are based on the Islamic principle of wakalah.
According to Syed Abdull, the products come with the flexibility to act either as an investment tool or a means of timely conversion into liquid asset. OCBC Al-Amin is the whollyowned Islamic banking subsidiary of OCBC Bank (Malaysia) Bhd. — Bernama

Monday, March 9, 2009

Sukuk pricing distorted by thin secondary market

Corporate issuers are eager to return to the Islamic bond market but a lack of secondary trading could distort the pricing of an estimated US$45 billion (RM166.5 billion) worth of sukuk in the pipeline and deter future issuance, Reuters reported on Mar 3.
The credit crunch and growing prospects of a global recession have virtually frozen sukuk markets worldwide, and the issue of distorted pricing could exacerbate issuers' reluctance to return to the markets, threatening a crucial source of funding for companies and governments, the report said.
"The problems would be in terms of the ability to price properly the sukuk. There is the issue of reluctance on the part of the issuer to issue in the sukuk market. If it's illiquid, then price distortion may occur, and it might reflect badly on them. It creates a benchmark for themselves," it quoted Badlisyah Abdul Ghani, chief executive of CIMB Islamic, which is the world's top sukuk arranger.
The report also said Mohamed Damak, credit analyst at ratings agency Standard & Poor's, recently estimated that globally pent up demand of more than US$45 billion is waiting to be released by issuers waiting for more favourable markets, while a report by McKinsey released in November estimated that only about 25% of total outstanding sukuk is listed.
Secondary sukuk trading in Malaysia, which was the world's second-largest Islamic bond issuer last year, according to Islamic Finance Information Service, is thin relative to the conventional market, it added.

Thursday, March 5, 2009

Continuous development needed in Islamic finance, says Zeti

By Alfean Hardy
Bank Negara Malaysia (BNM) sees the need for further forward looking business strategies, ethical market conduct practices and continuous investment in human capital development in the local Islamic finance sector to meet the challenges of the uncertain global economic situation, its governor Tan Sri Dr Zeti Akhtar Aziz said.
In a speech at the launch of Public Bank Bhd's Islamic subsidiary, Public Islamic Bank Bhd, in Kuala Lumpur on Mar 3, Zeti said the continued progress of Islamic finance in the local financial system had demonstrated that there was still further expansion and development of the sector in spite of the on-going global financial crisis.
"Malaysia now has a total of 17 Islamic banks, of which nine are the subsidiries of the domestic banking groups. Currently, the Islamic banking system in Malaysia has successfully positioned itself as a robust and competitive component of our financial system. Islamic banking assets now account for 17.4% of total banking assets while in the bond market, the sukuk market constitutes 57% of the total market as at end 2008," she added.
Zeti said while Malaysian banks are sound and well capitalised, and that the local economy is not over leveraged and its external posit ion remains strong, Malaysia, as an open economy, has already been adversely affected by global developments.
"During this challenging period, financial institutions including Islamic financial institutions have an important role to ensure the continuous access to financing by the private sector. Key to this is the forward looking business strategies being adopted by the banking institutions, the organisational structure and the operational capability that is being put in place," she added.
Zeti said there was also the need for ethical practices and human capital development, going forward.
"Not withistanding the success of Islamic finance, the global ramifications of the crisis also calls for more concerted efforts to bring the industry to a higher level of resilience," she said. "Of importance in this process is to embrace the values of Islamic finance of justice and fairness that benefits the society and the system. It is thus important for Islamic finance to transcend beyond just the pursuit of growth and monetary performance but also to emphasise ethical market conduct practices, in line with the principles of Maqasid al-Shariah or objectives of Shariah.
"Financial innovation, as has been shown in the recent crisis, has led to adverse consequences for the economy. By learning from the lessons of the recent crisis, the process of innovation in the formulation of Islamic financial products and services must be done carefully and in accordance with Shariah in its entirety and to take into account the distinct risk characteristics of Islamic banking," she added. Zeti also called for continuous investment in human capital development in order to create a larger pool of experts and high calibre professionals.
"This involves enlarging not only the existing talent pool but also building a robust pipeline of skilled human resources for the future," she said.

(This story appeared in The Malaysian Reserve on Mar 4, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)

Zainuddin appointed as new CEO of HSBC Amanah Takaful

Zainudin Ishak has been appointed the new executive director and chief executive officer of HSBC Amanah Takaful (Malaysia) Sdn Bhd. In a statement released in Kuala Lumpur on Mar 4, HSBC Bank Malaysia Bhd said Zainudin had 19 years of hands-on experience in managing a conventional and Islamic insurance company.
"Before he joined HSBC Amanah Takaful, he was the CEO of another local joint venture Takaful provider. "He led the company to deliver business results and pursued initiatives with the joint venture partner in leveraging Takaful expertise in Malaysia," it said.
Zainudin, 42, started his career in the Broking Division of a local insurance operator in 1989 and from then on, served in various capacities especially in sales and operations as well as the customer services division. — Bernama