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LATEST ARTICLES
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Digital sukuk issuance still faces the issue of uneven Shariah interpretation.
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Both Egypt and Turkey have recently been able to tap dollars more cheaply through sukuk.
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Islamic finance remains a federation of country-level success stories with no comparable global narrative. Does it matter if that’s where it stays?
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Islamic finance has a choice: continue on its existing path and consolidate its hard-earned gains in market share, or shake the whole thing up. One proposal calls for an end to the fractional-reserve banking system.
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The launch of an SRI-linked sukuk framework this summer is a blueprint for others to follow.
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Why do Saudi Arabia and Malaysia still overwhelm every other state in Islamic asset management?
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There has always been great overlap between Shariah-compliant finance and ESG principles. Malaysia is trying to harness the potential that arises from this confluence.
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Across every sector and region HSBC stands out for its commitment to developing partnerships and products that will bring finance at scale to create a more sustainable and resilient planet.
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Fraud, commodity prices and concerns over defaults have created a perfect storm for commodity trade finance – and the capacity of trading firms and finance funds to support the market remains unclear.
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Emirates NBD has excelled in all elements of its response to the Covid-19 pandemic, from steps taken to protect the health of its employees to loan deferrals for its customers; but what really stands out is the bank’s commitment to its community.
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HSBC has been central to maintaining imports of vital goods into the region, even while national borders slammed shut.
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Ahli United Bank, Bahrain’s largest bank by assets, reported a 5% increase in profits to $730.5 million and saw its cross-border business grow to 20% of its loan portfolio in 2019. Its takeover by Kuwait Finance House has been postponed until December due to the coronavirus outbreak, ruling it out of this year’s best bank award.
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The Middle East is a hard market in which to be truly sustainable, given the vast amount of money in the region that is tied to oil now and will be for some time.
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As the Middle East enters a new phase of development, one in which governments can no longer rely on endless petrodollars and in which economies built on global trade and travel will have to adapt to survive, it will need banks with outstanding M&A and advisory capabilities. Citi is such a bank.
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Under the stewardship of chief executive Jean-Christophe Durand, formerly head of BNP Paribas’s Middle East and Africa operations, National Bank of Bahrain (NBB) embarked on a radical transformation programme in 2017 that delivered impressive results during the awards period.
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Banking is evolving in Saudi Arabia – the Gulf’s largest economy – with government and regulatory initiatives boosting growth in the sector.
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Profit pressure is a threat to every bank, says Qatar Islamic Bank’s group CEO Bassel Gamal, discussing how Qatar’s robust and well-capitalized banking sector is navigating the twin shocks of lower oil prices and coronavirus.
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A draft law in the United Arab Emirates will see more family-run corporates listing, while pension reforms will create a huge pool of investable assets.
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Expect the unexpected with the former PM at a Vegas bunfight.
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Voted for by more than 7000 treasury professionals, find out which banks rank top in the Euromoney Trade Finance Survey 2020.
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Africa APAC CEE Latin America Middle East North America Western Europe
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Leading bankers in sustainable finance fear that, despite the advances and the rhetoric, the industry is not moving quickly enough. Euromoney asked 20 regional and global heads of sustainable finance for their views: what the experts think might surprise you.
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Euromoney has spoken to 20 sustainable finance experts about what is needed to bring about real progress. The last of our six recommendations is for efforts to be made to incentivize green finance.
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Euromoney has drawn up six recommendations for the sustainable finance sector, based on the views of 20 experts in the field. The fourth of our six proposals is to develop transition finance.
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$140 million green bond funding used to build… a petrochemical refinery.
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To reduce greenhouse gas emissions, clean up water supplies, prevent the loss of biodiversity, mitigate fire and flood risk and meet the nutritional requirements of a growing population the world must improve its regenerative and sustainable agricultural practices – new tools and support from the financial services industry are needed to fund that transition.
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Countries fall off the global financial grid for a host of reasons: political obtuseness, lack of sovereign recognition, the departure of correspondent banking relationships, even Ebola. But we make a mistake if we think of these places as distant and uninteresting curios
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Singapore has everything a market hub needs, but has not built on its regulatory environment.
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Blockchain has the potential to revolutionize trade finance, but a lack of standardization will hinder its adoption.
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Euromoney and its sister publication GlobalCapital are conducting a worldwide survey on the fast-growing area of sustainable financing and investing. Both issuers and investors are invited to take part.
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The vexed battle to finance small and medium-sized enterprises (SMEs) continues amid risk aversion, economic weakness, new regulations and banks’ balance-sheet repair. Here is a round-up of Euromoney's recent coverage.
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For nearly two decades Dubai has acted as the beating heart of Middle Eastern finance, but now its long-dormant rivals are mounting successful efforts to reclaim a piece of the action.
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Islamic finance has come a long way over the past few decades, maturing into a $2.4 trillion industry, but some long-term problems remain and the recent wrangle over a Dana Gas sukuk shows credibility is still an issue.
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Digital innovation has the potential to transform international trade, yet many argue that banks are lagging in replacing antiquated systems for trade with smart solutions. What is behind the delays?
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Veteran investor launches financial services firm to capitalize on reforms in Uzbekistan, while HSBC banker tapped to drive sovereign Eurobond debut.
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Islamic finance has become too focused on getting arcane structures to be technically Shariah compliant, but a new initiative in Malaysia attempts to make Islamic finance socially positive once more – and to measure its success.
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These are the areas that the United Nations says banks need to consider when accepting their responsibilities in shaping and financing a sustainable future.
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Over 20 years after microfinance first arrived in Kyrgyzstan, the largest players are transforming into banks to lower funding costs and increase financial inclusion. Can they convince the country’s farmers to put their cash into banks instead of cows?
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Welcome to Euromoney Trade Finance Survey 2019
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Euromoney's latest coverage of the bond markets in Africa.
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New policies, new hope – the Malaysian election has lots of positives, but not for anyone who is seen as having been a Najib acolyte. For them, the axe is already falling.
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The Middle East’s financial centres are keen to collaborate on fintech, in an effort to catch up with US, UK and Asian markets. But with rich pickings on offer, there is also stiff competition to establish fintech dominance.
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The country’s Employees Provident Fund puts considerable effort into Shariah compliance from an ESG framework. Could chief executive Shahril Ridza Ridzuan have hit upon a template for other Islamic funds?
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The impediments to providing more trade finance to emerging-market clients are well known, but that does not make them any easier to overcome. Could the ultimate solution be in turning trade finance into an attractive asset class for institutional investors?
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Banks in Qatar have been hit hard by its powerful neighbours’ unexpected blockade, but finance, just like other sectors of the Qatari economy, is finding ways to cope with this sudden realignment of regional alliances.
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Dana Gas, an Emirati gas company, is using Shariah non-compliance as an argument in its sukuk restructuring talks. That remarkable move, if successful, could undermine the whole system of trust built around Islamic finance in the Middle East.
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The 2017 Euromoney Trade Finance Survey includes quantitative and qualitative client assessments of their trade finance providers. This year for the first time, Euromoney has produced the Trade Finance Stars, based on the qualitative responses of clients, a ranking that recognizes providers with exceptional qualitative ratings in particular regions and in five areas of client service (full methodology here).
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The dearth of equity financing in the region plays into the hands of firms with strong debt franchises. The local banks are not leaving this business to the internationals and there is one local in particular whose efforts to develop its debt financing capacity should be recognized, not least for tapping into the local investor base.
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Events such as the rise and fall in the oil price and the steep devaluation of the Egyptian pound, made 2016 another eventful year for markets businesses in the Middle East.
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This year for the first time, Euromoney has produced the Trade Finance Stars, which recognizes providers with exceptional qualitative ratings in particular regions and areas of client service.
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Shariah savings scheme could be a game-changer; wealth push follows success in sukuk market.
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Best regional trade finance provider:
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The world seems to be turning away from globalization and towards protectionism. Yet despite this challenging environment for trade, the bankers who finance it remain surprisingly upbeat.
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The survey is designed to provide our readers with valuable information about the trade finance market. It asks participants to rank trade-finance providers across a selection of service categories and an overall, global category.
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International banks recently put up an unsecured loan for a Russian borrower with a parent on the US sanctions list. Has the loan market for unsanctioned investment-grade Russian borrowers just got broader, deeper and potentially cheaper?
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Dominance of global volumes continues; why aren’t others catching up?
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Digital initiatives boost Hong Leong Islamic Bank; Islamic finance fertile ground for fintech.
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Results index HSBC’s power in debt financing, allied with the strength of its balance sheet, is well known, but Stephen Williams’ capital financing team was no one-trick pony during our review period. It handled equity or equity-linked deals in Korea, Singapore, Taiwan and India as well as many of the deals that mattered most in Greater China. Among them were the $2.115 billion IPO of China Reinsurance and $2.54 billion IPO of China Huarong Asset Management which collectively re-opened regional equity fundraising markets in October. VRL Logistics in India was one of the most successful IPOs from the country for years.
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$100 million Islamic structured club facility
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M$100 million ($18.2 million) sustainable and responsible investment sukuk (Ihsan)
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£132 million ($187 million) secured Islamic facility
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UK Export Finance $913 million sukuk (Khadrawy)
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OR250 million ($650 million) sukuk
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The Shariah-complaint finance sector has been growing strongly, but only in a few jurisdictions and with limited product diversity. As oil-derived liquidity flows dry up in its core markets in the Gulf, what can it do to fix its lack of international reach?
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Euromoney highlights six of the strongest key innovations in Islamic finance from the last 12 months.
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Submission deadline Thursday 10th March 2016
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Trade Finance Survey 2016 full results Global 2016 2015 1 1 Deutsche Bank 2 2 UniCredit 3 3 Citi 4 4 HSBC 5 5 Commerzbank 6 14 Société Générale 7 12 RBS 8 6 Standard Chartered 9 20 ING 10 10 Santander
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Trade Finance Survey 2016 full results.
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Trade Finance Survey 2016 full results The survey is designed to give our readers valuable information with regard to the trade finance market and give them the opportunity to rank trade finance providers across a selection of service categories and an overall, global ranking of providers as rated by their clients.
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Islamic banks in the GCC may have two advantages over their conventional counterparts at a time of weak liquidity: loyal retail money and the ability to tap two investor markets
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Commercial Bank of Dubai pays up; Gulf Investment Corporation cancels deal.
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The drop in the oil price has combined with a general lack of liquidity to put issuers from Gulf states in an unfamiliar position. There may be no need to fear a crunch, but the region’s issuers must get used to the fact that they will have to pay up to raise capital.
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Interest rate of 26% for 165-day notes; international return inked in for 2016.
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Growing use of Islamic finance places greater importance on the ability of corporates to access hedging solutions that are complaint with Shariah principles.
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Asia’s rapidly changing corporate sector is becoming increasingly advanced in how it runs its treasury operations.
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Asia is home to an expanding corporate base that is becoming ever more sophisticated in how it runs its treasury function.
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The CEO of OCBC wants to show the Asian market that the bank is a force to be reckoned with outside Singapore, across all areas of financial services. A big acquisition in Hong Kong has made the market sit up and take notice.
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Best bank in Africa Standard Bank Best investment bank in Africa Citi Best equity house in Africa Citi Best debt house in Africa Barclays Best M&A house in Africa Rand Merchant Bank Best risk adviser in Africa Standard Bank Best flow house in Africa Access Bank Best transaction services house in Africa Standard Chartered Country Awards for Excellence 2015: Africa Awards for Excellence 2015: Results index
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Africa’s rich resources, natural and human, are luring capital, but investors will need to move fast.
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It is not without its challenges, but the economy is improving – steadily if unspectacularly.
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Best bank in the Middle East QNB Best investment bank in the Middle East HSBC Best debt house in the Middle East HSBC Best equity house in the Middle East HSBC Best transaction services house in the Middle East HSBC Best M&A house in the Middle East Citi Best flow house in the Middle East Standard Chartered Best risk adviser in the Middle East Standard Chartered Country Awards for Excellence 2015: Middle East Awards for Excellence Middle East press release Photos from the 2015 Middle East awards ceremony
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With expanding economies and hundreds of million Muslims, Africa deserves to be a bigger part of Islamic finance. After a slow start, there are signs the sector is beginning to gain the crucial mass and legislative backing it needs.
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As liquidity improves and conventional buyers become more familiar with it, the premium for issuing in an Islamic format is shrinking. Emerging market issuers may still hold the most promise for the future
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The growth and globalization of Islamic finance over the past decade has been a rare success story for the financial industry. Here, Euromoney examines the challenges the sector faces to rise to the next level. Throughout the section, we highlight the banks, advisers, issuers and companies that are moving the industry forward, in Euromoney’s inaugural Innovation in Islamic finance awards.
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International banks used to dominate Islamic finance. But their desire to innovate risked the market straying from its principles. Local and specialist firms have benefited from their withdrawal. But can they take Shariah-compliant finance to the next level without repeating the mistakes of the past?
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As Islamic banking ponders its next stage of development, it would be wise to consider the appeal of ethical investing.
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With expanding economies and hundreds of million Muslims, Africa deserves to be a bigger part of Islamic finance. After a slow start, there are signs the sector is beginning to gain the crucial mass and legislative backing it needs.
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Iraq is asking UK investors to help finance its war against Islamic State. Are pension funds equipped to mix politics with prudence?
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A host of new technology and new business models are aiming to transform the financial system. Many will fall by the wayside. But among them are potential winners that could be the Goldman Sachs or Nasdaq of the 21st century. Euromoney looks at the smart people and smart firms attempting to reshape finance.
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London is strutting its stuff as a world centre for fintech innovation to rival Silicon Valley and New York. The first-stage disruptors, challengers and innovators are now established and growing. Government and regulators want to build a better financial system and see technology as the key.
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Malaysia’s quest to create a regional champion with a large Islamic bank came to an end when a plan for a three-way merger was scrapped. The country’s second-largest lender by assets is now retrenching to boost returns and eyeing strategic acquisitions.
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Malaysia’s banking community prepares for the next chapter after an attempt to merge three banks ends in failure to complete the deal.
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Trade Finance survey 2015 full results
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Trade Finance Survey 2015 full results Best Regional Trade Finance Provider
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Trade Finance Survey 2015 full results
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Turkey’s president has tried to kick of one of the country’s largest banks into touch, through public attacks and behind-the-scenes pressure. Despite becoming a political football, Bank Asya is still in the game. Can Turkey’s reputation in the west as a place to do business survive Erdogan’s continued, politically-motivated vendetta?
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The overwhelming retail demand for the Saudi bank’s $6 billion listing raises questions about how the country’s equity market will respond to its opening up to foreign investors.
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Bahrain stuck in trading trough; Gulf markets are polarizing.
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The chief executive of the leading Turkish Islamic bank claims it is the victim of a politically driven campaign by the country’s president, in an exclusive interview with Euromoney.
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Malaysia gears up for consolidation in its financial sector as the three-way deal moves ahead.
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US-led airstrikes in Iraq have heightened security concerns among international banks and companies operating in the country, but despite the growing crisis, banking business is still being won on the ground.
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India needs a litany of reforms to unshackle its stalled capitalist project. Modi’s government should take inspiration from the paradox of Singapore’s activist state and strong private sector.
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South Africa issued its long-awaited debut sukuk on Wednesday in a bid to diversify away from conventional means of fundraising and attract investors in growth markets in the Middle East and Asia.
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In our September edition, Euromoney explores the challenges and opportunities for some of the world’s leading financial institutions in the Middle East, including a special investigation into Iran’s tentative economic and political rehabilitation in the eyes of international markets, Lebanon’s economy, UAE-India ties and Saudi Arabia’s equity-market revolution.
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Iran and the west don’t have to be friends, but there will be big benefits from a rapprochement.
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The Emirates’ economy has recovered much of the ground it lost in 2008. The country’s banks are taking advantage by growing strongly. Is there a danger of another round of overheating?
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After the Iranian Revolution overthrew the Shah in 1979 and the Grand Ayatollah Ruhollah Khomeini launched the Islamic Republic that exists today, there were a lot of assets the Shah and his followers had left behind as they fled Iran.
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In our September edition, Euromoney explores the challenges and opportunities for some of the world’s leading financial institutions in emerging markets, including BBVA’s bid to become the world’s first digital bank, Gulf banking, M&A in Malaysia and reforms to the Indian financial system.
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The debut issue of a five-year $1 billion sukuk this week is a statement of intent from Hong Kong that it is serious about Islamic finance, sending a strong signal to rival financial centres.
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A three-way banking merger is the biggest yet in Malaysia, part of a regional trend to boost domestic firms to compete locally and abroad. It would also give the country a big contender in Islamic finance
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The region’s markets are growing rapidly, and might even hit new highs this year. Meanwhile, a patchy record in growth and some important issuer absences do not seem to trouble international investors.
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The country is forging ahead in its aim of becoming a regional Islamic finance hub, issuing its debut sukuk in July. However, questions remain as to exactly how dedicated it is to reaching this goal.
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Senegal should focus on diversifying funding channels rather than marketing itself as an Islamic finance hub, which could limit investor interest.
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CIMB power grab looks set to shake up the region’s banking landscape.
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Statement of intent rather than a need for funds; DMO defends choice of leads.
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RBS has had to cease using BankTrade software after the US federal court upheld the bank was breaching copyright.
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Iraq’s economic potential may be enticing regional and western banks to develop operations there but the rise of the jihadist group is cause for alarm.
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This is no longer a straightforward award to give. There are at least five homegrown houses that can make a good case to be the best in the region.
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The Bahrain award is one of the easier ones in the region to decide upon; Ahli United is the leader on almost any metric. Its $579.4 million net profit for the 2013 financial year ($366.5 million after allowing for a one-off exceptional gain) was a record and a 25.7% improvement on the previous year, as well as being the biggest profit in the country’s banking industry. Total assets grew 9.3% to $32.65 billion; loans, 8.3%; customer deposits, 17.4%. NPLs are a healthy 2.4% and total provisions for those NPLs 149.4%, while the bank’s capital adequacy ratio now stands at 16.2%. Most of these metrics lead the industry.
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During a discussion on capital market development at the annual meeting of the African Development Bank in Rwanda, panellists argued sovereign sukuk issuance will finally take off this year in a bid to diversify sources of long-term dollar financing away from the Eurobond market.
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Issuance in ‘next financial year’; deal likely to be one-off.
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On top of the Aldar-Sorouh merger, the financing of the second phase of Emirates Aluminium (Emal) added to Abu Dhabi and the UAE’s resurgent confidence in 2013.
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Islamic finance roundtable: The new contest to be the capital of Islamic finance
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After the World Islamic Economic Forum was held in a Muslim minority country – the UK – for the first time. Euromoney quizzed the envoys of rival centres on their ambitions.
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Best Islamic local-currency deal of the year:
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Islamic finance deal of the year:
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Most innovative Islamic deal:
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Best Islamic project finance deal:
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2014 Results will be published 3 February.
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Lack of SME demand for funding might have been exaggerated. But many of those that seek funds might be risky prospects.
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Transaction banking: Transaction revenues stable but under pressure
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Inaugural sukuk issued; key constituent quietly leaves.
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Petrobras’s business plan to develop the pre-salt oil fields anticipates that the number of rigs and drillships with drilling capacity greater than 2,000 metres will increase to 65 by 2020 from 15 in 2010. Many of these deliveries will be financed by Petrobras suppliers through the capital markets. Since 2010, Moody’s has publicly rated around $5.4 billion in project bonds associated with the operational phase of offshore drilling and production equipment to be deployed off the coast of Brazil for Petrobras. These secured bonds use special purpose vehicles, but the main ratings component is Petrobras’s long-term operating contract for the rigs or drillships. These off-balance-sheet structures enable Petrobras to use its investment-grade rating to support these deliveries without an impact on its credit rating.
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Bankers discuss the progress made so far and the potential for Turkey to become a vibrant financial services hub.
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With resurging local interest and new catalysts for foreign investment, prospects are finally looking up for Gulf stock exchanges. Challenges remain, but new companies are already beginning to explore listings.
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As London positions itself as a hub for Islamic finance on the occasion of the ninth World Economic Islamic Forum, Badlisyah Abdul Ghani, CIMB Islamic CEO, predicts UK corporates are already primed to enter the sukuk market.
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Refutes return to bubble-era practices; Repays Tamweel liabilities
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One of the City of London’s highest-paid investment bankers has resurfaced at a small financial services firm after leaving taxpayer-owned Royal Bank of Scotland last year.
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State Islamizes banking sector; Potential impact on global sukuk market
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Trade finance is renowned for its quaint reliance on paper documentation and relative lack of technological sophistication, but despite the pressure on IT budgets, the business is modernizing, albeit slowly.
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Euromoney’s recent coverage of trends in the region, including an exclusive interview with Ngozi Okonjo-Iweala, the finance minister of Nigeria, the rise of agribusinesses - Africa’s new consumer boom – and an in-depth study into second-tier sovereign wealth funds in the Gulf. We also explore Saudi banking, the rise of bank M&A and transaction banking in the Gulf and interview Riad Salamé, the longstanding governor of Banque du Liban, the Lebanese monetary authority.
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Well run and well capitalized, with a flourishing Islamic sector, their only possible weak point is the high level of household debt.
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Local lenders burgeoning; regulators accommodative.
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Two years on from the start of the revolution, regulatory and infrastructure problems remain a headache for Libya’s banking sector. The revolutionary hangover means the nation’s economic potential might not be realized for a long time to come.
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Middle East businesses are borrowing more as the long-term nature of the burgeoning bond markets brings a greater sense of comfort. They must reveal all in the public documents needed to access those markets, initially an uncomfortable experience for many. But the better financing mix is worth it.
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One of the most important political and economic breakthroughs for the Philippines came in October last year when president Benigno Aquino finally agreed to a framework for peace with the Moro Islamic Liberation Front, the Muslim rebel group in Mindanao. It is hoped this will lead both groups to a final peace pact this year and allow for more inclusive economic development throughout the country, bringing thousands more people out of poverty. According to Standard Chartered, peace and political stability in Mindanao could add 0.1% to GDP growth at the end of 2013 and 0.3% by 2018. For the Philippines, the stars are finally aligned.
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A decade after Malaysia sold the first global sovereign sukuk, the market is growing from strength to strength, as are the traditional Islamic finance leaders.
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Mohamed Ali Elgari is one of the select handful of Shariah scholars without whom the Islamic finance industry could not exist. Shariah panels stamp products as being compliant with Islamic law; they carry the trust of Muslims that they are investing in a way consistent with their faith. Such is the diversity of their required skills – encyclopaedic knowledge of Islamic law, deep understanding of international business, fluency in English and Arabic at the very least – that there are few such scholars trusted by the world’s main Islamic institutions to serve on their Shariah boards. Ten years ago, there were only about five of them in the world; the picture has improved since, but not that much. Elgari is very much among that elite.
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With little happening in regional equity issuance, the most important deals in 2012 in the Middle East, even more than other emerging regions, were in debt – and, in particular, sukuk. This was the year when Islamic capital market issuance really found its voice, from Qatar’s international record $4 billion sukuk to a Turkish sovereign debut, Axiata’s dim sum sukuk and important domestic deals in Saudi Arabia and Malaysia. There was a record $144 billion of issuance in 2012, according to Ifis, part of the Euromoney group.
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In the Middle East rising sukuk issuance gave a new angle to the global emerging market debt boom. Sovereigns and supranationals launched daring benchmark deals, while in sub-Saharan Africa an outrageous last-gasp hijacking of a deal redefined the way China approaches M&A.
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Global capital markets underwent a remarkable recovery last year as bond and equity markets soared, creating a fertile dealmaking environment that few had foreseen at the start of the year. By the end, an impressive volume and variety of capital raisings had hit the markets, highlighting a voracious appetite for risk and complexity that bankers were only too happy to satisfy. Even in M&A.
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In an interview in his office in Riyadh, Suliman Azzabin, chief executive of Al Rajhi Bank, pours scorn on allegations that link his bank to terrorist financing repeated in the US Senate report on HSBC last year. So what is Al Rajhi Bank in 2013 really, and how is it still making so much money?
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State desperate for new funding sources; controversy at heart of political divide
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Regulators have regained their reformist muscle in the shape of Mark Carney, Bank of Canada governor and chairman of the Financial Stability Board. In a wide-ranging interview, Carney talks about recent banking scandals, the Volcker Rule, and why fears about Basle III are wide of the mark.
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After setbacks in May, EFG Hermes and QInvest will merge by the end of November, but despite economic and political turmoil, the joint venture is gunning for growth.
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The country has the potential to cement its position as the world’s leading centre for Islamic finance, but a lack of standardization is causing problems, particularly for international expansion.
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As South East Asia’s largest economy with the world’s largest Muslim population, Indonesia should be well placed to have a burgeoning Islamic finance sector. But instead, Indonesia lags way behind Malaysia on this front. Add to this Indonesia’s lack of infrastructure, and the economy is hardly running at full capacity.
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HSBC’s advertising slogan for many years was the "world’s local bank", now media headline writers are dubbing the bank: "The world’s local money launderer". Always considered conservative, well run and frankly a bit stodgy, HSBC has stumbled badly. And we are all like stunned moles blinking in the sunlight, following a 340-page report from a US Senate subcommittee accused HSBC of laundering cash for terrorists, drug barons and dictators through many of its subsidiaries.
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$2.6 billion Islamic loan maturity; Paves way for takeover battle
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Investors and financial institutions are demanding more innovative and tailored structured products. SG CIB is the stand-out provider.
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The bank has made good use of its global presence, bringing new pools of liquidity to emerging market borrowers.
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QInvest to inject $250 million; Eyes expansion in Africa, Asia
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A visit to a municipal wedding hall in Istanbul nowadays would be enough to show how far Turkish banks are willing to go to get hold of the gold kept under the pillow and outside the financial system.
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Qatar Petroleum’s finance unit, which plays a key role in overseeing debt raised by the Qatari state, says it is not concerned about overleveraging. But as Qatar embarks on investment in infrastructure and industry, its work is more important than ever.
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Eurozone crisis hits traditional fund flows; Trade links boost market potential
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A round-up of the key stories across the specialist financial media, including news that the US will file a complaint at the WTO on Tuesday over Chinese limits on exports of rare earths used in high-tech products
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All economic indicators suggest the country is a global growth market. Except one: its capital markets are small and underdeveloped. Bankers bemoan a lack of investors; investors say there are not enough products. A new stock exchange head aims to break the impasse. Could SMEs bring the market out of its shell?
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Nomura is expanding its global rates and foreign exchange trading business in the Middle East, with three senior hires in its Dubai International Financial Centre branch, the bank said in a statement on Monday.
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An Islamic bond could be the first corporate-level issuance in the capital markets by a leading Middle Eastern national oil company
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A small number of elite Shariah scholars ought to help bring consistency and standardization to Islamic finance around the world, but that’s a red herring
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Ibrahim Turhan, newly appointed CEO of Istanbul Borsasi, talks exclusively to Euromoney about his plans to expand Shariah-compliant products
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In the eight years since its inception Takaful Ikhlas has shown some truly impressive results. It boasts more than 400,000 policyholders and has more than 52 separate products in general takaful. Takaful Ikhlas can demonstrate an average growth rate for the past four years of 36.75%.
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Malaysia has the world’s most sophisticated market for Islamic finance. Some people might quibble with that judgement: the banks are bigger in the Gulf, and the asset management volumes are bigger in Saudi Arabia. But in terms of a tried, tested, supportive, well-thought-out infrastructure within which an Islamic finance industry can flourish, Malaysia leads the field.
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HSBC Middle East this year issued the first sukuk to employ a dual structure consisting of both wakala and mudaraba elements. This innovative structure has already been emulated by other institutions, including First Gulf Bank and Abu Dhabi Commercial Bank.
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Riyadh-based Islamic investment house Jadwa has rapidly grown to become one of the biggest and most respected asset managers in the Islamic finance industry. Its total assets under management as at November 2011 totalled about SR6 billion ($1.6 billion).
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In September a consortium led by Saudi-based Acwa Power entered into an agreement to proceed with the construction of what is set to be the world’s largest independent power generation project: Qurayyah Independent Power Project. The project will be located on the eastern coast of Saudi Arabia, adjacent to facilities owned by Saudi Electricity Company, and will operate on a build, own and operate basis. The electricity generated will be delivered to Saudi Electricity Company under a 20-year power purchase agreement starting in June 2014. The project reflects growing demand for energy in the Middle East, where consumption grew from 0.7% of world totals in 1973 to 4.7% in 2009.
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Over the year, KPMG provided assurance and advisory services to more than 65 Islamic financial institutions in the UK and Europe, the GCC, Asia-Pacific, South Asia, North America and Africa. The firm promoted Islamic finance in new markets as diverse as Russia, Africa, the Maldives and Sri Lanka.
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Citi’s Islamic finance business has greatly enhanced its rankings in the recent past. Between December 2010 and November 2011 it acted as bookrunner for deals totalling $1.8 billion, with a 7.6% share of the market. Compare this with the same period for 2008-09; then Citi acted as bookrunner for $599 million-worth of bonds.
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In its last annual report, ADCB reported strong growth in its Islamic products. Islamic product-related deposits more than doubled between year-end 2009 and year-end 2010, going from Dh7.27 billion to Dh14.98 billion ($4.07 billion). The Islamic retail loans and credit cards business grew by more than 100%. Corporate growth was slower but still strong at slightly over 20%.
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When it came to market in late November last year, the Republic of Indonesia’s second globally marketed US dollar sukuk broke barriers in its maturity and yield.
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CIMB Islamic goes from strength to strength, and today boasts over M$40 billion ($12 billion) in assets, offering a plethora of services in wholesale and consumer banking. On the retail side, for example, the bank has extensive network coverage throughout Asia, with 1,109 branches in 14 countries.
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Al Rajhi Bank’s success in Islamic banking in the Middle East has still not been eclipsed. Other banks were perhaps more aggressive before the crisis. However, since 2008 Al Rajhi’s more conservative, retail-oriented approach, resting on a 500-strong branch network, has meant that it has continued to thrive while competitors fell by the wayside.
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Standard Chartered was involved in a large proportion of the most important and most innovative sukuk deals of the year. These include the Republic of Indonesia sukuk – this year’s sukuk deal of year.
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The volume and innovative nature of deals that involved HSBC over the past 12 months make it the choice for the Islamic project finance award.
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Société Générale has built a strong franchise in structured products in conventional finance, winning the Euromoney award for best global structured products house in 2011, for example.
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HSBC Amanah continues to be the dominant global Islamic finance institution, providing wholesale, commercial and retail Islamic banking across Asia, the Middle East and Europe.
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In June, after nearly two years of work, Indonesia-based telecom company PT Natrindo Telepon Seluler (Axis, now known as PT Axis Telekom Indonesia) completed a financing that is notable for the amount raised, its innovative nature and its complexity.
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One of Clifford Chance’s standout deals this year was its advisory role in HSBC Middle East’s issuance of a $500 million sukuk. The sukuk incorporates an innovative dual structure, using both mudaraba and wakala elements.
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Establishing a corporation in 2010 to create and issue short-term Shariah-compliant financial instruments to improve cross-border Islamic liquidity management was a great idea. And it still is – despite the group not conducting a single issue or releasing any press statements.
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Issuance is booming but barriers will continue to hold back the market’s potential.
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The favourable tax haven is actively seeking to become the first Western centre to provide a Shariah-compliant platform by reviewing its existing legislation
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One area in which both Malaysia and CIMB have excelled in taking an early lead is Islamic finance. Malaysia has the most sophisticated industry, and enabling framework, for Islamic finance anywhere in the world; within it, CIMB is probably the name most closely associated with innovation.
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Saudi base gives Islamic specialist a platform for regional expansion.
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Listed on Tadawul; State wants more issuance
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The fortunes of Tunisia and Egypt are diverging rapidly since the Arab Spring. Tunisia offers encouraging signs but it is less influential.
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Dubai Bank ‘in dire need of capital’; Amlak next for takeover
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Potential in other media; Pooled films reduce risk
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Turkey’s participation banks – the local term for Islamic banks – are not immune to the funding pressures facing bigger institutions in the country, although they are having considerably greater success than their conventional cousins. There are four such banks, three of which have strong Gulf parents, from which most funding has traditionally been raised. Turkiye Finans has 64% of its shares held by National Commercial Bank of Saudi Arabia. Al Baraka Bank is owned by the Bahraini group of the same name. And Kuveyt Turk is majority owned by the Kuwait Finance House. Only Bank Asya is locally owned.
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Asset owners and managers are signing up to a series of principles on how they invest in agricultural land. Will this mollify critics of the land grab? Nick Lord reports.
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Feeding the world is the most pressing issue facing society. Billions of dollars of new investment is needed to forestall future crises in both supply and price. Markets and financial institutions can play a crucial role in meeting the challenge. But how can they do so without being seen to exploit the most crucial resource of all? Sudip Roy reports.
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Complex financing comprises three facilities; Biggest Islamic deal for private-sector borrower
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Part one: Middle Eastern private banking debate: The region reconsiders its wealth needs post-crisis
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Five years after Saudi banks saw their investment banking and asset management arms split from their commercial banks, the sector is still finding its feet. Three of the firms that got a head start tell Chris Wright how the battle for market share is likely to play out.
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Fewer prestige buyouts by state funds; International investors wary of political risk
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Samir Radwan was a surprise choice as Egypt’s new finance minister – even to himself. Appointed at the height of the chaos, the retired economist is working hard to sustain Egypt’s finances and economy through a period of extraordinary upheaval. Eric Ellis joins him in Cairo
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Just as it comes to terms with the fallout of the global economic crisis, the Islamic sector must prepare for political instability. Dominic Dudley reports.
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International firms evacuate staff; Further woe for local investment banks
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Banks tap emerging markets growth The rapid expansion of trade within emerging markets is a big opportunity. But Basle III requirements represent a huge risk to trade finance.
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Only a handful of firms stand out in the takaful industry: SAAB Takaful, Takaful Ikhlas and the winner of this year’s award, FWU.
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No bank comes close to disturbing Malaysia’s CIMB Islamic’s hold of the best Islamic bank in Asia award, certainly no local one. CIMB Islamic is the world’s fastest-growing Islamic financial institution based on total assets. The firm’s asset growth rate over the past four years has been so rapid that the growth rate of its nearest rival, Noor Islamic, is half as much.
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Turkey has the biggest economy of any majority Muslim country and its banking sector is well developed. But Islamic banks account for only a small minority of banking assets.
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Standard Chartered launched its Islamic arm, Saadiq, in 2007 and just under two years later it launched Standard Chartered Saadiq Berhad, Saadiq’s Malaysian unit. Since then Standard Chartered has continued to invest in its Islamic franchise in Asia and the results have been especially clear in 2010.
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Despite the troubles surrounding sovereign credit elsewhere Malaysia proved that both it and the sukuk asset class remain highly attractive investments when it successfully priced a $1.25 billion, five-year bond in May. It was the biggest ever dollar-denominated sovereign sukuk and Malaysia’s first in eight years.
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Al Rajhi’s dominance in the Middle East continues; it is the most successful bank in the most important market in the region. To the end of the third quarter of 2010 (the most recently published numbers), Al Rajhi remained the most profitable bank in Saudi Arabia, with profits of SR5.1 billion ($1.4 billion), well ahead of its nearest rivals, NCB (SR3.5 billion), Samba (SR3.5 billion) and HSBC affiliate SABB (SR1.5 billion).
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Crédit Agricole’s involvement in one of the biggest-ever Islamic tranches in a project finance deal gave the bank a big boost to its Islamic finance capabilities.
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No other project finance deal over the past 12 months has the same gravitas as the $7.5 billion financing for Ma’aden Aluminium. The deal and a previous Ma’aden venture, Ma’aden Phosphate, are the two largest endeavours in Saudi Arabia’s attempt to diversify from a hydrocarbon-dependent economy. The two projects will provide a third pillar, after oil/gas and petrochemicals, to the Kingdom’s economy.
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Standard Chartered Saadiq’s ability to provide local service on a global scale means that it takes this award this year. Its most notable transactions include two important project financings: the $7.5 billion deal for Ma’aden Aluminium (see best project finance deal) and an $8.5 billion financing for the Jubail refinery.
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Although Islamic finance has performed better in Asia than in the Middle East, the sector faced one of its tougher years in 2010. The industry’s future is not secured yet, and the boasts of the boom years have been replaced by introspection and a focus on sustainability. Dominic O’Neill reports.
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KPMG stands out for the way it is helping to grow Islamic finance globally. From training a leading UK bank in the processes, risks and controls involved in Islamic banking to helping India and Sri Lanka examine the potential of an Islamic finance industry, KPMG stands above its rivals to win the best advisory firm award.
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In 2001 Afaq Khan made a decision that changed his life. He had been at Citibank since 1988 working first in Pakistan, then in Bahrain as a relationship manager for the region’s Islamic banks.
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Wafra was a pioneer in Islamic structured products when it began offering Shariah-compliant leasing products to its clients more than a decade ago.
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If the best sukuk house award was purely a matter of which bank has the most business there would be no competition: CIMB Islamic would easily win. But biggest does not necessarily mean best and while CIMB Islamic has executed several impressive deals it lacks HSBC Amanah’s breadth of business. CIMB Islamic is a Malaysian sukuk house; HSBC Amanah is global. That doesn’t mean HSBC wins the award purely for its range of business: if that were the case, it would win every year. The deals themselves have to stack up. This year they do.
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The fund management business of Saudi Arabia’s biggest investment bank – NCB Capital – grew assets under management by 23.5% last year, adding SR6.8 billion ($1.8 billion) – 95% of the total market growth last year. NCB Capital has a 37% share of Saudi mutual funds.
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HSBC Amanah cannot afford to become complacent. Standard Chartered Saadiq is keeping up the pressure and is a worthy rival for the top spot as best international Islamic bank. A good example is Standard Chartered’s launch of the first Islamic dollar nostro account in the US. However, over the past year HSBC has appeared determined not to be eclipsed by Standard Chartered in Islamic finance. As of October 2010, HSBC Amanah’s operating profit was up 20% on 2009.
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Bahrain-based Al Baraka Banking Group is making progress in fulfilling the dream of its chairman and founder, Saleh Kamel.
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Clifford Chance retains a formidable Islamic finance practice, advising on some of 2010’s biggest deals. Examples include the $7.5 billion Ma’aden Aluminium and Ma’aden Rolling Mill project financings in Saudi Arabia, and the $1.25 billion sukuk from the Government of Malaysia.
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Euromoney Country RiskFive reasons for: 1. A Fragile Coalition: Unusually for Central Asia, the election in October of an interim government led by President Roza Otunbayeva was judged by international investors to have been a fair contest. However, it remains to be seen whether the new parliamentary system adopted since the deposing of Kurmanbek Bakiyev last summer can be made to work as a system of government. The coalition between the SDPK, Ata-Meken and Respublika parties has already fallen apart once in December after the Ata-Meken party leader, Omurbek Tekebayev, failed to win election as parliamentary speaker. The dispute was eventually resolved, but tensions remain over which parties will control key government posts. The number of parties in the already stretched coalition may soon increase to four if, as many observers predict, the nationalist Ata-Jurt party are invited to join. The party has close links to former President Bakiyev, but its strong electoral base in the south may help remove the perception that the government is northern-dominated.
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North Korea. Zimbabwe. Tunisia. Algeria. Iraq. Pakistan. Egypt. It’s a list of the world’s flashpoints. And they’re all part of Egyptian entrepreneur Naguib Sawiris’s unique telecoms empire. So when his Orascom group needed financing, and then sought a buyer, it presented Sawiris’s advisers with a unique set of challenges. Eric Ellis tells the fascinating story of corporate finance in the new world order.
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The trade finance survey is designed to give Euromoney’s readers valuable information on the trade finance market. It provides a ranking of trade finance providers across a selection of service categories and an overall, global ranking of providers as rated by their clients.
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Inter-emerging markets deals are on the increase. Some global investment banks will be hard pressed to get a look-in.
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Restricts options for other distressed investment firms; Creditors approve Aref and Ayaan restructurings
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Bond resurgence eschews riskier banks; Project bonds might seal demise of loan dominance in Gulf
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In the battle to rebuild war-torn Afghanistan, Kabulbank inserted itself as a key player, building the country’s largest deposit base and becoming the payment agent for many government enterprises. But a run on the bank in August led to the ousting of colourful poker-playing bank owner Sherkhan Farnood. What does this mean for the country’s banking sector? Eric Ellis reports.
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Not that I know anything about Shariah law, but I would have thought a Shariah-compliant FX trading platform would be a long way off. But no, Bank of London and The Middle East (BLME) has announced “the launch of BLMEFX, one of the world’s first Shariah-compliant web-based FX trading platforms to provide clients with direct access to multiple currencies in order to undertake overseas transactions.” Note the words: “one of the first” – it’s obviously been done before; shamefully, your correspondent doesn’t know any more than that.
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"History tells you that the dollars you put to work at this stage in the cycle are very attractive. Buying larger equity stakes does not mean that you are oversizing – it just means that you are buying at a different point in the cycle"
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Deals with creditors for the high-profile corporate collapses in the Middle East have a distinctly local flavour. They will set the standard for the future, and if the case of Dubai World is anything to go by, generate renewed interest and activity in the region. Nick Lord reports.
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Given the different macroeconomic and political backdrops, the region’s banking sectors are characterized by sharply differing business fundamentals and prospects. Guy Norton looks at some winners and losers.
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What is causing delays to the central bank’s approval of The Investment Dar’s restructuring? One theory is that some of the roughly 15% that did not approve the plan were non-financial institutions hoping to be paid first, particularly those with claims against money-market funds and Investment Dar Bank in Bahrain.
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Ambitious plans for international financial centres in the Gulf states of Dubai, Qatar and Bahrain that would be hubs for financial services in a broadly defined region are still a long way off being fulfilled. Dominic Dudley looks at the likely outcomes.
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Are you pleased with how the banking liberalization process has gone?
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Private lenders sold to foreign groups; Decisions awaited in bank licence auction
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Restructurings likely to lead to re-rating of financial sector risk; Domestic markets insufficient for future growth
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More flexibility in setting interest rates; Crackdown on non-performing loans
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Saudi Arabia’s Jubail oil refinery is one of the biggest and most complex projects ever to be commercially financed. With dollar and local-currency funding, Islamic and conventional tranches, an IPO, an Islamic bond, and multiple export credit agencies, it has demanded a huge amount of work. Dominic O’Neill reports.
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Central bank governor, Rasheed Al-Maraj, has successfully navigated his country’s banking industry through the financial crisis. But headwinds persist, not least the potential for further asset-quality deterioration. He speaks to Sudip Roy about Bahrain’s financial prospects.
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Touted as the next Bric country, Indonesia has avoided the worst of the financial crisis and its economy is powering ahead – but is that despite or because of a vacancy at the head of the country’s central bank? Eric Ellis investigates.
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Shariah banking is becoming big business in Southeast Asia, with Kuala Lumpur and Jakarta battling for the title of regional Islamic finance centre. But even the most optimistic bankers fear further expansion could be stymied by arcane regulation and lack of cross-border consensus. Eric Ellis reports.
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Limitless might have hurried restructuring; Doubts remain on second conglomerate
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Will Ross, HSBC’s head of structured capital markets Asia-Pacific, is to become its co-head of Islamic finance global markets. The position is a new role created by HSBC to cement its position in the growing Islamic finance business.
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Dar Al Arkan’s sukuk could have hardly come at a better time for Saudi Arabia.
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Clear sign of internationalization of market; KFH reverts to a safe pair of hands
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HSBC will announce that Will Ross, head of structured capital markets Asia-Pacific, is to become co-head of Islamic finance global markets. The position is a new role created by HSBC to try and cement its position in the growing Islamic finance business. Priorities for Ross and his team will be to help drive sukuk issuance, to try and develop new products and to attempt to better integrate HSBC’s Islamic finance business into the firm’s global markets line. Ross, a Canadian banker well-liked by both colleagues and rival debt bankers in Hong Kong, is known as an expert in structuring and has been at the forefront of some of HSBC’s more innovative deals in Asia including the surprise $1 billion covered bond for Korea’s Kookmin Bank last June.
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Standard Chartered Saadiq’s Islamic structuring team had an impressive 2009. Among its first achievements was the capped, structured rate facility it executed for Tanjung Offshore Berhad, a holding company with investments primarily in the hydrocarbon services industry. The facility was provided during the volatile environment early in the year, after the Malaysian central bank cut rates. The instrument was the first ever Shariah-compliant capped facility.
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HSBC Amanah enjoyed strong financial performance, an impressive portfolio of transactions and continued development of its retail business in 2009. The bank’s bald statistics provide a glimpse of its achievements over the past year. Operating income in the year to October was up 20% on 2008. Customer numbers increased 25% in the first half of the year. On the insurance side, SABB Takaful’s total premiums rose 52% for the first three quarters.
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Al Rajhi Bank has come through a difficult year for financial markets with an increase in profits, revenues, deposits and assets.
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In its short history, Bahrain’s Unicorn Investment Bank can already tick off a number of successes. Founded in 2004, it has a presence in the US, Malaysia, Turkey and Saudi Arabia (through its majority shareholding in Unicorn Capital Saudi Arabia).
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In a dual-currency syndicated murabaha, the Saudi operation of Kuwaiti mobile telephone firm Zain raised the largest Islamic cross-border loan of 2009.
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Bigger portions of Islamic finance were to follow in restructurings after that of Kuwait’s Global Investment House (GIH). The multi-billion-dollar restructuring of Kuwait’s The Investment Dar (TID) is one example. Unlike GIH, TID is a wholly Islamic institution. In the Middle East, though, GIH was the first to complete its restructuring, roughly a year after its default in December 2008.
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No other Asian bank can match CIMB Islamic’s achievements across the spectrum of Islamic banking and finance. The Malaysian bank has had a strong 12 months, especially in the debt capital markets, in structured products and in corporate finance.
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KPMG is known for its services to Islamic finance through areas such as auditing, risk management, corporate finance, tax and regulation. Its list of clients in the Islamic financial services sector is lengthy and includes some of the biggest names in the industry.
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Despite its delays, in July Al Dur became the first big new Gulf project of 2009 to reach financial close. The deal was for a 1.2MW gas-fired independent water and power project (IWPP) in Bahrain, the island’s third plant of its kind.
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The rapidity with which Al Rajhi Capital has developed its project finance business is impressive. It is now one of the biggest and most innovative players in the field, taking some competitors by surprise.
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GE Capital’s first sukuk is likely be remembered in years to come as one of the landmark events in the development of Islamic finance. The firm, after all, is a quintessentially developed-market, investment-grade credit. The issue was far bigger than any previous US sukuk.
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Since beginning to offer Islamic structured products a decade ago Wafra has established itself as a leading player in leasing. The firm has structured, implemented and managed more than 30 leasing programmes, with about $962 million in original equipment actual and projected costs. Twelve more programmes are planned for this year.
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Despite stiff competition from CIMB Islamic and Standard Chartered Saadiq, HSBC Amanah displayed the most impressive portfolio of transactions encompassing local and international currency; sovereign, supranational and corporate borrowers; and sukuks targeted to retail as well as institutional investors. Geographically the bank can boast of deals from Saudi Arabia, Indonesia, UAE, Malaysia and the US.
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Although SAAB Takaful had another good year in Saudi Arabia, with total premiums up 52% for the first three quarters of 2009, the award goes to a provider in Malaysia: Takaful Ikhlas.
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Even while it began to grow in developed markets, Islamic finance faced key tests. Fears about the enforceability of sukuk contracts in the Middle East might have proved exaggerated, but critics of the industry’s mimicking of conventional finance remain.
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Fund management is fast becoming one of the most competitive segments in Islamic finance. HSBC Amanah and CIMB Islamic have launched groundbreaking China- and infrastructure-related funds over the past year but the award goes to Wafra for its Kuwaiti dinar ijarah fund.
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It might seem premature to give an outstanding contribution award to a man who is only 36 but Badlisyah Abdul Ghani has packed more into his 12-year career than most people do over 30 years.
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At a time when some law firms were scaling back, during 2009 White & Case expanded its teams in Abu Dhabi and Riyadh. It worked on some of the most innovative Islamic finance transactions of the year, advising clients on deals totalling more than $19 billion.
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If Islamic finance is to be more than just a marketing fad, radically new products must be developed.
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There is a natural controversy in Islamic finance about how strictly banks should adhere to Shariah rules. Some think certain structures that have proliferated and helped grow the industry should be banned – others say these are fine.
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Saudi banks often set aside most of their provisions for bad debt in the fourth quarter. Last year, there was more reason to do so, as debt problems at the local Saad and Al Gosaibi groups emerged in May and information only came out gradually.
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Private Banking and Wealth Management Survey 2010 results revealed February 8.
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The annual Private Banking and Wealth Management Survey provides a qualitative and quantitative review of the best services in private banking, by region and by areas of service. It is an informative guide for high net-worth individuals on the range of service providers that are available.
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Two-thirds of banks and investors with an interest in Kuwait’s The Investment Dar (TID) approved a restructuring programme on December 24, allowing a deal to proceed.
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Bond investors thought Dubai World was government risk. Dubai doesn’t see it that way. Sudip Roy reports.
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The emirate is beginning to recover from the financial shocks of the past year. But several challenges remain, not least servicing its large debt pile. Sudip Roy reports.
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Big jump in issuance from Abu Dhabi, Qatar; More Islamic and higher-yield issuance to come
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Treacherous conditions persist in the Middle East when it comes to closing private equity deals. But firms investing together and using equity rather than debt still have a chance.
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Standard Chartered Bank has concluded its first-ever structured Islamic FX hedging transaction in Europe. The deal was concluded with the European Islamic Investment Bank. The bank says it is part of an ongoing process to develop products that both follow Shariah principles and fulfil its customers’ specific requirements. StanChart adds the deal is the first of its kind under its new Musawamah documentation and involves an exchange of commodities for each FX leg.
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France’s parliament amended article 2011 of the civil code on September 17 to help the structuring of Islamic financial products in the country using the French equivalent of trusts.
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Hopes to raise equity up to $500 million; Turns away from real estate development
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Credit-quality and profit-growth troubles; Subsidiary in Syria to undertake IPO
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Gulf project finance has become a tougher market since the credit crunch. But local banks are plugging some of the funding gaps and international banks will still take on sound projects if the terms are right. Nick Kochan reports.
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Iran’s privatization programme is putting shares in the hands of quasi-state organizations. That’s partly because the domestic private sector is starved of funds and foreign investment is hampered by US sanctions and local restrictions. Mainly, though, it’s because the ruling elite wants to retain control. Angus McDowall reports.
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Afghanistan has a fast, efficient, customer-friendly banking system in its network of money traders. They operate where western-style bankers fear to tread – indeed those bankers rely in part on the traders to complete transactions. But the government would like the banks to supersede this old, established system.
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For most of 2009, Malaysian dealmakers had little to talk about. But when a landmark bond issue for Petronas, the country’s biggest corporate name, came to market in August, it more than made up for lost time. Lawrence White reports from Kuala Lumpur.
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BNP Paribas: The French bank has been adept at finding new sources of finance in a tight market and succeeding with difficult deals
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Qatar’s leaders are taking pre-emptive action to ensure that none of its banks gets into difficulty. Last year the Qatar Investment Authority bought 5% stakes in all local banks and is expected to take another 5% later this year, except in Qatar National Bank, which is already 50% state owned.
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Saudi Arabia is home to Al Rajhi, the Middle East’s biggest bank by market value.
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Public Bank no longer has this award so easily to itself as the CIMB Group continues to develop and grow, but for now it is still Malaysia’s clear leader pretty much any way you look at it.
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Amid the almost terminal instability threatening the Islamic Republic of Pakistan, a few pillars of the business community have remained solid. One of these is certainly MCB, the banking group privatized in 1991 and controlled by the country’s richest man, Mian Mohammad Mansha. Voted best bank in Asia in 2008 by Euromoney, Pakistan’s largest private sector bank has experienced both change and consolidation in the past year. MCB sold a minority 20% stake to Maybank of Malaysia in summer 2008; since then, the two have been working together to expand into new markets, notably in the Middle East and North Africa, while boosting their united presence in the Islamic banking sector. Total assets continue to rise at MCB, up 3% in the first quarter of 2009 to Rs456 billion ($5.7 billion). First-quarter 2009 results were also strong, with earnings up 8% year on year in the first three months, to Rs6.24 billion. While other Pakistan lenders, such as Allied Bank and UBL, continue to make gains, eating into MCB’s lead, the process is slow. Even the bank’s direct peers grudgingly accept MCB’s pre-eminence. "They’re still ahead of the rest," says a rival banker. "Better managed, better systems, better IT, better on-the-ground presence, better retail banking." Another notes that the bank’s 1,000-strong branch network allied to its technologically pioneering nature and strength in the SME sector makes it "hard to touch" for probably the next "two or three years at least".
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Banks in the Middle East know how to cope with a crisis: Lebanese banks’ profit as the country teeters on civil war; Iranian institutions deftly avoid US financial sanctions.
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Running a bank in Qatar appears to be getting easier all the time. The local government’s latest bailout plan for its financial sector will involve the state clearing up to $4.1 billion of troubled real estate loans and investment from lenders’ balance sheets.
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Debt restructurings are untested process; Demand for new sovereign sukuk still strong
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A bridge between Asia and the Middle East.
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Unlike many of the 100-odd new Saudi investment firms, Jadwa is not just a brokerage or an under-employed Saudi equivalent of an international firm. Created three years ago by Prince Faisal Bin Salman and other Saudi investors, Jadwa is Shariah compliant and has the sixth-largest asset management portfolio in the Kingdom.
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Middle East debate: A bright future for the Gulf’s wealth managers
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At the beginning of the year Kuwait’s biggest investment company, Global Investment House, announced that it had defaulted on about $2.5 billion in debt. It became the first big financial institution in the Gulf to default since the credit crisis began. In an exclusive interview its chairwoman Maha Al Ghunaim tells Dominic O’Neill how she plans to turn the company’s fortunes around.
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Michael Ervolini, chief executive of Cabot Research, a behavioural finance adviser to investors, says that an increasing number of investment managers are beginning to analyse their buying and selling behaviour to increase returns. According to Ervolini, most managers could capture more than 100 basis points more in alpha by better understanding their behavioural tendencies.
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Saudi debt markets are set for a resilient year, with the promise of more to come.
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At the recent Euromoney Islamic Finance Summit Mohieddine Kronfol - managing director - Alegra Capital, discusses the impact of the financial crisis on Islamic finance, government intervention and the performance of Allegra's sukuk fund
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At our recent Euromoney Islamic Finance Summit, Debashis Dey, partner at Clifford Chance, discusses AAOFI's definition of sukuk and its legal ramifications plus the progess in developing a true sales securitization market.
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At our recent Euromoney Islamic Finance Summit, Dr Mohamad Nedal Al Chaar - secretary general - AAOIFI, discusses the impact of AAOIFI's ruling on sukuk, Islamic finance reform, standardization and the role of international banks.
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At Euromoney's Islamic Finance Summit, Aamir Khan - managing director - Unicorn Investment Bank discusses the size of the private equity market in Islamic fianance, the differences between conventional private equity and Islamic finance private equity, the impact of the liquidity squeeze and how private equity is perceived in the Middle East?
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At our recent Euromoney Islamic Finance Summit Mukhtar Hussain, global CEO HSBC Amanah, discusses the impact of the financial crisis on the Islamic banking systems, demand for sukuk, new issue premium and areas of growth for Islamic finance
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Central bank governor of Kuwait speaks of a more restrained support plan for the investment sector.
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It is not all bad news at Royal Bank of Scotland. At least its Saudi franchise is improving, which might ultimately fetch the troubled UK bank a higher price if it decides to sell the stake it inherited from ABN Amro.
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Old-style capitalism is in disrepute. Fans of Islamic finance say it is a model whose ethics give it more sustainability. But optimists will be disappointed to see how far it is part of the global bust. Dominic O’Neill reports.
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Winner: CIMB Islamic
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Winner: Khazanah’s $550 million exchangeable sukuk Malaysian state-investment company Khazanah had already impressed the market with its first groundbreaking sukuk transaction in 2006. In March 2008, its third such deal pushed the boundaries of the Islamic debt capital market even further with a $550 million exchangeable sukuk that featured a number of innovations.
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Winner: Calyon Calyon’s Islamic banking team made big strides over the past year. The French bank was involved in several eye-catching deals, including financing for the Ma’aden Phosphate Company’s $5.6 billion development in Saudi Arabia.
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Winner: Orimix Concrete Products "It is important not to fall in love with the company and to look at a serious offer when it comes, even though it may not have met your time horizons," says Aamir Khan, managing director of global private equity at Bahraini investment bank Unicorn.
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Winner: HSBC Amanah
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Winner: Deutsche Bank
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Winner: Kuwait Finance House
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Winner: BNP Paribas Najmah
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Winner: Jadwa’s acquisition of 30% stake in Luberef ExxonMobil sold its 30% stake in Lubricating Oil Refining Company (Luberef), a joint venture with Saudi Aramco at the very end of 2007. The buyers were a consortium composed of affiliates of the Zamil Group, the Al Subeaei Group and Jadwa Proprietary Investments. Jadwa Investment advised the consortium.
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Winner: SABB Takaful
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Winner: Ras Laffan power and water project
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Winner: Standard Chartered Saadiq
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Winner: Al Rajhi Bank Of the four biggest project finance deals in the world last year, Saudi Arabia’s Al Rajhi Bank participated in two: the $10 billion Saudi Kayan Petrochemical Complex and the $5.6 billion Ma’aden-Sabic Fertilizer Complex Project.
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Winner: HSBC Amanah
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Winner: Kuwait Finance House
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Winner: Clifford Chance
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Appointed in January to chair the recently established Task Force for Islamic Finance & Global Financial Stability, Bank Negara Malaysia governor Zeti Akhtar Aziz is one of Islamic finance’s most prominent advocates.
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A year ago Gulf economies were touted as being so uncorrelated with those of the rest of the world that they had little to fear from the credit crunch. Now even Dubai – which for so long seemed to operate under different economic forces from the rest of the planet – is facing a property crash.
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The annual Private Banking and Wealth Management Survey provides a qualitative and quantitative review of the best services in private banking, by region and by areas of service. It is an informative guide for high net-worth individuals on the range of service providers that are available.
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Data from the Islamic Finance Information Service indicate that rapid growth of Shariah-compliant banking comes mostly from a low base. Is the sector set for a wave of consolidation as organic growth slows? Chris Wright reports.
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Islamic finance debate: Prospects and problems of Shariah-compliant finance
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The market is growing fast in Muslim countries and among Muslim communities. Its fuller development, Euromoney’s roundtable of experts suggests, depends on clearer views on objectives, further development of regulation and standardization of products and approaches.
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"If you track our market performance since the election in early March... there is probably less volatility" -Dato’ Yusli Mohamed Yusoff, Bursa Malaysia
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Libya has Africa’s largest oil reserves but last year it was only the continent’s third-biggest producer. So the decision of Bahraini Islamic investment bank Gulf Finance House to invest $400 million of initial equity into an energy infrastructure project there is understandable. This is especially so given that the bank says it will not be surprised if the Libyan government’s Economic and Social Fund, which is advising on the project, makes a similar sized equity injection. Libya’s National Oil Company is seeking to increase oil production by 1 million barrels a day in the next four years, while doubling the country’s gas capacity.
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Mid-caps starved of operational and growth capital have new lenders.
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The European Commission could seriously damage structured finance, say speakers.
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The recent turbulence at the heart of Pakistan’s political machine raised significant but nuanced questions for Mian Mansha. The two individuals publicly responsible for ousting Pervez Musharraf as president – former premier Nawaz Sharif, and Asif Ali Zardari, the current president and widower of the late prime minister Benazir Bhutto – are also prominent members of the country’s rich list. Zardari, second in the rankings, is worth an estimated $1.8 billion, while Sharif, ousted as premier in 1999 by Musharraf, is worth $1.4 billion (but possibly as much as five times that tally), largely thanks to his shareholding in the Lahore-based Ittefaq Group, founded by Sharif’s father, Muhammad.
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Meet Mr Pakistan
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The growth in Islamic finance has slowed with the deepening credit crunch but the Saudi Binladin Group has raised the first sukuk for the world’s most holy boom town: Mecca.
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Dubai Islamic Bank has appointed a new chief executive. Abdulla Al Hamli moves to the position from his role as chief of operations and information technology at the bank. Al Hamli has worked at DIB for nine years. For more than 10 years before that, he was director of information systems at the Dubai Ports Authority and Jebel Ali Free Zone.The previous chief executive, Saad Abdul Razak, left in late 2007 to join the Investment Corporation of Dubai.
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The recent turbulence at the heart of Pakistan’s political machine raised significant but nuanced questions for Mian Mansha. The two individuals publicly responsible for ousting Pervez Musharraf as president – former premier Nawaz Sharif, and Asif Ali Zardari, the current president and widower of the late prime minister Benazir Bhutto – are also prominent members of the country’s rich list. Zardari, second in the rankings, is worth an estimated $1.8 billion, while Sharif, ousted as premier in 1999 by Musharraf, is worth $1.4 billion (but possibly as much as five times that tally), largely thanks to his shareholding in the Lahore-based Ittefaq Group, founded by Sharif’s father, Muhammad.
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Mian Mansha owns one of the best banks in Asia but his ambitions reach much further. His empire incorporates insurance, cement, textiles, infrastructure and power generation. In his first-ever interview with the foreign media, he tells Elliot Wilson of his plans to list his holding company on the London Stock Exchange within the next two years, and expand across Asia into the Middle East, emerging Europe and beyond.
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Bahrain-based Ahli United Bank’s real estate interests are not confined to the Gulf region. It is a growing powerhouse in property investment in Europe and an established force in Islamic mortgages in the UK. Elliot Wilson reports.
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The world's leading Central bank governors and Ministers of finance in Euromoney
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One would expect the banking sector to be a shambles in Palestine but it is in a period of dynamic growth. According to the Palestine Monetary Authority, the central bank, the sector grew by 22% in 2007; total assets are $7 billion, client deposits $5 billion, compared with $150 million at the time of the Oslo Accords in 1993, according to the Bank of Palestine.
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Turkey set out on the road to EU accession some 60 years ago but the goal remains elusive. Turkish bankers consider the journey worthwhile. But, they muse, if the country keeps on being spurned it should look east rather than west to apply its new-found expertise and dynamism. Eric Ellis reports.
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Outstanding contribution to finance: Dr Sri Mulyani Indrawati, Indonesia
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The Middle East's most successful banks remain on a determined course for growth, both regionally and in terms of the products they offer. Will the boom in financial markets and services continue, despite political uncertainty and the contagion of the credit crunch?
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Does Syria’s long-awaited equity market finally mean business? Alex Warren reports.
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Rising food prices, in a country where people spend half their income on food already, are a crucial issue for finance minister Mirz Azizul Islam.
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One of the puzzles of Islamic finance is how Indonesia, the world’s most populous Muslim nation, has been so utterly left behind in its development. Nearby Malaysia has evolved the most sophisticated regulatory environment for Islamic finance anywhere in the world and, after building an admirable domestic base, has now opened its doors to foreign entrants. Several Gulf states, notably Bahrain, have built centres of excellence around Shariah-compliant finance; and even less-developed nations such as Pakistan are making up for a slow start and witnessing a boom in this growing area.
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The financing for Peru’s biggest ever project is in the final stages after a $3.8 billion package was signed last month.
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Opinions are divided on quantifying the vastly important market for Shariah-compliant investment products, leaving institutions about how what resources to devote to them.
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While the build-up of a portfolio of diversified assets overseas is one key pillar of the government’s economic strategy, another is a commitment to a broad range of service-based industries domestically.
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Standard Chartered Bank has relaunched the Shariah-compliant version of its online treasury FX trading and hedging platform under its global brand for Islamic products, Standard Chartered Saadiq. The bank says it is the first to launch online services in Islamic FX utilizing the wa’ad structure, which enables Islamic companies and institutions to hedge forward FX exposures under a Shariah-compliant structure.
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Dubai, Bahrain and Qatar are vying to be the Gulf’s financial hub and the battle is by no means over, with each centre adopting a very different approach.
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Standard Chartered Bank has relaunched the Shariah-compliant version of its online treasury (OLT) FX trading and hedging platform under its global brand for Islamic products, Standard Chartered Saadiq. OLT integrates into Stan Chart’s Straight2Bank trading platform. The bank says it is the first to launch online services in Islamic FX utilising the Wa’ad structure; this allows Islamic companies and institutions to hedge forward FX exposures under a Shariah-compliant structure.
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Public Bank is Malaysia’s largest bank by market capitalization and, by some distance, the country’s best-performing lender. It offers excellent financial ratios, the steadiest yields in the country and, most pertinently in these turbulent times, a steady institution focused on maintaining growth while minimizing risk.
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Getting to the top is easy, it’s staying there that’s difficult. Not that it seems to be a problem for National Bank of Kuwait. The firm is universally recognized as one of a handful of Middle Eastern banks that sets the standard for others to follow.
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Muslim Commercial Bank is again nominated best bank in Pakistan. Moreover, MCB has proven itself to be one of the best-performing banks in Asia, and garners our award this year for best overall regional bank in Asia. The award is well deserved. MCB posted a 26% rise in full-year 2007 profits, to PRs15.3 billion ($242 million). Analysts attribute the strong performance to an aggressive foray into consumer finance and low administrative charges. MCB is well placed geographically and financially. Its return on assets at March 31 2008 stood at 5.69% – one of the highest rates in the world – and its solid financial performance continued this year, with profit after tax rising to PRs4.1 billion in the first quarter of 2008, up more than 10%. MCB’s financials have hardly been ruffled by the challenging global environment. "Pakistan is very non-correlated to the US economy – rather, it is strongly connected to the Gulf region, which is driving the investment in Pakistan stocks," says a Hong Kong-based investment banker. "Moreover, Pakistan has one of the best and strongest banking sectors in the world, with MCB the strongest bank in the country. They’re a class act." MCB has been further boosted by the sale of a 15% stake to Maybank of Malaysia this year for $680 million. Maybank’s acquisition, at 5.1 times book, shows how highly MCB is valued – Maybank has the right to boost its stake to 20% by May 2009. The Pakistan bank said the alliance enabled Maybank to join forces with a lender with a strong consumer and Islamic banking franchise.
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Credit crunch? What credit crunch? This could be the Middle East’s favourite mantra. But for bad as well as good, bankers in the region are acutely aware of events in the rest of the world.
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Despite the turbulence in global financial markets and growing political noise at home, Garanti Bank has continued to exhibit strong growth, which has secured it the best bank award in a fiercely competitive field. Thanks to its strong client focus, the bank secured the top spot in the cash and non-cash lending fields, extending a total of TL50 billion ($40 billion) of loans. Backed by the rapid expansion of its branch network – Garanti opened 105 new branches in 2007 – it attained the highest growth in total deposits, 30%, among its domestic peers and became the sector leader in foreign currency deposits. Garanti is firmly established as Turkey’s leading consumer and mortgage lender. Increased lending at healthy margins fed into a strong bottom line performance, with Garanti delivering the highest growth in net interest income as well as ordinary banking income. In 2007, Garanti more than doubled its net income to TL2.3 billion, giving it a 40% return on equity, almost twice the sector average of 22%. As well as impressing its nearly 6 million retail customers the bank has demonstrated the trust of international investment banks, recently securing a €600 million loan at a tightly priced all-in level of 67.5 basis points over Euribor.
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With a return on assets of 3.6% and a return on equity of 32.6%, Doha Bank had one of the best performance ratios in the region in 2007. The bank’s development as one of the Middle East’s finest is a result of continuous improvement over a number of years. For example, it has posted a four-fold growth in shareholder equity and a seven-fold increase in annual net profit over the past five years.
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Despite commercial property values having plummeted some 12% since the start of the credit crunch, London’s lure is still strong for some investors, particularly Middle Eastern sovereign wealth funds.
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Reaz Islam, head of Citi’s Falcon Strategies hedge funds, is leaving the bank.
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Malayan Bank, Malaysia’s biggest lender, has acquired 15% of Pakistan’s MCB Bank, Pakistan’s fourth-largest bank by asset value. This is the Malaysian bank’s third acquisition in Asia in two months and the largest banking acquisition in Pakistan.
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Rasmala was created by one man: Ali Al Shihabi. The firm and its founder encapsulate the cultural fusion for which their home, Dubai, is famed. Dominic O’Neill profiles a company that specializes in the world’s fastest-growing financial market.
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In the first few weeks of April, the Tadawul, the Middle East’s most liquid equity exchange, had returned to form and bucked the downward trend of developed global markets. But until then, 2008 seemed to be the year of recoupling with western markets, rather than decoupling, as far as the Saudi stock market was concerned.
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While elsewhere the mortgage market is drying up and securitization is quiescent, the biggest economy in the Gulf is trying to expand both. The finishing touches are being applied to laws on the Saudi mortgage market but it’s uncertain they will provide enough flow to meet demand for funding. Dominic O’Neill reports from Riyadh.
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There are complaints that investors are being misled by funds.
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The Kingdom of Bahrain’s Real Estate Finance company (Reef) has secured $150 million in warehouse financing to bolster its local mortgage lending activities. The facility, provided by Calyon Crédit Agricole CIB, enables Reef to diversify its funding sources. Ultimately, the mortgage portfolio could be used to back a residential mortgage-backed securitization in either an Islamic or standard format.
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Far from turning a corner in 2008, the market looks set for a few tough months yet.
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With traditional debt markets still in disarray, it’s theoretically a good time for sukuks to foster issuance outside the Middle East and Asia.
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"Sudan is probably the richest country in the region. It has the best commodity in the world: water. It also has oil, minerals, cattle, fertile land and human resources. If it can resolve its problems, Sudan has the potential to be a perfect economy." Such is the view of Ahmed Abbas, CEO of Liquidity Management Centre, a Bahraini Islamic investment firm. And if the capital markets are anything to go by, says Abbas, the biggest country in Africa might already have begun its recovery.
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Euromoney has been informed by a source claiming to have been close to an eight-figure deal that cash-rich Saudi Islamic bank Al Rajhi entered into with troubled US bank Bear Stearns just before Christmas.
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Structured finance departments have taken a bit of a battering in the past few months but in southern Africa there is still belief in and appetite for the business. The domestic market in South Africa is growing rapidly, partly to meet political pressure to transfer assets to people with little money and no equity. Electricity shortages might well also be a key driver of new deal flows.
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In the past few years, HSBC Amanah has demonstrated its ability to innovate through a series of fund products. Its Global Properties Income Fund is, at $1.7 billion, the biggest Islamic real estate fund.
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Clients for Deutsche Bank’s structured products transcend geographic and sectoral boundaries in the global Islamic finance industry.
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While some of the biggest names in international banking are struggling to keep their heads above water, Qatar Islamic Bank goes from strength to strength.
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Dow Jones boasts nearly 70 Islamic indices that cover a variety of Shariah-compliant equities and fixed-income securities around the globe. Now the group can lay claim to the largest, most visible and widely used set of Shariah-compliant indices in the world.
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In the past 12 months, KPMG has provided more than 50 Islamic financial institutions with assurance and advisory services. It is the geographical spread of this business that gives KPMG this award.
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The growth in size, expertise and therefore competition in the Shariah-compliant market in 2008 made Euromoney’s choices for our Islamic finance awards the hardest to date. The best firms not only got bigger, they brought new levels of innovation to bear in a series of landmark deals.
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For yet another year, the joint venture between Dawney, Day and Icap has been well ahead of the competition in Islamic commodities trading.
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The Islamic finance industry is expanding so rapidly and in such a fragmented manner that barely a month goes by when some financial institution does not claim to have launched a new shariah-compliant asset class.
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The tide is changing in the global takaful market. In 2007 the UK-based world leader in insurance, Prudential, took a definitive step into the GCC takaful market with Bank Aljazira, one of Saudi Arabia’s smallest banks.
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As the Saudi Arabian project finance pipeline grows to almost $500 billion, there is new momentum behind the Shariah-compliant project finance world.
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An RMBS clinching the best deal category for the year of the sub-prime crisis might appear at first to be a little ironic.
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Islamic finance has grown dramatically in recent years as more countries, banks and investors see its potential. But the growth of the asset class will remain limited until industry standardization on Shariah compliance is reached. When is this likely to happen?
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2007 was a year of achievement for Islamic finance, with growth on all fronts. Yet the sector still faces great challenges, not least in finding and training enough Islamic bankers.
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The annual Private banking awards provide a qualitative and quantitative review of the best services in private banking, by region and by areas of service. It is an informative guide for high net-worth individuals on the range of service providers that are available.
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Demand is high, but the volume and diversity of instruments is limited.
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The world’s most profitable chemicals company, and possibly soon to be its biggest, has ploughed ahead with big expansion plans despite the credit crisis, making more use of Islamic and local capital markets. Dominic O’Neill talks to Sabic’s CFO, Mutlaq Al Morished.
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One of Latin America’s biggest challenges is financing its massive infrastructure needs, and nowhere is this more pressing than in Mexico, especially in toll road development.
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Submissions now being accepted.
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Credit Suisse has appointed Michael Fouad Chahine as global head of Islamic banking distribution. The bank is expanding its platform to distribute Shariah-compliant products. Chahine, who will be based in Dubai, will coordinate the existing Islamic banking businesses across Credit Suisse’s investment banking, private banking and asset management divisions to build a distribution centre in Dubai. Chahine has been with Credit Suisse since 2000. Most recently he was head of strategic initiatives in Dubai.
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JPMorgan is making a big push in the Middle East, and particularly in Islamic finance, after announcing last month that it had hired some of the biggest names in investment banking in the region.
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Euromoney looks at the extent to which green finance will change the fabric of the global capital markets in the years to come, speaking to the thought-leaders at the world’s largest banks about their strategies to assist in – and benefit from – the challenge of climate change.
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Bank of London and the Middle East (BMLE) has advanced its bid to provide a bridge between southeast Asian and Middle Eastern Islamic finance. The bank, which became London’s second independent wholesale Islamic bank when it opened at the beginning of July, announced at the beginning of August that it had appointed a head of structured finance, Derek Weist. Weist comes to BMLE from ABC International Bank, where he was European head of Islamic banking and head of Islamic asset management. BMLE’s CEO, Humphrey Percy, says he hopes to expand their team from 35 to around 65 people over the next two years.
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The spate of new privately owned banks will soon be joined by specialist Islamic banks, which by all accounts can look forward to a flying start in the pristine Syrian market.
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The insurance sector in Syria is emerging from almost half a century of state monopoly and is still in a nascent state that offers both attractions and risks to the first new wave of private firms.
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The CEO of a London-based product design and consultancy firm has told Euromoney his team has developed a Shariah-compliant futures contract which he says will "revolutionize" Islamic finance. Humayon Dar of BMB Islamic, a specialist Islamic finance company, hopes work on the contract, which he says has already been approved by Shariah scholars, will be finished by the end of the year. He says it should be ready to go on the market during the first quarter of 2008.
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The governor of Sama has led the Saudi economy through a turbulent but ultimately prosperous period during an unprecedented term of almost 25 years.
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Tamweel controls one-third of Dubai’s burgeoning mortgage market. In the wake of the company’s issuance of the Gulf’s first ever internationally rated securitization, Dominic O’Neill talks to the company’s CFO and CEO.
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Is central Asia of the verge of an Islamic banking boom?
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After an absence of almost half a century, private-sector banks are once again doing business in Syria. Some three years after the first pioneers opened their doors, the country’s economic landscape is still in full transformation – and competition is beginning to heat up. Alex Warren reports.
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National Bank of Kuwait is a leading force in raising capital using Shariah-compliant instruments for property development in its domestic market and in the region. Nigel Dudley reports.
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JPMorgan has hired Bill Schwab as a managing director and head of the structuring team in its real estate structured finance business. He joins JPMorgan from Deutsche Bank, where he was a founding member of the real estate finance team and head of the European real estate capital structure and underwriting. Before that, Schwab was real estate chief lending officer at Goldman Sachs. Based in London, Schwab reports to Jon Rickert, head of real estate structured finance for Europe, Middle East and Africa.
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Two MBS transactions have become the Gulf region’s first internationally rated securitizations.
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With the exception of extremely volatile regional stock markets that have hit the profits of some banks and their customers, the dynamic economies of the Middle East have created a benevolent environment for the region’s banks. High oil prices have enabled governments, particularly in the Gulf, to reduce debt, pay private sector contractors more promptly, deliver annual surpluses and invest in infrastructure.
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The US bank has been present from the ground floor up in emerging market takeovers of developed market companies and cross-border emerging market deals.
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Al Rajhi was the pioneer of Shariah-compliant financial services in the mid-20th century, and Al Rajhi Bank has built on those principles ever since.
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S&P this June launched the new S&P Pan Asia Shariah Index, a new addition to its Global Shariah Index Series.
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The UK’s Prudential and Bank Aljazira, Saudi Arabia’s smallest bank, have signed a memorandum of understanding to promote takaful or Islamic insurance in the kingdom.
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Standard & Poor’s has launched the S&P BRIC Shariah Index, aiming to give it a bigger share of the fast-growing Islamic finance market. The new index is designed to cover the largest and most liquid stocks in Brazil, Russia, India and China that meet Shariah law investment criteria and that trade on developed market exchanges – the Hong Kong Stock Exchange, the London Stock Exchange, the New York Stock Exchange and Nasdaq. Standard & Poor’s already offers Shariah-compliant versions of its most widely used global indices – the S&P 500, the S&P Europe 350 and the S&P Japan 500, as well as the S&P GCC Middle East Shariah Index Series. "The S&P BRIC Shariah Index feeds into the already powerful line-up of Islamic indices launched over the past six months by Standard & Poor’s," says Alka Banerjee, vice-president of Standard & Poor’s Index Services. "Each of the constituents within the S&P BRIC Shariah Index is liquid and completely hedgeable. As a result, we are already seeing clients create mutual funds and structured products based upon the index." To be eligible for inclusion in the S&P BRIC Shariah Index, companies must first be constituents of the S&P/IFCI Index for Brazil, Russia, India and China. Constituents are then screened for Shariah compliance based on proprietary sector and financial ratios. Only those stocks deemed Shariah-compliant are retained for the final universe of the index. All S&P Shariah indices are screened by Ratings Intelligence Partners, a Kuwait consulting company.
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Housing provision for a burgeoning youthful population puts the development of a mortgage market centre stage in the GCC countries.
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In Euromoney’s February 2007 Islamic finance awards section, we incorrectly stated that the PCFC or Dubai Ports $3.5 billion pre-IPO convertible "was structured by Deutsche Bank". The transaction, Best Islamic finance deal of the year, was structured, arranged, underwritten and distributed by Barclays Capital and Dubai Islamic Bank only, while Deutsche Bank was advising PCFC on the acquisition of P&O. We regret any inconvenience that may have been caused.
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Turkey’s latest political crisis was triggered on April 24 by prime minister Recep Erdogan’s nomination of foreign minister Abdullah Gul as the ruling AK party’s candidate for president. Many had hoped that he would opt for a candidate from outside the party in order to assuage the fears of the fiercely secularist sections of the population, who demonstrated with an almost million-strong march on April 29 that they are genuinely afraid that Turkey might become an Islamic state.
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Dubai Islamic Bank has opened a new real estate office in Sharjah, one of the northern emirates in the UAE, on February 28. The office aims to provide commercial real estate finance services and products such as murabaha (property purchase finance), istisnaa (construction finance) and musharaka (cash against property finance). Sharjah is the bank’s second office to open since the end of last year following the real estate finance department’s first branch inauguration at the Dubai Land Department.
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Morley, a UK property fund manager, has increased its European capability with three hires and one internal reshuffle. Andreas von Gossler joins as head of acquisitions for the European property fund. Previously he was a fund manager at the German real estate group Union Investment. Lorenzo Segre, comes from Italy’s Pirelli Real Estate, and will become a manager on the Morley European fund. Also joining is analyst Matthew Hills who comes from HDG Mansur Investment Services, a US property group that specialises in Islamic Shariah-compliant products. All three report to Julian Taylor, lead manager of the European fund.
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"Islamic finance has only popped up onto people’s radar screens in the West in the last five years or so," says Jeremy Beswick, head of asset management at European Islamic Investment Bank (EIIB). Despite its youth, though, Islamic financing is spreading around the globe and in recent months there has been a rapid increase in the range of real-estate-related products that banks have to offer.
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Since the turn of the decade the region’s property market has seen spectacular growth. Now the infrastructure is catching up, giving entrepreneurs greater confidence in the market’s long-term health. Nigel Dudley reports.
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Lebanese banks have maintained a comfortable financial position despite last year’s Israeli attack and a continuing stand-off between Hizbollah and the government. However, the macroeconomic situation is far from rosy, not least because the country has the world’s highest debt-to-GDP ratio. James Drummond reports from Beirut.
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Aston Martin announced the start of a new chapter in its financing history as the sports car manufacturer agreed its leveraged buyout to a consortium of investors led by sports car veteran David Richards.
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In the our last issue in the Islamic finance awards section we incorrectly stated that Dubai International Bank had won the best Islamic bank in the Middle East award. It was in fact Dubai Islamic Bank.
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Aeon Credit Service, a credit card issuer, became the first Japanese company to tap into the growing market for Shariah-compliant debt when it began issuing under an agreement signed with joint lead arrangers, managers and bookrunners Aseambankers Malaysia, Bank of Tokyo-Mitsubishi UFJ and CIMB Investment Bank.
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On January 30, the leading names in the Islamic finance industry gathered at the Royal Garden Hotel in London for Euromoney’s fifth annual Islamic Finance Awards dinner.
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Best in Islamic finance: Pushing beyond the boundaries
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Modern Islamic finance has a history stretching back more than three decades. But many bankers believe 2006 will prove to be the breakout year in its evolution – when a niche play finally went mainstream. The stigma that Islamic financial products struggled to overcome – they were once seen as instruments suited only to Muslims' religious beliefs – has been shed as banks proffer an ever more sophisticated array of Sharia-compliant products to a market whose appetite shows few signs of abating.
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Demand for Islamic finance products is high. At last supply is starting to meet investors’ needs. The challenge for the industry is to ensure that the market’s infrastructure develops sufficiently quickly so that more companies and entities continue to embrace Shariah-compliant techniques. And on the following pages Euromoney profiles the winners of the latest Islamic finance awards.
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Pushing beyond the boundaries
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Pushing beyond the boundaries
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Pushing beyond the boundaries
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Gulf institutions maintain their dominance of Euromoney’s rankings as growth continues for third successive year. Morris Helal reports.
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Islamic finance is a natural home for structural innovation. Even the most basic Shariah-compliant products necessarily involve some degree of structuring: finding methods to mimic the economic benefits of conventional financial products while maintaining a religiously acceptable asset base. Now, though, banks are taking this structuring a step further. Chris Wright reports.
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Pushing beyond the boundaries
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Pushing beyond the boundaries
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Pushing beyond the boundaries
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Despite facing fierce competition from such rivals as BNP Paribas, Citigroup, HSBC and UBS, Deutsche Bank emerged victorious in the race to secure the award for best structured product house in the Islamic finance market. Thanks to the extensive conceptual groundwork the German bank laid in 2005, in 2006 it was able to take full advantage of the explosive growth in the structured products segment of the Islamic finance market and offer a wide range of instruments spanning different asset classes and regions.
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Compare wealth management advisors and wealth management services.
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The year ahead will see the first Islamic-compliant securitizations. The question is, which jurisdiction will produce the first?
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“The share price hasn’t moved for a decade. Working for Citigroup has put an extra five years onto my working life. You make a pact with the devil when you work for an investment bank, I know, but you at least expect him to keep his side of the bargain!” One disgruntled Citigroup banker bemoans having his retirement plans indefinitely delayed
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Bahrain’s much anticipated retail and leisure development on Amwaj Island, has experienced overwhelming interest from potential lenders.
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Middle East countries might look close geographically, but their debt regimes are very diverse. Here are the overriding factors in fixed income for the GCC region.
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The Nakheel Group has sold a $2.5 billion ijara sukuk, the first equity-linked sukuk to be issued.
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As Khazanah’s biggest investment, Telekom Malaysia is perhaps the most notorious symbol of the inefficiencies evident in the country’s public sector. A successful participation in an exchangeable bond and improving financial figures suggest management is starting to turn the company around but it is still falling short of its key performance indicators. Sudip Roy reports.
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In July, Malaysian bank group Maybank hired a former JPMorgan corporate financier to spearhead its investment bank, Aseambankers. In his first three months Surachet Chaipatamanont has brought leadership and structure to the firm. But, as he tells Sudip Roy, there’s much more work to be done.
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Expect the first true sale securitization in a matter of months.
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Qatari bank aims to become world’s largest Islamic player after IPO.
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Enormous energy is going into the creation of new Shariah-compliant finance structures for eager Middle Eastern corporates to fund themselves by appealing to Islamic investors and their growing pool of money. Every market participant expects the surging Islamic finance sector to keep on growing fast. But a key element is missing. Secondary trading in these instruments is severely limited. Sudip Roy suggests that for the recent increase in primary market activity to be sustainable, more attention needs to be devoted to trading infrastructure.
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Islamic investment and finance company Investment Dar will increasingly look to the sukuk market to meet its funding needs, according to its chairman and managing director, Adnan Al-Musallam, because of limited opportunities for bank finance in Kuwait.
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Ebrahim Sheibany is governor of Iran’s central bank, a position he has held for three years. He tells Eric Ellis in Tehran that as far as economic policy is concerned, little has changed, despite the election of Mahmoud Ahmadinejad as president.
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The country’s newly revitalized banking system throws up colourful characters and eccentric approaches to marketing. But overseeing it all is a rigorous central banker with solid US commercial banking experience. Eric Ellis reports.
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Bahrain is experiencing a mutual fund boom, according to the Bahrain Monetary Authority, which says assets under management by BMA-authorized mutual funds have grown by 55% to $8.3 billion in the past year.
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Dubai Investment Group subsidiary Dubai Financial has bought a 40% stake in Malaysia’s oldest Shariah-compliant bank, Bank Islam Malaysia Bhd (BIMB) – the group’s largest single investment in the Asian financial sector to date.
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Australia I China I Hong Kong I India I Indonesia I Japan I Malaysia I Mongolia I Pakistan I Philippines I Singapore I Taiwan I Thailand Public Bank is the best bank in Malaysia by some distance and with the government seemingly bent on removing all other viable competitors save monolithic government-linked institutions, it might remain the only credible candidate for years to come.
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Bahrain I Egypt I Iran I Israel I Jordan I Kuwait I Lebanon I Morocco I Oman I Qatar I Saudi Arabia I United Arab Emirates I Lifetime Achievement As always the competition to be best bank in Lebanon is extremely fierce. Bank Audi has again performed exceptionally well but by the narrowest of margins it is this year just beaten by Bank Blom.
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Azerbaijan I Kazakhstan I Kyrgyzstan I Uzbekistan Uzbekistan’s banking sector is getting into ever deeper trouble as president Islam Karimov’s increasingly repressive policies close the country off from international trade and drive the economy into crisis. Despite this, Ansher Capital still manages to survive and thrive as Uzbekistan’s leading investment bank. In the past 12 months, it managed to attract the first foreign investors into an Uzbek corporate bond. It is also looking to do a listing in the next year on the Frankfurt Stock Exchange.
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Bahrain I Egypt I Iran I Israel I Jordan I Kuwait I Lebanon I Morocco I Oman I Qatar I Saudi Arabia I United Arab Emirates I Lifetime Achievement After only two years under local management, following the end of Citibank’s equity holding and management contract, Samba is now in its strongest ever position in an increasingly competitive local market and is a clear winner of the best bank award.
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Bahrain I Egypt I Iran I Israel I Jordan I Kuwait I Lebanon I Morocco I Oman I Qatar I Saudi Arabia I United Arab Emirates I Lifetime Achievement Competition in the UAE is among the toughest in the region and getting the decisions right, particularly in the retail market, is, as many banks have found, far from easy.
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Ever since Kuwait amended its banking legislation in early 2004 to license foreign banks, outside players have continued to show confidence in a high-potential market.
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The recent sale of the first Islamic compliant securitization originated in the US is likely to open up a new source for the sukuk market, bankers believe.
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Saudi petrochemicals company Sabic will issue domestic sukuk bonds with a total value of at least SR1 billion ($267 million), according to the company’s financial vice-president, Mutlaq al-Morished. The bond should be finalized this month or next, with huge demand expected from the paper-hungry local market.
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The Kazakh bank has embraced new currencies and structures.
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The International Finance Corporation is only a small part of the World Bank organization, with a modest annual financing requirement. But it does pioneering work in developing local bond markets and its own benchmark dollar deals are of high quality.
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Fitch Ratings has downgraded its rating for the Islamic Republic of Iran from BB– to B+, to take account of what it calls the “escalating confrontation between Iran and the international community over Iran’s nuclear programme.” Although it contends that material sanctions are still some way off, it argues that the risk is increasing and events “are becoming increasingly unpredictable”. The agency acknowledges, though, that with high oil prices Iran’s external financial position remains strong.
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BMA chief confident about region’s fundamentals.
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International banks have been encouraged to re-enter the Saudi project finance market with big-ticket deals backed by a relatively healthy risk environment and more solid financial guarantees than in the past. Nigel Dudley reports.
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The central Asian republic may still be developing suitable funding channels, but a pick-up in deals is expected, given an economy that continues to grow and an appropriate legal framework. Patrick Gill reports.
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Although the oil-rich emirate does not need other people’s money to finance big-ticket projects, it has shown an increasing appetite for project finance, reports Mark Ford in Abu Dhabi.
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Citigroup’s CEEMEA banks have executed a number of successful transactions in recent years, including several for Polish telecom TPSA. The bank is well positioned in the increasingly important area of Islamic finance. The one area where Citigroup’s CEEMEA banks seek improvement is in the equity markets. Shirish Apte, chief executive for CEEMEA, Citigroup, speaks with Sudip Roy about their plans for the future.
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The Iranian authorities’ recent granting of operating licences to two new private banks (Bank Sarmaye Daneshgah and Bank Pasargeda) suggests that the sector has a future, despite president Mahmoud Ahmadinejad’s apparent disdain for his predecessor’s reformist agenda.
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Supply of both Islamic-compliant and conventional instruments has so far failed to keep up with the voracious levels of demand across the Middle East, but there are signs that product-starved investors might now begin to see a steadier flow, though far-reaching challenges remain. Kathryn Wells reports.
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Dollar bond with enhanced curve is a sign of bigger things to come.
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A hostile bid in the Malaysian banking market is almost unheard of. But CIMB's pursuit of Southern Bank has provoked more than just headlines, and now almost every major banking group in the country is in play.
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Vanilla deals fell out of favour in equity-linked issuance in 2005, with highly complex, structured transactions building unprecedented dominance. Despite higher volatility levels than in 2005 and a very promising M&A outlook, this trend is likely to continue in 2006. Peter Koh reports.
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First-of-a-kind deal exploits strong interest in regional IPOs.
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Citigroup, Morgan Stanley and RBS finance the UK pub party.
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Saudi Arabia’s Bank Al Jazira dominates the field of life takaful in terms of both volume and innovation, and helped to develop the Saudi insurance market following the introduction of new insurance legislation. The bank beat Munich-based financial services company FWU Group to take the top spot in this category.
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Although Asad Zafar, managing director of HSBC Amanah, stresses that the bank’s activities are wider than just project financing, its activities in this field were remarkable in the 11 months from December 2004 to November 2005.
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HSBC Amanah remains the undisputed regional heavyweight, but the 2006 award has gone to Dubai Islamic Bank (DIB), ahead of HSBC and last year’s winner National Commercial Bank. DIB’s list of achievements is extensive, particularly its project financing and sukuk work (see best sukuk house). According to Aref Kooheji, executive vice-president of investment and corporate banking, as the world’s first Islamic bank – it opened in 1975 – DIB has been able to capitalize on its long experience and has become involved in providing innovative structural financing solutions for a number of large projects and institutions in the GCC region and elsewhere.
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Euromoney reports on the innovations driving the market forward, and profiles the winners of latest Islamic finance awards.
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Arcapita has been named best Islamic private equity house in recognition of its leading position in the world of international shariah-compliant private equity. The firm was created in 1997 and currently employs more than 140 people in its offices in Bahrain, Atlanta and London.
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The Cagamas R$2.05 billion ($542.5 million) Islamic residential mortgage backed sukuk (IRMBS) Musharakah, the world’s first rated IRMBS, brought a new asset class to Islamic finance. Cagamas MBS Berhad (CMBS), a single purpose and wholly owned subsidiary of Malaysia’s national mortgage corporation, appointed CIMB, HSBC Amanah, ABN Amro and AmMerchant as joint lead managers for the August 2005 deal.
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Deutsche Bank wins this award on the basis of innovation, the experience of its Islamic finance team, the breadth of its product range, and the frequency with which it advises other Islamic institutions or deals.
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There is little to choose between the two Malaysian Islamic banking leaders, CIMB Islamic and AmMerchant, but CIMB comes out on top for the second year running because of the breadth and volume of its Islamic finance activities. CIMB Islamic is a bank within a bank and is responsible for CIMB Group’s Islamic finance business onshore and off. CIMB Islamic’s focus is on Islamic debt and equity capital markets, private equity, private banking, asset and fund management, and corporate finance. The bank’s head, Badlisyah Abdul Ghani, says the key to its success is the quality of its staff.
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The contest between DIB and CIMB Islamic for best sukuk house could not have been tighter. However, the standout deal over the past 12 months was DIB’s role as co-lead manager of a $600 million issue for the government of Malaysia. CIMB has failed to make significant strides in the Gulf, while DIB was able to snatch business from CIMB’s own backyard. Aref Kooheji, DIB’s executive vice-president of investment and corporate banking, says that DIB expects to do more deals in Malaysia and Asia more broadly in the future. Having lead managed the world’s only $1 billion sukuk al ijara, critics argued that DIB and other Islamic banks should be getting involved in more innovative sukuk deals rather than run-of-the-mill transactions. DIB responded to its critics with a string of landmark Islamic bond issuances between December 2004 and November 2005.
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Leading international management consultancies have traditionally topped this category, with past winners including Ernst & Young and PricewaterhouseCoopers. This year, although KPMG was an impressive challenger, Euromoney recognizes the work of local specialist Dar Al Istithmar.
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The sukuk market has bucked the general trend of lack of supply in Islamic finance.
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Although Takaful Malaysia remains a major player in the field of shariah-compliant insurance, offering some 117 types of general takaful schemes, it is primarily focused on southeast Asia. In contrast, the winner of this year’s award, HSBC Amanah, has a global reach. It now offers general takaful products to both its retail and corporate clients in Singapore, Malaysia, Brunei, Saudi Arabia, the UAE and the UK, via a combination of its own manufacturing capability and white labelling. The general takaful offering was only initiated in late 2004, however, meaning that volumes are still small.
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In a year characterized by innovation in Islamic finance, Deutsche Bank stands out. A new structure based on the wa’s contract has allowed the bank to introduce novel shariah-compliant asset classes and pay-offs and to make possible most derivatives, such as interest rate swaps, currency swaps and options.
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This year’s winner is Denton Wilde Sapte, while 2005’s winner, Norton Rose, came a close second. Denton Wilde Sapte has dedicated Islamic finance teams in Abu Dhabi, Dubai and London, and its client list includes ABC Islamic, ABN Amro, ADIB, Amlak Finance, BarCap, DIB, DB, GIB, HSBC Amanah, KFH, Standard Chartered, Standard Bank, WestLB and Shamil Bank.
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CIMB Islamic’s Islamic profit rate swap (IPRS), a shariah-compliant version of an interest rate swap, opens up a new field in Islamic finance. According to Badlisyah Abdul Ghani, the bank’s head, the IPRS was launched in December 2005 under the purview of Malaysia’s central bank.
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Iqbal Khan, the founding CEO of HSBC Amanah, is one of the most powerful and successful financiers in the Gulf region. He is also a board member of HSBC Bank Middle East, HSBC Investment Bank in Saudi Arabia and Saudi British Bank.
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Bahrain-based Noriba snatched this year’s award, narrowly beating the 2005 winner, Gulf Financial House. Noriba, which was incorporated in 2002, is a wholly owned subsidiary of Switzerland’s UBS Group. According to CEO Toufic Kanafani, the bank’s investor base is international, with clients from the Gulf region, the wider Middle East, the US, Europe and South East Asia.
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Noriba exits some investments early after strong performance.
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Middle Eastern private investment and advisory firm Injazat Capital is launching a $100 million Islamic-compliant healthcare fund this month.
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Saudi and Qatari banks launch new investment products. National Commercial Bank has become only the second Saudi Arabian financial services provider to launch a Shariah-compliant mutual fund that will invest in the countries in the Gulf Cooperation Council.
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The Dubai International Financial Exchange (DIFX) has set itself an ambitious target, according to its chairman.
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The UAE's financial regulator, the Securities and Commodities Authority, announced on September 6 that the case of two individuals and a brokerage suspected of manipulating the stock price of Dubai Islamic Bank (DIB) had been referred to the judiciary.
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Zeti Akhtar Aziz reforms Malaysia's financial markets; Fukui achieves much by doing llittle in Japan.
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From quiet beginnings as one of the world's smallest states, Qatar has emerged as a regional player as a result of shrewd investment in natural gas and sound economic management. Although oil and gas revenues still account for about 60% of GDP, the non-oil sector grew by 10.8% last year, and the financial sector is performing particularly strongly.
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Sabic's upcoming $267 million Shariah-compliant domestic bond should set the pattern for issuance in a Saudi market that has seen little corporate paper up to now.
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As tensions mount between Iran and the west over the Islamic state's nuclear ambitions, Tehran seems to be adopting an Ostpolitik, looking to China and India for political and energy ties. Opec's second-largest oil producer, which also has the world's second-biggest gas reserves, is wooing Asia's fast-growing and energy-hungry economies.
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Six-month paper will help investors diversify Shariah-compliant portfolios
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%3CBODY%3E%3Cul%3E%0D%0A%09%09%3Cli%3E%0D%0A%09%09%09%3Cstrong%3EChina%20pushes%20into%20North%20America%20%u2013%20again%3C/strong%3E%0D%0A%09%09%3C/li%3E%0D%0A%09%3C/ul%3E%0D%0A%09%3Cp%3E%0D%0A%20%20Not%20to%20be%20put%20off%20by%20Chinese%20oil%20major%20CNOOC%27s%20failure%20to%20seize%20control%20of%20US%20oil%20company%20Unocal%2C%20China%20National%20Petroleum%20Corporation%2C%20China%27s%20biggest%20state-owned%20oil%20company%2C%20paid%20%244.18%20billion%20to%20acquire%20Canadian%20oil%20company%20PetroKazakhstan%2C%20a%2020%25%20premium%20to%20where%20the%20stock%20was%20trading.%20The%20company%27s%20shares%20are%20traded%20in%20New%20York%20and%20its%20oil%20fields%20are%20in%20the%20north%20of%20Kazakhstan.%0D%0A%3C/p%3E%0D%0A%09%3Cp%3E%0D%0A%20%20The%20deal%20has%20to%20be%20approved%20by%20the%20Kazakh%20government%2C%20and%20could%20be%20scuppered%20by%20a%20counter-bid.%20However%2C%20if%20it%20is%20successfully%20completed%2C%20it%20will%20be%20the%20largest%20overseas%20acquisition%20to%20date%20by%20a%20Chinese%20company.%20CNOOC%20withdrew%20its%20%2418.5%20billion%20offer%20for%20Unocal%20at%20the%20beginning%20of%20August%20after%20strong%20opposition%20from%20the%20US%20government.%0D%0A%3C/p%3E%0D%0A%09%3Cp%3E%0D%0A%20%20%A0%0D%0A%3C/p%3E%0D%0A%09%3Cul%3E%0D%0A%09%09%3Cli%3E%0D%0A%09%09%09%3Cstrong%3ETakeover%20Panel%27s%20new%20director%3C/strong%3E%0D%0A%09%09%3C/li%3E%0D%0A%09%3C/ul%3E%0D%0A%09%3Cp%3E%0D%0A%20%20Mark%20Warham%2C%20head%20of%20UK%20mergers%20and%20acquisitions%20at%20Morgan%20Stanley%2C%20has%20been%20chosen%20to%20be%20the%20next%20director%20of%20the%20Takeover%20Panel%2C%20the%20body%20that%20regulates%20M%26A%20activity%20in%20the%20UK.%0D%0A%3C/p%3E%0D%0A%09%3Cp%3E%0D%0A%20%20He%20will%20take%20a%20two-year%20secondment%20from%20Morgan%20Stanley%20to%20take%20up%20the%20new%20role%20at%20the%20end%20of%20November.%20He%20is%20the%20first%20Morgan%20Stanley%20banker%20to%20hold%20the%20post%2C%20replacing%20Richard%20Murley%20of%20Goldman%20Sachs.%0D%0A%3C/p%3E%0D%0A%09%3Cp%3E%0D%0A%20%20%A0%0D%0A%3C/p%3E%0D%0A%09%3Cul%3E%0D%0A%09%09%3Cli%3E%0D%0A%09%09%09%3Cstrong%3EGMAC%20sells%2060%25%20of%20its%20mortgages%3C/strong%3E%0D%0A%09%09%3C/li%3E%0D%0A%09%3C/ul%3E%0D%0A%09%3Cp%3E%0D%0A%20%20GMAC%2C%20the%20finance%20subsidiary%20of%20General%20Motors%2C%20has%20announced%20that%20it%20will%20sell%2060%25%20of%20its%20commercial%20mortgage%20business%2C%20GMAC%20Commercial%20Holding%20Corporation%2C%20to%20private-equity%20groups%20KKR%2C%20Five%20Mile%20Capital%20Partners%20and%20Goldman%20Sachs%20Capital%20Partners.%20GMACCH%20wants%20an%20independent%20credit%20rating%2C%20superior%20to%20that%20of%20its%20parent%2C%20to%20give%20it%20access%20to%20cheaper%20funding.%0D%0A%3C/p%3E%0D%0A%3C/BODY%3E%0D%0A
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As a new president takes office in Iran and deadlock hits talks with the European Union over Tehran's controversial nuclear programme, investors are pondering whether they should enter an economy that might soon be subject to sanctions.
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Iranian shipping company NITC is a rarity: it's one of the few non-oil and gas companies in the Islamic Republic seeking funds in the international markets.
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Qatar has become a centre of project finance expertise as the government pursues big industrial and infrastructure projects. Skills have spread from foreign banks to local institutions and are being used in the whole region.
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The woman who has run the central bank since 2000 has overseen reform of the exchange rate, the capital markets and the banking industry. With her encouragement the country has also become a hub for Islamic finance.
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BEST BANK
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BEST BANK
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BEST BANK
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BEST BANK
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BEST BANK
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A new book explores how the Florentine dynasty lent money and still went to heaven. Mark Johnson looks at the ways in which Italy's fifteenth-century bankers circumnavigated religious prohibitions to make their margins
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The expansion of the MENA region's equity and debt capital markets must go hand in hand with stronger corporate governance and financial regulation. Financial market reform requires better governance structures, necessitating legal reforms as well as improvements in policies and procedures required to foster private sector development and tackle inefficient, ineffective and discriminatory government practices.
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The Asian bond markets have given investors an easy ride in the past two years. Now, with inflation and interest rate uncertainty, buyers need to be smarter.
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Attention now turns to more complex Al Marai transaction
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According to the International Monetary Fund (IMF), domestic bond markets help to foster financial stability, reduce inflationary funding, improve financial intermediation and assist governments in managing the effects of volatility in the international economic and financial system. Khaled Fouad, senior vice-president, merchant banking at TNI, says: "In the absence of a debt market, any crisis in the banking industry will have a spillover effect and would likely require the government to step in and assume the burden in order to prevent the financial system from collapsing."
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Ms Ooi Lay Leng is a senior portfolio manager at the Government of Singapore Investment Corporation (GIC), managing global fixed-income portfolios including global emerging market fixed-income and currency portfolios. She specializes in policy matters, participates in investment strategies and is responsible for fixed-income investment decisions pertaining to the Asean markets. Lay Leng has accumulated more than 10 years of experience in the fixed-income market. During her career with the fixed-income department, she had worked at GIC's London and New York offices, before returning to the GIC's head office in July 1998 Lim Heong Chye is managing director of DBS Asset Management (DBSAM). He joined DBS Asset Management in 2001 and since his joining, DBSAM's fixed-income funds have been ranked top quartile, and its flagship global fixed-income fund has received a five-star rating from Mercer Investment Consulting. He has been instrumental in enhancing DBSAM's fund management franchise and, in addition to his present responsibilities, is focused on building DBSAM's capabilities in Greater China. He also oversees the institutional marketing and client servicing functions at DBS Asset Management.
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The creation of financial centres and the opening of banking markets in the Gulf to foreign players are broad themes across the region, which is riding a wave of liquidity. Bank consolidation should be the next consideration. John Hamilton reports.
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Jakarta, Indonesia's chaotic capital, offers a fascinating view of the clash between capitalism and Islam, as Chris Leahy explains
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Growing liquidity derived from high oil prices, less restrictive regulation, a drive to privatization and a reduction in investment abroad have driven the Saudi Arabian stock market to new heights
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A proposed expansion of Saudi Arabia's rail system is set to be one of the biggest construction projects in the Middle East and should revolutionize freight distribution in the region.
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Islamic finance has made striking advances in the past year in its prime market of Muslim individuals, sovereigns and institutions, and among non-Muslim issuers and consumers attracted to Shariah-compliant products.
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Return to UBS tops private banking poll
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Private banking FirstRand has finally offloaded subsidiary Ansbacher Group to the approval of all involved. The sale to Qatar National Bank (QNB) of the group, which provides financial services to high-net-worth clients internationally, was completed in November, opening a door to the lucrative and expanding high-net-worth market in Qatar.
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The market for Shariah-compliant finance has grown rapidly in size and sophistication in the past few years, demanding expertise in regulation, product structuring, legal services and marketing. Nigel Dudley speaks to pioneers of the industry.
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UK budget airline easyJet has appointed 43-year-old Jeff Carr as its new finance director as of January 2005, replacing Chris Walton.
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The Islamic capital market proves its capacity to fund one of the biggest ever deals outside the oil and gas sector in the Middle East.
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Publication: SABI - Business News
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Islamic bonds, known as sukuks, have more than doubled their share of the Gulf bond market from 14% to 32%, according to international law firm Trowers & Hamlins (T&M). The State of Qatar's Global Sukuk issue, which closed in October 2003, was so popular that its size was increased from $500 million to $700 million, while the Dubai's Department of Civil Aviation recently announced the biggest ever sukuk issue, amounting to $750 million.
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Banks in Arab countries enjoyed much better results in 2003, especially during the second half. In 2002 earnings fell on the back of weakness in global investment markets, tight margins, and higher provisions. Net profit bounced back in 2003, rising by over 15% for the top 100 Arab banks.
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Iran's economic liberalization programme has shown impressive results. But the victory of conservative forces in the latest elections threatens further progress. Meanwhile the country's banks are incapable of funding its corporations, which are turning instead to the capital markets.
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Last year, at the IMF meetings in Dubai, the Iraqi delegation was led by Adil Abdul Mahdi. At the time, he was already a leader of the Supreme Council for the Islamic Revolution in Iraq, the leading Shiite party in the country.
Today, Mahdi is minister of finance in Iraq's interim government, charged with restructuring the country's debts before the end of the year. Here, he speaks to Euromoney in his first detailed comments on the subject since he took office. -
The Shariah-compliant debt market has grown rapidly, with interest from issuers and investors outside as well as inside the Muslim world. The next development is likely to be more corporate issues using Islamic structures.
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Islamic finance has broken another barrier with news of the first European based and backed Islamic bond (sukuk) to be issued by the German state of Saxony-Anhalt. The ?100 million of sukuks will be issued at the end of July. The bonds, which must comply with sharia?ah rulings, do not represent borrowing by the named entity, the most notable prohibition with sharia?ah compliance being the illegality of interest bearing accounts. A further complication is the existence of four schools of Islamic law which can provide differing interpretations on compliance.
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Best bank
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Royal Bank of Scotland
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Best bank
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The International Swaps and Derivatives Association is writing to capital markets regulators in the Middle East to see whether its derivatives documentation can be used in Islamic jurisdictions.
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With foreign players set to start investment banking operations in Saudi Arabia, local banks are confident that they can meet the challenge.
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Linklaters has hired 15 new finance partners to boost its global finance practice.
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Iran's State Tax Organization (STO) last month made its ambitions clear: in 2004/05 it is aiming to gather enough tax revenue to cover almost half of government expenditure. To achieve this it needs to record a 38% year-on-year increase in tax collection, or total revenues of almost $11 billion.
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On February 25, the Bahrain Monetary Agency went on the road to sell a $250 million sukuk – Bahrain's first international Islamic bond. Bahrain's bond follows issues by Qatar and Malaysia. And the news that Citigroup is working with the German state of Saxony-Anhalt on an Islamic bond suggests that, as well as being used to boost the Islamic capital markets, sukuks can be commercially attractive to a broad audience.
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After over two years of doom and gloom in the corporate finance job market, things finally are looking up.
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In the Islamic awards section in January we mis-printed the name of Commerce International Merchant Bankers. Apologies.
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Islamic banks have much potential to tap Islamic, ethical and conventional borrowers and investors. The key will be whether the industry can introduce the regulatory standards to reassure investors. Nigel Dudley reports.
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Permal, part of French group Worms & Cie, announced last month that it had launched its first Islamic hedge fund.
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New financial legislation and infrastructure in Dubai and Saudi Arabia give them the opportunity to challenge Bahrain's position as the Middle East's prime financial centre. Nigel Dudley reports.
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With Islamic banking business growing faster than more conventional financial services, competition to provide new products is heating up.
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In the wake of September 11, the US authorities targeted informal financial networks serving people in the Islamic world for particularly severe treatment. One of these was called Barakkat, a cash-transmission network that linked expatriate Somalis living in the US with their impoverished home country. Barakkat was closed down less than a month after the outrage, causing enormous stress to the large expatriate Somali community in the US and their families in Somalia.
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After a weak 2001, most Arab banks enjoyed little pick-up in their fortunes in 2002. However, early results in 2003 suggest that the tide may be turning.
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The Central Bank Governor of the Year and the Finance Minister of the Year awards will go live on September 19. Visit the site then to find out who won.
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A growing number of companies are realizing that there is a large pool of cash in the Islamic world that they may be able to tap into to diversify their funding sources and lower their financing costs. However, they must be willing to embrace Shariah-compliant structures.
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An embarrassing and potentially damaging controversy is emerging in Islamic equity funds. Because of the way the vast majority have been handled by mainstream brokers, many may not be as Shariah-compliant as investing customers would expect.
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Best bank - Public Bank
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Best bank - National Bank of Bahrain
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Best bank - HSBC
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Best bank - Mashreq Bank
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Citigroup
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Malaysia
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The aftermath of war in Iraq may delay a few project finance deals in the Middle East but the market is in good health. Development diversification will spur large projects. Sponsors, however, may have to accept more costly financing.
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Impending full liberalization of Malaysia's banking system is encouraging local players to grow their investment banking business, with RHB Sakura and CIMB taking the lead.
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General Hilmi Ozkok, Turkey's army chief of staff, last month expressed his displeasure at prime minister Abdullah Gul's interference in army policy towards Islamist officers. In a speech he made at the military's annual party for the media (Islamist journalists are not invited) Ozkok said Gul's attitude would "indubitably encourage those who got mixed up in recidivist [meaning Islamic fundamentalist] activities".
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The AKP’s hefty majority in Turkey’s November elections looked promising but indecision has taken a hold on the new government, not least in its commitment to the discipline required by the IMF.
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Western Europe Central & Eastern Europe Latin America North America
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CEO and president of Shariah Funds Inc
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Financial engineering for ethical investors
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Islamic law once forced Muslims to make do with poor investment returns. Now, complex Shariah-compliant structures are burgeoning to add value. We look at the market leaders.
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Riba, Gharar, Murabaha, abba, Ijarah, Salam, Istina, Sukuk, Mudarabah, Musharaka, Takaful
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Chief executive officer, HSBC Amanah Finance
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Traditionally Bahrain dominated finance in the Gulf but initiatives elsewhere in the region, particularly Dubai, have undermined its lead. Now Bahrain's central bank is making up lost ground.
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The world’s largest financial services firms are realizing that Muslims would increasingly like to invest through Islamic funds. These are growing in number but have had a rough ride in the global bear market since many of them were heavily invested in technology stocks.
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Reforms implemented by Pervez Musharraf have shown good results. The hope now is that next month’s election of a civilian government will not take Pakistan back to the bad old days.
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Euromoney polled treasurers and financial officers at corporates, financial institutions, supranational organizations and sovereign/state agencies. Respondents were asked to nominate banks providing the best service in capital raising and risk management.
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Saudi Arabia’s investment needs are so great that it looks as if economic reform – however halting – will win out over statist, introverted policies.
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Dubai is busily preparing to host the annual IMF/World Bank meetings in 2003 which it hopes will showcase the city’s credentials as an international financial centre.
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The IMF has disbursed $13 billion to Tukey this year and claims to see widespread support for economic reform in the country. But the summer’s political crisis has raised the prospect of electoral success for the Islamists.
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Issuer: Bank Markazi Iran (central bank)Amount: e500 millionLaunched: July 10 2002Bookrunner: BNP Paribas, Commerzbank
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Awards for Excellence 2002
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Issuer: Malaysia Global Sukuk IncAmount: $600 millionLaunched: June 25 2002Bookrunner: HSBC
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Dubai is moving fast to develop an international financial centre with strategic links to western markets. Its plans are ambitious but UAE regulatory problems, regional rivalries and simmering political tensions might prove to be stumbling blocks.
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Kuwait’s banking sector has seen many false dawns over the past 20 years, with only one real international player, National Bank of Kuwait, enduring. Now, however, other players are looking to make a real impression.
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Leaning easily against their sandbagged position, the machine-gunners look decidedly bored and even a little sleepy in the glaring midday sun. Watching the quiet approach road to Karachi's main international airport is, apparently, not the kind of duty that sets pulses racing. The local newspapers may be exercised by the story that a section of the airport is being handed over to American forces as a staging post for Afghanistan - and by the notion that US troops might be hunting for Osama bin Laden inside Pakistan - but Karachi's citizens apparently couldn't care less. The mopping up of Al-Qaeda leaders has become a subject of wry humour rather than passionate outrage. When the Americans called their operation Enduring Freedom did they mean that Osama bin Laden and Mullah Omar were going to enjoy enduring freedom? So runs one popular joke.
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In little more than a decade, Islamic banking has grown into a $200 billion a year industry. With top global banks entering the market, it is deepening its professionalism and broadening out with sophisticated and ingenious new products, including private equity, mortgages and even some securitization. Regulators are striving to impose stricter regimes. But individual Sharia courts can still be at odds over what is deemed compliant with Islamic law.
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Saudi Arabia’s banks are bracing for a period of intense retail competition by preparing to launch new products, especially for Islamic and internet banking, and developing personal and mortgage lending.
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The majority of Arab banks enjoyed a good year in 2000 as most of the main Arab countries recorded solid rates of GDP growth, benefiting from the continued high price of oil. Reflecting this, the top 100 Arab banks saw net profit rise by 15% in 2000 on an aggregated basis. The overall return on equity rose to 14.1% in 2000 from 13.2% in 1999, and the return on assets increased to 1.3%.
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General Pervez Musharraf, Pakistan's head of state, talks about his country's economic programme, the Afghan Taliban and Islamic fundamentalism.
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This survey covered the following countries: Bahrain, Egypt, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Syria, Tunisia and the United Arab Emirates
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If ever a finance minister was in the firing line, Shaukat Aziz is that man. The 30-year veteran of Citibank is saddled with the task of selling yet another military government in Pakistan to a sceptical international investor community.
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Best bank
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Sporadically, the lights go out in Damascus, although power cuts tend to be short-lived and much less frequent than they used to be, say local businessmen. Nevertheless, Syria clearly needs to channel funds into its power sector. Today, it has installed generating capacity of some 3,600MW, and will need to add an estimated 2,200MW by 2006, representing an annual increase in demand of 6%, which calls for an investment of just over $1.6 billion.
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Reform, liberalization, infrastructure investment and international borrowing were among the leading topics of discussion at Euromoney's recent conference. Entitled Saudi Arabia: Financing the Future, this, the largest international conference of its scale in the Kingdom to date, took place on May 29-30 at the Al-Faisaliyah Center in the Olaya district of Riyadh. Euromoney organized and hosted the event along with co-organizer Council Saudi Chambers of Commerce and Industry and co-host Saudi Arabian General Investment Authority.
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More and more Arab banks accept that they must embrace the internet or risk losing share in their home markets to more technology-savvy international players. National banks see the internet as a means to realize their regional ambitions. Change is under way across the region, perhaps most notably in Bahrain, traditionally the key offshore banking centre in the Gulf. Now Islamic banking and investment banking operations are growing up and offshore banking is becoming less prominent. The country’s leading offshore and local banks are rethinking their strategies and hope to become regional players.
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Executives at Perbadanan Usahawan Nasional (PUNB) - Malaysia's National Entrepreneur Corporation - appear to have taken their remit rather too literally.
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The $700 billion trade-finance market is one of the few large pools of tradeable fixed-income assets that has not yet attracted the attention of institutional fixed-income investors. Changing that, and propelling the fragmented and illiquid trade-finance market through the same developments that transformed the emerging-market debt market in the 1980s is the ambition of a group of bankers and traders who last month launched Internet Trade Finance Exchange (ITF).
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The $700 billion trade finance market is one of the few large pools of tradeable fixed-income assets that has not yet attracted institutional fixed-income investors. Changing that, and propelling the fragmented, illiquid trade finance market through the same developments that transformed emerging market debt in the 1980s, is the goal of bankers and traders who this month launched Internet Trade Finance Exchange (ITF).
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To date, most Arab countries have been insulated from outside pressure due to highly protected markets and huge oil reserves. But foreign competition is set to increase, especially for markets joining the World Trade Organization. The biggest banks in small countries will have to look outside their domestic markets for growth, either through acquisitions or alliances. Darren Stubing reports.
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To date, most Arab countries have been insulated from outside pressure due to highly protected markets and huge oil reserves. But foreign competition is set to increase, especially for markets joining the World Trade Organization. The biggest banks in small countries will have to look outside their domestic markets for growth, either through acquisitions or alliances. Darren Stubing reports
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Conversation in Kazkakhstan in recent months has centred on one topic: oil. What appears to be a major new find has excited locals, multinationals operating in the energy sector and buyers of an oversubscribed sovereign Eurobond. The prospect of this impoverished country, where the average wage is barely $100 a month, becoming the next Kuwait has also enabled the nation teasingly to play prospective bride to both the West and Russia. Ted Kim reports
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Credit Suisse First Boston
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Who could have dreamt that Korean online trading, almost non-existent two years ago, could be almost as large as that of the US?" So asked Andrew Sheng, chairman of Hong Kong's Securities&Futures Commission (SFC) in an address to the local Securities Institute delivered earlier this spring. Although online trading is gathering momentum across Asia, the speed with which it has been embraced by Korean investors has been staggering. As a report published on Korea's "internet laboratory" by Lehman Brothers early in March commented: "Over just a one-year period, online trading has grown from 4% of market turnover to 45%. Twenty-nine out of 31 domestic brokers now offer online broking services, and two million Korean investors have gone online."
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Arab banks used to be content to stick to their lucrative national markets. But with oil prices low, times are getting harder in the Middle East and banks are positioning themselves to go regional. Darren Stubing reports.
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The key to prospects for world growth in 1999 is Japan. I expect the US economy to slow during the year and the core of Europe to grow by less than 2%. So the OECD as a whole is unlikely to achieve even 1% real growth this year unless Japan picks up.
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The question of how the world's institutional investors will react to Emu and the changes in the European market over the next year is a much debated topic.
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The recent fall in oil prices might once have spelt disaster for the Saudi Arabia's banking sector - slashing government revenues and weakening banks' asset quality. But this time the authorities seem well prepared for the current wave of economic turbulence and the banks are optimistic of riding out the storm. Michael Peterson reports.
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Top 100 Arab Banks: Waiting for the after-shock
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Top 100 Arab Banks: Waiting for the after-shock
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Top 100 Arab Banks: Waiting for the after-shock
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Top 100 Arab Banks: Waiting for the after-shock