IFN weekly market roundup: 2nd – 8th June 2018

Date: Jun 2018

Daily Cover

As a long-awaited sovereign Sukuk facility gears up to hit the road and new institutions enter the industry, Malaysia unravels yet another Sukuk-funded financial fiasco. All that and more in this week’s IFN weekly market roundup. 

Morocco to debut Sukuk soon 

Morocco is looking to debut its MAD1 billion (US$105.57 million) Sukuk in the coming weeks after adopting a regulatory framework governing Sukuk sales, Reuters reported citing Finance Minister Mohamed Boussaid. The Sukuk was originally slated for the 15th September 2017, but was then postponed. 

Islamic finance industry welcomes new entrants 

Around the world this week, various companies jumped on the Islamic finance bandwagon. Switzerland’s Lombard Odier, a wealth and asset manager, rolled out a full suite of Shariah compliant investment solutions, with a target to reach US$1 billion in total Islamic investments in the next three to five years. In Indonesia, ALAMI Teknologi Sharia launched an online platform linking keen business fund-seekers to Islamic financial institutions in Indonesia. 

In Pakistan, Telenor Microfinance Bank plans to introduce an Islamic window whereas in neighboring India, it was reported that Kerala State Financial Enterprises is looking to roll out an Islamic chitty (chit fund), which will be a derivative of the NRI (non-resident Indian) chitty. 

Russian Sberbank has reportedly hired KPMG to advise on the establishment of an Islamic window. 

IDB unveils new brand identiy 

After 44 years in operations, the IDB has revamped its corporate image, unveiling a new brand identity reflecting modernity and its global-facing focus while remaining true to its core principles. 

IFSB establishes task force 

Aiming to include the Takaful and Islamic capital market sectors in its Prudential and Structural Islamic Financial Indicators database, the IFSB is forming a new task force to, among others, collect data and metadata for the new sectors. 

The UAE introduces Sukuk reforms 

The Securities and Commodities Authority of the UAE issued a resolution on Sukuk to achieve a more stringent reporting and disclosure regime, which says that, among others, issuers of Islamic securities would need to disclose mechanisms of resolving disputes including with regards to reallocation of resources, and the method of resolving disputes related to the Islamic financial paper. 

Bank Negara Malaysia to introduce new Takaful rules 

Bank Negara Malaysia released an exposure draft on trade credit Takaful and trade credit insurance, which looks at the recognition of trade credit insurance and as credit risk mitigation under the Capital Adequacy Framework (Basel II – Risk-Weighted Assets) and Capital Adequacy Framework for Islamic Banks (Risk-Weighted Assets). 

Pakistan establishes Deposit Protection Corporation 

The State Bank of Pakistan launched the Deposit Protection Corporation, which will reimburse banking depositors for the loss incurred by them in the event of failure of a member institution. 

Sukukholders give nod for Dana Gas’s proposals 

It was all smiles from Dana Gas this week as the energy producer announced that it received consent from 90.93% of its 9% ordinary Sukukholders and 96.45% of its 7% exchangeable Sukukholders for the restructuring and refinancing of its defaulted Sukuk Mudarabah, with none voting against. 

Bank Negara Malaysia’s governor resigns 

The Malaysian political purge goes on almost a month after the general elections which saw Pakatan Harapan taking up the country’s helm. 

Following the claims that ex-prime minister Najib Razak had used proceeds raised from a land sale to the central bank to pay off the debts of 1MDB, the governor of Bank Negara Malaysia, Muhammad Ibrahim, announced his resignation. Although no replacement has been announced yet, former deputy governor Nor Shamsiah Mohd Yunus is tipped to be among the candidates to take over Muhammad’s position. 

The government is also considering replacing Bursa Malaysia’s CEO, Tajuddin Atan. 

Malaysian insurers spin off licenses 

With less than a month to go for insurance and Takaful providers to separate their life insurance/Family Takaful and general insurance/Takaful business under the central bank’s order, Zurich Takaful Malaysia and Syarikat Takaful Malaysia have started to operate their  respective General Takaful and Family Takaful businesses under separate legal entities. Eight Takaful companies are required to separate their operations by the 1st July, but to date, only three have converted their licenses.

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