Amir inaugurates Warba Bank

KUWAIT: His Highness the Amir Sheikh Sabah Al-Ahmed Al-Jaber Al-Sabah arrives to officially inaugurate Warba Bank in Salwa Sabah Al-Ahmed Ballroom yesterday. His Highness the Crown Prince Sheikh Nawaf Al-Ahmed Al-Jaber Al-Sabah attended the event

KUWAIT: Under the patronage and attendance of His Highness the Amir Sheikh Sabah Al-Ahmed Al-Jaber Al-Sabah, Warba Bank yesterday celebrated its official launch during a ceremony at Salwa Sabah Al-Ahmed Ballroom. The bank started operating during the first quarter of 2012 with the opening of four branches.
His Highness the Crown Prince Sheikh Nawaf Al-Ahmed Al-Jaber Al-Sabah, Parliament Speaker Ahmed Abdulaziz Al-Saadoun, Prime Minister Jaber Al-Mubarak Al-Hamad Al-Sabah, as well as several ministers, sheikhs and VIP guests, attended the ceremony.

The event opened with the national anthem, followed by a recitation of the Holy Quran. Warba Bank came into existence with the issuance of an Amiri decree and has been registered in the Islamic Banks’ register of the Central Bank of Kuwait since April 5, 2010. The government, represented by the Kuwait Investment Authority (KIA), owns 24 percent of the bank’s total capital. The remaining 76 percent has been granted to the entire Kuwaiti population, with 684 shares per citizen, subscribed and paid for by the government. The authorized share capital of Warba Bank is KD 100 million.

The idea of launching the bank reflects the cooperation between the legislative and executive authorities, as the decision to establish the bank was a result of an initiative by Parliament that was endorsed by the government. Such a national project of economic significance serves the target of turning Kuwait into a financial and commercial hub, and accomplishes several national goals towards pursuing continuous development in Kuwait.

During the event, narrator and actor Jassim Al-Nabhan introduced the audience to the story of the bank’s formation and the stages of its establishment as a Kuwaiti shareholding company. The bank is marked to become the first of its kind on a worldwide scale since the Kuwaiti government pioneered establishing a bank for the nation’s citizens to meet their economic and financial needs, while providing financial stability for the coming generations.
Concluding the event, His Highness the Amir received a memorial shield presented by the Chairman and Managing Director of Warba Bank, Jassar Dakheel Al-Jassar.

In the first quarter of 2012, Warba Bank successfully opened four branches in Hawalli, Al-Qibla, Salmiya, and Sharq, in addition to special segregated branch facilities for women, given the importance of this segment. The openings came as part of fulfilling the ambitious strategy of the banking group to reach the largest segment of clients in different areas in Kuwait. The bank also plans to open one additional branch before the end of 2012.

Warba Bank commits to offering the finest e-services and the latest technological solutions, given its cooperation with specialized global technological companies. At the retail segment, the bank offers the opening of several types of accounts, financing, and presents various banking cards, including the ATM, credit cards and prepaid cards, in addition to offering financial solutions for its clients. For the wholesale segment, the bank leads a fully operational corporate and investment banking solution service for its clients. Warba Bank also offers Shariah-compliant banking products and services.

There is demand for Shariah-compliant banks: Al-Jassar

By Velina Nacheva, Staff Writer

KUWAIT: Warba Bank is making arrangements with local banks for the financing of the complex of the national industries estimated at KD 100 million – a loan that Jassar Dakheel Al-Jassar, Chairman and Managing Director of Warba Bank, calls “a big achievement” because it is the biggest financing operation by a young bank. In remarks Al-Jassar made to the press on the sidelines of the official inauguration ceremony of Warba Bank yesterday, he said that the Warba shares of the loan will be governed by the provisions of the Central Bank.

He said that Warba Bank has an advantage over its counterparts in the market because it is a new bank with “a very clean balance sheet”. “There is a demand for Shariah-compliant banks in Kuwait,” Al-Jassar said. Stressing that there are opportunities for more Islamic banks in the country, he said that competition will create a challenge for local players to introduce more products and services.

He also said that over the last four months since its establishment, Warba Bank has made remarkable progress. Al-Jassar pointed out an investment in China as one such achievement which brought a 40 percent return on the investment. The purchase of the British Telecom headquarters in UK which has been subsequently leased for 15 years, Al-Jassar pointed as another Warba Bank feat, in addition to the lease of properties in the US.

Since its launch, the bank has been implementing its strategy which has been tailored in cooperation with one of the most reputed consultants. Part of the strategy, Al-Jasser said, includes the bank’s three sectors: Retail, Investment and Corporate Banking. Each sector has a timeframe, Al-Jassar added. As for the bank’s expansion plans, Al-Jassar said, Warba Bank will stretch its current network to a total of five branches with the opening of its fifth branch in the third quarter this year.

http://news.kuwaittimes.net/2012/05/23/amir-inaugurates-warba-bank/

Islamic Banking in Africa

 KFH Research prepares report about future of Islamic finance in Africa

- 38 financial institutions are currently operating in Africa Promising future for Islamic finance, and southern and eastern African countries will become pivotal service centers

- North African countries have great untapped potential

-Lack of competent employees and fragile infrastructure most prominent obstacles, while retail services and small projects most promising opportunities

KFH Research prepared a report about the future of Islamic finance in Africa that said that there are various promising opportunities for the growth and development of Islamic banking in Africa; especially North African countries, in addition to Kenya, Nigeria, Senegal and South Africa. It is worth noting that South Africa is a market with great potential for Islamic banking transactions.

In addition, the report mentioned that Africa hosts 38 Islamic finance institutions, and stressed that most African countries have amended their legislations to allow Islamic institutions to operate.

However, the report shed light on several major obstacles that hamper the ability of Islamic finance to blossom in Africa, such as lack of competent employees, fragile infrastructure, and the low returns on some projects.

Despite the aforementioned, Islamic banks have great potential in the fields of retail services, financing of small and medium scale projects, and real estate development projects.

Sudan is the only African country that has restructured its economy and financial system in accordance with the teachings of Islam. In recent years, however, the continent has witnessed encouraging growth of Islamic finance, underpinned by the following factors:

· Increasing awareness in Sub-Sahara Africa on the back of the growing trade interactions with the Middle Eastern countries.

· Growing demand for Shariah-compliant products and services by Muslims who wish to comply with their religious beliefs.

· Increasing demand for the ethical, risk-sharing approach offered by Islamic finance, in particular in the wake of the recent global financial crisis.

 

 

The article was very interesting and makes reference to the need to educate the...

 

 

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· Measures undertaken by some of the governments to review and reform their respective banking laws to allow Islamic finance institutions to set up and prosper.

Growth and Development 

Although Islamic banking commenced in Egypt since the 1960s, the industry is still in its infancy across the continent. Currently, there are approximately 38 Islamic financial institutions operating in Africa. Kenya is among the African countries that are taking up the lead in Shariah-compliant banking services. While the demand for Islamic banking services has continued to grow in leaps, banks have been slow in offering such services, mainly due to a lack of expertise in Islamic finance and its products.

North Africa represents a large and still untapped market of 190 million people or 91% Muslims, except in Sudan where Muslims represent 70% of the population. However, Islamic banking is still a niche market in North Africa, where consumers are used to conventional banking products and services. Nevertheless, we expect things to slowly change moving forward, given new regulations created by the governments. For example, the Moroccan Central Bank decided in 2007 to authorise certain types of Islamic financial products, called alternative financial products, in response to consumers' demand. Full-fledged Islamic banks are already established in Egypt, Algeria and Tunisia; Islamic windows in Egypt, Morocco and Algeria. In 2011, the Central Bank of Sudan has approved Abu Dhabi Islamic Bank's request to open a branch.

In West Africa, development of the Islamic banking industry can be witnessed in Nigeria. Provisions of the Banks and Other Financial Act (BOFIA) 1991, as amended, provided for the establishment of Islamic banking in Nigeria. Following this, Habib Bank was given approval in 1992 to operate an Islamic banking window which is still operational with Bank PHB. In June 2011, the Central Bank of Nigeria issued the latest new guideline for non-interest banking and approved a banking licence for Jaiz International Bank to launch the country's first Islamic bank. However, the central bank is not a promoter of Islamic banking but only issued guidelines concerning its introduction. The main reasons for introducing Islamic banking in the country are as follows:

· To attract foreign investment to develop infrastructure in Nigeria and to guarantee financial inclusion for more Nigerians.

· To be used as positive catalysts in the banking sector.

· To meet the demand for non-interest, profit-sharing form of banking and finance, irrespective of religious affiliation.

Elsewhere in Senegal in October 2009, Bank Asya, Turkey's leading participation bank, acquires a 40% stake in Senegal-based Tamweel Africa Holding SA, owned by the Islamic Corporation for the Development of the Private Sector (ICD), a subsidiary of Islamic Development Bank (IDB). Bank Asya, the IDB and the ICD will operate in the interest-free banking sector together throughout Africa, especially in the western part of the continent.

In East Africa, Islamic banking commenced in Kenya in 2008 when the government allowed Kenya Commercial Bank to operate its Amana Islamic suite, the country's first full-fledged Islamic bank. With the establishment of Gulf African Bank, Kenya now has two full-fledged Islamic banks, which contribute around 1% of the banking sector's net assets. Five other conventional banks have also introduced Islamic banking products in Kenya to provide Shariah-compliant products to an increasing customer base. In May 2010, the Central Bank of Kenya amended its Banking Act in May 2010 to allow Islamic finance institutions to set up and prosper. Elsewhere in Uganda, the central bank is amending its banking regulations to allow for the establishment of Islamic banks in the country.

In the south, Muslims represent 2.3% or 1.3 million of the population in South Africa. However, only 10%-15% of the Muslim population uses Islamic banking. There are currently three Islamic banking institutions - one full-fledged Islamic bank and two Islamic banking windows. Al Baraka Bank, registered in South Africa in 1989, is the first Islamic bank in the country. Total Islamic banking assets currently account for 1%-2% of total banking assets in South Africa.

The outlook for the Islamic banking industry in South Africa is bright, given various measures undertaken by the regulators to develop the industry - (1) South Africa is currently in the process of introducing tax neutrality laws for Mudharabah, Murabahah and diminishing Musharakah, and (2) The National Treasury envisages South Africa being a central hub for Islamic product development and ensuring the rollout of such products into African markets. Nevertheless, challenges faced by Islamic banks in the South African market include increased competition, lack of customer education and awareness, and lack of good geographic spread.

Opportunities 

Islamic banks and products are likely to be most popular in the parts of Africa with the highest concentration of Muslims such as North Africa, large parts of West Africa and down the eastern seaboard. Islamic banks are also expected to become attractive in countries with significant populations of Muslim businesspersons such as South Africa.

Opportunities for Islamic banks in Africa include retail products as well as SME financing. Although Islamic finance has been around for 50 years in Africa, more than half of the continent's Muslim population remains unbanked. Unlike major urban areas which have a penetration rate of approximately 60%, banks in rural Africa have a very low penetration rate of less than 20%, given the branch infrastructure which makes it inadequate to serve the population. Given the continent's growing middle class and large young population, this serves as an opportunity for banks to expand their network of banking services.

The opportunities for Islamic SMEs and microfinance are also vast, underpinned by steady economic growth, government ambition to reduce poverty levels and enrich the standard of living, the growing preference for Shariah-compliant products, and a large Muslim population. However, the risks are perceived to be higher, given agribusiness SMEs in Africa tend to be undercapitalised, lack collateral, and have poor expertise in management, commercial and financial skills. In this regard, Islamic banks can actually adapt from successful microfinance institutions such as Grameen Bank in Bangladesh and Bank Rakyat Indonesia who adopted dynamic incentives, regular repayment schedules and collateral substitutes to help maintain high repayment rates. One of the key success factors would be to develop products that not only meet the requirement of the target groups, but are also affordable for the masses.

Outlook

Moving forward, we expect the Islamic banking industry to continue to expand in Africa, supported by the following factors:

· The on-going shift by African countries from being aid-dependent to increasing trade and business interactions with the Middle East. Islamic finance can potentially play a part in facilitating more trade between Africa and the Middle East with the involvement of more global and Islamic banks from both regions.

· Policies and business reforms in some parts of the continent have made Africa the third fastest-growing region in the world, after the Middle East and Asia. This will result in huge infrastructure requirements which will in turn result in an increase in the demand for Islamic financing. Issuing sukuk will provide an opportunity to tap funds from the Middle East and Asia.

· According to African Development Bank (AfDB), the number of middle-class Africans has tripled over the last 30 years to contribute more than 34% of the continent's population. Strong economic growth over the years, enhanced human resource development, and promotion of private sector growth are some of the factors that have caused the number to increase. This is expected to boost consumer spending and support the demand for retail banking products such as vehicles and houses as well as insurance products.

· Besides amending the banking laws to accommodate Islamic banking, the African governments are expected to undertake similar review on the insurance industry and the capital markets which will bode well for the Islamic finance industry as a whole.

· Efforts by some African countries such as South Africa and Nigeria to promote and position themselves as Africa's Islamic finance hubs.

· Africa is host to the second largest Muslim population in the world, where 540 million or 52.4% of its population is Muslim.

Risks and Challenges

Risks and challenges that need to be overcome for Islamic banking to expand in Africa include the following:

· Lack of qualified and skilled personnel in Islamic finance. In addition, the banking and financial authorities need to become more familiar with the principles and practices specific to Islamic finance to enable them to make appropriate supervisory and regulatory judgments.

· Lack of awareness of Islamic finance. Greater marketing and product education and awareness are crucial to help overcome any resistance that may arise.

· Senegal and The Gambia already have operational regulations governing Islamic banks, while several other countries are at various stages of drafting their respective regulatory guidelines. However, more needs to be done in terms of establishing robust regulatory and legislative structures, strict risk management frameworks as well as governance and compliance structures for the Islamic finance industry to take off and prosper.

· Lack of infrastructure such as Islamic money market to help provide liquidity in the Islamic banking system, as well as takaful to protect investments of Islamic banks against unforeseen hazards.

· Most African countries do not have specific tax legislation related to Islamic banking and finance products. If they remain unsolved, this would delay the development of Islamic finance in the rest of the continent. Certain countries such as South Africa and Nigeria have recognised the need to place Islamic banking on an equal footing with conventional banks.

· In some African countries, political and economic instability has made financing home purchases difficult. The growth of SME loans and financing has also been hindered by not only political instability but strong dependence on a few raw materials.

© Press Release 2012

from Kuwait Finance House

http://www.zawya.com

GCC urged to follow unified Islamic finance regulations

The Gulf Co-operation Council (GCC) should have a unified rule under one regulator for Islamic investment products for ensuring lower cost of funds, according to Islamic Wealth Management (IWM) Report 2012.
“The GCC countries could take a leadership role by establishing standards for the registration of Islamic investment products with one regulator,” the Bank Sarasin report said.

The report was launched by Bank Sarasin managing director and head of Islamic Finance Fares Mourad and Monzer Kahf, a leading Islamic finance scholar.

Such unified rule would allow asset managers to market the product to clients across the region, it said.

Currently any offering needs to comply with different regulations in Bahrain, Kuwait, Saudi Arabia, Oman, Qatar and the UAE, resulting in a lengthy and expensive registration process, the report said. “Reducing expenses and increasing the availability would increase competition, benefiting local investors and further the GCC’s development as a centre of excellence for Islamic finance.”

Although unified rules could be done either a state, region or Arab league level, it would be better to have a centralised agency that could interpret the legislations regarding Shariah investments, Mourad said.

Asked whether there was a need for a separate entity for the regulation and supervision of Islamic investments and products, he said “I really would like to have this” but it was for the regulators in the respective jurisdictions to decide.

Kahf said the Islamic Financial Services Board could take the lead in the centralised agency as it consisted of central bankers in the Muslim countries. “Once you have such an agency, there is no need for separate Shariah boards as lawyers specialised in the field could suffix its role,” he added.

The report also took note of the constant criticism of certain Islamic finance structures such as the ‘Tawarruq’, which involves purchasing a commodity with deferred payment and selling it to a third party for cash, hence replicating the effect of a loan.

“Regulations need to be adjusted to allow financial institutions to engineer products that fit the spirit of Islam while meeting legal and regulatory requirement,” it said.

In this regard, the report cited an example of recent co-operation between the halal industry (mostly foodstuffs) and Islamic finance – two sectors with similar goals that have had little contacts.

With issues related to the environment and social practices as well as corporate governance getting more attention, it said there has been more reporting on corporate social responsibility, which is important to Islamic finance.

“There is still much room for improvement with higher standards and a more strategic approach required at the state, company and private level. The Muslim countries face the greatest challenges,” the report said.


http://www.gulf-times.com

Al-Mulla Obtains PhD In Islamic Financial Ops

Al-Mulla Offering A Copy To Al-Omar

Al-Mulla Obtains PhD In Islamic Financial Ops

Kuwait Finance House (KFH) CEO Mohammed Al-Omar asserted that the development of skills of KFH employees has no ceiling, and noted that all employees are aware of the importance of improving and upgrading their skills. It is worth noting that the Development and Research Manager Unit at KFH Adnan Al-Mulla has obtained a PhD degree in his field of work, which prompted Al-Omar to receive him and take a copy of his studies. He went on to say that such academic efforts are highly appreciated, since they allow KFH to offer its clients innovative Islamic services and products.

Meanwhile, Al-Mulla stated that the PhD that he had obtained from Cairo University focused on Islamic financial operations, and noted that he chose this field of studies, since it is part of his work at KFH. He added that investors and institutions currently applaud Islamic financial transactions, especially after this industry withstood the financial crises that hit global markets during the past few years by offering real financial solutions. Such success forced non-Islamic markets to take advantage of such transactions.

http://www.arabtimesonline.com

KFH-Bahrain wins top Islamic finance award

Kuwait Finance House-Bahrain (KFH-Bahrain) received the "Best Islamic Wealth Management" award at the Islamic Business and Finance Awards 2009 organised by CPI Financial.

"We are proud to receive the 'Best Islamic Wealth Management Award' as it is a manifestation of the hard work and innovation that KFH-Bahrain employees are known for," KFH-Bahrain managing director and chief executive officer Abdulhakeem Alkhayyat said. "The bank employees have successfully developed and structured innovative products and services through "Priority Banking" that meet the requirements of our clients in the area of wealth management.

"Winning this honour is a triumph for the bank's Priority Banking employees and management and it confirms the strength of the products and VIP services offered to the Priority Banking clients." The Islamic Business and Finance Awards were designed to encourage, inspire and reward excellence within the global Islamic business and finance community and they have become the yardstick by which Islamic finance institutions and practitioners across the globe measure themselves. These awards have assumed such significance due to the Islamic Business and Finance magazine's widely recognised position as one of the most respected voices of the industry.

Winners are voted for by the readers of the Islamic Business and Finance magazine and are judged on their merits and performance over the last 12 months. The Islamic Business and Finance Awards were launched in 2005 in response to the phenomenal growth of the Islamic finance industry.

"The 'Best Islamic Wealth Management' Award highlights KFH-Bahrain's achievements in developing its products and services, based on clients' needs for Priority Banking," KFH-Bahrain executive manager Abdul Razak Jawahery added. "With the continuous steady growth in the economy, the number of high net worth individuals in Bahrain and the region is growing at a high rate. "Priority Banking offers a high level of personalised service with superior standards of reliability and confidentiality." One of the main features of KFH-Bahrain Priority Banking is that each client is individually served by a dedicated client relationship manager who is specially trained to address their full financial needs from day-to-day banking to wealth creation.

Priority Banking also provides an extensive range of Sharia-compliant services, which include reduced service charges, preferential rates on foreign currency, and priority on entering into new investment opportunities and products.

Link: http://www.gulf-daily-news.com/NewsDetails.aspx?storyid=267060

Kuwait – a growing force in the Islamic finance sector

Since the onset of the global downturn, the Islamic finance sector has attracted attention as a potentially profitable alternative to conventional banking. In Kuwait, the sector continues to grow.

The region is gradually pronouncing itself a centre of Islamic finance, along with other global centres such as Kuala Lampur, Dubai, Manama, Doha, London and Singapore.

Kuwait Finance House (KFH) has long been a local dominating force in the Islamic finance sector and represents 25% of Kuwait’s total deposits. The bank operates in both Arab and Middle Eastern countries, including Bahrain, Malaysia and Turkey.

The second largest Islamic bank in Kuwait (by market share) is Boubyan Bank.

Recently, competition between two of the region’s largest banks, KFH and the National Bank of Kuwait (NBK), has become even fiercer, and reports claim that NBK is to secure a stake in Boubyan Bank. NBK currently has 21.5% of the market share for deposits and represents 28.5 % of the market for attracting loans. Meanwhile, KFH represents 19.6% of the market for attracting loans.

KFH was also recently granted the Most Trusted Bank Award for 2009 by World Finance magazine.

Given NBK’s increasing dominance in Kuwait, it appears that the bank will soon become a close competitor of KFH in the Islamic finance sector.

Other notable banks include BKME and the Kuwait International Bank, which have both entered the Islamic finance market.

Link: http://www.globalislamicfinancemagazine.com/articles.php?id=982