Intl Bank of Azerbaijan sponsors the World Islamic Banking Conference


The International Bank of Azerbaijan received an official invitation to take part in the largest annual international event devoted to Islamic Banking – 16th World Islamic Banking Conference.

The Bank reports that the conference is given support by the Central Bank of Bahrain and a range of international financial institutions, including Islamic Development Bank, CITI, Gulf Finance House, Abu Dhabi Islamic Bank, Deutsche Bank, BNP Paribas, etc. The event to be held on 6-9 December 2009 in Manama, the capital of Bahrain, is to involve over 1 200 delegates from 50 countries of the world.

The IBA will participate in the conference as a privileged sponsor that will allow it to provide information about Azerbaijan and tell of prospects of Islamic Banking prospects in the country. The Bank’s executives intend to hold some meetings within the conference for the purpose to raise financial resources for Islamic Banking development in Azerbaijan.

AZ news

UK Islamic Bank Serves More Non-Muslims

On a recent Friday afternoon, the Islamic Bank of Britain (IBB) branch in West London was bustling with a large number of customers, including non-Muslims. At a time many conventional banks have gone bust in the credit crunch and financial crisis, the IBB is reporting a growth of 5 percent in customer numbers and 13 percent in customer financing.

The reason is that the bank “has been better protected from the credit crunch affecting mainstream banks,” Sultan Choudhury, the commercial director at the IBB, told

A financial crisis swept the US last month after the collapse of Lehman Brothers, the fourth-largest investment bank, and the financial woes of a number of Wall Street giants.

This triggered a domino effect across the world leaving conventional banks, lending each other on the money markets, short of credit.

Western government have since pumped billions of dollars into their troubled banks to keep credit flowing and prevent a complete financial meltdown.

The British government recently unveiled a massive the £37bn bank bailout of taxpayer’ funds to rescue Lloyds TSB, HBOS and Royal Bank of Scotland from liquidity shortage.

Choudhury said the IBB does not take interest-based loans from other banks, and has high quality, asset-based investments.

“That means that the bank avoided the instability the other high street banks have suffered,” he explained.

Islam forbids Muslims from usury, receiving or paying interest (known as Riba) on loans.

Transactions by Islamic banks must be backed by real assets — not shady repackaged subprime mortgages.

Shari`ah-compliant financing deals resemble lease-to-own arrangements, layaway plans, joint purchase and sale agreements, or partnerships.

Investors have a right to know how their funds are being used, and the sector is overseen by dedicated supervisory boards as well as the usual national regulatory authorities.


Choudhury cited a rise in the number of IBB’s customers “looking for a safer option for their money.”

Abul Fozoll, the manager of the IBB Shepherds Bush branch, says Muslims make up the majority of customers.

Most of the bank’s branches are located in areas with a large Muslim population.

However, the bank officials say more branches are to open in other areas as its profits and customer numbers are picking up.

The IBB,UK’s first stand-alone Islamic bank, is reporting an increase in the number of non-Muslim customers.

Bank officials said the numbers are growing because Islamic banking offers a “safer option” thanks to its operations which are based on no-interest schemes.

However, they refused to give any breakdown of Muslim and non-Muslim customers.

Non-Muslim customers are drawn to the IBB because High Street banks offer less opportunities for house mortgages during the crunch.

Recent figures from the Council of Mortgage lenders have shown a continued slowdown in mortgage approvals and advances.

Just 59,000 residential properties, worth more than £40,000, were sold during September, the lowest level since HM Revenue & Customs began issuing figures in this format in 2005.

The number was well down on the 126,000 homes sold during September last year.

The IBB has stepped in, launching new home purchasing schemes based on the Islamic financing principles of Ijara (leasing) and Diminishing Musharaka (reducing partnership).

Along with financial advantages, Chodhury said that a growing number of non-Muslims is drawn to his bank’s genuinely ethical offering.

“It is ethical, as investing in businesses that are considered unlawful is prohibited. That includes companies that deal in gambling, pornography, tobacco and other commodities contrary to Islamic values

source : iol

A New Financial Dawn: The Rise of Islamic Finance

Joseph A. DiVanna
Antoine Sreih
Joseph DiVanna is an author, global speaker and currently Managing Director of Maris Strategies. He contributes to a number of journals of banking and finance, including The Banker, Financial World Magazine and New Horizon. He is the author of Understanding Islamic Banking, Redefining Financial Services, the Future of Retail Banking and the editor of How to Run a Bank.
Antoine Sreih is the Chief Executive Officer of Europe Arab Bank. He is also Chairman of Wahda Bank in Libya. He is a highly experienced professional with a strong international background in IT and Operations, project management and general banking.

Summary of the book
A New Financial Dawn examines the global economic crisis in the context of how western markets influence Islamic financial innovation. Joseph DiVanna, author and Managing Director of Maris Strategies, and Antoine Sreih, CEO of Europe Arab Bank, discuss how market conditions are creating a fertile seedbed for the next generation of innovation in Shariah-compliant financial services.

Publisher: Leonardo and Francis Press Ltd

ISBN-10: 1905687109
ISBN-13: 978-1905687107

UK-Lebanese IFQ seeks to standardise Islamic finance

Islamic finance has long been criticised for its lack of standardisation – from the disunity in the way scholars interpret Shariah law to the various qualifications available for professionals dealing in the rapidly-expanding industry.
But times are changing as a new qualification developed by both Muslim and non-Muslim industry experts from East and West is embraced across the Gulf region and beyond.
The Islamic Finance Qualification, or IFQ, was developed by Britain’s Securities & Investment Institute in partnership with the Central Bank of Lebanon and incorporated scholars from Saudi Arabia, Bahrain and the United Arab Emirates.
Interest in Islamic finance has been rising in line with the value of global Shariah-compliant assets amid growing demand for products such as Islamic bonds known as sukuk, Islamic insurance contracts known as takaful as well as Islamic mortgages.
In 2007, the value of Shariah-compliant assets worldwide surpassed $500bn for the first time, according to a recent report by Standard & Poor’s.
Accountants at Ernst & Young put the 2007 figure even higher at $900bn and expect Islamic assets to grow at a rate of 20% annually. The industry is set to hit $2tn by 2010.
Kuwait Finance House, or KFH, forecasts that Islamic assets in the six-member Gulf Co-operation Council (GCC), will grow to 18% of system assets by 2012 from its current 13%.
A total of $19bn new sukuk were issued in the Middle East alone in 2007, according to data.
Ruth Martin, head of the London-based Securities & Investment Institute, or SII, is one of the people who helped develop the new Islamic finance qualification from its infancy.
“GCC countries are reacting very warmly to the IFQ because when we were developing it we incorporated experts from around the Gulf, so it has a resonance in the region,” Martin told Zawya Dow Jones in an exclusive interview in Bahrain’s capital Manama.
Test centers in the United Arab Emirates, Bahrain, Qatar, Lebanon and Kuwait are now offering the qualification and SII is in talks to formally introduce the qualification in Saudi Arabia, Oman and Egypt.
The qualification, which was launched in March 2007, is studied through workbooks or training centers before the final examination is taken at a test center or online.
Nine months after its launch over 1000 workbooks were sold, Martin said.
“So far the exam has been taken in 37 different countries ranging from South Africa to New York to Dubai,” she said, adding another factor for the success of the IFQ is its basis on a stricter interpretation of Shariah Law.
Islamic law differs widely from country to country with Gulf countries such as Saudi Arabia preferring a stricter interpretation to Asian countries such as Malaysia.
Islamic law prohibits the charging of interest, so Islamic banking products are based on a tangible underlying assets while proceeds take the form of profits or rent from those assets, rather than interest on debts.
Islamic investments also prohibit support to businesses seen to negatively impact the welfare of their communities such as companies dealing in alcohol, pork products, arms and pornography.
“Our qualification follows the Gulf model of what is Shariah-compliant – the main issue with this model is debt cannot be treated as an asset unlike the Malaysian model – it is stricter but we deliberately took that approach,” Martin said.
Another advantage is that most high net worth individuals investing their money in Islamic Finance, whether in the a non-Muslim country such as Britain or a Muslim country such as Saudi Arabia, are from the Gulf.

“What we have been trying to achieve over the last year is organic growth with the local partners who work with us but we are keen to expand to other countries,” Ruth said.
For Muslim and non-Muslim banks looking to gain a foothold in this lucrative industry there are various qualifications but none as tailored as the IFQ, said one industry expert.
“The IFQ is popular because the industry is still an emerging market and there are not many comprehensive qualifications available at present,” said the expert, who declined to be named.
But competition is heating up. The Diploma in Islamic Accounting and Compliance by Bahrain Institute of Banking and Finance, or BIBF, in partnership with the Association of International Accountants, or AIA, is being pitted by industry experts as the new main competitor for the IFQ.
The diploma was launched in January and its course-structure and format is compiled by the BIBF while the AIA sets the exam syllabi and papers for the diploma.
Until professionals go through both the IFQ and BIBF training and test the skills they have learnt in the work environment it is still too early to tell whether or not the IFQ qualification will be a true global benchmark, the expert said.
Ruth is aware of the competition and plans to maintain an edge in the industry. “We need to review our syllabus every year to make sure we are up-to-date with what’s happening – it’s very important that we do things slowly, properly and safely,” she said
source : gulf times

The Certificate in Risk Management for Islamic Financial Institutions

The Global Association of Risk Professionals and the Banque du Liban recently announced the development of a new program, the Certificate in Risk Management for Islamic Financial Institutions.

The explosive growth in, and increasing sophistication of Islamic financial products has created the need for standards and guidelines for sound risk management approaches analyzing these financial instruments.

The Certificate is expected to be available in 3Q 2009.

Islamic Finance

The holistic approach to life Islam requires of individuals also affects their approach to business and financial activities. The basic tenets of Sharia’a, the part of Islamic Law that covers practices and activities, dictate that investors cannot engage in transactions that are speculative, pay interest or involve contractual uncertainty.

Globalization of the financial markets and increased wealth in Islamic regions have accelerated the trend of Islamic banking and specialized products that are Sharia’a-compliant.

The expertise in Islamic Finance offered by the Advisory Oversight Committee’s members combined with GARP’s proficiency in creating globally accepted standards on risk management methodologies will result in a benchmark approach to assessing and measuring the financial risks associated with Sharia’a-compliant financial products.

IDB Gives Nod To Brunei Leadership Role In Islamic Finance

Bandar Seri Begawan – Bank Islam Brunei – Darussalam’s (BIBD) appointment as one of the co-lead managers for the Islamic Development Bank’s (IDB) upcoming US$1.5 billion sukuk issue gives a nod to Brunei’s leadership role in Islamic finance and the application of syariah-compliant instruments.

The bank was mandated alongside BNP Paribas, CIMB, Deutsche Bank and HSBC last July for the IDB’s latest sukuk offering, which will have a three-to five-year maturity date to be decided and a price to be announced, depending on the investor base.

“Choosing a banking institution from Brunei as part of the lead managers, for us, it is partly out of respect for Brunei. It has done extensive work in terms of regulatory framework, which has led to the establishment of several

Islamic banking institutions in the country,” IDB vice-president Abdul Aziz Al Hinai said following a meeting with investors at the Empire Hotel and Country Club yesterday.

“Brunei is an active member of the IDB, and is also very proactive in terms of providing the institutional set-up for syariah-compliant products and I’m sure it will benefit in the long run from this lead.”

The sukuk transaction will be launched by either September 9 or 10, Abdul Aziz said, and it’s pricing and maturity date revealed when the roadshow ends. Having already covered Riyadh, Kuala Lumpur and Singapore, the IDB will be continuing on its investor roadshow to the UAE on September 6, followed by Switzerland before ending it in London on September 8.

The total amount to be raised during the drive will depend on the desire of investors and the condition of the sukuk market,” he said.

The Jeddah-based institution is issuing the latest sukuk as the first tranche under a US$6 billion sukuk and medium-term note programme partly aimed at helping member countries mitigate the impact of the global financial downturn and the rise in commodity prices.

At least 25 of the 56 IDB member states are classified as least-developed countries (LDCs), which include some of the world’s poorest countries.

Javed Ahmad, the acting managing director of BIBD, said its appointment as joint lead manager is going to be “a tremendous benefit and a catalyst” for the bank to be involved in other transactions domestically and internationally, adding that there are already a number of transactions that the bank is already in discussions for. He did not give further details.

This is the first time that Brunei gets the privilege and opportunity to be involved in an international sukuk issue, and a sukuk issue that is actually very important from our perspective,” he said.

BIBD was the lead manager and underwriter of the first corporate sukuk issued in the Sultanate in 2006. The Brunei government has so far issued $1.8 billion worth of sovereign sukuks.–
source : Bt

Downturn hits Islamic Finance, not Islamic banks

In 2008 the global Islamic financial services have felt the impact of credit crunch and consequently Sukuk issuance has more than halved and the value of the equity funds has fallen. according to IFSL’s Islamic Finance Report.

Islamic banks, however, have been less affected than many conventional banks as they are prohibited from activities that have contributed to the credit crunch, such as investment in toxic assets and dependence on wholesale funds, IFSL Finance Report said.

The global market for Islamic financial services rose by 37% to $729bn at end-2007. In 2008, IFSL’s Islamic Finance report notes that the industry has felt the influence of the credit crunch and downturn in the global economy – Sukuk issuance has more than halved and the value of equity funds has fallen

London has been consolidating its position as the key western centre for Islamic finance in 2008. Two Islamic banks, Gatehouse Bank and European Finance House, have been granted licences bringing to five the number of fully Sharia compliant banks in the UK. Principal Insurance became the first Shariah compliant independent company authorised to offer Takaful to UK residents. In capital markets, four new exchange traded funds and two new equity funds were launched.

IFSL’s report indicates that the UK’s offering includes a total of 22 banks, far more than in any other Western country. Professional services are provided by 18 law firms and the Big Four accounting firms. A cumulative total of 18 Sukuk issues raising $10bn have been listed on the London Stock Exchange, second only to Dubai. With 55 institutions offering educational and training products in Islamic finance, the UK has more providers than any other country worldwide.

Duncan McKenzie, IFSL’s Director of Economics said “The UK has benefitted considerably from supportive government policies intended to put Islamic services on the same footing as conventional services. Evidence of London’s growing role in Islamic finance is shown in the UK being the only western country to feature prominently, 8th with assets of $18bn, in a global ranking of Sharia compliant assets by country.”

Sir Andrew Cahn, UK Trade & Investment’s Chief Executive Officer said: “Despite its origins overseas, Islamic finance has found a natural home in the UK. Though no sector is immune to the global financial crisis, Islamic finance has shown great resilience. It is important we continue to work with our Islamic finance partners to maintain our position as the leading western centre for Islamic finance service providers
source : CommodityOnline