Bank Islam and Affin conclude RM300m deal for college

Bank Islam Malaysia Bhd this morning concluded a syndicated Islamic financing facility of RM330 million for Kedah Sato Sdn Bhd, a wholly owned subsidiary of Bina Darulaman Bhd (BDB), for the construction and development of a permanent campus for Kolej Universiti Insaniah (KUIN) in Baling, Kedah.

Bank Islam, the lead arranger, completed the exercise with the participation of Affin Islamic Bank Bhd as co-arranger. Bank Islam’s syndication is RM200 million, while Affin Islamic’s portion is RM130 million.

The facility will be used to finance the total construction and development and other costs relating to the KUIN project. Under the financing structure, Kedah Sato shall settle the facility over 15 years, inclusive of a three-year grace period.

The agreements for the facility were signed this morning between Kedah Sato, Bank Islam and Affin Islamic. The event was witnessed by Kedah Menteri Besar Datuk Seri Azizan Abdul Razak.

“The syndicated financing will contribute to the economy of the State. Currently, Kedah is experiencing economic growth at a very exhilirating rate representing five per cent of the nation’s gross domestic product (GDP), and foreign direct investment (FDI) and a strong potential in its major industries which are hi-tech,
bio-tech and manufacturing sector.

Bank Islam managing director Datuk Seri Zukri Samat said, Bank Islam had also provided the financing for KUIN’s present campus, comprised of shop house buildings located at Lebuhraya Sultanah Bahiyah, Alor Setar.

KUIN, an institute of higher learning for Islamic studies, has a current enrolment of over 4,000 students. KUIN’s new campus will cater to the expansion and growth of the college as well as the growing student population.

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Islamic banking defies crisis with global launches

More Islamic banks and financial products have been launched worldwide since late in 2008 despite the global banking crisis that restricted conventional banks from doing so.

Joseph DiVanna, managing director of UK-based consulting and advisory firm Maris Strategies, said in this month’s issue of The Banker that Shariah-compliant banks were performing better than conventional banks.

Islamic banks focus on ethical investing; speculative financing and trading is forbidden. This makes Islamic banks highly dependent on customer deposits for their liquidity.

“This in turn makes them less susceptible to changes in credit markets,” according to DiVanna.

South Africa stands to benefit from Muslim investors who want new markets in southern Africa, which presents one of the best platforms on the continent for growth in Islamic banking products following the regulatory restrictions that were put on these products.

This could be the reason Absa Capital, the investment banking division of Absa, launched South Africa’s first Shariah-compliant equity-linked exchange traded fund (ETF) on Thursday.

The banking group said that the initial public offering for the NewFunds Shariah Top40 index ETF had opened on Monday. The ETF will be listed on the JSE on April 6.

The Shariah Top40 index ETF tracks the FTSE/JSE Shariah Top40 index, jointly established by London’s FTSE International and the JSE.

Vladimir Nedeljkovic, head of ETFs and index products at Absa Capital, said that the Shariah Top40 index ETF was a first for South Africa. It was expected to redefine the Muslim investment landscape in the country.

“This ETF is a cost-efficient, transparent and easy-to-access investment product that conforms to the principles of Shariah law,” said Nedeljkovic.

He expected the product to do well in a market that urgently required more local Islamic investment products to service the estimated 400 000 Muslim households in South Africa.

“The Shariah Top40 index ETF provides investors with diversified exposure to the broad market through investing in one Shariah-compliant ETF share and earning a market related performance,” he said.

Absa Capital’s NewGold ETF, the biggest ETF in the South African market with about R9 billion in assets, is also Shariah-compliant. It has been approved by the Shariah supervisory board.

“Islamic banks were generally not impacted by collateralised debt obligation or asset backed securities,” DiVanna said.

Since November 11, new Islamic banks had been formed, including the United Arab Emirates’ first Islamic commercial bank, the Ajman Bank.

DiVanna added that while banks in the developed world had curtailed their expansion, 23 Islamic banks had extended their operations into new countries such as Botswana, Iraq, Kenya, Malaysia, Pakistan, South Africa, Sudan and Syria.

Qatar National Bank opened a full-service branch in Singapore and the Arab Bank opened a branch, specialising in Islamic banking, in Qatar.

South Africa has been offering Islamic banking since 1989 and all big four banks are developing or offering Islamic products.


source : busrep