Edcomm Banker’s Academy Updates Islamic Banking Compliance Training Program for 2010

Islamic Banking Compliance has been revised as part of Edcomm Banker’s Academy’s ongoing commitment to providing the most up-to-date and pertinent financial services information as the banking industry enters a new decade.

Islamic Banking is one of the fastest growing sectors of the financial services industry in the world. With the current economic crisis,

the inherent stability and security of banks adhering to Shariah principles has made Islamic Banking ever more desirable to both Muslim and non-Muslim customers alike. As a result of this, the number of institutions offering Islamic Banking products and services worldwide has significantly increased. The key to success in this competitive marketplace is by having employees who are knowledgeable about Islamic Banking so that they may better serve the bank’s customers.

Islamic Banking Compliance, from Edcomm Banker’s Academy, is a computer-based, distance learning program that teaches participants everything they need to know about Islamic Banking Compliance in an interactive, self-paced format. Students will learn about the history of Islamic Banking, as well as the differences between conventional banking and Islamic Banking. Islamic Banking Compliance also covers: Shariah principles, Murabahah, Musharakah, Mudarabah, Ijarah, Istisna, Salam, Wadiah, Wikalah, products and services, deposit accounts, card services, personal finance, home finance, auto finance, leasing and more.

The Edcomm Group Banker’s Academy is a 23-year-old multimedia education and communication consulting firm specializing in the development of creative business solutions that improve productivity, customer service and market share – providing bottom-line results. The Edcomm Group Banker’s Academy has had the privilege of assisting many distinguished clients with business solutions in the form of eLearning programs, online bank training and classroom instruction, multimedia production and online and print based documentation. Edcomm Banker’s Academy offers many off-the-shelf and customized courses such as Teller Training, Compliance Training and Systems Training specifically designed for Banks, Credit Unions and Money Services Businesses (MSBs).

The Edcomm Group Banker’s Academy is a 23-year-old multimedia education and communication consulting firm specializing in the development of creative business solutions that improve productivity, customer service and market share – providing bottom-line results. The Edcomm Group Banker’s Academy has had the privilege of assisting many distinguished clients with business solutions in the form of eLearning programs, online bank training and classroom instruction, multimedia production and online and print based documentation. Edcomm Banker’s Academy offers many off-the-shelf and customized courses such as Teller Training, Compliance Training and Systems Training specifically designed for Banks, Credit Unions and Money Services Businesses (MSBs).

source : pr-inside

Staying ahead of the competition in Islamic financing

Kenya: CBK Targets Gulf Cash with Sharia Compliant Bonds

The Central Bank is working on a framework that will eventually lead to the flotation of sharia – compliant bonds and treasury bills in the local money market.

The move to entrench Sukuk bonds and bills in the law is seen as a push by CBK to tap the increasing amount of cash flowing into Africa from the Gulf region.

Sukuk — bonds that are structured to be in compliance with Shariah law which bars payment of interest — have seen rapid uptake in recent years as more and more businesses and governments have used them to raise financing.

They has a maturity that is determined in advance and is backed by an asset which makes it possible for the investor to earn a return from the profits derived from the assets.

Much of this activity has taken place in the Gulf and South East Asia so far, and analysts believe a government issue could be the key that Kenya needs to place it as the premier Islamic finance hub in the region.

“We’re are still waiting for the structured Sukuk to cover bonds and the Treasury bills market,” says Alex Nandi – deputy director banking supervision at the CBK.

Plans for a framework to oversee the flotation of Sukuks come two years after the licensing of the first Islamic banks in Kenya.

Gulf African Bank and First Community Bank are still finding their footing in the Kenyan banking sector and are on course to turning profitable two years into operations.

But unlike conventional banks which are able to trade in bonds and treasury bills, Sharia law has constrained income avenues for Islamic banks.

With the flotation of Sukuk bonds, Islamic banks will have an investment avenue to generate income from the new form of government securities.

Infrastructure bond

Gulf African Bank for instance invested Sh500 million in the sukuk portion of a government infrastructure bond issue last year and received a 13.5 per cent rate of return.

In 2009 the bank earned Sh56.6 million from its investment in government securities compared to no income from government securities in 2008.

The banks are also benefiting from cash flowing from the Middle East into investment projects in the country.

Sovereign funds in Gulf States, flush with cash are eyeing African countries as lucrative investment zones and most of this cash is handled by these institutions.

“There is a huge appetite by business people from the Gulf region to invest in Africa,” says Suleiman Shahbal, the chairman of Gulf African Bank.

Since the break-out of the global economic crisis which took it’s toll on conventional banking, Islamic banking and financing has enjoyed a growing popularity.

Touted as the answer to conventional banking whose risky practices have come under the spotlight since the start of global financial crisis back in 2008, it presented an attractive alternative.

Last year, global issuance of Sharia – compliant bonds and loans grew 40 per cent in the first 10 months of 2009 compared to the same period a year ago, as reported by the New York Times.

The total amount of Sharia – compliant debt outstanding is estimated at about $1 trillion, up from $700 billion just two years ago.

Still, Sukuk issues were not spared the snowball effect of the global financial crisis that hit conventional banks.

Sukuk issues fell from $25 billion in 2007 to $15 billion last year.

Jawal Ali a managing partner at law firm King and Spalding’s Middle East office says that by 2008, up to 85 per cent of Sukuks issued were not considered Shariah compliant.

But the Dubai Debt crisis early this year did nothing to firm-up the credibility of Islamic financing as a bright spotlight was cast on Sukuks.

About 10 per cent of the Dubai’s $80 billion debt load is estimated to comply with Shariah, casting the spotlight on the credibility pedestal Islamic financing has ridden on over the years.

Underlying assets

A key problem was a collapse in value of underlying assets – primarily real estate investments – which back Sukuk issues.

Islamic bonds are structured as profit-sharing or rental agreements, and their returns are derived from underlying physical assets such as real estate or commodities.

Unlike conventional banking which has a vast array of investment options, Islamic banks are heavily concentrated in real estate placing them at high risk should property values fall as they did during the financial crisis.

But as the global economy limps out of the recession and the choke-hold on credit eases, Islamic financing is expected to gain traction this year.

“There is a lot of market activity and there might be a pick up this year,” says Mr Ali.

source : allafrica

Access Islamic finance in the UK with an ETF

Sharia-compliant investing could be the start of a new trend

Kathleen Brooks

THE last two years have shaken traditional western forms of finance to the core. Lax regulation combined with complex trading products proved to be a lethal cocktail and governments across the developed world are now picking up the bill for hefty bailouts.
But should investors be looking at other financial models to invest their cash? Islamic finance, which conforms to the principles of Sharia law, has predominantly been based in the Middle East but there are ways to access it in the UK and one way is through listed products. Exchange-traded fund (ETF) provider iShares offers an Islamic ETF that tracks the MSCI USA Islamic index.

So how does the ETF work? It doesn’t offer exposure to the Middle East or Islamic companies per se; instead it looks at companies that are part of the MSCI US index, and uses a filtering mechanism to include companies whose activities are allowed under Sharia.

The first filter looks at the companies’ business lines. Some business would be excluded because their activities are banned under Sharia law, for example alcohol and pork production, tobacco, financial products and gambling, explains Fahad Mehboob, relationship director at Europe Arab Bank, who is based in London.

The index also excludes companies that derive significant income from interest and have excessive leverage levels. This actually helped the index to outperform during the financial crisis, says Mehboob, because the conventional banks, which make up a significant part of the MSCI index, were sharply sold off.

Obviously non-Muslim investors don’t stand to gain anything from a religious point of view by investing in a Sharia-compliant ETF but there are other benefits. Sharia-compliant investing is a bit like ethical investing. But financial ratio screening actually makes sense for non-Muslim investors who don’t want excessive risk in their portfolio: “The general principle is that excessive leverage is not true to the essence of Islamic finance. This makes it inherently less risky,” Mehboob says.

Western indices that are Sharia compliant could prove to be popular with Middle Eastern investors that are awash with petro-dollars, says Mehboob. Middle Eastern investors have traditionally had huge exposures to their home market, especially real estate, and are starting to diversify, he adds.

The iShares MSCI USA Islamic ETF, which came into existence in 2007, has outperformed the actual MSCI USA Islamic Index. In the last three months it has posted returns of 6.24 per cent relative to 6.01 per cent for the index. it also pays a bi-annual dividend of 1.3 per cent.

If you want to help diversify your portfolio then sharia-compliant investing could be for you.

source : cityam

Absence of global standardization hobbles Islamic finance industry

More syariah funds to invest abroad

Investors seeking better returns via portfolio diversification

PETALING JAYA: More syariah funds are expected to make inroads into overseas markets, especially Asia, in view of the improving economy and investors diversifying their portfolio for better returns.

Since the beginning of this year till March, nine syariah funds (seven foreign and two domestic) have been launched in various markets, notably in the Asia Pacific region.

The HwangDBS AIIMAN A20 China Access Fund is the latest Islamic fund that offers investors access into China’s A-share market.

The fund, which was officially launched on March 26, is a joint effort between HwangDBS Investment Management Bhd and Asian Islamic Investment Management Sdn Bhd. The latter is the fund manager of the HwangDBS AIIMAN A20.

The fund was also the first syariah-compliant fund to invest directly into the top 20 China A-shares listed on Shenzhen and Shanghai stock exchanges to enable investors, among others, to gain from China’s robust economic growth and potential appreciation of the yuan.

Pacific Mutual Fund Bhd CEO and chief investment officer Michael Auyeung said it was inevitable for these funds to invest abroad as more investors now seek greater diversification to reduce risk concentration in the local market.

He felt the target of new syariah funds would certainly favour Asia and some of the emerging markets due to their long term economic prospects.

Federation of Investment Managers Malaysia president Tunku Ya’acob Tunku Abdullah attributed the growth and demand of syariah compliant funds to the rising affluence of Muslim communities wishing to invest surplus funds in a syariah-compliant manner.

“Another contributing factor is the non-Muslim investors’ desire to diversify their investment through such funds. The recent global financial crisis witnessed the resilient performance of Islamic funds which were relatively shielded from huge losses that affected some asset classes.

“In light of this, more investors are now beginning to understand and appreciate the benefits and value of Islamic funds,” he told StarBiz.

The net asset value (NAV) of Malaysian Islamic-based funds grew by 230% from 2004 to 2009 as compared to their conventional counterparts which grew by only 110%. During the period, the NAV of Islamic funds surged from RM6.7bil to RM22.1bil.

For the three months to March 31, nine new Islamic-based funds were launched compared with a total of 11 conventional funds. As at March 31, the NAV of Islamic-based funds stood at RM22.7bil.

According to Auyeung, the average fund size of offshore syariah-based funds during the period (as at 31 March) was RM170mil, which was commendable considering many of these funds were launched at higher equity market levels. Total assets under management of these foreign funds during the period stood at about RM3.9bil.

Pacific Mutual Fund currently manages three syariah equity funds with exposure in the Asia Pacific region including Oceania (Australia), the US and Canada, as well as in Malaysia.

Pacific Dana Dividen, which was launched in 2007, has outperform its benchmark and is currently ranked top in the Equity Global – Islamic category under the Lipper Hindsight. The fund had generated a return of 30% in the one year to April 30, 2010.

On whether there were plans to launch more syariah offshore funds, Auyeung said: “Our decisions will be investor and distributor driven. At this point, there is some interest in a global syariah equity mandate that has added layers of syariah screening, which may come to fruition in the second half of the year.”

Asian Islamic Investment Management CEO and executive director Nor’ Azamin Salleh said the company has a few syariah funds in the pipeline this year.

“We are expecting to follow a similar marketing strategy as out latest fund, which is to have the fund domiciled in Malaysia, but also distributed in other regions through our parent’s (DBS Bank Ltd) distribution channels as well as through the Mutual Recognition Agreements that the Securities Commission has with foreign regulators. We are running a tight ship and are maintaining our focus to ensure we are not spread too thinly,” he said.

HwangDBS Investment Management and Asian Islamic Investment Management are sister companies. On the outlook of syariah funds this year and next year, he said there are still large untapped and to some extent, underserved markets in Asia and the MENA (Middle East and North Africa) region.

The syariah fund industry requires three sets of impetus for it to grow – sufficiency and depth of syariah-compliant capital market instruments that are investable, a strong culture of product innovation and the growing consciousness among the investors at large, Nor’ Azamin said.

source : biz star

Korea’s first Islamic investment fund approved

The Korea Herald reports that the Financial Supervisory Service has approved the country’s first Islamic investment fund, the Yurie Shari’ah Compliance Korea Index



Yurie Asset Management, a subsidiary of Bookook Securities, is responsible for the new fund which invests in 78 local Korean blue chips acceptable under Shari’ah precepts. Among Korean firms, the Korea Herald reports that Shinhan Financial Group, KB Financial Group and Samsung Life Insurance are excluded from the Yurie Shari’ah Compliance Korea Index as it is unlawful for an Islamic fund to purchase, hold or sell shares of brokerages. KT&G and Kangwon Land are also excluded. The restrictions on the processing of pork and slaughtering of animals also exclude local producers of livestock goods from the fund.

 source : cpifinancial

Islamic ethical finance offers country tempting opportunities

Islamic finance is growing at 25 per cent a year. None of the Islamic banks were hit by the subprime crisis and, favouring asset-backed financing and equity financing structures, are arguably better placed in the real economy.

Islamic finance not only presents high-growth commercial potential, providing access to alternative forms of liquidity, it also offers a values-based alternative to the “greed driven” banking paradigm of recent years, an attitude that has adversely affected all too many stakeholders in the recent financial crisis.

Not only the UK but also various other national governments have publicly stated their ambition to become a gateway to Islamic funds. The attraction of these funds to finance big infrastructure projects is well documented and Scotland’s proud heritage in faith-based finance makes the country well-placed to embrace the practices and theories of Islamic finance. But are we now being left behind?

Across Europe, a German state has issued an Islamic sovereign bond and the French government has established its Islamic finance working group, signalling its clear intent to enter this market and access the large pool of liquidity within the Gulf region through Islamic finance.

Tomorrow, the Islamic Finance Council UK and law firm Tods Murray hosts the second Islamic and Ethical Finance Conference in Scotland.

It is a propitious time to be holding an event that looks at all aspects of the moral economy as this year sees the 200th anniversary of the foundation of the world’s first commercial savings bank, the Trustee Savings Bank, by the Rev Henry Duncan, “the father of savings banks”.

Whatever your faith, we can all recognise the major challenges facing the world. Balancing economic growth to counter global poverty, while preserving our fragile planet, requires new thinking, coupled with practical, collaborative and immediate action, championed by those with boldness and energy.

One of the ways to highlight what people have in common is to encourage tolerance and understanding based on a mutual respect and to remind people of the many principles shared by the great religious traditions which are often obscured or discarded in the modern age.

Islamic finance and ethics in financial and business dealing share in these crucial principles. Honesty, integrity, transparency and contentment are some of the key concepts underlying the Islamic economic philosophy.

While we can bring like minds together, however, it is clear political will is a key determinant for success in this market and across Europe, the Middle East and Asia governments are actively engaging in Islamic finance.

For Scotland to also tap into this market, the Scottish Government will need to be more proactive and apply focused, timely and material resources to capture the economic development opportunities Islamic ethical finance presents, particularly in these challenging times of recession. The positive engagement from a few MSPs now needs to be converted into concrete and meaningful commitment from the Scottish Government as a whole or Scotland risks losing the current window of opportunity.

If the UK government Germany, France, Luxembourg, Singapore and Australia are getting involved at the highest political levels, then why can’t Scotland, which is arguably better positioned with its heritage in ethical, mutual and faith-based finance?

For example, the proposal for an “Islamic finance house” designed as a conduit for Islamic funds has received widespread support and presents an ideal opportunity for the Scottish Government to take the initiative.

 Omar Shaikh is an executive board member of the Islamic  Finance Council UK.

source : scotsman

Islamic bank enters Germany

The European Union’s largest and strongest economy, Germany, is finally edging toward facilitating Islamic finance in its jurisdiction. Germany has a Muslim population of 4.3 million, the second largest Muslim population in the EU after France with 5.5 million.

Reports from Germany stress that the country’s banking regulator, the Federal Financial Services Authority (BaFin), has issued a limited banking license to Kuveyt Turk Participation Bank, one of Turkey’s four so-called participation (Islamic) banks. Kuveyt Turk is majority-owned (62 percent) by Kuwait Finance House, one of the largest Islamic banks in the world in terms of capital and assets. The Islamic Development Bank (IDB) also has a 9 percent stake in Kuveyt Turk Participation Bank.

At the same time, Cologne-based Meridio AG has recently launched the Meridio Global Islamic Multi Asset Fund, a Luxembourg-domiciled mutual fund, which the promoters claim is the “first approved, actively managed, international, ethically compliant, balanced mutual fund under European investment laws” and is aimed at retail and institutional investors in Germany and the Euro zone countries initially, and later in the Middle East, Malaysia, Russia, India, Pakistan and East Asia. The investment pool comprises Shariah-compliant equities and sukuk.

These developments come after the first-ever Islamic finance conference held by BaFin in October 2009 in Frankfurt-an-Main, which was addressed inter alia by Jochen Sanio, president of BaFin, Muhammad Al-Jasser, governor of the Saudi Arabian Monetary Agency (SAMA) and Nik Ramlah Mahmood, managing director of the Securities Commission of Malaysia.

Kuveyt Turk is arguably the most proactive of Turkey’s four Islamic banks, which also include Turkiye Bankasi, in which Saudi Arabia’s National Commercial Bank  has a majority stake; Albaraka Turk Participation Bank, which is a subsidiary of the Albaraka Banking Group, which in turn is majority owned by Saudi Arabia’s Dallah Albaraka Group, headed by Saleh Kamel; and Asya Bank.

Kuveyt Turk hitherto had a representative office in Frankfurt-am-Main in Germany, and the new authorization, albeit limited, of Kuveyt Turk Beteiligungsbank is effectively an upgrade of the representative office. Kuveyt Turk Participation Bank has hitherto marketed its profit-and-loss (PLS) sharing products to expatriate Turks working and living in Germany and the Benelux countries through representative offices. Kuveyt Turk also subsequently got permission to set up branches in Germany.

Kuveyt Turk Participation Bank also has a banking subsidiary in Bahrain and the Dubai International Financial Centre (DIFC) and plans to open further offices in selected countries, especially those with which Turkey has promising trade relations. International; rating agency, Fitch at the end of 2009 placed Kuveyt Turk Participation Bank’s long-term foreign currency rating on positive watch (RWP). Fitch also affirmed Kuveyt Turk’s long-term local currency rating at BBB-, short-term foreign currency rating at B and short-term local currency rating at F3. The ratings reflected the bank’s sound fundamentals and the strong support of its majority shareholder, Kuwait Finance House.

Kuveyt Turk net profit totaled 107 million TL in the first nine months of 2009 – up 26.7 percent from the same period in 2008. Total assets similarly increased from 4.954 million TL to 6.439 million TL in the same period for 2008 to 2009; total cash loans too increased from 4,136 million TL to 4,957 million TL, while customer deposits increased by 40.7 percent to reach 4,989 million TL for the same period.

Kuveyt Türk Beteiligungsbank  got the initial go-ahead toward the end of 2009, effectively making it the first stand alone bank to operate under Islamic banking principles in Germany, and second only in the European Union after the UK’s Financial Service s Authority (FSA) authorized five banks that operate under Islamic banking principles over the last two years.

Qatar Islamic Bank is also reportedly in the process of setting up a joint venture Islamic bank in France after getting approval from the French central bank.

Germany, whose history of credit unions and mutual societies, should be the ideal fit with Islamic finance. But, apart from Deutsche Bank, Hypo Real Estate Bank, Commerzbank and insurance giant Allianz and FWU AG, another insurance company, structuring and distributing a number of ad hoc Islamic financial products such as real estate transactions, private equity deals, equity certificates, sukuk, Takaful and Retakaful in the Middle East and Asia, the German financial services sector has been conspicuous in its absence of promoting such offerings in its home market. Commerzbank, for instance, was the fund manager for Albaraka’s asset management company, Al Tawfeek’s Al-Sukoor European Equity Fund, which has since matured and closed.

KTB is set to start operations in Mannheim in early 2011 with branches in several other German cities to follow. KTB’s license allows it to collect deposits and investment funds in Germany that will be transferred to PLS accounts in depositors and investors’ names in Turkey.

As far as the Meridio Global Islamic Multi Asset Fund is concerned, it is a dual currency (US dollar and Euro) open-ended multi-asset mutual fund with an issue price of $100 or 100 euros, is targeting high end Shariah-compliant stocks in the real estate, energy, raw materials, infrastructure, pharmaceuticals, alternative energy, transportation, food or water sectors in the countries of the Euro zone, United States, Canada, Brazil, India, Southeast Asia, Australia, the GCC countries, Turkey, North Africa and Russia. The subscription period closes at the end of April 2010 and the fund will start investing in early May 2010.

The fund’s investment manager, Meridio Vermögensverwaltung AG, is an independent asset manager for private and institutional investors, and has experience of launching investments with partners in the Middle East, where it launched its latest Meridio Arab World Fund in 2007.

According to Meridio Vermögensverwaltung AG, it can draw on a universe of more than 12,000 global securities/bonds, all of which meet the strict requirements and specifications of the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) rule-book for Shariah-compliant equities and sukuk.

These take into account the fundamental data, technical analysis and market psychology, upon which the fund management then decides when and with what amount it invests in the relevant securities. The Ethical Review Board (the Shariah Advisory Board) then reviews the fund at regular intervals, in order to guarantee that the equities and sukuk fund portfolio comply with Islamic investment guidelines.

source : arabnews

Dundee University – First University in UK to offer MSc in Islamic Accounting and Finance

A SCOTTISH university is to offer the UK’s first postgraduate course in Islamic finance.

Dundee University will unveil its MSc in Islamic accounting and finance at a conference on ethical finance in Edinburgh today. The course has been created to meet increased demand from the banking sector.

Dr Rania Kamla, a lecturer in theDr Rania Kamla, a lecturer in the accountancy and finance department at Dundee who will lead the new course, said high street banks were increasingly catering for Muslims and needed knowledgeable staff.

She said Islamic banking should not invest in areas in conflict with the religion’s teachings such as pork products, alcohol, the arms trade, or pornography.

“But it is also about the deeper impact, so it would also encourage investment in communities and try to reach out to disadvantaged groups, “she added.

There is only one dedicated bank that adheres to the teachings of Sharia law, the Islamic Bank of Britain.

Dr Kamla said: “It was originally based in London and Birmingham, but has now expanded to Scotland. Up to 20 financial institutions in the UK now provide Islamic products, including HSBC. It is not allowed in Islam to charge interest, therefore they promote interest-free banking.

“Instead, they depend on profit and loss sharing, so you both share in the risk.”

The MSc course, which begins in September, is expected to take a handful of students in the first year while the university gauges demand.

Omar Shaikh of the Islamic Finance Council said: “This is a wonderful opportunity for Scottish students to study Islamic finance, in Scotland.

“Education is extremely important if we are to realise the ambition to make Scotland and UK a global gateway for Islamic finance.”

Legal firm Tods Murray, which created the first Islamic mortgage in Scotland, organised today’s conference. Partner Graham Burnside said: “The role of Islamic finance and ethical-based financial systems in today’s economy has not been fully explored, and the launch of Dundee University’s course is an important step to ensure that Scotland does not miss out on the potential it offers.”

The Islamic and Ethical Finance Conference, takes place at the Tods Murray headquarters in Edinburgh Quay, and will explore the various faces of ethical finance and Scotland’s heritage in faith-based finance.

Speakers include specialists from the Islamic finance industry and representatives from the Church of Scotland, the Co-Op Bank and the Scottish Widows Investment Partnership.

Professor Christine Helliar, dean of the school of accounting and finance at Dundee University, said of the new course: “Graduates will be able to bridge the gap between accounting and financial knowledge and how it relates to Islamic law. The programme will include an introductory element to the main issues, coverage of the most popular products and how they relate to Sharia law, and how conventional banks compare with the practices of Islamic banks.”


UNDER Islamic teaching usury is not allowed therefore borrowing money must be done under special arrangements.

For example if you wanted a mortgage to buy a property, the bank would buy the house and then sell it back to you but charge you profit.

In other words the deal would be based on profit sharing by both parties rather than interest payments.

This is because profit is allowed under Sharia law while charging interest on debt is considered immoral.

Islam also precludes banking which invests in businesses which go against the teachings of the religion.

So for example, it would be un-Islamic to invest in the arms trade or pornography.

But it would also not be seen as ethical to gain profit out of firms that are involved with pork products or alcohol which are also barred by the religion.

source : scotsman