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Monday, 2 July 2012

3 Islamic investment banks in Bahrain plan merger

DUBAI, United Arab Emirates (AP) — Three Islamic investment banks in Bahrain said Sunday they have agreed to merge to better compete in a fragmented market.
The combination of Capivest, Elaf Bank and Capital Management House will create a bank with assets of $400 million, according to a statement from the lenders. The banks said the deal is the first-three way merger in the Gulf island kingdom's history.
Elaf's vice chairman, Isa Habib, said the combined bank should be able to win larger projects while benefiting from a more diverse balance sheet.
"The aim of this merger is to establish a strong banking institution that is able to compete solidly in a changing market," he said in a statement issued by Kuwait Finance House, which advised the lenders on the merger.
The official Bahrain News Agency also announced the deal, which must still be approved by Bahrain's central bank and the Ministry of Industry and Commerce.
Bahrain, one of the oil-rich Gulf's traditional banking centers, has positioned itself as a major hub in the Islamic finance industry. Its reputation as a business haven has been seriously damaged by more than 16 months of unrest in the strategic island nation, which is home to the U.S. Navy's 5th Fleet.
The Islamic banking industry focuses on investments and financial tools that comply with Islamic law, which generally prohibits the charging of interest.
The central bank last year pressed for consolidation in the country's Islamic banking industry to bolster the health of lenders' balance sheets.
A proposed merger of two other lenders in the kingdom, Bahrain Islamic Bank and Al Salam Bank, fell through in February after they were unable to agree on terms of the deal.
Some analysts have urged the Gulf's many relatively small local lenders to consider consolidation to better compete with international rivals.
In one of the region's rare banking acquisitions, Dubai's Emirates NBD in October agreed to take over Dubai Bank, a struggling lender with strong government ties. That deal was pushed through by the emirate's government, which came to Dubai Bank's rescue in the month before the acquisition.

(Canadian Business / 01 July 2012)

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Sri Lanka: SriLankan Airlines gets $175m sukuk from Gulf banks

SriLankan Airlines signed a $175 million sharia-compliant loan, a statement from one of the arranging banks said on Sunday, the first time the carrier has borrowed from the international syndicated loan market.

The state-owned airline completed the four-year facility with Abu Dhabi Islamic Bank, Abu Dhabi's Al Hilal Bank, Mashreq Bank, Dubai's Noor Islamic Bank and United Bank Limited, a statement from Mashreq's Islamic arm said.

The loan was provided in dollars and UAE dirhams and will be repayable from ring-fenced cash flows, the statement added.

Mashreq Al Islami acted as the coordinating bank.

"The successful closure of this transaction is clear evidence of the growing acceptance of the Sri Lanka credit story in international markets," said John Iossifidis, head of international banking group at Mashreq.

He emphasized the growing importance of Sri Lanka in the region and how Mashreq, in conjunction with its other key partner banks, have been instrumental in closing the facility despite the difficult global liquidity conditions continuing.

He added, “Sri Lanka is a key strategic market for Mashreq and we are committed to working alongside our core relationship clients, to explore different forms of capital raising."

This transaction marks an important foray in the Islamic banking space by a major corporate based in Sri Lanka and should pave the way for many similar transaction in the future.

SriLankan Airlines, the national carrier of Sri Lanka, currently operates a fleet of 19 aircraft covering 60 destinations across the globe with an increasing presence in the Middle East and Asia.

The successful arrangement of this facility will financially strengthen SriLankan Airlines at a time when the Government of Sri Lanka expects the airline to be a catalyst for the further growth of Sri Lanka’s economy, especially tourism and export industries. - TradeArabia News Service &Reuters

(Trade Arabia / 02 July 2012)

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First Islamic Mutual Fund Created in Tunisia

The first Tunisian mutual fund complying with Islamic sharia law was established yesterday. In a press conference, held at the headquarters of the Stock Market of Tunis, General Director of the Fund of Deposits and Consignment (CDC) Jamel Belhaj announced the creation of “Theemar” as the first Islamic product of its kind in the market of alternative finance in Tunisia.

Capitalized at around 50 million dinars ($30 million), Theemar’s mission is to finance small and medium-sized enterprises with a priority on those located in Tunisia’s interior. “During the first phase, we aim to create up to 30 enterprises providing at least 1,000 jobs,” Belhaj said.

Theemar’s shareholders are CDC, the Islamic Bank of Development, Kuwait Projects Company, and Al Baraka bank.

As impediments to create enterprises are not only financial, the fund plans to provide its clients with technical know-how and support for the first four or five years until they establish a foothold in the market.

Theemar will be made up of a number of committees, including a committee of renowned Islamic scholars and Islamic banking experts who will supervise investments.

Islamic finance currently has a small presence in Tunisia’s financial services sector, with only the establishment of Zitouna Islamic Bank in 2010. Al Baraka is an off-shore Islamic bank that does not provide Islamic financial products within Tunisia.

(Tunisialive / 2 July 2012)

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