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Saturday, 14 June 2014

UK mandates banks for maiden sovereign sukuk 'in coming weeks'

The British government has mandated banks to arrange a five-year 200 million pound sukuk - the world's first Islamic bond to be issued by a Western sovereign.
The Islamic bond could be issued in the coming weeks, subject to market conditions, The Treasury said in a statement late on Thursday.
The roadshow will start on June 17 in Jeddah and Kuala Lumpur, then moving to Riyadh, Dubai, Doha, and Abu Dhabi, ending in London on June 20, lead banks said.
A sovereign sukuk is the centrepiece of Prime Minister David Cameron's bid to position London as a leading hub for Islamic finance, as competition heats up with financial centres in the Middle East and Asia.
The bond would be issued before similar transactions planned by Luxembourg, Hong Kong and South Africa, all keen to diversify their funding sources and tap liquidity provided by increasingly wealthy Islamic investors.
In January, Britain appointed HSBC (HSBA.L) to arrange the deal and it has now added four more banks to the syndicate: Qatar's Barwa Bank, Malaysia's CIMB (CIMB.KL), National Bank of Abu Dhabi (NBAD.AD) and Standard Chartered [STANB.UL].
The sukuk will use an ijara structure, a sharia-compliant sale and lease-back contract, allowing the rental income of three central government offices to underpin the transaction.
In an ijara sukuk, a party leases equipment, buildings or other facilities to a client for an agreed rental price - a popular format among both sovereign and corporate issuers.
Britain has six full-fledged Islamic banks and over 20 institutions in the country that offer sharia-compliant financial services, which follow religious principles such as a ban on interest and gambling.
A sovereign sukuk could help Britain's Islamic banks to help manage their short-term liquidity needs.
In March, The Bank of England said it was studying ways to increase the number of sharia-compliant assets that Islamic banks can use in their liquidity buffers, a step towards reducing concentration risks in the sector.

Britain considered a sovereign sukuk six years ago, but that issuance never materialised as the Debt Management Office decided the structure was too expensive at the time.
(Reuters / 13 June 2014)
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Malaysia Seeks To Pioneer Islamic Wealth Management

KUALA LUMPUR, June 11 (Bernama) -- Malaysia hopes to be the first in the world to introduce Islamic wealth management, and champion the new product under the Islamic financial system, said Finance Deputy Minister Datuk Ahmad Maslan.

He said Islamic wealth management is an exciting and promising sub-sector of the financial services industry.

"We understand the concept of wealth management from the Shariah perspectives that covers both the physical as well as spiritual facets of wealth.

"This principle stands in contrast to the conventional wealth management that focuses on only the physical or material wealth," he told reporters after officiating a conference on Islamic Wealth Management, here Wednesday.

He said having already established itself as a global leader in Islamic finance, Malaysia today is the world's third largest market for shariah assets, namely, Islamic banking products and services, sukuk and takaful.

Ahmad said to further Malaysia's aspiration of becoming a centre of intellectual excellence in Islamic finance, the government is stepping up measures to that end.

"Several human capital development institutions, including the International Shariah Research Academy for Islamic Finance (ISRA), International Centre for Education in Islamic Finance (INCEIF), Islamic Banking and Finance Institute of Malaysia (IBFIM) and the Asian Institute of Finance (AIF) have been established to crystallise the aspiration.

"I foresee Islamic wealth management as a natural next-stage development of the local Islamic finance industry with the availability of our infrastructure, in respect of the human capital development to the Islamic financial institutions and expertise we have before us today, " he added.

The two-day conference, organised by the Malaysian Financial Planning Council and Labuan International Business and Financial, serves as a platform for networking and exchange of thoughts and outlook about the inner workings of the Islamic financial industry.

More than 300 delegates involving policy makers, research institutes, government agencies, practitioners and scholars are attending the conference.

(National News Agency Of Malaysia / 11 June 2014)
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