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Sunday, 15 February 2015

Al-Monayea Highlights KFH Experiment In Sukuk Issuance

 “KFH succeeded in developing Islamic financial services and capital markets during the last 2 decades through participation in Sukuks issuance and efforts to develop Sukuk markets” said Mr. Emad Al-Monayea, Board Member and CEO – KFH Investment Company. KFH has participated in the issuance of Sukuks of various governments and companies in GCC countries, Turkey, Japan, United States, Britain and South Africa. KFH provides technical support to entities intending to issue Sukuks in order to enable them to issue Sukuks successfully without any hindrance or obstacles.

Al-Monayea, in a presentation delivered at Euromini Conference at London named “Islamic Finance & Investment” highlighted KFH experiment in Sukuk issuance in general, namely during the year 2014 and the support which it has provided to make all Sukuk issuance deals a success. KFH subscriptions surpassed the required amounts. KFH played a significance role as a guarantor for the success of new Sukuks issuances due to the trust which KFH enjoys globally among investors and global markets. KFH has participated remarkably in the diversification of customers funding, increase number of Sukuk issuers and the size of amounts invested in this field.

Al-Monayea reiterated that KFH shall endeavor to increase the issuance of more Sukuks for governments and companies worldwide in order to reinforce and support the role of this product. This product is  considered as the legislative substitute for bonds and participates in providing finance for several projects in an innovative manner and sound mechanism. KFH seeks to reinforce and support Islamic banking role in major projects and increase development efforts in various societies.

Al-Monayea indicated that sufficient efforts are exerted in the issuance of Sukuks and several countries and marjoram companies have shown great interest in this product. However, the lack of secondary Islamic markets is still mitigating the possibilities of expansion and growth in this vital and axillary activity in the world of Islamic banking. Several countries lack appropriate laws to organize the issuance and dealing process of Sukuks. Sukuks are one of the tools through which banks are able to manage liquidity in case there is a secondary market for issuance of Sukuks.

During the conference, representatives of South Africa emphasized their experience in the first issuance of sovereignty Sukuks last September and how this matter has participated in facilitating Islamic economy affairs. Several entities have adopted this type of finance and investment. They highlighted KFH role as one of the main organizers of these Sukuks. These Sukuks are considered as the first sovereignty Sukuks in Africa. Significant assets were used to issue these Sukuks. Accordingly, Sukuks were given considerable rating by major global rating agencies e.g. Moody’s, Fitch, Standard & Poor’s.

British government was the first European country to issue sovereignty Sukuks in 2014. Britain has shown remarkable interest in Islamic finance. It seeks to occupy a leading position in this sector as it is the case with Malaysia and UAE. Central Bank of Britain endeavors to introduce liquidity tools to serve Islamic banks as well as traditional banks. Appropriate legal environment is considered as one of the basic elements to support and facilitate Islamic economy in Britain. A major part of the contracts used by Islamic organizations are governed by the British law.

(Arab Times / 15 February 2015)
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Islamic banking becomes more preferable, says Kuwaiti banker

Islamic banking sector instruments are becoming more popular and attractive all over the world since major economies began to struggle as a result of the current financial systems. G20 finance ministers and central bank governors meeting held in Istanbul this week where expanding Islamic banking system became one of the subjects. International Monetary Fund (IMF) announced that they will organize three seminars on Islamic banking this year to introduce its methods and advantages to more people. Deputy Prime Minister Ali Babacan has said that participation banking and lease certificates are real instruments of trade and investment, and that, since they are not based on "making money from money," they spread the risk in times of crisis and volatility. Babacan also said that various ministers, some of whom are Christian democrat politicians who took the floor during the meetings, also said that Islamic banking and funding methods should be integrated into local economies. Turkey's first Islamic bank was established by the Kuwait Finance House (KFH) in 1980 in partnership with Turkey and named Kuveyt Türk. This finance giant is not the only first in Turkey it is also the very first Islamic bank in Kuwait as well, which is established, just two years before they began to operate in Turkey, in 1978. KFH is also the second Islamic bank around the world. 

Speaking to Daily Sabah, Fahad al-Mukhaizeem, KFH's Marketing, Public Relations and Strategic Planning Department Manager, stated that Islamic banking sector historically has been growing about 18 percent annually, which is much higher than conventional banking system. "We see higher growth in Islamic banking sector," Mukhaizeem said, adding that Islamic banking sector's total activity volume in the world is $2 trillion. KFH is in the top three with an asset size about $52 billion.

Mukhaizeem said that their main focus in Turkey small and medium size businesses which are the driving force of Turkish economy. Kuwaiti banker also stated that Turkish markets' high performances brings high returns and even conventional banks work to serve Islamic banking instruments. Kuwait Finance serves many products; all Islamic finance instruments, real estate financing and all types of accounts on the liability side so they have deposit account which is a profit sharing. They also have investments like hospitals, aircraft leasing, IT. The bank has 300 branches in Turkey and subsidiaries in Turkey, Malaysia, Bahrain, Saudi Arabia and Kuwait. "There is also our Kuveyt Türk branches expected to open in Gulf Cooperation Council and Europe," Mukhaizeem said, which is projected to be established in partnership with Turkey. 

(Daily Sabah Business / 15 February 2015)
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