UAE group to invest Dh1.8bn in Oman

Ghantoot will invest in various water and power projects

In a major expansion drive outside of the UAE, the Abu Dhabi-based Ghantoot Group will invest $500 million (Dh1.83 billion) in various projects in Oman’s hospitality, water and power sectors, said a press statement on Sunday.

A top official for Ghantoot Group said that starting 2012, the Group plans to establish two power plants, three hotels and investment in other facilities in water desalination, transmission and distribution and oil and gas projects aimed to benefit the Sultanate.

The first power plant, of 140MW capacity, will be set up in Ras Al Khaimah in the UAE to supply electricity exclusively to Musandam, in Oman, and adjoining areas, while another power plant, of 120MW capacity, will be set up in central Oman at a site to be finalised soon. When completed, the two plants will provide power to Omani consumers at a lower cost to the government.

The Group, which has diversified business interests across the Middle East, also plans to invest in hospitality portfolio by building a 320-room resort hotel in Musandam, and another two hotels featuring 600 rooms in total. Altogether, the projects will create more than 2,000 jobs for Omani nationals, while preserving the natural beauty and environment of Mussandam and adjoining areas.

Rashid AlBalooshi, Managing Director of Ghantoot Group, said that the Group is currently in discussion with government bodies in Oman to finalise the proposal. “Over the past few years, the Sultanate of Oman has taken huge strides in driving its economy forward and generating jobs for its nationals. We are keen to partner with the Oman government and play a constructive role in the country’s development,” he added “Our investment in Oman reaffirms our ability in identifying suitable opportunities to invest in promising, high-growth regions in the Middle East.”

The hotel planned for Musandam and the power plant will create 300 jobs for Omanis as well as more importantly, sustain the environment which has remained unpolluted, AlBalooshi said. It is proposed that the power for Musandam will be transmitted from the UAE’s Ras Al Khaimah emirate, located only 15 km from the Oman border.

AlBalooshi also stated that a specialized training centre with a reputed UK college will provide training for UAE and Omani candidates also to enter the utilities sector with diplomas and on-the-job apprentice studies. This will greatly help in alleviating the local shortage of skills required for the utilities industry.

Conservative estimates point out that Oman will be able to benefit more than US$1 billion through direct investment savings and other water and power production cost savings alone, once the projects are implemented.

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Noor Islamic Bank Social Media

Sukuk demand still outweighs supply

Plans by sovereigns outside the Middle East and other largely Islamic regions to tap the sukuk market could meet pent-up demand from Islamic institutional investors and banks to diversify their bond holdings, making the sukuk market a useful source of additional funding over time, Fitch Ratings said.

The opportunity to buy Shariah-compliant debt from investment grade sovereigns that have not yet tapped the market would be likely to generate strong investor appetite.

Supply has got off to a strong start in 2012, with the General Authority for Civil Aviation of Saudi Arabia bringing a government-guaranteed deal that could pave the way for more issuance from the Kingdom, including the sovereign.

Issuers from outside the Islamic world could contribute more eventually to the increase in supply as they diversify their investor base. Sovereigns would be well placed to tap demand, as they are unlikely to have to struggle to find assets that qualify to back shariah-compliant bond issuance. Savings in the oil-exporting countries of the Middle East will continue to grow at current oil prices, supporting greater demand from investors.

South Africa invited banks to pitch for a government sukuk advisory and structuring mandate in December. Bloomberg reported in mid-January that Ireland, which is due to return to the bond market in 2013 under the terms of its EU/IMF assistance package, is considering sukuk issuance.

Sukuk supply from sovereigns outside the Middle East and South-East Asia would be a much-anticipated development. In 2004, the German state of Saxony-Anhalt issued EUR100mn sukuk, and in 2009, France amended its civil code to develop Islamic finance. Anticipated issuance from France, the UK and Luxembourg has not materialised.

The sukuk market is growing rapidly. 2011 issuance was $84.4bn, a 62 per cent increase on 2010, according to Zawya Sukuk Monitor. But supply is still overwhelmingly from Muslim countries or countries with a Muslim majority population. Malaysian issuers accounted for more than half of 2011′s supply by volume. Between them, issuers in Malaysia, Qatar, the UAE, Indonesia and Saudi Arabia provided more than 90 per cent.

Despite the strong year-on-year increase in supply, the sukuk market remains a fraction of the size of the global bond market. The lack of a standardized deal structure has constrained growth, which has not kept pace with demand from Islamic institutional investors and banks.

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UAE bank lending to grow

High public spending in the UAE triggered by a surge in the country’s oil earnings is expected to spur credit by banks following a sharp slowdown in the wake of the 2008 global fiscal distress, a key US agency has said.

After two years of slower profit growth, the 23 national banks and 28 foreign units recorded better income in 2011 despite restraints such as a weak asset quality, increasing loan to deposit ratio, continued provisioning to cover non-performing loans, decreasing deposits volume and bad debts from government related holdings, Frost & Sullivan said in written answers to questions sent by Emirates24|7 about the prospects of UAE banks.

But it noted that UAE banks, which control the largest asset base in the Arab world, have managed to build a strong equity capital base, with most banks having a capital adequacy ratio between 16-20 per cent.

“The liquidity position of the industry has also significantly improved over the last year, an effect of reinforced liquidity risk management adopted by the banks,” said the Banking and Financial Services Practice, Frost & Sullivan.

“Frost & Sullivan expects an expansionary monetary policy by the UAE government to help improve asset quality, cover up non-performing loans and enable loan growth….over the next 2-3 years, Frost & Sullivan forecasts an increasing trend towards industry consolidation and a greater focus on client satisfaction and quality of service.”

However, some of these growth drivers are likely to be affected by the euro – zone crisis and hence, profitability of the industry in 2012 is expected to remain at the same level as 2011, the agency added. It said that while the property market in the UAE is shaping up and retail loan books are improving, bad debts from government related holdings still seem to be a cause of concern in the coming months.

“At the same time, increase in non-performing loans might affect profitability in the future. A poor response to the debt market twice in two years shows there was little investor confidence in the banking industry.”

UAE banks have not yet issued full year results but Central Bank figures for the first 10 months of 2011 showed the 51 banks netted Dh24.9 billion.

In a recent study, National Bank of Kuwait said it expected banks in the UAE to return to profit growth through 2011 and the next two years following a turbulent period over the past two years because of the 2008 fiscal crisis and regional debt default problems.

UAE banks have been locked in a massive provisioning drive to bolster their financial position and face any fresh crisis in the future, with their NPL provisions soaring to a record Dh53.2 billion at the end of November, nearly Dh12 billion above their level at the end of 2010.

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Appetite for sukuk surges across the Gulf this year

Companies and governments in the Gulf sold Islamic bonds this year at the fastest clip since 2007, underscoring a trend where borrowers are seeing more appetite for their debt among regional investors in the wake of the sovereign-debt crisis sweeping Europe.

Sales of Islamic bonds, or sukuk, by Gulf issuers reached US$7.3 billion (Dh26.81bn) this year, according to Bloomberg News data. That was 62 per cent higher than last year and the largest amount of Islamic debt on offer in four years.

Conventional bonds, meanwhile, which unlike Sharia-compliant sukuk do not comply with Islam’s prohibition on charging or receiving interest, have taken a hit this year. Bond sales in the region have fallen 27 per cent compared with last year.

Major sukuk sales have come from regional governments and banks including Abu Dhabi Islamic Bank, which launched a $500 million Islamic bond last month.

“Regional banks and banks in South East Asia have so far been less affected by the problems in Europe, and so tapping the Islamic market is a way to access investors that have been less impacted by European problems,” said Nick Stadtmiller, the head of fixed-income research at Emirates NBD.

Average yields on Islamic debt in the Gulf slumped 1.14 percentage points this year, outpacing the decline in average emerging-market bonds yields. With euro-zone countries looking to raise $1.1 trillion next year, according to Deutsche Bank forecasts, borrowers may try to entice more GCC wealth next year.

“Issuers are taking advantage of the pools of liquidity in the Islamic space,” said Mohammed Dawood, the managing director of global capital financing at HSBC Amanah, the Islamic banking unit of HSBC Holdings.

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Noor Islamic Bank Social Media

Al Fakih named AAOIFI secretary general

MANAMA: The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) has announced the appointment of Dr Khaled Al Fakih as its new secretary- general.

Chairman Shaikh Ebrahim bin Khalifa Al Khalifa said that the appointment had been made after carrying out the due process of selection.

“On behalf of AAOIFI and the board of trustees, I am pleased to welcome Dr Al Fakih to his new role and I am confident that he will steer the organisation to an even stronger position to discharge our responsibilities in developing and issuing standards for the international Islamic finance industry,” he added.

Dr Al Fakih has extensive experience in banking and finance and a unique combination of expertise in Islamic law, risk management, audit and technical finance.

He holds a PhD in Islamic Studies from the University of Saint Joseph, Beirut, Lebanon, and an MBA in banking and finance.

He is a Certified Financial Risk Manager, Certified Management Accountant, Certified Internal Auditor and Certified Financial Services Auditor.

He is a member of the Islamic Banks Committee of Association of Banks in Lebanon (ABL) and the AAOIFI Sharia Standards Committee.

He was also a member of the venture capital and Islamic securitisation study group as well as the Islamic corporate governance study group at the Central Bank of Lebanon in 2007.

Dr Al Fakih has lectured on the principles of Islamic jurisprudence at the Islamic University of Beirut’s Al Sharia College and delivered seminars in different countries in collaboration with International Monetary Fund, ABL and Union of Arab Banks, covering major Islamic finance topics on principles of Islamic finance, structured finance, risk management and audit. “I am honoured for the trust and confidence that have been placed on me,” he said.

Shaikh Ebrahim also paid tribute to the sterling leadership and immense achievement of outgoing secretary- general Dr Mohamad Nedal Alchaar, who has assumed the position of the Minister of Economy and Trade of Syria.

He will continue to oversee AAOIFI’s operations during the transition period before Dr Al Fakih’s appointment takes effect on February 1. He will also continue to serve as a member of AAOIFI board.

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Noor Islamic Bank Social Media

Dhs3.5m donation to support minors

Awqaf and Minors Affairs Foundation (AMAF), mandated to supervise the well-being of minors, has received Dhs3.5 million from Noor Islamic Bank as a donation to support minors and empower them with the capability and resources to independently fend for themselves in later life.

The funds are to be used in providing minors with resources such as education including fees, books and uniforms, as well as healthcare until they reach adulthood.

According to the Secretary General of AMAF, Tayeb Abdel Rahman Al-Rayes, said: “This donation adds another chapter to the tremendous efforts of Noor Islamic Bank in supporting charitable organisations in the UAE.”

Source: Noor Islamic Bank Social Media

Majid Al Futtaim latest to join rush to sell Islamic bonds

Majid Al Futtaim (MAF) Holding is preparing to sell Islamic bonds as increasing numbers of companies seek to bypass frozen western credit markets and raise funds through sukuk sales.The retail and hospitality giant, which operates Dubai’s Mall of the Emirates, is laying the groundwork for a sukuk sale worth about US$500 million (Dh1.8 billion).The company’s overall $1bn sukuk programme is expectedto be in place by the end of the month, with an issuance of five-year sukuk worth about $500m possible soon after, said Daniele Vecchi, MAF Holding’s head of group treasury.

Getting to grips with the IBAN

Account identifier comes into effect today but many still unsure of its importance
The UAE Central Bank recently launched a new account identifier called the International Bank Account Number (IBAN) to reduce errors in local and international money transfers. However, many banking customers remain clueless as to what the fuss is all about.
IBAN is a unique 23-digit long, internationally recognised code assigned to each bank account. It’s nothing more than an extended version of the conventional bank account and is primarily used in payment transactions in over 50 countries in the world, including all European Union states and Arab countries like Kuwait, Saudi Arabia and Tunisia.
The use of IBAN takes effect in the UAE today, which means banks now accept and process payment instructions using the new code, but it’s not mandatory yet because the Central Bank has granted a three-month grace period, to allow more time for everyone to successfully transition to the new system.
Banks in the country have already provided their account holders with their IBANs. However, when Gulf News asked some customers about it, many did not know what it was for. Two out of three said they had not received their IBAN yet.
“Is that a new Apple product?” Christopher, a software engineer, asked when the subject was brought up.
Lenny T., who works as an account executive for a public relations agency in Dubai, was equally clueless.
“I’m sorry, because when it comes to finance, I’m a little bit naïve. Is IBAN related to buying bonds?” she asked.
Client concerns
Another bank customer said the new account identifier is very long and it can only complicate payment transactions.
“Imagine I have to write down 23 digits, there’s a lot of chance that I enter a wrong number. How can that eliminate errors?” the customer wondered.
Concerns have also been raised whether UAE residents will encounter problems in outbound and inward money remittances involving countries that have yet to implement the IBAN. While IBAN is recognised internationally, some countries like India, Philippines, Canada and the United States are not using the system yet.
According to the UAE Central Bank, the new system which was originally developed by the European Committee for Banking Standards, will ensure efficient and speedy payment transactions.
“Since banks check the accuracy of the IBAN at the point of initiating a payment, they can only make the payments which carry the correct IBAN,” the bank said on its website.
“IBANs contain validation which easily allows banks to verify whether an account number is correct before any payment is processed. The IBAN therefore makes the process of sending and receiving payments more secure and less prone to delays caused by incorrect account numbers being supplied in error,” said Richard Musty, managing director at Lloyds TSB in the Middle East. Musty explained that with the IBAN, the location of the bank account can be identified without the full name or address of the bank being disclosed.
“The UAE Central Bank is driving the introduction of IBAN to the UAE, and I am fully supportive of their decision as it offers benefits to both banks and their customers,” he said.
The Central Bank earlier instructed banks in the UAE to generate and distribute the IBANs to all their customers. Some UAE residents initially encountered problems in getting the new codes, but many confirmed they have received their IBANs without much of a hassle.
“I had no problem with my bank. When I called them about my IBAN a few weeks ago, they told me they would send it to me soon. I just got it in the mail,” said Maricris, who has an account with Noor Islamic Bank.
Emirates NBD, National Bank of Abu Dhabi (NBAD), Standard Chartered Bank, Mashreq, HSBC, Lloyds TSB, Noor Islamic Bank and Barclays have advised their customers about the IBAN either through personalised letters, SMS, customer statement of accounts, online campaigns or messages via electronic banking. In addition, banks have enabled their networks and call centres to assist all customers with the introduction of IBAN.
Standard Chartered, HSBC, Lloyds TSB, Noor Islamic Bank, the National Bank of Abu Dhabi and Barclays have set up an online utility on their websites to enable customers to retrieve the IBAN themselves.
Emirates NBD and Noor Islamic said all their newly-issued chequebooks contain the IBAN, in addition to account number.
HSBC, for its part, has trained its relationship managers and branch staff to inform customers about IBAN pro-actively.

Source: Noor Islamic Bank Social Media

Turmoils shift the axis of Islamic investments

The ongoing unrest in North Africa and the Middle East have directed many investors from Gulf countries to Turkey. The newcomers include many Islamic bankers, says to top executive of Dubai-based Noor.

Noor Islamic Bank leads US $1.4bn Islamic Finance Mandates in Turkey

Noor Islamic Bank (Noor) has been mandated to arrange and lead manage more than  US $1.4 billion Islamic finance capital market deals in Turkey in the last 18 months, making it the most active UAE bank in the republic.

Noor released details of its financial dealings in Turkey on the eve of the Islamic Investment and Finance Forum, scheduled to take place in the Turkish capital Istanbul, from October 24-27. Noor is the Sukuk partner for the event.