The global debt crisis may help Islamic finance nearly double to $1.8 trillion in assets by 2016 as stagnant corporate lending pushes institutions to seek alternative financing to traditional methods, according to a report by Deutsche Bank.
The bank forecasts that there is over $2 trillion of deleveraging in the United States and Europe, creating a financing glut for both struggling countries and countries in developed markets.
Islamic bonds slumped in November, snapping a five-month rally, as concern Europe’s debt crisis will spread reduced demand for higher-yielding assets in emerging markets.
Average yields on sukuk climbed 19 basis points, or 0.19 percentage point, in November to 5.04 percent, the highest level in two months, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. Yields had dropped 194 basis points from May 31 until the end of October. The extra yield investors demand to hold non-Islamic emerging-market debt instead of U.S. Treasuries rose 22 basis points in the month to 267, according to JPMorgan Chase & Co.’s EMBI+ Index.
T'azur Company b.s.c. (c), (T'azur), a regional Takaful (Islamic Insurance) company headquartered in the Kingdom of Bahrain, announced today the signing of an Islamic re-insurance (Retakaful) agreement with Hannover Retakaful, the Bahrain-based Islamic subsidiary of Hannover-Re, one of the world's leading re-insurers with premiums in excess of EUR10bn.
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.
The interest-free microfinance can be defined as provision of financial services to those people who are denied access to the financial market; opens new perspectives, and empowers people who can pursue projects with their own resources, and who lack assistance, subsidies and dependence. Besides, it provides financial services to those, who are traditionally non bankable, mainly because they lack guarantees against a loss risk.
Deutsche Bank AG announced today the formation of Deutsche Gulf Finance, a joint venture Shariah-compliant home financing company owned 40% by the Bank’s Riyadh Branch and 60% by a group of prominent Saudi-based investors, led by Fahad Abdullah Abdulaziz Al Rajhi.
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