Bahrain's central bank (CBB) plans steps to encourage securities issuance and lure foreign investors who have been deterred by the global financial crisis and political unrest in the Gulf island kingdom. The CBB will soon issue a directive on the offering of securities covering both Islamic and conventional paper, governor Rasheed al-Maraj said in an emailed interview, part of the Reuters Middle East Investment Summit.
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Investors from the UAE and Bahrain have applied for a licence to establish an Islamic bank in Iraq with a paid up capital of $240 million. "We have applied to the Central Bank of Iraq and expect the approval to be given within six months," Abdulsalam M. Juwaied, Vice President of the Iraqi Islamic Bank for Investment and Development, told Zawya. The growth of Bahrain's takaful (Islamic insurance) sector dipped to single digits in 2011 for the first time in a decade, while still outpacing growth in conventional insurance, according to data released on Sunday by the country's central bank. Takaful gross contributions grew by 4.25 percent to 40.2 million dinars ($107 million) in 2011, the central bank said in a statement. This compares to 18 percent growth in 2010, with double-digit growth registered in all of the previous 10 years, central bank data shows. As investors looked on in dismay at the 2009 default of Islamic bonds from Saudi Arabia to Kuwait, many critics forecast the demise of the Gulf’s sharia-compliant industry. Islamic bond structures were seen as too complicated and too far removed from the real economy. While financial instruments appeared to be based on collateral, they turned out to be just like any other conventional product. The Islamic investment sector can widen its customer base by adopting a socially responsible model, according to industry experts, but distribution channels, a sophisticated investor base and incentive schemes need to be enhanced first. The links between Islamic finance and socially responsible investments (SRI) are not new, but the former needs a similar transformation which brought SRI into the mainstream. Islamic finance to strengthen economic and financial linkages between Asia and the Middle East5/24/2012 The rapid international expansion of Islamic finance reflects its ability to remain competitive and to increasingly meet the complex requirements of the global financial community. With various countries now intensifying efforts to develop their respective Islamic financial capabilities, it is becoming increasingly vital to build deeper relationships between the key markets for Islamic finance and also between the leading industry players in each of these jurisdictions. Bahrain plans to issue a sovereign bond by the summer, its central bank said on Tuesday, a sign that the Gulf country is confident it can draw international investors despite ongoing social unrest and budgetary pressures. A year of clashes between protesters from the Shi'ite majority and security forces has weighed on the small non-OPEC oil exporter, eroding capital parked in its mutual funds, while fiscal handouts have raised the average oil price the kingdom needs to balance its budget to near-market levels. Traditionally, Islamic banks have outperformed their conventional peers in most markets. However, a closer look suggests the market dynamics are changing, demonstrating a new trend. Two key indicators are cause for reflection: slowing growth rates and eroding profitability, A.T. Kearney, a global management consultancy, said Monday. Declining growth rates are occurring in key geographies including Saudi Arabia, Bahrain and the UAE, where growth rates have dropped to between 3 and 8 percent from double-digit figures. In parallel cost income ratios are increasing in most markets, putting pressure on profitability. Global Islamic insurance contributions surged 19 percent in 2010 to $8.3 billion helped by Saudi Arabia, the world’s biggest oil exporter, which made up more than half the industry, an Ernst & Young report said. The six-nation Gulf Cooperation Council, which also includes the United Arab Emirates, Qatar, Bahrain, Oman and Kuwait, made $5.68 billion of Islamic insurance or takaful contributions in 2010, and South East Asia $2 billion, according to the World Takaful Report 2012 e-mailed today. |