Bahrain's Al Baraka Islamic Bank plans to open a sharia-compliant bank in France next year as the lender seeks to expand into Europe, Chief Executive Adnan Ahmed Yousif said on Sunday.
France has one of the largest Muslim populations in Europe but cultural and legal obstacles have impeded the development of its Islamic finance industry.
A group that’s raised $4.5 billion for child vaccinations since its inception in 2006 plans to tap the Islamic debt market for the first time, kickstarting sales of ethical-based sukuk.
seeks to sell as much as $500 million of dollar-denominated Shariah-compliant notes, Michael Bennett, head of derivatives and structured finance at the World Bank’s treasury department, the intermediary for the sale, said in a Sept. 3 interview in Kuala Lumpur. IFFIM, a non-profit organization based in London, will sell the three-year vaccine bonds backed by commodities as early as this month, he said.
Societe Generale, France's third-largest bank by assets, will raise up to 1 billion ringgit ($311.24 million) with a multi-currency sukuk programme in Malaysia, RAM Ratings said on Thursday.
Last year, people with knowledge of the matter had told Reuters that Societe Generale would issue $300 million worth of Islamic bonds in Malaysia by the end of 2013. Funds from the programme will go towards expanding the bank's operations in the Middle East.
The European Central Bank and the Malaysia-based Islamic Financial Services Board (IFSB) are conducting a joint study on policies affecting Islamic finance in Europe, the IFSB's top official told Reuters.
"We are doing a joint study with Europe's central bank which brings together European scholars and regulators to examine a broad set of policy and regulatory issues in relation to Islamic finance in Europe," said IFSB secretary-general Jaseem Ahmed.
Syed Alwi bin Mohamed Sultan, the Kuala Lumpur-based head of Islamic banking for Asia Pacific at BNP Paribas Malaysia Bhd., discusses the trends in Islamic finance at the World Islamic Banking Conference in Singapore.
“There’s greater diversification of the investor base. What we have seen from recent issuance is that there are greater non-Islamic investors coming in to accept sukuk or invest in sukuk instruments. The Khazanah Nasional Dim Sum sukuk witnessed more than 50 percent from Singapore and Hong Kong investors.
Fitch Ratings says 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 investorsand banks to diversify their bond holdings, making the sukuk market a useful source of additional funding over time.
The opportunity to buy shariah-compliant debt from investmentgrade sovereigns that have not yet tapped the market would be likely to generate strong investor appetite.
Islamic finance in the European Union may be taking a back seat as the continent is gripped with a dire euro zone sovereign debt crisis which has even impacted on sovereign Germany's attractiveness as a bond investment asset class.
Similarly, London's role as a hub for Islamic finance, investment and trade - the declared ambition of the previous Labor government and the current Conservative-Liberal Democrat Coalition - is stalling because of the disappointment of the UK Treasury deciding not to raise funds in the wholesale sterling market through a debut sovereign Sukuk.
The 18th annual World Islamic Banking Conference (WIBC 2011) will feature a key session on "Islamic Finance New Developments in France - Growth and Opportunities". The forum will be held from November 21 to 23 at the Gulf Hotel.
The session, hosted by Invest in France Agency, will feature critical discussions on the development of Islamic finance in France. It will also analyse and evaluate the tax and legal framework in France and will also assess real case feedback for structuring Islamic ethical compliant equities and funds.
Bahraini Islamic lender Al Baraka will expand to France next year and expects to launch a bank with a capital of EUR 100 million ($142 million) by the first half of 2012, the bank's top official said.
Al Baraka had announced in 2009 its plan to launch operations in France but had to postpone it due to the financial crisis.
Japan will alter regulations to give foreign investors tax breaks on sharia bond dividends, the latest country to pursue Islamic finance to woo investors demanding sharia-compliant assets.
Islamic bond dividends received by foreign investors may be declared tax-free as early as end-2011.