Kuwait's Boubyan Bank aims to issue $250 mln sukuk by April-end

Kuwait's Boubyan Bank aims to issue sukuk worth $250 million before the end of April, the lender's chief executive said on Monday.

Adel Abdul Wahab al-Majed told reporters of the plan after the company's annual meeting.

Boubyan Bank in January said it had received regulatory approval to issue a capital-boosting sukuk worth $250 million.

Majed added that the sukuk would allow the bank to fulfill Basel III requirements and cover its capital needs until 2018.

(Reuters / 21 March 2016)

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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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Kuwaiti firm launches Islamic trade finance fund

Kuwait-based Asiya Investments has launched an Islamic trade finance fund with $20 million in seed capital, aiming to cater to small Asian manufacturers.

Asiya, whose largest shareholder is sovereign wealth fund Kuwait Investment Authority, aims to fill a gap left by Western banks that are scaling back their trade finance business, making credit scarce for small and medium-sized firms.

"We engage those companies that are already banked but whose credit lines are limited - we are complementing their financing," said Sulaiman Alireza, executive director of Asiya's investment management arm in Hong Kong.

Despite strong growth in Islamic finance globally over the last few years, the industry has neglected merchandise trade, leaving trade finance for conventional banks to dominate.

But conventional banks are retreating because of the world financial crisis and higher capital requirements under upcoming Basel III regulations, which could open up about 20 percent of the business to non-bank institutions, Alireza said.

Established as the Kuwait China Investment Co in 2005, Asiya estimates that current annual intra-Asia trade of $5 trillion could reach $20 trillion by 2020.

Asiya's Cayman-domiciled fund, soft-launched in December, offers short-term financing through murabaha contracts, where the fund buys and sells merchandise on behalf of the company and shares a portion of the profits.

"We use a murabaha structure with the underlying commodity serving as collateral. This is a standard, tried-and-tested murabaha structure," Alireza said.

Islamic institutions across the Gulf are working to diversify their money market transactions, so Asiya's product could appeal to some of them. It will have a higher yield than commodity murabaha contracts and better liquidity than sukuk, Alireza said.

Asiya's fund aims for a net return to investors of above 5.0 percent and it has $55 million worth of assets in the pipeline, with capacity for approximately $400 million, said Brian Luck, director of Asiya's advisory office in Dubai.

"Trade finance is not well known as an asset class...but the reality is there are not enough Islamic fixed income products available," Luck said. Plans include offering the trade finance product on a managed account basis, he added.

The firm identifies clients such as denim and latex manufacturers through its Singapore-based joint venture partner, EuroFin Asia.

(Al-Arabiya / 06 May 2013)


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Kuwait regulator urges better Islamic finance oversight

Feb 12 (Reuters) - Islamic financial institutions in Kuwait should hire enough personnel to ensure they comply with sharia standards, and work with the personnel in a transparent way, the country's market watchdog said on Tuesday.

The statement by the Capital Market Authority (CMA) appeared to be in response to concern about uneven self-regulation by the institutions.

The number of Islamic financial firms, which obey religious principles such as a ban on the payment of interest, has increased substantially in Kuwait and elsewhere in the Gulf over the past decade.

The companies have in-house sharia boards of scholars who rule on whether their products and actitivies are sharia-compliant, and sharia compliance officers who check whether guidelines are being followed on a day-to-day basis.

But around the Gulf, the industry has been hampered by shortages of experienced scholars and qualified staff, and by rulings by sharia boards at different companies that sometimes conflict with each other, confusing investors.

The CMA's statement on Tuesday called for "the appointment of a sufficient number of legal observers in accordance with the size of the institution". It urged institutions to provide "full transparency" in their communications with compliance officers.

The watchdog also urged companies' sharia boards to take more care to issue rulings that were in line with each other.

The CMA's statement was a recommendation, not a new set of regulations. CMA officials could not be reached for comment.

There are five Islamic banks and around 30 mostly Islamic investment companies listed on Kuwait's stock market, as well as 15 "takaful" Islamic insurance companies. (Reporting by Ahmed Hagagy; Writing by Sylvia Westall; Editing by Andrew Torchia)

(Reuters / 12 Feb 2013)

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Kuwait’s Boubyan Bank sees Islamic banking boom

Kuwait: Islamic banking is growing at more than double the pace of conventional banking in Kuwait and strong demand is expected throughout the Arab region, according to the chairman of Boubyan Bank.

Credit volumes at Islamic banks in Kuwait reached 11.1 billion Kuwaiti dinars ($39.3 billion) in the first nine months of 2012, up 13.2 per cent on last year, Boubyan chairman and managing director Adel Abdul Wahab Al Majid told the Reuters Middle East Investment Summit.

That compares with 5.6 per cent credit growth to 18.6 billion dinars at conventional banks, Al Majid said.

The hunger for sharia-complaint banking in Kuwait means that Boubyan is not interested in overseas expansion quite yet, in contrast to more-established rival Kuwait Finance House (KFH) .

“Innovation or presence outside, it is only a matter of time [for] the likes of us and others,” Al Majid said. “Right now we are busy because the slice of Islamic pie in Kuwait is big.”

However, in 2014 the bank will set out a new five-year strategy, which will include the possibility of an international presence.

This year’s Arab Spring uprisings are expected to boost sharia-compliant banking in the Middle East and North Africa because of the new Islamic governments it created, Al Majid said.

The Boubyan chairman was previously an executive at National Bank of Kuwait (NBK), which in July raised its stake in Boubyan to just over 58 per cent from 47 per cent in a deal valued at about 122 million dinars.

Al Majid moved to Boubyan as part of an executive team charged with the task of shoring up the struggling bank at a time when NBK held a minority stake in it.

During the financial crisis of 2009 Boubyan reported a net annual loss of 51.7 million dinars. This background has made the bank cautious about expansion.

“I think the mistake is that it started venturing outside before it had a stable, profitable base in Kuwait,” Al Majid said.

Since 2009, earnings have grown and the bank reported an 8 million dinar net profit in 2011.

“We expect this year to be in the same positive trend,” Al Majid said. In the first nine months of this year the bank posted net profit of 7.6 million dinars.

Provisions for problem loans at Boubyan were 26 million dinars in the first nine months of this year. Al Majid said he believed that these had peaked for the Kuwaiti banking sector as a whole, with the process continuing at a slower pace.

However, the Gulf Arab state is not completely immune to developments in global markets, Al Majid said, and lower profit growth has become the new norm.

“Given the whole turmoil all over the world, I don’t think anybody here wakes up in the morning with a smile on his face. You see what is happening in Europe, the US and China.”

(Gulfnews.Com / 25 Nov 2012)

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Thailand set to boost Halal food industry with Kuwait

KUWAIT, Oct 16 - Thai Prime Minister Yingluck Shinawatra reaffirmed close ties between Thailand and Kuwait and pledged that Thailand is ready to cooperate with the Middle Eastern country to produce Halal food for the world.

The Thai premier made her remarks as she hosted a reception for the Thai and Kuwaiti business communities as she arrived in Kuwait, at the opening of her three-day visit there.

Ms Yingluck said Thailand and Kuwait have had a close relationship for nearly 50 years and the value of mutual trade between the two countries has increased by 185 per cent in the past five years.

In the first half of this year, about 40,000 Kuwait tourists visited Thailand, she said.

The Thai prime minister stated that Thailand's economic fundamentals remain strong: some US$74 billion is being invested for additional basic infrastructure development including transport routes connecting Thailand with neighbouring countries, expansion of international airports, and joint investment in Myanmar's Dawei deep-sea port which will link Thailand with India and the Middle East.

Regarding economic cooperation between Thailand and Kuwait, Ms Yingluck highlighted the concept "Kitchen to the World". She said that exports of Halal food have increased by 30 per cent compared to last year, and an efficient standardised Halal food industrial estate has been established in the country's southern region.

She said Thailand expects to cooperate with Kuwait in producing and exporting Halal food to the world community.

Ms Yingluck added Thai businesspersons who accompanied her during this trip are also keen to invest in the energy, public health and tourism industries here.

The Thai premier is scheduled to attend the opening ceremony of the Asia Cooperation Dialogue (ACD) summit, along with the leaders of 32 countries today.

As Thailand is an ACD coordinating country, Ms Yingluck will speak on Thailand's role in tourism, finance and human resources.

ACD was inaugurated in June 2002 in Cha-Am, Thailand, where 18 Asian Foreign Ministers met together for the first time.  A continent-wide forum, ACD aims to build links in Asia incorporating every Asian country, building an Asian community without duplicating other organisations or creating a bloc against others.

The grouping currently comprises 30 countries from East to West Asia, including Bahrain, Bangladesh, Brunei, Bhutan, Cambodia, China, India, Indonesia, Iran, Japan, Kazakhstan, Republic of Korea, Kuwait, Lao PDR, Malaysia, Mongolia, Myanmar, Pakistan, Philippines, Oman, Qatar, Russia, Saudi Arabia, Singapore, Sri Lanka, Thailand, United Arab Emirates and Vietnam, Tajikistan and Uzbekistan.

(Pataya Mail / 17 Oct 2012)

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Kuwait's NIG to repay $475 mln sukuk on time, drops delay request

* $475 mln sukuk to be repaid on Aug 16 - statement

* Drops extension request after getting 92 pct sukukholders nod

* Says to finance repayment with sharia-compliant loan

* Shares rise 5.4 pct on Kuwait bourse (Adds detail, background)

DUBAI, Aug 14 (Reuters) - Kuwait's National Industries Group Holding (NIG) will repay its $475 million Islamic bond, or sukuk, when it matures on August 16, it said on Tuesday, dropping earlier plans to get a four-year extension from creditors.

NIG, an investment firm controlled by one of the country's biggest merchant families, asked creditors in July to extend 70 percent of the sukuk maturity to 2016 in exchange for a much higher interest rate.

While about 92 percent of certificate holders had approved the extension, the request has been cancelled because NIG has raised enough finance to fully repay the sukuk, the firm said in a statement to the Dubai bourse.

NIG shares rose 5.4 percent as at 0820 GMT on the Kuwait bourse following the announcement.

The company had said previously it was in the process of securing a 100 million dinar ($354.4 million) three-year syndicated sharia-compliant loan being arranged by local lender Warba Bank.

NIG had around 85 million dinars of cash on its balance sheet at the end of March, according to Moody's in a May report labelling the Warba Bank facility credit positive.

Last month, NIG said it would repay 30 percent of the $475 million total on the August 16 due date but under a revised structure, which sukukholders had until August 9 to agree to, NIG would repay 25 percent of the principal amount at the end of each of the four years the sukuk was extended for.

The profit rate would have also been amended from a floating rate of three-month Libor plus 105 basis points to a fixed rate of 450 basis points - much higher than the 151.59 bps paid out at the last coupon payment in May.

The Kharafi family, which owns NIG, controls one of the biggest family conglomerates in Kuwait with interests in real estate, retail and financial services. It is also thought to control, through various entities, around a quarter of telecom operator Zain.

Like a number of Kuwaiti investment firms, NIG was hard hit by the 2008 financial crisis. These firms borrowed cheap short-term cash in the boom years to fund an asset-buying spree, both locally and overseas, but found they couldn't refinance the debt once borrowing costs rose. Offloading assets at deflated values has also proven difficult in a stagnant market.

Several Kuwaiti investment firms have faced debt problems, including Investment Dar, co-owner of luxury carmaker Aston Martin, International Investment Group and International Leasing and Investment Co.

Global Investment House, in the midst of its second restructuring in three years, said on Sunday it would seek shareholders approval for a debt-for-equity swap which will see creditors own 70 percent of the company.

(Reuter / 14 August 2012)

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