DUBAI: Islamic Banking is the right platform to boost ‘green financing’ as it is based on the concept of promoting good practices and values, a leading Indian banker in Qatar has said.
R Seetharaman, the Chief Executive Officer of Doha Bank, said Islamic banking is not just a financial system, but is part of a total value-based social system that seeks to enhance the general welfare of society as a whole.
Seetharaman was delivering the inaugural address at a seminar on Islamic economics, organised by the Indian Islamic Association – Qatar (IIAQ), under the title, ‘Toward an Alternative Economy’.
“Sustainable environment development, developing water resources, facing global warming, ensuring women’s participation and promotion of small-scale enterprises are all part of green financing. This is clearly an area where Islamic Banking can play a pivotal role,” he was quoted by Gulf Times as saying.
Seetharaman, however, noted that Islamic banking is currently in its infancy and faces several challenges and added that young people should be encouraged to take up these challenges to ensure this significant economic system carries through and plays a leading role in the current global financial stage.
The Tourism Secretary of the Municipality of Marbella, José Luis Hernández, has stated that they have reached an agreement with the United Arab Emirates and Kuwait to create a promotional campaign to familiarize the Gulf states with Málaga.
Moreover, contacts have been established with Emirate Airlines, which is interested in creating direct flights to Málaga. Qatar Airlines is also interested in the Málaga Airport. These connections could improve tourism in the Marbella area, but Hernández stated that these flights won’t be available starting this summer, as time is needed to handle all the details of this operation.
Several other contacts were established with investors interested in taking over some of the luxury resorts in Marbella.
The International Tourism Fair in Madrid offers great possibilities for development and business ventures between the Gulf states and Costa del Sol.
Dubai Islamic Bank (DIB) plans to launch the UAE’s first real estate investment trust.Investors can buy into portfolio of properties, which pay income from rents and sales just like a mutual fund profits from equities. This could prove useful for the revival of the Dubai property market.
Overseas investors seeking to access local property market will handle business easier and the Dubai Islamic Bank would be able to tap into liquidity, which is necessary for the aftermath of the global economic crisis.
It has been developed as part of a joint venture by DIB and Eiffel Management, a French asset management company.
“As the Middle East economy recovers from the global economic slowdown, international investors, and those in the region, are looking for long-term, low-risk and secure investments in the Middle East. Emirates REIT can offer all of these advantages,” said Sylvain Vieujot, the chief executive of Eiffel Management and vice chairman of the Emirates REIT.
It is expected that the investment trust’s size will be around €1 billion. The REIT will be listed on NASDAQ Dubai and is also planned to have a secondary listing on another market, either in Europe or Asia.
Up to 49 per cent of the trust will be open to overseas investors.
The company’s portfolio includes a handful of properties formerly owned by Deyaar Development, a unit of DIB, and other buildings outside designated free zones.
The REIT will earn its “Sharia-compliant” label by avoiding investments in properties linked to industries forbidden under Islam, such as gambling, alcohol or the arms trade.
According to Citigroup, an unnamed government new to Islamic finance is scheduled for its first sukuk issue before the end of March.
There are no further details, except the fact that the size of the issue is not known yet. Also, Citigroup is working in bringing islamic banking to new market in the course of 2011, like the sales of Islamic debt from Turkey.
Declining to provide further details, Dubai based Hulusi Horozoglu said: “The size of the issue is not decided yet.”
The new Turkish issues will probably be bigger than the $100 million sold by Kuveyt Turk Katilim Bankasi AS, a bank, in August, he said.
Under the slogan “I need Spain”, a new campaign for attracting tourists from the Middle East to Spain was launched in Dubai. The first step for getting Arab tourists to come to Spain was the inauguration of direct flights from the Emirates to Madrid.
The target is to attract 50-60 thousand tourists annually. The new Gulf Cooperation Council campaign has been specifically designed to target the Middle Eastern tourist, with one ad depicting a Middle East couple, and abaya-clad lady shopping in one of Spain’s upmarket designer stores.
Clearly, the creation of the ads posed some challenges in the effort to create ads that were complaint with the culture.
Along with the marketing campaign targetting consumers, the Spanish Tourist Board was also planning a big push to work with the trade in the form of fam trips and training programmes.
According to Enrique Ruiz de Lera, head of marketing and branding at Spain’s Ministry of Industry, Tourism and Trade, the most popular destinations for tourists from the Middle East are Andalusia and Costa del Sol. He emphasized the fact that there is much more to see in Spain.
We think that this is a smart move. Middle Eastern tourists are bound to bring their money into the country and some of them might be interested in doing business here.
This is one example of an ad. An Asian couple travelling in Spain:
Islamic banking, which accounts for 17% of the Gulf Cooperation Council banking assets, is expected to grow annually at 15%-20%, according to Kuwait Finance House.
Over the years, Islamic banking in the Gulf Cooperation Council region has witnessed remarkable growth and seen tremendous demand for its products and services, the report said. The share of Islamic banking sector continues to increase, accounting for around 16.6% of the total assets of the region’s banking system as of end-March 2010.
Kuwait’s Islamic banking sector accounted for 34.3% of the country’s total banking assets, followed by Qatar (19.3%), Saudi Arabia (15.9%), the UAE (14.0%), and Bahrain (10.9%).
The Gulf region’s high GDP per capita at $27,937, coupled with its young population (30% of the population falls under 15 years and 66.7% of the population between 15-64 years), will help support consumer spending and investment which would in turn increase the demand for Islamic financial products and services moving forward, the report said.
Kinos Group has signed several agreements with important partners within the Gulf Cooperation Council and is collaborating in the project entitled “The Market Development Plan. Planning 2009-2011. The Gulf Countries”. The document is issued by the Ministry of Industry, Commerce and Tourism in collaboration with The Spanish Confederation of Business Organizations. It comprises strategies and actions necessary for the promotion of economic relations between Spain and the Gulf Countries (Bahrain, Saudi Arabia, Oman, Kuwait, Qatar and the United Arab Emirates).
Islamic banks in the UAE recorded a decline of around 17 per cent in their net profits in the first half of 2010 despite a sharp rise in the profits of the Abu Dhabi Islamic Bank.
The combined net income of the Islamic banks dropped to nearly Dh1.24 billion in the first half of 2010. These earnings accounted for 13.4% of the total net profits of the UAE’s banking sector.
In comparison to the first half of 2009,the total net earnings of the UAE banks dropped by 12.6%, from a reported Db9.22 billion to Db9,04 billion. Analysts said the decline in the profitability of the UAE banking sector was due to high provisions and slackening credit.
Individually, several national banks reported growth in their net income in the first half of 2010, including the government-controlled National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB). The UAE’s largest bank, Emirates NBD, reported a 51 per cent fall in profits because of its exposure to Dubai World. From Dh2.111 billion, its profits plunged to Dh1.513 billion.
Central Bank figures showed UAE banks are pushing ahead with a post-crisis provisioning drive because of their exposure to Dubai World, the domestic real estate sector and two Saudi financially troubled family businesses.
Islamic banking is one of the fastest growing segments in the financial industry, tracking a 10-15% growth over the past decade. Islamic banking assets are estimated to grow an average 15% per year.
The growth rate is attributed to the increasing demand for Islamic banking services by Muslims and the appeal of the financial services to non-Muslim investors
Islamic banking now forms a significant part of the global economic picture with presence in 75 countries. The Middle East accounts for nearly 60% of global Islamic banking assets, with the top three banks Al Rajhi bank, Bank Saderat Iran, and Kuwait Finance House.
While the Middle East continues to be the nerve center, the Malaysian financial sector has managed to build a key position as an Islamic finance hub.
Outside of the Islamic world, the United Kingdom has emerged as the epicenter for Shariah-compliant finance. HSBC holdings has offered Islamic equivalent mortgages and the Islamic Bank of Britain is the first Islamic bank in a non-Muslim country.
Several other non-Muslim banks have launched Islamic banking operations: Citigroup, which arranged Islamic transactions in Europe, Asia, the Middle East. , Deutsche Bank announced a joint venture with Bahrain’s Ithmaar Bank and Dubai’s Abraaj Capital.UBS has Islamic finance operations in the Middle East as well.
Khalaf al Habtoor, a leading businessman in the UAE, gave an interview for the Arabian Business magazine. According to him, the fall of Lehman Brothers didn’t mark an important turning point in the Gulf region’s financial evolution.
He states that the region was taken down by poor management of the unprecedented growth. He also emphasizes the fragility of the financial institutions from the Gulf.
He says to Arabian Business : “The Arab world was fragile because they didn’t have the proper structure [in place]; the economic structure was not well built.” These opinions were given at the second anniversary of the collpase of Lehman Brothers, which caused the beginning of the international economic crisis.
He also doesn’t place the single blame to Lehman Brothers, but says that some other financial institutions provoked this situation.
The international crisis hit the world badly and it still hasn’t fully recovered. The Gulf region has been affected by the crisis, but it continues to face it.
Lehman Brothers filed for bankruptcy on the 15th of September in 2008, having a debt of $613 billion. The Federal Reserve refused to bail it out. Click here to check out a timeline of the Lehman Brothers crisis.
Bahraini airline Gulf Air is considering a partnership with British Airlines and Spain’s Iberia Group. A spokeswoman for the company declared the Gulf Air is keen on working with the airline tycoon.
Last week British Airline chief executive Willie Walsh said the airline and Iberia have shortlisted 12 airlines, including one from the Middle East for possible acquisition.
The two carriers are planning a merger and joint venture with American Airlines which would lead to the creation of International Airlines Group (IAG).
The spokeswoman declared to the National newspaper that “Gulf Air has not been approached regarding this initiative. However, it is something the company would consider positively at the appropriate time”. The airline stressed that a central element of their strategy is to consider an alliance and they are looking for a suitable partner.
Islamic Banking Spain 