Total Islamic assets rise
The total assets of the Islamic banking industry stood at US$12.94 billion (RM47.1 billion) in 2005, accounting for 11.3% of Malaysia’s total banking assets.
Guidelines for securities placement
The Securities Commission introduced a set of enhanced guidelines aimed at promoting greater protection for shareholders and investors, which came into effect on the 27th April 2006, replacing existing provisions in the policies and guidelines on issue/offer of securities.
Cagamas to grow Islamic finance business
Cagamas intended to grow its Islamic finance business and to provide more innovative and diverse Islamic financial products.
Chairman Ooi Sang Kuang said Islamic banking was set to expand further, while the larger number of investment banks would intensify competition. He also noted that the national mortgage corporation was expected to grow in strength in the field of securitization in 2006, adding that the growth potential for securitization in other segments of the Malaysian market were promising. “Therefore, overall growth trend in earnings is expected to materialize in the next couple of years as sufficient returns from securitization and Islamic finance filter through.”
SC approves Islamic PDS issues
Of the 26 private debt securities (PDS) issues approved by the Malaysian Securities Commission (SC) in the first quarter of 2006, 61.5% were for Islamic securities.
This total, which excluded issuance by Cagamas, reached a total approved issuance limit of US$4.1 billion (RM14.9 billion). The remaining 38.5% were for conventional PDS issues. The number of approved PDS issues in the first quarter increased by about 62.5% on the number of issues approved in the same quarter of last year.
BUTM aims for 20% growth
BIMB Unit Trust Management (BUTM), a wholly-owned subsidiary of Bank Islam Malaysia, targeted a 20% growth in sales for its newly re-branded Islamic trust funds this year. The re-branded BUTM funds included the Islamic ASBI Dana Al-Fakhim (previously ASBI Dana Bon Islam).
Bank Pembangunan issues notes
Bank Pembangunan Malaysia issued US$274 million (RM1 billion) in notes pursuant to its Islamic and conventional 30-year medium-term notes programs of an aggregate amount of up to US$1.92 billion (RM7 billion) established earlier this year. Through a book-building process, which began on the 12th April, it attracted US$2.64 billion (RM9.62 billion) in bids.
Good collection from funds expected
CIMB Principal Asset Management expected its fixed income funds, Xcess Income Fund and Lifetime Dana Fayyad, to garner US$54.63 million (RM200 million) and US$27.31 million (RM100 million) respectively within three months.
CIMB-Principal to merge
CIMB-Principal Asset Management announced it would be merging with SBB Mutual and SBB Asset Management, to make it the largest asset management company in the country.
Affin Holdings reorganized
Affin Holdings underwent a corporate reorganization exercise where the new structure would see Affin Islamic Bank coming directly under Affin Holdings, instead of under Affin Bank. StanChart offers Islamic derivatives
Standard Chartered Bank Malaysia (StanChart) offered a comprehensive Islamic derivatives solution. Based on the globally accepted Islamic concept, it comprised the Islamic profit rate swap, Islamic cross-currency swap and Islamic forward rate agreement.
StanChart’s head of Islamic banking Azrulnizam Abdul Aziz explained that the Islamic profit rate swap was an option for customers to swap fixed rate profit to floating rate profit and vice versa, while the Islamic cross-currency swap best served the segment of customers who required to manage exposure of multiple currencies.
Islamic bonds size to be increased
Bank Negara Malaysia planned to increase the amount of the three-year Islamic bonds that would be opened for sale on the 13th April 2006. Sovereign bonds fell after the Government announced that it would sell US$950 million (RM3.5 billion) of Islamic bonds, due in 2009.
Islamic dual currency instrument
HSBC Bank Malaysia introduced the country’s first Shariah compliant structured investment product to further complement the success of its Islamic banking business.
The product was expected to appeal to existing customers who were already investing in dual currency structured investments, or for those with a need for various foreign currencies such as for overseas education. It would also be an alternative for Malaysian institutions that wanted to manage their foreign currency exposures with a Shariah compliant risk management instrument.
BCHB to regionalize
With a potential fund size of US$3.92 billion (RM14.4 billion) arising from its proposed merger with Southern Bank (SBB), Bumiputra-Commerce Holdings (BCHB) was set to regionalize its asset management business, given the tremendous potential in markets such as Jakarta and Singapore.
The company obtained approval to distribute four Islamic mutual funds in Singapore under CIMB-Principal Asset Management, but decided to corporatize the asset management units in Singapore and Jakarta under CIMB-Principal and build a stronger distribution network.
Rise in Islamic debt financing
The Malaysian bond market was expected to continue its aggressive stance in 2006 with an estimated US$10.36 billion (RM38 billion) to US$10.9 billion (RM40 billion) worth of new debt to be issued, of which 80% was expected to be Shariah compliant.
IFSB admits new members
The Islamic Financial Services Board (IFSB) Council agreed to admit five new institutions to its membership, bringing the total to 88 members, comprising regulatory and supervisory bodies, international inter-governmental organizations and market players.
Qatar Financial Center Regulatory Authority was admitted as an associate member, while Kuwait Finance House (Malaysia), Industrial Development Bank of Sudan, First Investment Company Kuwait and the Securities House Kuwait were admitted as observer members.
TAKAFUL briefs
Takaful Malaysia to enter Kuwait
Syarikat Takaful Malaysia would enter the Kuwaiti Takaful market to add to its growing overseas business. Takaful Malaysia was already providing consultancy services to a Kuwaiti company on the setting up of Takaful operations there.
Takaful market penetration rises 5.6%
Market penetration in the local Takaful industry rose to
5.6% in 2005 from 5.1% previously, underpinned by a strong domestic economic growth.
Bank Negara Malaysia said other factors which contributed to the industry’s strong performance included a combined family and general Takaful net contributions which grew by 18.8% to US$355 million (RM1.3 billion) from US$300 million (RM1.1 billion) in 2004. This increased the Takaful share to 5.4% from 5.1% in 2004 of the combined net contributions in the insurance sector.
Total assets of the Takaful industry increased by 16.9%
to US$1.6 billion (RM5.9 billion) in 2005 from US$1.36 billion (RM5 billion) in 2004, accounting for 5.7% of the total assets in the insurance sector last year compared with 5.6% the year before.
BNM vigilant over Takaful
Bank Negara Malaysia (BNM) said it would step up its vigilance of the insurance and Takaful industry’s state of readiness to cope with the changing environment both in the market and industry regulations.
Governor Dr Zeti Akhtar Aziz said as significant impending regulatory changes drew closer for implementation and market conditions continued to evolve to reflect broader-based competition and multi-faceted risk dimensions, an orderly transition of market-led adjustments was vital to ensure that the adjustments did not de-stabilize the market or undermine public confidence.
Maybank Takaful investment plan
Maybank’s latest Takaful fund – Takaful Capital Protection Plan II – was to invest at least 70% into fixed income and the balance into equities from the Dow Jones Islamic Market World Index.
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