November , 2010 Bahrain Issue 00 Middle East

“Building a new growth paradigm – Islamic bank-ing and the new global financial landscape” The three day event which ends on the 24th of November is con-vened under the patronage of HRH Prince Khalifa Bin Salman Al Khalifa, the Prime Minister of the Kingdom of Bahrain and held under the support of the Central Bank of Bahrain. Convened under the theme “Building a new growth paradigm – Islamic banking and the new global financial landscape”, the event will kick-off tomorrow with series of prag-matically focused pre-conference workshops and executive briefing sessions led by experienced and re-spected industry experts, who will place a range of complex themes in a practical framework, enabling a deeper understanding of the critical issues facing the Islamic finance industry. Announcing their partici-pation at the event, Arshad Khan, Chief Executive Officer and Manag-ing Director of the Bahrain Financial Exchange said that “as the Strategic Exchange Partner of the WIBC 2010, the Bahrain Financial Exchange (BFX). We are looking forward to showcasing our findings and insights into this dynamic market by address-ing the conference participants with a presentation on, ‘Exchanges: the catalyst for growth in Islamic Finance – BFX leading the way’.

WIBC: The World’s Largest Gathering of Islamic Finance Leaders

Continue to page 3 Read Story on Page 10

page 6page 4page 2 page 8 page 10Islamic Banking GCC Upbeat Special Report Global HighlightsLocal News

Islamic banking and finance indus-try has crossed regional boundaries and come to be accepted on the global stage, due to the demand for an alternative to western banking products structured along ethically-aware Islamic principles. The global Islamic finance industry is now worth more than $1 trillion in terms of assets, having quadrupled in the last three years. Although this figure remains just a fraction of global assets, given a world Muslim population of around 1.5 billion people, the industry has enormous potential, and some of the largest western-based banking, fund management and insurance groups have now launched banking facilities compliant with Shari’a law. Over the past five years, the Islamic Financial Services industry has made con-siderable progress and is growing at a faster rate than conventional banking. The various segments of the industry and the related intellectual capital, institutions and policy

initiatives have developed rapidly and at-tained a degree of maturity and international recognition. Further growth of the industry is dependent on the establishment on new Islamic banks and the integration of the in-dustry within the existing financial system with greater regulatory guidelines based on the Shari’a. One key shari’a ruling on economic

activities of Muslims is the strict and explicit prohibition of Riba, most usually described as usury or interest. Shari’a scholars con-sider exchanging interest payment within the conventional banking system as a type of Riba. Modern Islamic banking has devel-oped mechanisms to allow interest income to be replaced with cash flows from produc-tive sources, such as returns from wealth generating investment activities and opera-

tions.

The concept of Sukuk In Islamic finance, the sukuk pro-vides a good example of how the market has grown in recent times. As concepts such as interest (riba) and the trading of debt are prohibited in Islamic finance, conventional bonds that are offered by western banks are unacceptable. Sukuk is the closest thing to a bond in Islamic finance, the difference be-ing that its returns are strictly linked to the

asset that has been purchased. In this way it has some similarities to an asset-backed security. The Islamic Law of Contracts plays a pivotal role within the Islamic financial sys-tem. Islamic commercial jurisprudence con-sists of principle and rules that must be ob-served for transactions to be acceptable in Islam; and the Islamic Law of Contracts is at

the heart of this. One important principle is contractual certainty. Under this body of law, uncertainties or ambiguities that can lead to disputes may render a contract void under Shari’a. While some of these principles and rules are based on clear and explicit rulings of shari’a, others are derived from shari’a scholars’ interpretations and understand-ing of the law, known as Fiqh, as set out in the Qur’an. These interpretations can and do differ between shari’a scholars. Certain contractual terms deemed to be valid un-der shari’a by the scholars of one school of Fiqh may not be acceptable to scholars from another school. This has had significant im-plications for the development of Islamic fi-nance.

Basel II and Islamic finance Risk management in Islamic fi-nance can be looked at as a challenge, as standards such as Basel II were prepared without much thought about how to inter-pret Islamic financial instruments. Looking at Basel II implementation, different coun-tries are at different stages. Bahrain and Saudi Arabia have set a target of 2008 for their banks to be Basel II compliant, while the Qatar National Bank is already report-ing the monthly capital adequacy ratio to its central bank. It is this sort of rich diversity that means that both corporates wishing to invest in Islamic finance instruments and western banks wanting to set up Islamic fi-nance subsidiaries or take Islamic products to existing foreign markets need to pay a great deal of attention to every last detail. There are challenges presented by Islamic banking that have an effect on slow-ing down Basel II implementation, such as availability of data and the unique risks of Islamic finance. Profit and loss sharing shifts the risks in the institution to investment de-positors. Islamic banks, by their nature, take on a lot of risks that are usually borne by equity investors. With regard to Islamic finance’s ap-proach to various types of risk, unlike interest, some forms of gains in capital are permitted under shari’a law. In Mudaraba contracts, the holder of the investment account shares the profit and also bears, at the same, all the market risk as well as the credit risk of that position. The investor provides capital and therefore is eligible to share the profit, rather than receiving interest that is initiated from the banking activities and products. Of course the potential downside of this for the investor is that they also share the risk exposure and so could make a loss. In terms of credit risk, most Islamic banks favour the standardised approach, one of two approaches suggested by the Basel II committee.

The challenges for growth As well as creating opportunities, the growth in Islamic finance is also posing a challenge to the sector. For example, Islamic finance institutions rely on Shari’a commit-tees of scholars for advice and instruction on their services - as the number of institu-tions increase, the relatively small number of scholars is being stretched, and there is pressure to ensure that a new generation is being groomed to handle the increasing demand. Islamic banks in the Middle East and Asia are also facing competition from western banks that are setting up their own Islamic products to compete in the growing marketplace. There is a diversity of opinion as to whether particular or products are Shari’a compliant. This means that some product and services may be approved as being shari’a compliant by some Shari’a scholars but not by others. On a global level, the ap-proval of Islamic firms’ products and servic-es may also depend on the jurisdiction they are to be offered in. For Islamic finance providers, gain-ing approval from the Shari’a Supervisory Board [SSB] on shari’a compliance of a product before its launch is vital. Equally im-portant for firms is recognizing that shari’a compliance is a continuous process, mean-ing that their products and services are adequately monitored. Unlike conventional finance, this has implications for an Islamic firm’s prudential requirements as well as conduct of business: some products, if they breach shari’a compliance rules, can ad-versely affect a firm’s solvency by convert-ing an asset into a liability on the balance sheet. Effective monitoring of shari’a compli-ance by an Islamic firm may involve reinforc-ing more remote SSB oversight through the Internal Shari’a Audit process in addition to developing more knowledge and expertise within the firm. The Islamic economic model has

Islamic Banking and Financegaining global acceptance By: GBCorp Media Center

November, 2010

been developed over time, based on the rul-ings of shari’a on commercial and financial transactions. The Islamic financial frame-work, as seen today, stems from principles developed within this model, emphasizing fairness. This is reflected in the requirement that everyone involved in a transaction makes informed decisions and is not misled or

cheated. On a macro-economic level, the Islamic model aims at social justice and the economic prosperity of the whole communi-ty; for example, specific shari’a rulings seek to reduce concentration of wealth in a few hands, which may be detrimental to society. Islam encourages and promotes the right of individuals to pursue personal economic wellbeing, but makes a clear dis-

tinction between what commercial activities are allowed and what are forbidden. For ex-ample, transaction involving alcohol, pork related products, armaments, gambling and other socially detrimental activities. The current global crisis has again drawn positive atten-tion to the fundamentals of Islamic

banking and is sure to generate greater awareness as well as help the Islamic banking industry gain global acceptance thanks to its ethical roots and strong regulatory guidelines.

3November, 2010

We further understand the need for training in this field of finance and are delighted to be hosting a pre-conference workshop on the ‘Evolution of Murabaha: From Physical To Electronic Trading’. WIBC 2010 will feature more than 60 leading industry partners and exhibitors showcasing their latest innovations at the World Islamic Banking Exhibition organised along the sidelines of the conference. The inaugural plenary session of WIBC 2010 which will be held on Monday will feature high-powered discussions by key regulators in the Islamic finance indus-try on strengthening industry foundations to sustain growth in a challenging climate. This will be followed by a CEO & Industry

Leaders’ Power Debate which will examine and assess growth prospects for the con-sumer banking, corporate banking and in-vestment banking markets.David McLean, Managing Director of the World Islamic Banking Conference said that “this years event is the most crucial in its 17 years history as it comes at a juncture when the major industry players are seeking to re-visit key strategies that will focus on charting a new growth path for the Islamic finance industry in light of the new global financial landscape that has emerged post crisis.” A key highlight of WIBC 2010 is the specially convened Guru keynote session featuring world renowned investment leader and emerging markets guru, Mark Mobius, Executive Chairman of Templeton Emerging Markets Group. This session exclusively fo-cused on shifting perspectives from crisis to recovery to sustainable growth will address new realities in the global financial system and implications for Islamic banks. Speak-ing ahead of his session Mark Mobius noted that “since the bottom of the market in early 2009, prices have risen from those very low levels. Nevertheless attractive valuations can be found since, on the average, those valu-ations are in the middle of their long term

range.” He also said that “economic growth in emerging markets is sustainable in view of their strong fundamentals with high pro-ductivity, low debt to GDP ratios, and high foreign exchange reserves.” In a statement issued, the organiz-ers of WIBC said that the new and updated ‘World Comes to WIBC Initiative’ will this year feature a series of country pavilions and an exclusive country focus roundtable and will further explore new growth opportunities that are emerging in the most dynamically evolving and exciting high-growth markets for Islamic finance. Richard Thomas, Chief Executive Officer of Gatehouse Bank said that they “are excited about the opportu-nities presented in an improved trade and economic outlook worldwide, and are keen to explore new territories also where Islamic finance is now gathering strong momentum. As well as providing a forum for natural Is-lamic jurisdictions in the Middle East and Asia, we welcome its wider global engage-ment to help move the industry beyond niche to its absolute relevance in the broad-er financial services spectrum.” MEGA BRANDS. MEGA CLIENTS. MARKET LEADERS.Shaping the Future of the Global Islamic Finance Industry Since 1993

Abdul Muhsin (Marketing & Media Manager)

David Mclean

Mark Mobius

From page 1...Building

More than 1,200 industry leaders set to gather in

Bahrain to explore new opportunities for islamic

banking and finance

Central Bank of Bahrain (CBB) Governor Rasheed Al Maraj will be the keynote speaker at a dinner organised by the Bahrain British Business Forum (BBBF). ‘It is a great honour to have Al Maraj speaking at our dinner for WIBC and Bahrain hosting this conference reflects the importance of the kingdom as a fi-nancial centre and the growing interest

from around the world in Islamic finance,’ said BBBF chairman Khalid Al Zayani.‘It is also a great pleasure for me to wel-come our colleagues from UK Trade and Investment (UKTI) and from the recently established UK Islamic Finance Secre-tariat, who are promoting UK expertise in Islamic finance, and the BBBF looks forward to developing opportunities for both countries.’‘Bahrain retains its important position for Islamic finance and the BBBF wants to support the British focus on this area. ’ said BBBF financial services interest group head Premal Patel.

Ithmaar Bank, an Islamic, retail-focused bank, reported a profit attributable to the shareholders’ for the third consecu-tive quarter, and announced year-to-date profits of $11.1 million as compared to a loss of $80.3 million during the same pe-riod last year. The announcement, by Ithmaar Bank Chairman His Royal Highness Prince Amr Mohammed Al Faisal, follows the re-view and approval, by the Bank’s Board of Directors, of the Bank’s consolidated finan-cial results for the nine month period ended 30 September 2010. “On behalf of the Ithmaar Bank Board of Directors, I am pleased to report that the Bank continues to report profits, despite challenging market conditions,” said HRH Prince Amr. “The Bank’s year-to-date results indicate that our core retail and corporate banking activities remain a stable source of recurring income and that costs are under control,” he said.

“Ithmaar’s financial results for the nine month period ended 30 September 2010 show a net profit of $13.4 million, of which $11.1 million is attributable to shareholders of the Bank,” said HRH Prince Amr. “This compares to a loss of $82.6 million for the same period last year, and reflects the Bank’s growing success,” he said.“Ithmaar Bank’s balance sheet continues to remain strong, at $5.5 billion, and total shareholders’ equity, at $796 million,” said HRH Prince Amr. “Ithmaar has continued to build prudent impairment provisions which amounted to $29.4 million for the nine month period ended 30 September 2010, compared to $53.1 million in the same period last year,” he said.Ithmaar Bank Chief Executive and Mem-ber of the Board, Mohammed Bucheerei said that, following its transformation into an Islamic retail-focused bank, Ithmaar has focused on further diversifying its liquidity base by strengthening its interbank and

institutional relationships and on growing its customer accounts by launching new customer-focused products and services.“Ithmaar’s year-to-date results, made all the more significant by the challenging market conditions in which we operate, reflect the success of the Bank’s efforts to develop its core retail and corporate banking business - and unrestricted investment accounts have improved significantly, by 37 percent, to $1.3 billion,” said Bucheerei. “Ithmaar’s profit attributable to shareholders of the Bank for the three month period ended 30 September 2010 show a net profit of $6.5 million, which compares to a loss of $32.6 million during the same period last year. The net profit for the three month period includes $29.4 mil-lion which represents profit arising from the sale of certain assets to a related party,” said Bucheerei. “Total income for the nine month period ended 30 September 2010 remains strong at $140.2 million, an in-

crease of 27 percent compared to the total income of $110.4 million reported for the same period last year. The net profit for the nine month period includes $53.5 million which represents profits arising from the sale of certain assets to a related party. This significant growth in revenue was achieved in parallel with a reduction in costs: operat-ing expenses, at $106.3 million, are eight percent lower than the $114.8 million re-ported for the same period last year,” he said.

“Ithmaar has mandated a leading investment bank to assist exit from certain non-strategic investments,” said Bu-cheerei. “This will allow us to continue our efforts both on expanding Ithmaar’s range of retail products and services as well as its delivery channels and on extending the Bank’s geographical reach across the GCC region by offering a wide range of corpo-rate banking services,” as Mohammed Bu-cheerei conclude.

Ithmaar reports $11.1 million in profits

Bahrain’s Islamic finance expertise to be probed

4 November, 2010

Gulf Islamic finance expertise boosted with Bahrain launch of IFAAS Advisory Services Islamic Finance Advisory & As-surance Services (IFAAS), the European Islamic finance consultancy, today an-nounced the opening of its Gulf office in Manama’s prestigious Bahrain Financial Harbour. Local businesses have ex-pressed interest in its Shariah consultancy services based on its extensive knowl-edge and experience in Islamic finance operations with services incorporating European standards. By working with IFAAS, businesses in the Gulf have direct access to international Islamic finance expertise and IFAAS’ ability to facilitate

transactions between Middle Eastern investors looking to develop opportunities with European corporations. Commenting on IFAAS’ Gulf launch, Farrukh Raza, managing director, IFAAS, said, “Bahrain has the reputation of being the hub for the Islamic finance industry in the Gulf. I offer the IFAAS team a warm welcome to Bahrain, and the Gulf region overall,” said His Excellency Jamie Bowden, British Ambassador to Bah-rain. As a trusted player in the European Islamic finance landscape, I am confident that IFAAS’ official arrival to the Gulf will offer local businesses a valued service helping them to develop their local and overseas Islamic finance offering.” IFAAS has been at the forefront

of the development and growth of the European Islamic finance industry. IFAAS’ arrival in Bahrain is a real enhancement to the regional financial industry and Bahrain’s position as an Islamic finance hub. Presently, there are 29 Islamic banks (whose assets under management total $16.4bn), 15 Islamic insurance compa-nies (Takaful), and 1 re-Takaful company operating in the Kingdom. Bahrain also plays host to a number of organizations central to the development of Islamic finance, including the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), the General Council for Islamic Banks and Financial Institutions (CIBAFI), the Interna-tional Islamic Financial Market (IIFM) and the Islamic International Rating Agency (IIRA).

IFAAS now in Bahrain

REGENCY AD

The UAE central bank said yester-day local Islamic banks have started partici-pating in the auction of newly-launched Sha-riah-compliant certificates of deposit (CDs), which aim at helping the lenders manage cash. “Islamic banks operating in the UAE have started participating in the auction of these certificates for tenors from one week to 12 months,” the central bank said in a state-ment issued yesterday. The Shariah-compliant CDs are the first Is-lamic liquidity management tools issued by the central bank, according to the statement. The central bank said in a circular

posted on its website last week that the Shariah-compliant CDs would serve as a monetary policy tool and as a liquidity management tool for local Islamic banks. The participating banks’ profit has been set at 2.5% per annum on deferred payment basis, the central bank said last week. The certificates’ maturities range from one week to five years and will be de-nominated in UAE dirham, US dollars and euros. The Shariah-compliant CDs are based on the murabaha concept and lend-ers that participate in the programme must first sign a Commodity Murabaha Deposit

Master Agreement with the central bank, according to last week’s circular.

A murabahah transac-tion is a sale and deferred-payment agreement based on an asset in which the cost and profit margin are pre-agreed between a bank and its customer. Transactions in Islamic finance are based on the exchange of assets rather than interest to comply with Shariah principles.

SAUDI Arabia’s Al Rajhi Bank may be a late-comer in affluent banking in Malaysia, but the bank is confident of capturing a size-able share of the lucrative segment with its syariah-compliant product suites that meet customers’ needs. Al Rajhi Bank Malaysia chief ex-ecutive officer Ahmed Rehman said affluent banking in Malaysia is a huge business with great potential.Players in local affluent banking sector in-clude Citi Gold, HSBC Premium and CIMB Preferred. “We have a niche as our products are 100 per cent syariah-compliant, catering

to all ethnic groups.“Differentiation (from the competitors) will come from product space and compliance in syariah,” he told Business Times in an in-terview in Kuala Lumpur recently. Al Rajhi Bank, which started opera-tions in Malaysia four years ago, launched its first affluent banking branch in Bangsar last month.Ahmed said the bank currently has three to four products in the pipeline.“We will build a suite of products. We will do products wrapped around gold and struc-tured products for children and retirement,” he said, adding that the bank already has one unit trust fund. The bank is also considering bring-ing Saudi funds to Malaysia, where they will be made cross-border funds. Ahmed sid there are 14 funds man-aged by Al Rajhi Bank group in Saudi Arabia. “The income and growth funds are

Saudi-centric, but we can customise the products for customers here,” he said. Ahmed said in affluent banking, there is not much room to manoeuvre in ser-vices because affluent customers are used to good services.Ahmed said Al Rajhi affluent banking branch has relationship managers who possess dif-ferent skills compared to bankers in normal branches.Ahmed is upbeat with the location of the bank’s flagship affluent banking centre, which has elements of exclusivity and con-venience.

Bonds in developing nations out-performed Shariah-compliant notes for the last six months as global sales of sukuk dropped 29 percent to $13.7 billion. “It will be very difficult for sukuk to catch up,” Mohd Noor Hj A Rahman, head of the Islamic fund management unit at OSK-UOB Unit Trust Management Bhd. overseeing about 250 million ringgit ($81 million) of Shariah-compliant assets in Kuala Lumpur, said in an interview. Sales of Islamic bonds, which pay asset returns to comply with Shariah’s ban on interest, dropped this year as defaults, debt restructuring and fall-ing property prices in the Middle East hurt investor confidence. Issuance from Malay-sia, the world’s biggest sukuk market, fell

31 percent as companies cut infrastructure spending following last year’s recession. Shariah-compliant bonds returned 12.6 percent this year, according to the HSBC/NASDAQ Dubai US Dollar Sukuk In-dex. Debt in emerging markets gained 16 percent, JPMorgan Chase & Co.’s EMBI Global Diversified Index shows.The yield on Malaysia’s 3.928 percent Is-lamic note due in June 2015 climbed 18 basis points for the week to 2.52 percent, according to prices provided by Royal Bank of Scotland Group. Yields on five-year Trea-suries rose at a slower pace, widening the Malaysian sukuk’s spread to U.S. govern-ment debt to 149 points from 138 points a week ago.

The extra yield investors demand to hold Dubai’s government sukuk rather than Malaysia’s narrowed 19 basis points this week to 367, according to data com-piled by Bloomberg.Sales of ringgit-denominated sukuk de-clined to 21.3 billion ringgit so far in 2010 compared with 30.7 billion ringgit in the year-earlier period, the data show.

Costs to Issuers The difference between the aver-age yield for sukuk and the London inter-bank offered rate narrowed six basis points this week to 332 basis points, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index.

Shariah-compliant CDs auction successful

Sukuk Trails Emerging Debt as Falling Issuance Saps Trade

6

Al Rajhi BankLATE COMER IN AFFLUENT BANKING By Hamisah Hamid

Gulf Finance House, one of the leading in-vestment firms in Bahrain, held an extraor-dinary annual meeting in the presence of 31.78 per cent of the shareholders.The issues featuring on the agenda of the meeting, at Al Areen Palace and Spa, were discussed and approved. However, some shareholders voiced their objection regarding certain issues.Concerned authorities are now drawing up a detailed plan to assess the level of objections and their potential impact on the final approval, the bank announced yesterday in a statement posted on the Bahrain Stock Exchange website.

The Central Bank of Bahrain (CBB) an-nounces that the monthly issue of the short-term Islamic leasing bonds, Sukuk Al-Ijara, has been oversubscribed by 215%.Subscriptions worth BD 21.5 million were received for the BD 10 million issue, which carries a maturity of 182 days.The expected return on the issue, which begins on 18t November 2010 and ma-tures on 19 May 2011, is 0.82%.The Sukuk Al-Ijara are issued by the CBB on behalf of the Government of the King-dom of Bahrain.This is issue No. 63 (BH000A1AQVJ6) of the short-term Sukuk Al-Ijara series.

CBB Sukuk Al-Ijara Oversubscribed

November, 2010

7

The market for Islamic Bonds, or sukuk, became an indicator for the entire Islamic Finance industry. Not only has the Dubai World debt restructuring removed some doubts on Islamic Bonds, but the market has also gained pace in general.

Sukuk has become a common financial instrument in East and West, for long-term and short-term financing. In October, the Dow Jones Citigroup Sukuk Index added 1.12% (as of the close of trading of October 25th). This does not seem enough to at-tract investors as Shariah-compliant equity indices offered more attractive returns, such as the Dow Jones Islamic Market (DJIM) Kuwait Index, which rose 4.41% in October, or the Dow Jones Dubai Financial Market (DFM) Index, as the latter surged 5.88%

higher. But the comparably lower return of the Dow Ones Citigroup Sukuk benchmark composite, which measures the perfor-mance of investment grade, dollar-denom-inated sukuk, is not representative of the comeback of Islamic Bonds.

Dubai World marks a turning point On September 10, Dubai World announced an agreement with its credi-tor banks to restructure $24.9bn. Of this amount, a share of $14.4bn is owed to creditor banks “The conclusion of the Dubai World’s debt restructuring saga is a credit positive development for the UAE bank-ing system,” Moody’s has said, and bank shares across the GCC surged since then. In recent months, sukuk issuances were an-nounced and executed at breakneck speed. Nakheel’s inability to pay off a $3.52bn su-kuk raised eyebrows worldwide in Novem-

ber 2009. Only a $10bn bailout from the Abu Dhabi government saved Nakheel from default.

Banks jump on the bandwagon The sukuk market’s revival is taking place across the region. In Istanbul, Kuveyt Turk’s three-year $100m Islamic bond was launched as the first sukuk in Turkey. Qatar Islamic Bank’s $750m sukuk from end of September received $6bn in bids. The five-year Islamic bonds were priced to yield 237.5 basis points above similar maturity midswap. Abu Dhabi Islamic Bank, also known as ADIB, also aims to sell a five-year sukuk reports revealed on October 11. Due to the action in the market, Samad Sirohey, Dubai-based CEO of Citi Islamic Investment Bank, expects the global sukuk volume to grow further. The value of sukuk issued in 2008 plummeted by more than 56% com-pared with 2007, to $14.9bn. In 2009, it took six months until the London Stock Exchange (LSE) - the leading Western capital market for Islamic securities - welcomed the first sukuk of that year, a $750m sukuk issued by CBB International

Sukuk Company on behalf of the Govern-ment of Bahrain. Total sukuk in 2009 re-

bounded to $24.65bn. “The market could see issues of close to $46 billion in 2011 as investor confidence returns and new issuers emerge in the growing Islamic finance industry, Said BMB Islamic’s chief executive Humayon Dar. The EUR100m sukuk of the East-ern German region Saxony-Anhalt, launched in 2004 as Europe’s first sovereign Islamic Bond, was a watershed, but since then no German entity followed. Even Kuveyt Turk’s move to the largest EU state this last spring might not be enough, because the Turkish Islamic bank focuses primarily on Islamic re-tail clients in Germany. On a year-to date basis Dow Jones Citigroup Sukuk Index gained 10.14%, far more than the Shariah-equity compos-ite Dow Jones Islamic Market GCC Index which gained 10.03% year-to-date.

MAKRAM AZAR

Mr. Saad Abdulla Al Khan has been appointed Acting Chief Investment Officer of the Real Estate Division. He has over 12 years experience in the field of Islamic Banking. Prior to joining VCBank, Mr. Alkhan was a member of AlBaraka Islamic Bank’s (AIB) Senior Management team. He was the Senior Manager of Investments & Marketing. During his time at AIB, he gained knowledge in Islamic investment banking activities and was successful in establishing a broad network of relationships particularly in the UAE. Mr. Alkhan holds a B.Sc. degree in Accounting from the University of Bahrain.

SAAD ABDULLA AL KHAN ABDULLA BUKHOWA

Jackie DeAngelis will contribute business and financial reports from the region, for its global programme Capital Connection, which is tri-anchored live from London, Singapore and Bahrain. Most recently DeAngelis was Director of Strategic Programming and Development at the network›s global headquarters in Englewood Cliffs, New Jersey. John Casey, Vice President of International News and Programming, at CNBC, commented, «Jackie is a talented broadcast journalist who has fantastic experience in creating and producing CNBC business day and primetime programming.

JACKIE DEANGELIS

Barclays Capital, the investment banking division of Barclays Bank PLC., announced the appointment of Makram Azar as Managing Director and Head of Investment Banking, Middle East and North Africa (MENA). Makram will be responsible for all investment banking functions for MENA, coordinating Barclays Capital activities for clients across the region. Makram enjoys an established global track record and a reputation for supporting clients in achieving landmark investment banking transactions said Thomas King, Head of EMEA Investment Banking. Prior to joining Barclays Capital, Makram was head of the MENA region for Kohlberg Kravis Roberts & Co. (KKR).

Standard Chartered Bank Bahrain has appointed Abdulla Bukhowa as the head of global markets for the kingdom. In his new role, Bukhowa will be responsible for the strategy, development and management of the bank›s global market business in Bahrain, underscoring the bank›s commitment to building and growing its business here.He brings with him more than 14 years of extensive knowledge and international banking experiences. His appointment will reinforce our ambition to drive and grow our financial market capabilities. Abdulla joins Standard Chartered Bank Bahrain from the Central Bank of Bahrain, where he was head of portfolio management.

PublisherEbrahim SharifEditorLeila DulayInternational Business EditorRasheed Abou-AlsamhArt DirectorRene “Nats” FuentesGraphic DesignerNino Louies HerreraAccount ExecutiveChris Manalo

ISLAMIC BONDS ACCROSS THE GLOBE

For more information and details about this journal please contact: laeila@creator-me.com or call +971 17212682

November, 2010

APPOINTMENTS

Editorial Team

Standard & Poor’s Ratings Services believes that the sukuk market has grown large enough to support atransformation in the Islamic fund indus-try. The sukuk market returned to growth in the first half of 2010. Global sukuk issu-ance topped $13.7 billion during this period, nearly twice the $7.1 billion recorded dur-ing the same period last year. In our view, the slight improvement in market conditions since the significant slowdown in 2008 has contributed to this performance.

During the past couple of years, Asia--and particular-ly Malaysia--has contributed substantially to sukuk market growth. At the same time, is-suers from the Gulf Coopera-tion Council (GCC) region are progressively returning to the market. In our view, the future direction of the GCC market is likely to depend on improvements in market conditions and the region’s track record on sukuk default reso-lution. We observe that sukuk funds are increasingly popular among investors as they produce fixed-income returns similar to those from traditional fixed-income invest-ment products. Sukuk funds may also help investors to diversify away from pure equity and real estate funds, which suffered heav-ily during the last credit cycle. We anticipate that the increasing volume of sukuk issu-ance will boost investors’ confidence in the sukuk fund industry’s prospects. While the figures are difficult to gather, we believe that the fund industry has launched or expects to launch a greater number of sukuk funds in 2011 and 2012 compared with the past four years. Along with the boom in the whole Islamic finance industry, Islamic asset man-agement grew by 52% between 2005 and 2009, according to Ernst & Young’s 2010 Islamic Funds and Investment report. It re-mained flat in 2009, with Ernest & Young estimating that total assets under manage-ment were $52 billion, across approximately 750 funds. We believe that the slowdown mainly reflects the wait-and-see approach investors took in the aftermath of the glob-al financial and economic turbulence that eventually reached the GCC during 2009.The expansion of the sukuk funds industry will, in our opinion, go hand in hand with the growth of the sukuk market, which contin-ues to face obstacles like limited liquidity and a lack of standardization. Governments and other market participants are taking the

following actions to seek to address these problems and revive the sukuk market:• Government-sponsored issuances;• Listing sukuk on organized markets; and• Standardizing Sharia interpretations, mar-ket conditions, and the route used for sukuk resolution in case of default.In our opinion, the success of these efforts will shape the direction the sukuk market and funds industry will take in the future.

Growth In The Sukuk Market Has Resumed, But Major Ques-tions Remain Unanswered Global sukuk issuance topped $13.7 billion in the first six months of 2010, nearly doubling the $7.1 billion recorded during the same period last year (see chart 1). In Standard & Poor’s view, some of the impetus for this improvement came from the slight improvement in international market conditions. There were 98 sukuk issues dur-ing the first six months of 2010, compared with 32 in first-half 2009.

Chart 1

Governments and central banks issued many of these sukuk (75% of total volumes). We believe they aimed to revive the market, benefit from the continued avail-ability of pockets of liquidity, and create lo-cal instruments for liquidity management for Islamic financial institutions. Standard & Poor’s believes that governmental issuance can enhance the growth of the market by creating a yield curve that private-sector is-

suers can use when they issue sukuk. We have seen some private-sector issuers re-turn to the market in 2010. July 2010 saw Japan’s first sukuk issue, which in our view sent a signal that the sukuk market continues its march to-ward globalization. We believe that many issuers around the world--for example, in Singapore, Thailand, and Hong Kong--may be willing to enter the market as conditions become more favorable. Given issuers’ in-terest in tapping the sukuk market, we fore-see sustained growth for the second half of 2010 in established locations such as Asia (especially Malaysia) and in regions newer to sukuk. Asia continued to dominate issuance in first-half 2010, with 70% of total issuance. Cementing its position as the world’s top Sukuk market, Malaysia alone contributed 52.7% of total issuance. We believe that broadening the investor base is a key con-sideration for Asian companies and financial institutions entering the sukuk market. Issu-ers from the Gulf are slowly re-entering the market, taking their share of total issuance to about 30% during the first half of 2010. Is-suers like Saudi Electric Co. (AA-/Stable/--),

the State of Qatar (AA/Stable/A-1+), and Dar Al Arkan (BB-/Stable/--) have led the way with large sukuk issuances. The market has also reopened for well-established issu-ers based in the United Arab Emirates. For instance, the National Bank of Abu Dhabi (A+/Stable/A-1) issued a $155 million sukuk on the Malaysian market in June 2010. We believe that the speed with

which the market broadens its geographic reach will hinge on market conditions. We estimate that about 150 sukuk are currently either being prepared or talked about in the market. We anticipate that these will likely come to the market as and when conditions allow. Despite the sukuk market’s current upturn, we still believe that major questions related to the market remain unanswered. In our opinion, failure to address issues such as resolving sukuk defaults, standardizing Sharia interpretation, and increasing sukuk liquidity could curb future growth. While we do not expect the solutions to these issues to be easy or quick, we believe that how they are handled will shape the direction the market takes.The Islamic fund management industry has seen growing interest from in-vestors in products that mimic fixed-income investments. In response to client feedback, an increasing number of asset managers have expanded the range of their invest-ment products by launching sukuk funds in the past couple of years. we observe that the transformation of and growth in the su-kuk market has encouraged asset manag-ers to build a true fixed-income asset class that remains underweighted in portfolio management strategies. While fund manag-ers are looking to benefit from market op-portunities and enhance their funds’ yields, their selection process is critical to mitigat-ing their credit risk exposure, in our view.

Sukuk Creditworthiness Deserves Close Attention In our opinion, creditworthiness, like liquidity, is one of the criteria on which investment managers base their selection processes. While investors may choose to invest in sukuk to comply with Sharia law, and so will check on a sukuk’s Sharia-compliance, we believe that it is equally im-portant that they ascertain that a sukuk is

Sukuk Funds Poised To Grow As Sukuk Market Continues To Expand

8 November, 2010

SPECIAL REPORT

creditworthy.In the past five years, market participants have told us that the average yield on a sukuk has been slightly higher than that available on a “plain vanilla” con-ventional comparable instrument, because of the structured nature and lower liquidity of the sukuk. During this period, we under-stand that conventional investors, seeking a higher yield for the same credit risk expo-sure, have entered the sukuk market, joining those who invest in line with their religious principles.

Different Sukuk Structures Offer Different Levels of Creditworthiness The Accounting and Au-diting Organization for Islamic Financial Institutions lists 14 ways to structure sukuk. Never-theless, from a rating perspective, Standard & Poor’s distinguishes between only three types of sukuk. We base our distinctions on the full inclusion, partial inclusion, or ab-sence of credit enhancement mechanisms in sukuk structures.

Sukuk with full credit enhance-ment mechanisms Under this type of structure, su-kuk receive irrevocable third-party credit enhancement mechanisms on both thepe-riodic and final distribution to investors. These mechanisms are generally provided by a parent, or the original owner of the underlying assets. The ratings on this type of sukuk largely depend on our view of the creditworthiness of the entity providing the credit enhancement mechanisms and on the potential mechanisms’ subordination to the entity’s other financial obligations.

Sukuk with no credit enhancement mechanisms Under this type of structure, su-kuk resemble asset-backed securities (ABS). The pool of underlying assets serves as the sole basis for the periodic and final payments. The ratings on these sukuk are largely based on our view of the ability of the underlying assets to generate sufficient cash flow to meet the issuer’s obligations in a timely manner. Standard & Poor’s bases its ratings on this type of sukuk on the expected per-formance of the underlying assets under dif-ferent stress scenarios and on the expected value of the assets at maturity.

Sukuk with partial credit enhancement mechanisms This type of structure combines features of both of the first two categories. Third-party credit enhancement mechanisms absorb limited shortfalls from an otherwise asset-backed transaction. Our

ratings approach depends on our estimate of the capacity of the underlying assets to meet the issuer’s financial obligations, the terms of the credit enhancement mecha-nisms, and our view of the creditworthiness of the entity providing them Our ratings do not address compliance with Sharia law, instead they focus on issuers’ creditworthi-ness and credit enhancement mechanisms.

Understanding The Sukuk Restructuring Process The sheer variety of sukuk structures is not the only aspect of the sukuk market some investors may find confusing. In our view, the lengthy and uncertain process of su-kuk restructuring and default resolutions also

makes asset managers cautious. Each juris-diction differs, but in general, sukuk with full credit enhancement will tend to behave like bonds. The obligations in this type of transac-tion depend on the entity providing the credit enhancement mechanisms. By contrast, su-kuk with no credit enhancement will generally tend to behave like securitizations because the underlying assets serve as the major source of money to honor financial obliga-tions. Sukuk with full credit enhancement are the most common type of rated sukuk. That said, we expect the less-common form--su-kuk with no credit enhancement--to become more popular in the future. As a track record in terms of sukuk resolution--particularly what to expect in terms of recovery and the length of the process--emerges, we expect investors to find these structures more predictable.

Shaping The Future Of Islamic Fund Management In our article “Using Fund Ratings As A Tool To Assess Credit And Market Risks In Sharia Funds” published on May 4, 2010, we stressed the Islamic finance in-

dustry’s need to broaden the range of its investment products if it aims to attract more assets. So far, fund managers have focused most of their investment products on equity and alternative strategies aimed at mitigating the volatility in the equity market. In 2010, fixed-income-style funds account for less than 15% of total assets managed by the global Islamic fund industry (see chart 2). In our opinion, in order for the sukuk mar-ket to grow, the sukuk fund management in-dustry must be supported by a broad class of assets that act like fixed-income assets, offering both short- and long-term invest-ments.

Chart 2

Sukuk Funds Poised To Grow As Asset Managers Reach Out To New Investors By providing fixed returns and in-vesting in accordance with Sharia, sukuk funds aim to attract a wide range of institu-tional investors such as takaful companies, pension funds, and the corporate sector. There is still an untapped market of retail in-vestors who cannot invest directly in sukuk issues because of the size of the upfront in-vestment. We believe that sukuk funds will grow further as asset managers reach out to new investors. We expect some consolida-tion in the future in an industry that remains largely fragmented. More than 50% of Is-lamic funds have assets under management of less than $50 million. Those who succeed in attracting new investors by offering a wide range of investments products are likely to be better positioned to benefit from this transformation. They will be able to build on their already increased asset-gathering ca-pabilities. Successfully reaching out to these potential investors is likely to reshape the in-dustry as a whole, in our view. Constraints On The Sukuk Indus-try Limit Sukuk Fund Expansion On top of

the issues affecting the asset management industry itself, sukuk funds face the same obstacles as the sukuk industry itself. We believe the following obstacles, if not over-come, will inhibit growth in the Sukuk market.

Lack of standardization constrains issuance There is little standardization across regions regarding interpretation of Sharia in relation to sukuk. Sukuk issuers and funds are both subject to similar Sharia approval process-es, so both can be hit by changing inter-pretations. Malaysia was the first country to tackle this problem. In 2009, it designated the Sharia Board of the Malaysian Central Bank as the sole arbiter in Sharia compli-ance matters in the financial sector. We believe other countries are like-ly to follow suit. Malaysia has now become the locomotive of the sukuk market and ac-counts for more than half of all issuances.In addition, sukuk issuance is a longer and more-expensive process because there are no standard sukuk structures.To overcome this obstacle, the Dubai International Finan-cial Center (DIFC) has started a project to standardizesukuk issuance.

Sukuk funds seek greater diversification and liquidity The market remains dominated by issuance from governments and their re-lated entities. This offers limited alternatives for sukuk fund managers. Most of the sukuk issued so far have been over-the-counter instruments privately placed with specific investors. While funds can tap this market directly as initial investors, the market lacks liquidity. In our view, listing sukuk on orga-nized markets could increase their liquidity and may help broaden the investor base. In addition, it would give sukuk fund managers the capacity to adjust their positions when the environment shifts. We are seeing an increasing number of sukuk being listed on organized markets both international and lo-cal markets in the GCC or Malaysia.

Developments In The Sukuk Industry Offer The Funds Industry An Opportunity To Share In The Success We believe it is clear that the Sukuk fund industry is intertwined with its under-lying markets. All the roadblocks we have identified could be cleared with time, and the active participation of various market partici-pants. We are seeingencouraging signs on different fronts. For example, Malaysia has led the way in committing to the uniformity of interpreting Sharia in the financial sector. In the GCC region, the DIFC has undertaken

9November, 2010

more on next page

to standardize sukuk issuance. We are also seeing an increasing number of Sukuk be-ing listed on organized markets. We consider that the efforts al-ready undertaken to clear the way for the sukuk market to expand further bode well for the Islamic fund industry. In our view, as the sukuk market expands beyond its natu-ral borders and a broader range of issuers enter the market, the fund industry itself will need to rethink its future. If it fails to act on opportunities to reach out to new investors and establish a clear fixed-income-style as-set class, we believe the Islamicfund indus-try could find itself sidelined.

• Using Fund Ratings As A Tool To Assess Credit And Market Risks In Sharia Funds, May 4, 2010• Sukuk Issuance Is Up And Running, But Will The Climb Continue Apace?, July 27, 2010• Standard & Poor’s Approach To Rating

Primary Credit Analysts:Samira MensahLondon (44) 20-7176-8417samira_mensah@standardandpoors.com

Secondary Credit Analyst Emmanuel VollandParis (33) 1-4420-6696emmanuel_volland@standardandpoors.com

Published by Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. Executive and Editorial offices 55 Water Street, New York, NY 10041. Subscriber services: (1) 212-438-7280 Option 2. Copyright © 2010 by Standard & Poor’s Financial Services LLC (S&P). All.rights reserved

10

Kuwait Finance House, the country’s biggest Islamic lender, is looking for real estate investments in southern China and Europe as it seeks to more than double its portfolio, a se-nior official said. Kuwait Finance House (KFH) wants to increase global assets under management (AUM) to about $4bn in coming years from $1.5bn with a focus on residential property, Ali al-Ghannam, international real estate department manager, told Reuters. “We reached a decision in the middle of 2005; we decided to liquidate everything because of the overheated real estate prices,” al-Ghannam told Reuters in an interview on the sidelines of a conference in Hong Kong. The Kuwaiti lender is looking for oppor-tunities in Guangzhou, after a success-ful residential investment in Shenzhen. Both cities are in southern China. Kuwait Finance House, which invests according to Islamic law, has also put money into residential property in US cities such as New York, San Francisco and Los Angeles. Al-Ghannam said the com-pany would prefer to invest in existing projects with local partners, rather than going into residential construction. “For companies around the world, they want income producing because they want to satisfy their minimum returns to investors to the company. In Ma-laysia, which has an active Islamic fi-nance market, Kuwait Finance House is involved in a mixed-use project just across from Singapore that has shop-ping malls, offices and residential units. Kuwait Finance House, which posted a 23% fall in its net profit in the third quar-ter ended Sept. 30, would consider in-vesting in Singapore and Hong Kong if the prices are right, al-Ghannam said. It is putting other markets, including Japan, South Korea and India, on the back burner.

KFH to expand real estate Hong Kong

Nowadays just to keep us reminded and going back to the ba-sic concept of Islamic Finance that – MONEY has no fundamental value as its standalone. In Islamic finance is as-set-based as it goes up counter to cur-rency-based whereby an investment is structured on exchange or ownership of assets, and the money is simply the payment mechanism to effect the transaction. The basic framework of Is-lamic financial system is based on Sha-riah principles, which governs Islamic societies. (Bahrain Economic Develop-ment Board) What the value of money actually is (i.e. what units of the stan-dard will buy, in general) depends on 1) how much money there is, 2) how much money is held out of circulation, and 3) how many exchanges circu-lating money is used to cover. This is the “quantity theory of money” and can be expressed in a famous equation by the American astronomer and econo-mist Simon Newcomb: MV = PT. “M” signifies the actual quantity of money; “V” signifies the “velocity,” which is the rate at which money circulates or how long money is held out of circula-tion; “T” is the number of transactions, or exchanges; and “P” is the level of prices. This equation easily illuminates most questions about inflation or de-flation, which is how money becomes less or more valuable over time. (Milton Friedman 1992) “Practices of the unscrupu-lous money-changers stand indicted in the court of public opinion....Yes, the money-changers have fled from their high seats in the temple of our civiliza-tion. We may now restore that temple to the ancient truths. The measure of that restoration lies in the extent to which we apply social values more no-ble than mere monetary profit.” (Frank-lin Roosevelt – 1933)

Money value in Islamic Finance

November, 2010

Sukuk, Sept. 17, 2007Additional Contact: Mohamed Damak

from page 9

11

Government pledges some 22 acres of Jinnah terminal land against financing By Sajid Chaudhry

ISLAMABAD: To arrange finances to meet budget deficit, the State Bank of Pakistan has accepted offers of around Rs 62 billion against an initial target of Rs 40 bil-lion against three-year Sukuk bonds, official sources said on Saturday. The State Bank of Pakistan had of-fered investment opportunity to Islamic bank institutions through Sukuk bonds, which re-

ceived overwhelming response and against the initial target of Rs 40 billion, received of-fers up to Rs 67 billion. The bank, however, accepted the offers worth Rs 62 billion on six-month treasury bill rate for Sukuk bond, while the government has pledged some 22 acres of Jinnah terminal land against this financing. This money would be provided to the federal government to finance budget deficit during the ongoing fiscal year 2010-11, the official sources added. The budget deficit had been pro-jected at Rs 684 billion or four percent of the

Gross Domestic Product (GDP) at the start of the fiscal year 2010-11, however, due to the floods, the projection had been revised upwards in consultation with the Internation-al Monetary Fund (IMF) to Rs 4.7 percent of the GDP for the ongoing fiscal year. This would increase the budget deficit from Rs 684 billion to Rs 745 billion in the ongoing fiscal year, showing an increase of Rs 105 billion. Budget deficit during the first quarter of July-September had been recorded at Rs 272 billion, which is on the higher side against the projection for this quarter

The launch by India’s Tata Group of its debut Islamic equity fund two weeks ago sees the entry of another major Indian asset management company in the Islamic finance space. This follows the establish-ment by the rival Reliance Anil Dhirubahi Ambani Group of a dedicated Islamic as-set management company in Malaysia, Reliance Asset Management Malaysia Sdn Bhd, in late 2009 to spearhead its global Islamic asset management activities. According to TAMM, the offering is a diversified open-ended equity fund in-vesting in Shariah-compliant equity or eq-uity-equivalent listed Indian companies. To underline its commitment to developing the island state as an international Islamic capi-tal markets center, Port Louis has acceded to membership of the Islamic Financial Ser-vices Board (IFSB) and last month in Kuala Lumpur became a founding participant to-gether with nine other central banks and two multilateral agencies in the International Islamic Liquidity Management Corporation (IILM) with a $5 million equity subscription.Tata’s entry into the Islamic asset manage-ment space virtually coincided with the offi-cial visit of Indian Prime Minister Manmohan Singh to Malaysia at the end of October 2010. India has had a strange relation-ship with the Islamic finance industry over the last few years. At a political level, de-spite the fact that Manmohan Singh since his days as finance minister has been a strong supporter of facilitating Islamic fi-nance in India, the government has been very slow to react to the global growth of Islamic finance. Whether for political or religious reasons, those opposed to the introduction of enabling legislation to allow Islamic finan-cial products, tend to see Islamic finance as an extension of political Islam, which is both incorrect and misleading. In the UK legislation, for instance, sukuk are regarded under the Finance Act 2010 as Alternative Financial Investment Bonds. Even in Muslim countries such as Turkey, Islamic banks are called Participation Banks in the Banking Act 2007.

India has had some Islamic finance activ-ity mainly through brokerage and finance companies such as Al-Falah, Parsoli and Barakat. The Saudi-owned Dallah Al-Bara-ka Group was one of the first overseas groups to venture into India establishing the Al-Baraka Finance House Merchant Bank in the 1990s with participation of the local Oomer Group. Over the last few years how-ever prominent Indian Muslim business-men, bankers and professionals have been lobbying the government and the Reserve Bank of India (RBI), the banking regulator, to consider introducing a legal and regula-tory framework to facilitate the introduction of Islamic financial products in India. “There have been from time to time demands for experimenting (with) Is-lamic banking. There are signs that State Bank of India (SBI) is starting to warm to Islamic finance. According to Indian asset management industry sources, SBI cir-culated a White Paper earlier this year on Islamic finance inviting comments from the public on whether the RBI should open the market to Islamic financial services compa-nies based in India to offer products in the local market. However, realistically, given the notorious bureaucracy in Indian state institutions including the government appa-ratus, the progress toward the introduction of Islamic financial products in India through enabling legislation will take some time. Similarly, India could also seek cooperation with organizations such as the Islamic De-velopment Bank, the IFSB and counterpart regulatory authorities such as Bank Negara Malaysia and the Saudi Arabian Monetary Agency (SAMA).

Indian corporates foray into Islamic finance

Outfit to have minimum capital of RM300milKUCHING: Islamic Cooperative Bank of Malaysia (ICBM), the first bank to be owned by Angkatan Koperasi Kebangsaan Malay-sia Bhd (Angkasa), is awaiting the greenlight

from Cooperative Commission of Malaysia to start operations. Angkasa president Prof Datuk Dr Mohd Ali Baharum said that 560 credit cooperatives with almost four million mem-bers and several non-credit based cooper-atives had become associate members for the setting up of ICBM.

“We have also opened up ICBM to non-credit based cooperatives like agriculture cooperatives to become shareholders.Dr Mohd Ali said the main activities of ICBM would be personal financing, housing loans and capital for the development of land.In line with this, only one board of patrons will be established by Angkasa complete with members of board of directors and a new chief executive officer to drive ICBM.

Angkasa

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SBP arranges Rs 62bn through Sukuk Bonds for deficit financing

November, 2010

Bahrain as Islamic Finance hubBahrain In the last three decades have attracted global financial ser-vice industry and grown to be the center of Middle East financial hub, with more than 400 local, regional and international Islamic financial institution offering variety of services. “Bahrain as a financial center grew significantly in the 1970s following the 1973-74 sharp rises in oil prices which created the need for an active financial and banking center to recycle the substantial financial surplus of the region. In 1975, Bahrain took the lead and invited major international banks to open branches in the Kingdom of Bahrain and operate as offshore banking units (OBUs).” Statement from Ali Abdulla Ali Mohammed Hassan Al-Thawadi”

November, 201012M

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