Executive News September 2004, Issue No. 5. Contents

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1 Phone/Fax: Subscription: Free of charge Advertising: Executive News September 2004, Issue No. 5 Contents in the West Retail Seminar in October IDB Conference in London Conference on export finance for German companies German summit on hold IPO of the Islamic Bank of Britain Amlak expands to Turkey Dear Readers, M. S. Gassner Editorial As salamu alaikum The news on going on throughout the summer. I hope you spent a good vacation and that you will start now with new deals. Please send the announcements of those to us first. It is always a pleasure to meet each other personally. A good occasion would be either between 6th and 8th of October, or between 10th and 11th of October in London. If you are interested in the German market or in European real estate please contact us in advance. BTW: Do not forget to share this newsletter! It s free. Best regards wa salaams, Michael Saleh Gassner Cologne - Germany Distribution Partners: DIFC: New Director General, Sukuk and Real Estate KFH (Bahrain) launches Islamic finance card National Bank of Sharjah offers Haj and Umrah finance National Commercial Bank dominates local fund sector Oasis Leasing s new Director for Business Development Abu Dhabi Islamic Bank increased rating by Fitch Market Shares in Yemen Dubai Islamic Bank potential investor to Sudan Airways Nigeria, new requirements to set up Islamic banks Islamic banking applications in Bangladesh Public Mutual Fund in Malaysia increase fund sitze OCBC Bank Malaysia studies to apply for license Standard Chartered Malaysia aims to increase Islamic Assets Singapore aims to attract industry Islamic Sukuk (Bonds) Pakistan to launch Islamic Bond Sukuk s share in the total Malaysian Bond Market BMA s Sukuk Al Salam oversubscribed Arab Media Corporation issues USD 100 to 150 mn with Atlas Investment Group Islamic Real Estate Bahrain Financial Harbour 10 per cent complete Al Islami Far Eastern Real Estate Fund by DIB / Cheung Kong Ethical Opportunity Fund, Singapore s first compliant fund Takaful A.T. Kearney on the German Takaful Market MNI Holdings Bhd expands distribution Michael Gassner, Consultancy, Kyffhäuserstr. 8, Cologne, Germany We made every effort to ensure the accurateness of the herein enclosed information. However we could not accept any legal responsibility whatsover for consequences may arise. Especially we do not take over so for any hyperlink given in this newsletter which is referring to third parties. Copyright notice: This publication might be copied, duplicated, stored in whole without prior permission. It may not be distributed partly or against fees without prior written permission nor changed.

2 Executive News September 2004 No. 5 Page 1 Dear Reader, Retail Seminar 11./ All among you which are interested in the European retail market are kindly reminded to draw their attention to the Islamic Retail Finance seminar on 11th and 12th of October in London organised by Islamic Conferences Group. The editor will present a speech on the German market, the regulatory and tax issues and potential solutions on this occasion and also will give insight to the German Sukuk. Workshops for Retail Bankers 1./2.12. IRTI / IIBI 7./8.10. German Chamber of Commerce Summit IPO Islamic Bank of Britain Khalifa Al Thani Qatar Int. Islamic Bank AMLAK Korfez KuveytTürk Fawaz Al Issa Further the editor does offer for retail bankers in Europe a one day workshop about the foundations of on 1st December and on Islamic Mortgage and the applied models of it in US, UK and Canada on the 2nd December. Venue is the conference centre of the chamber of commerce in Frankfurt which is located at the stock exchange. For more details please contact us at gassner@islamicfinance.de. The number of places is limited to ensure the seminar character. There are a lot of conferences ahead. We do like to mention two of those: The IRTI as educational arm of the Islamic Development Bank organises jointly with the Institute of & Insurance a conference on "Islamic Financial Sector Development" on the 7th and 8th of October in London. More informations on their websites. The editor would be glad to meet you during this time in London. The German Chamber of Commerce is undertaking on 24th of November the "Finance Business Conference" which focuses on German companies doing business in MENA with the key matters Export Finance, Infrastructure, Project Finance as well as. The German Summit is currently on hold and might be re-scheduled to a later time. Reuters reported on August, 26 about the IPO and private placement of the Islamic Bank of Britain. The bank intends to raise GBP 40 mn (USD 72 mn) resulting in GBP 38.5 mn after expenses. 160 mn shares at 25 pence each. Expected valuation of the bank will be GBP 105 mn after listing on Londons AIM market on 12th of October. Further noteworthy: For regulatory reasons the two biggest shareholders before IPO were published: The Qatari ruler Sheikh Hamad bin Khalifa al-thani and the Qatar International Islamic Bank, each with 17.4 percent. AMEInfo wrote on the 5th of September about AMLAK the mortgage finance pioneer. They reached an understanding with the Turkish Real Estate firm Korfez Gayrimenkul about a joint venture mortgage finance company in Turkey. Korfez is a subsidiary of KuveytTürk, which is 62 % owned by Kuwait Finance House. Fawaz Al Issa deputy chief executive officer of KuveytTürk said that the venture starts after clearance from the Turkish Capital Market Board. DIFC Dr. Omar bin Sulaiman AMEInfo reported on 8th of September about the assignment of the new Director General of the Dubai International Financial Centre (DIFC), which is Dr. Omar bin Sulaiman. Formerly he was the CEO of the Dubai Internet City. The Dubai Property Group is hosting a business breakfast on 14th of September to discuss the development plans for the DIFC ( AMEInfo). Further the DIFC revealed plans for a workshop to discuss the sukuk market. Industry statistics were nameless cited that the region has USD 30 mn in surplus cash of Islamic fund managers without suitable product (AMEInfo 1st September).

3 Executive News September 2004 No. 5 Page 2 KFH (Bahrain) Ijara Card National Bank of Sharjah Service Lease Expansion National Commercial Bank Fund Market Kuwait Finance House (Bahrain) is along with another innovation announced for later this year: The Ijara Card which allows holders to purchase durable goods from a list of more than 100 pre-approved shops in Bahrain on a "lease-promise to own" Islamic Ijara basis, as Tariq Khonji in Gulf Daily reported on 7th September. The card should *not* be related to any organisation such as Visa or Mastercard as usual. National Bank of Sharjah introduces a service lease for Haj and Umrah financing, according to AMEInfo, 4th of October. Their aim is to capture 10 % of the potential customers who go on Haj or Umrah every year. The personal finance range of products should be extended in the next weeks by holiday packages, air tickets, residential accomodation, medical treatment, and education. Khaleej Times reported on 25th August (Menafn) that the National Bank of Sharjah is about expanding its activities as well regionally to include the AGCC countries, particularly Kuwait, in addition to providing new banking services in accordance to Islamic law in Abu Dhabi, Al Ain, Dubai, Ras Al Khaimah, Umm Al Quwain and Fujarah. According to Abdulkareem Abu Al Nasr as reported on Arab News 30th of August the National Commercial Bank runs 26 funds in Saudi-Arabia out of total of 168. The value of their funds exeeds SR 23 mn which should represent a market share of 44 %. They receive technological and financial advice from Wellington for Asset Administration, Dutch Bank, Gulf International Bank and Al Bakheet Financial Consulting. (Menafn) Service range Michael Gassner Consultancy What could we do for you? Advertisements in the Executive News? Real Estate opportunities in Europe? Workshops on? Consulting on structure and placement? Please contact: gassner@islamicfinance.de Oasis Leasing Al Noaimi Abu Dhabi Islamic Bank Rating upgraded Market Share Yemen Sudan Airways Dubai Islamic Bank Salem Rashid Al Noaimi is named as Director of Business Development and Investor Relations for Oasis International Leasing based in Abu Dhabi, reported AMEInfo on 16th of August. Prior to Oasis he worked in the investments department of the Dubai Islamic Bank. Abu Dhabi Islamic Bank (ADIB) is upgraded by the international rating agency Fitch. The individual rating reached C from its previous rating of C/D. Further it maintained the Long-term (A-), Short-term F2 and Support 2. The reasons for the upgrade are stated to be a positive record of profit growth, good asset quality over a five-year period, sound liquidity, strong capital ratios and a growing franchise. ADIB was established by Amiri decree in (Ameinfo ) Mahyoub Al-Kamaly wrote in the Yemen Times on 16th of August that Islamic banks capturing confidence in the Yemini market with steadily increasing budget. The proportion of deposits reached 24.5 %. Sudan Tribune reported on 8th of September about the privatization of Sudan Airways. The government will retain 31 % of shares in the new company, 20 % to the Sudanese private sector while the remaining 49 % would be taken by foreign investors. Dubai Islamic Bank shall seriously considering buying a major share of those.

4 Executive News September 2004 No. 5 Page 3 Nigeria Islamic Bank License? Bangladesh Banking Licenses Public Mutual Fund Lam Kam Yin OCBC Bank (Malaysia) License / Products StanChart Malaysia Shayne Nelson Singapore Goh AllAfrica.com reported on 10th of August on the Islamic Bank which should get license by December in Nigeria. Dr. AbdulLateef Adegbite, secretary general of the Nigeria Supreme Council for Islamic Affairs, is cited that already the existing requirements of the Central Bank are met with the raised N 3 bn while the requirement were N 2 bn. The bank needs to be granted with the license before the new requirement would take place which are N 25 bn (USD 200 mn). Foreign investors are welcomed and he hopes that the central bank reconsiders their plans. There has been an active discussion on this issue on IBF net during August, naming such a bank as Jaiz Int l plc. In Bangladesh according to Matamat, 2nd September, there are awaiting 10 financial institutions a banking license, some of them e.g. the Al Hera Islami Bank Ltd., International Islamic Leasing and Investment Ltd. and Multinational Ltd. aiming to do business. A top official of the central bank states that Bangladesh has already a sufficient number of banks and more may destabilise the sector. The final decision will be done after consultation by the finance and planning minister who recommends to issue the licenses to the central bank or not. Sources are stated in the commerce ministry that foreign investment proposals could hardly be denied according to the WTO services agreement. Public Mutual Bhd received approval of the Malaysian Securities Commission to increase their fund sitze of the Public Islamic Equity Fund (PIEF) from 2 bn units now to 6 bn. CEO Lam Kam Yin stated the increase was due to the strong public demand. The fund is also popular among non-muslims. (TheStar ) OCBC Bank (Malaysia) Bhd studying currently a consultancy paper to apply for an Islamic banking license, according to the Edge Daily on 17th of August. On 16th of August HSBC already considered publicly to apply for an Islamic banking license. OCBC is planning to launch three to four more Islamic financial products by year-end besides their 15 existing ones, such as an Islamic cash loan. Standard Chartered Bank Malaysia Bhd has currently 2 % Islamic assets out of their total banking assets. They do intend to increase this figure to 5 %CEO Shayne Nelson announced during a press conference according to The Star on 3rd September. Hindustan Times wrote on 28th of August on Singapore plans to become a center for, citing Goh, a central bank governor. It should improve the ties with West Asia, and should enable Singapore to manage Arab wealth. The central bank already reviewing local regulations whether there are any impediments to the spread of Islamic-style financial services. Islamic Sukuk Pakistani Sukuk Baljeet Grewal Malaysian Sukuk Market Sukuk Al Salam No. 40 BMA Pakistan prepares to launch its first international Islamic bond this year. Details or size are not yet defined. Part of the strategy would be to issue such bonds on annual basis to keep on the presence in the market, according to Financial Express on 8th of September. The daily times reported on 28th of August about the Pakistani Sukuk strategy as it was intented to be presented in those days to the International Monetary Fund s review mission. B.K. Sidhu wrote in The Star (Malaysia) on 8th of September about Islamic debt instruments. Baljeet Grewal, economist and head fixed income research at Aseambankers Malaysia Bhd, were cited with interesting figures: in 1999 Islamic debt instruments were at 7 % of total bonds, but grew to 36 % in She added that about 50 % of all Malaysian domestic bonds, mostly the larger issues, were now shariah compliant. The monthly issue of the Sukuk Al Salam (no.40) undertaken by the Bahrain Monetary Agency has been oversubscribed by 80 %. USD 45.4 mn subscriptions were received for the USD 25 mn issue. Expected return is 1.8 %. (menafn, Bahrain Tribune )

5 Executive News September 2004 No.5 Page 4 AMC Sukuk Atlas Investment Group Arab Media Corporation is going to issue a USD 100 to 150 mn Sukuk. As Financial advisor and lead manager has been Atlas Investment Group, Jordan appointed. Earlier in 2004 Atals was acquired by Arab Bank plc to become its investment banking arm. No details on tenor, yield and size have been disclosed to public so far. Islamic Real Estate Bahrain Financial Harbour Ethical Opportunity Fund Al Islami Far Eastern Real Estate Fund DIB / Cheung Kong The Chairman Esam Janahi told reporters according to AMEInfo 8th of September that 10 % of the Bahrain Financial Harbour are completed, comprising the Dual Towers, Financial Mall and Harbour House. China Daily reported on 10th of August that Hong Kong s Sun Hung Kai Financial Group launched a real estate fund to finance projects in Hong Kong, Singapore and Australia according to Sharia. International Mezzanine Fund Management will provide intermediate financing with assets focused on office, retail and residential properties. Cadmus Partners has been appointed as advisor for the fund. According to Anusha Attygale of Dow Jones Newswire (Yahoo Asia, ) reported that the "Ethical Opportunity Fund" had a closing target of USD 25 mn which was reached within days of launching, while also receiving subscriptions for a new fund. Sheldon Lee as Singapore based director of Cadmus Partners explained the demand with the strong desire for such ethical and social investments. Cheung Kong, a Hong Kong billionaire and Dubai Islamic Bank announced a USD 450 mn Islamic property trust based in Bermuda and managed by ARA Asset Management, a fund owned by its management and Cheung Kong. The closed end fund will end in five years, reports Michele Batchelor on Bloomberg News (IHT ). According to Khaleej Times on 8th of September target markets are Hong Kong, Singapore, Kuala Lumpur, Seoul, Beijing and Shanghai. Workshops Foundations of Islamic Mortgage M.S. Gassner Workshops 1 st /2 nd December 04 Foundations venue: of Introductory Seminar for European Retail Bankers - 1 st December Islamic Mortgage Structures and Examples of UK, USA and Canada for the Retail Market 2 nd December Venue: Conference Centre Chamber of Commerce Frankfurt, Germany Please contact: gassner@islamicfinance.de Takaful German Takaful Market A.T.Kearney MN Holdings Bhd Distribution A.T. Kearney looked at the potential of the German takaful market. The annual market volume is estimated at Euro 1 bn. 70 % of the Turkish population in Germany stating themselves to be religous. Currently this market niche is un-discovered, reports the Versicherungsjournal on 8th of September. MNI Hodlings aiming to expand their existing distribution network which currently consists of the OCBC Bank and Affin Bank as well as insurance agents. The strong growth in turnover so far came due to the high volume in the life insurance/ family takaful business which rose to RM 1.1 mn. Best regards wa salam, Michael Saleh Gassner