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KPMG, Sberbank Agree on Counterpart Financing at Kazan Summit 2017

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Baku, Fineko/abc.az. On May 19, a business breakfast of Sberbank and KPMG on “Counterpart Financing: #NewReality” was held in Kazan within the framework of “Russia-Islamic World: KazanSummit 2017”.

The moderators of the breakfast were Vugar Aliyev, Head of Financial Services at KPMG in Russia and the CIS, Managing Partner of KPMG in Azerbaijan, and Behnam Gurbanzada, Counsellor to the Deputy Chairman of the Board at PJSC Sberbank. The business breakfast was dedicated to the discussion of the prospects and triggers of the development of counterpart financing in Russia and the CIS countries.

Rustam Minnikhanov, President of the Republic of Tatarstan, Marat Kabaev, President of the International Association of Islamic Business, Oleg Ganeev, Deputy Chairman of the Board of Sberbank, Khalid Al Janahi, Senior Advisor of the Dubai Islamic Economy Development Centre, Hamed Hasan Al Merah, General Director of Accounting and Auditing Organization for Islamic Financial Institutions, AAOIFI, Alexey Simanovsky, Counsellor to the Chairman of the Bank of Russia, and Dmitry Saveliev, RF State Duma Deputy of the 6th and 7th convocations and First Deputy Chairman of the Committee on Security and Counteracting Corruption of the State Duma delivered speech at the session.

Due to turbulence in the geopolitical sphere and in the world of finance, as well as certain crisis of confidence to the financial institutions, interest in counterpart financing is growing today. In Russia and the CIS countries, the issue of implementing counterpart financing is also of interest to traditional banks searching for sources of long-term funds. However, despite the well-formed client segment, this area cannot fully develop in accordance with the law. To introduce counterpart financing, which becomes a new reality of the financial sector, certain changes in the banking system and creation of necessary conditions for development are required. The purpose

of the business breakfast was to discuss these changes, existing prerequisites for them and further situation in this field in Russia and the CIS countries.

During the event, speakers highlighted all aspects of this topic: best practice in implementing counterpart financing, current situation in this field in Russia and Kazakhstan (activities of Sberbank working group, establishment of Tatarstan International Investment Company, counterpart financing of PPP projects and other projects related to export promotion) and issues of legislative regulation of counterpart financing products. The event ended with a discussion of the development prospects of counterpart financing, as well as in the context of various business segments, and Q&A session.

Originally published on www.abc.az

Kazakhstan Set For Debut Sovereign Sukuk In Early 2016

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kazakhstanNov 16 Kazakhstan’s parliament has approved legislative amendments to facilitate Islamic finance, paving the way for Central Asia’s largest economy to issue its first sovereign sukuk next year, a government official said.

The amendments, which still require the president’s signature, would also allow for the conversion of conventional banks into Islamic ones, said Yerlan Baidaulet, an adviser to the Investments and Development Ministry.

“We expect the sovereign sukuk in early spring of next year. Probably in March, it depends on the decision of the Ministry of Finance as it has its own budgetary process,” Baidaulet said on the sidelines of an industry conference in Kuwait.

The legal amendments to the banking services and securities laws are the latest steps by the majority Muslim state to help develop Islamic finance. A dedicated Islamic banking law is also currently in preparation, Baidaulet said.

Lawmakers have also passed a law to establish an offshore centre in the capital Astana, which is partly aimed at attracting Islamic finance business, he added.

The government announced plans for a sovereign sukuk, or loan, at the end of last year, which would follow a 240 million Malaysian ringgit ($73 million) sukuk issued in 2012 by the state-owned Development Bank of Kazakhstan.

The National Bank of Kazakhstan plans to sell an inaugural $1 billion sukuk next year as part of a $3 billion programme, a central bank official told the Interfax news agency last week.

The government sold $2.5 billion worth of conventional eurobonds in October of last year.

Kazakhstan, which gets over half its budget revenues from oil sales, has been hit hard by a collapse in world oil prices and the weakening of the currencies of Russia and China, its major trading partners. (Reportijg by Bernardo Vizcaino; Editing by Eric Meijer)

Originally published on www.reuters.com

Development Bank Of Kazakhstan’s AA2 Ringgit Sukuk Rating Reaffirmed By RAM Ratings

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development-bank-of-kazakhastanRAM Ratings has reaffirmed the AA2/Stable rating of the Development Bank of Kazakhstan Joint-Stock Company’s (DBK or the Bank) MYR 1.5 billion Sukuk Murabahah Programme (2012/2032). The rating reflects the credit strength of the Government of Kazakhstan (GOK, rated AA2(pi)/Stable/P1(pi)), given RAM Rating’s opinion of a very high likelihood of support in times of need.

DBK, ultimately owned by the GOK, plays a strategic role in facilitating the latter’s goal in diversifying Kazakhstan’s economy away from the oil and gas sector. The GOK has been firmly backing the Bank, particularly through numerous capital infusions between 2009 and 2014, besides ongoing funding support.

As a development financial institution, DBK’s loan book inherently carries higher credit risk as it finances large-scale, long-term infrastructure and industrial projects that include green-field developments. Nonetheless, its gross impaired-loan ratio had eased to eight per cent as at end-June 2015 (end-December 2013: 24 per cent), albeit still deemed elevated, after the disposal of a large chunk of impaired loan in 2014 and experiencing strong loan growth during the period. RAM expects further stress on the bank’s already-weak loan quality following the devaluation of Kazakhstan’s tenge (KZT) in August this year, especially in relation to borrowers of foreign-currency loans without foreign-currency revenues. The bank’s exposure to high credit risk is, however, moderated by its adequate capitalisation. As at end-December 2014, DBK’s tier-1 capital ratio stood at 20 per cent.

To match the long maturities of its loans, DBK relies heavily on long-term wholesale borrowings. Although this subjects the bank to refinancing risk, the maturity profile of its wholesale debts is well spread out. This, coupled with the bank’s liquid balance sheet, supports its sound liquidity position. Although DBK’s assets are mainly denominated in USD, its foreign-currency mismatch is manageable as the bank also predominantly borrows in the same currency. As such, the devaluation of the KZT is not expected to affect DBK’s ability to service its debt obligations.

Originally published on www.cpifinancial.net

12th Islamic Financial Services Board Summit To Be Held In Almaty

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IFSB-logoThe 12th Sammit of the Islamic Financial Services Board (IFSB) will take place in Almaty from May 19 to 21, Tengrinews reports citing BNews.kz. It is the first time the IFSB Summit will be hosted by a post soviet country.

The Summit facilitates dialogue between key players in the Islamic financial sphere. The current IFSB Summit will address issues in Islamic financing, control over Islamic institutions, regional and global cooperation, and plans for development of the sector.

According to the National Bank of Kazakhstan, a memorandum of understanding on conducting the Summit was signed by the National Bank of Kazakhstan and the IFSB on December 21, 2014.

The Summit was conducted for the first time in the UK in 2004. The following IFSB Summits were hosted by Qatar, Lebanon, the UAE, Jordan, Singapore, Bahrain, Luxembourg, Turkey, Malaysia, and Mauritius. The annual meeting is sponsored by central banks or regulatory institutions of a host country. Over 300 delegates from more than 35 countries gather for the annual Summit. Hosting the event in Kazakhstan will be a step towards promoting Almaty as an Islamic financial hub in the CIS (post soviet space) and Central Asia.

According to the official website, the IFSB “serves as an international standard-setting body of regulatory and supervisory agencies that have vested interest in ensuring the soundness and stability of the Islamic financial services industry, which is defined broadly to include banking, capital market and insurance”. “As at December 2014, the 184 members of the IFSB comprise 59 regulatory and supervisory authorities, eight international inter-governmental organisations, 112 financial institutions and professional firms as well as five self-regulatory organisations (Industry Associations and Stock Exchanges) operating in 44 jurisdictions.”

Kazakhstan adopted a law on Islamic Financing in 2009, created conditions for Islamic banks, Islamic investment funds and started issuing Islamic securities. In 2011, another law that allowed issuing state Islamic securities was adopted. To develop Islamic financing, insurance and leasing, Kazakhstan’s National Bank developed a draft bill introducing amendments and additions into some of its legislations concerning insurance and Islamic financing.

“At the moment, the draft bill is being consideration by the Kazakhstan Parliament. The government approved the Islamic Finance Development Roadmap till 2020 to create favorable conditions for registration of property-related transactions under murabaha, Ijarah, Istisna schemes; and to sign double taxation treaties with countries of South-East Asia and Middle East,” the National Bank website said.

Originally published on www.en.tengrinews.kz 

The 12th IFSB Summit To Be Held In Almaty, Kazakhstan

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IFSB BuildingThe Islamic Financial Services Board (IFSB) is pleased to announce that the 12th Annual Summit will be held on 19 – 21 May 2015 in Almaty, Kazakhstan. The National Bank of Kazakhstan is hosting the twelfth edition of this annual landmark event for the IFSB, the first to be held in the Central Asia region.

A Memorandum of Understanding (MoU) was signed between the National Bank of Kazakhstan and the IFSB on 31 December 2014. The MoU signifies the cooperation and commitment of both parties in ensuring the success of this important event.

Jaseem Ahmed, the Secretary-General said, “I am delighted that the 2015 Summit is being held in Kazakhstan. The IFSB Summit presents an important high-level platform for the key regulators, market players and thought leaders of the global Islamic financial services industry (IFSI) to discuss issues pertinent in steering the regulatory direction of the industry, with the mutual aim to further strengthen its resilience and stability.” He added, “The National Bank of Kazakhstan has been an Associate Member of the IFSB since November 2011, and we are very happy to work with them in organising this twelfth edition of the Summit. We are especially pleased that the Summit will take place in Central Asia – a region of emerging importance and potential on the map of Islamic finance.”

The Annual IFSB Summits aim to bring together industry leaders and professionals from across the globe. In particular, participants of the previous Summits have included key players of the IFSI, especially members of the IFSB from among regulatory and supervisory authorities, international inter-governmental organisations and market players.

More information about the 12thIFSB Summit will be announced in due course. Enquiries on participation and sponsorship opportunities can be forwarded to [email protected].

Originally published on www.zawya.com

 

National Bank Of Kazakhstan Becomes A Member Of AAOIFI

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kazakhstan_national_bankThe National Bank of Kazakhstan, the central bank and financial services regulator of the Republic of Kazakhstan, has taken up membership in Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI). The signing ceremony to commemorate the membership was held on Tuesday 2 Dec 2014 at the World Islamic Banking Conference 2014 in Manama, Kingdom of Bahrain.

Signing on behalf of the National Bank of Kazakhstan was Mr. Nurlan Kussainov, Deputy Governor, while signing on behalf of AAOIFI was Dr. Hamed Hassan Merah, Secretary General. The signing ceremony was attended by senior officials from both organisations.

Dr. Merah said, “We are deeply honoured to welcome the National Bank of Kazakhstan as a member of AAOIFI and we would like to record our utmost appreciation for the support that has always been given to us by the National Bank of Kazakhstan.” He added that the membership would allow AAOIFI to work more closely with the National Bank of Kazakhstan and the finance industry in the Republic of Kazakhstan to support continuing development of Islamic finance.

Mr. Nurlan Kussainov said, “On behalf of the National Bank of Kazakhstan, I would like to thank AAOIFI represented by its Secretary General Dr. Hamed Merah, for accepting the membership of the National Bank Kazakhstan in this esteemed organization. The membership gives us an opportunity to gain from the international experience in development of Islamic finance industry, to benefit from recommendations of international experts and financial institutions, and to participate in workshops and conferences organized by AAOIFI.”

The Republic of Kazakhstan introduced in early 2009 law and regulations for operations of Islamic financial institutions. This then led to establishment of the first Islamic bank (Al Hilal) and the first Islamic insurance (Takaful) company in 2010. The Development Bank of Kazakhstan then became the first Sukuk issuer in the Central Asia region with its Sukuk al Murabaha issuance in July 2012, denominated in Ringgit Malaysia at the equivalent amount of approximately $76.7 million (or MYR 240 million). Earlier in 2014, the first Islamic leasing (Ijarah) company was set up in the Republic of Kazakhstan through participation of the Islamic Corporation for Private Sector Development, a member of the Islamic Development Bank Group.

Originally published on www.cpifinancial.net

Islamic Financial Services Council Summit To Be Held In Kazakhstan Next Year

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islamic finance

A summit of the Council for Islamic Financial Services will be held in Almaty in 2015, Tengri news reports citing the Governor of the National Bank of Kazakhstan Kairat Kelimbetov as saying at the briefing in the Central Communication Service headquarters in Astana in October.

“A summit of the Council for Islamic financial services will be held in 2015 in Almaty. We expect that this will enable us to obtain support in development of common standards for Islamic financial institutions,” Kelimbetov said.

A legal framework for accounting based on standards of the Auditing Organization for Islamic Financial Institutions has been developed this year, Kelimbetov said. This is similar to the conventional financing principles established by the International Financial Reporting Standards, which Kazakhstan is planning to join this year.

“Kazakhstan is one of the leaders of Islamic finance in the region of Central Asia and CIS. Over the past years we adopted the legislation unprecendented for the CIS that regulates organization and activities of Islamic finance; the Government adopted a roadmap for  evelopment of Islamic finance until 2020; we became a member of the Council for Islamic Financial Services,” Kelimbetov stressed.

He also noted that in the near future Kazakhstan would have an opportunity to actively use the tools of Islamic finance.

“I believe that in the next five years the government of Kazakhstan, the quasi-public and private sectors of our country can actively use this tool to attract sovereign and quasi-sovereign bonds and private sector bonds. Very good opportunities for this will be here already in 2015. In any case, we have prepared legislation for regulating the issuance of Islamic bonds,” Kelimbetov said

Originally published on www,en.tengrinews.kz/

RAM Ratings Reaffirms Development Bank of Kazakhstan’s AA2 Ringgit Sukuk Rating

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RAM-Ratings“The rating reflects the credit strength of the Government of Kazakhstan (GOK, rated AA2(pi)/Stable/P1(pi)), given our opinion of a very high likelihood of support in times of need.

“Ultimately owned by the GOK, DBK plays a strategic role in facilitating the former’s goal of diversifying Kazakhstan’s economy away from the oil and gas sector. Reflecting DBK’s strategic importance, the GOK has demonstrated a strong track record of support for the Bank. Apart from ongoing funding support, the GOK also infused capital into the Bank thrice between 2009 and 2013.

“As a development financial institution, DBK’s loan book inherently carries higher credit risk as the Bank finances large-scale, long-term infrastructure and industrial projects that include green-field developments. This results in very significant levels of borrower-concentration risk and problem loans. Nonetheless, its gross impaired-loan ratio had eased to 24 per cent as at end-March 2014 (end-December 2012: 47 per cent), albeit still deemed high, after the disposal of a large chunk of impaired loans in 2013.

“With the removal of the prohibition on using its own capital to fund its lending activities in April this year, DBK plans to finance more projects and expects its loan book to expand rapidly. The anticipated rapid expansion, coupled with the 19 per cent devaluation of the Kazakh tenge in February this year that may affect the debt-servicing aptitude of some of its borrowers, means that DBK’s asset quality will remain very weak. However, the Bank’s high credit risk exposure is moderated by its sound capitalisation. As at end-March 2014, the Bank’s tier-1 capital ratio stood at 19 per cent while its total assets came up to only 4.6 times of its total equity.  

“To match the long maturities of its lending portfolio, DBK relies heavily on long-term wholesale borrowings. Although this subjects the Bank to refinancing risk, the maturity profile of its wholesale borrowings is well spread out. This, coupled with the Bank’s liquid balance sheet, supports its comfortable liquidity position. Although DBK’s assets are mainly denominated in USD, its foreign-currency mismatch is manageable as the Bank also predominantly borrows in the same currency. As such, the tenge’s devaluation is not expected to affect the Bank’s ability to service its debt obligations.”

Originally published on www.cpifinancial.net

Kazakhstan Should Adjust Its Legislation For Islamic Finance: Says Central Bank Governor

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Kazakhstan should adjust its legislation for Islamic finance KelimbetovThe 4th Kazakhstan Conference on Islamic Finance took place this Wednesday in Kazakhstan. In his speech at the conference Governor of Kazakhstan’s National Bank Kairat Kelimbetov declared it was necessary for the Central Asian country to adjust its legislation to facilitate development of Islamic finance, Tengri news reports.

He said that Kazakhstan’s central bank was studying other countries’ experience in implementation of this type of financing. “The National Bank is ready to provide assistance, including financial one, for the development of the industry,” he said.

Kelimbetov suggested developing Islamic finance in Kazakhstan stage by stage and named three key areas that had to be improved to give Islamic finance a go-ahead in Kazakhstan.

“The human capital is the first one. We will be training international level experts in Islamic finance. Special grants will be made available for this. The government and the National Bank will provide the funding. In addition, we will be paying special attention to educating the population about the basics of Islamic finance, not only in Almaty and Astana (Kazakhstan’s largest cities) but also  in other regions of our country,” Kelimbetov said.

The second stage will involve improvement of the country’s legislation and building up the infrastructure needed for Islamic finance, he said. Kazakhstan has signed a technical assistance agreement with the Islamic Development Bank to help it with the latter part.

“The introduction (of Islamic finance in Kazakhstan) should progress gradually, as we need a better understanding as to where we want to get. For example, it took Malaysia and Turkey about 30 years and the share of Islamic banking in these countries is around 20 percent and 5 percent,” he said.

The third area that Kazakhstan needs to work on to introduce Islamic finance is a proper marketing strategy and reliable partners. Kelimbetov said that “attracting financial institutions of the Middle East and South-East Asia” to Kazakhstan was crucial for the strategy to be successful.

Originally published on en.tengrinews.kz
www.hypersmash.com/dreamhost/

Kazakhstan Islamic Bank Eyes Regional Expansion

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Kazakhstan Islamic Bank Eyes Regional ExpansionKUALA LUMPUR: Kazakhstan’s Al Hilal Islamic Bank, the only Sharia-compliant lender in the country, may expand into neighbouring countries as legislative efforts to develop Islamic finance gather pace across the region, its chief executive said.

Fresh Islamic finance legislation is being developed in Azerbaijan, Kyrgyzstan and Tajikistan, creating a more welcoming framework for the industry in countries which have secular regulatory regimes.

Legislation is also being redrawn in Kazakhstan, the first former Soviet country to introduce Islamic finance rules in 2009; the initial set of rules failed to spur much activity.

Almaty-based Al Hilal, whose parent is wholly owned by the Abu Dhabi government, is considering increasing its geographical presence as part of its 2015 business plan, chief executive Prasad Abraham said on the sidelines of an industry conference.

“Our medium-term strategy is to test the effectiveness of the Kazakhstan model, and then use that as a base for further expansion to other regions of the CIS (Commonwealth of Independent States) as appropriate.

“An important precondition for any expansion is the existence of a proper legislative framework for Islamic finance in the respective countries.”

A draft amendment, currently awaiting discussion in Kazakhstan’s parliament, would provide the bank with a clearer framework that could translate into better commercial opportunities, Abraham said.

This could spur new entrants into the sector, such as Zaman Bank, a local bank which is working to convert itself into the country’s second Islamic bank. It has not given a time frame for that plan.

In addition to Zaman, the regulator has now received an application to operate another fully-fledged Islamic bank, Abraham said without elaborating.

Launched in 2010, Al Hilal is on target to see asset growth of 70 per cent this year, with similar growth expected for 2015, he said, adding this was partly because growth was from a low base; it is expected to slow as the bank gains size. The bank posted a 46pc increase in assets in 2013, reaching 16.7 billion tenge ($92 million), financial statements showed. Its business is focused on government and large corporate clients, and after conducting a feasibility study earlier this year it has decided to wait for legal issues to be resolved before offering retail banking services. Islamic banks in Kazakhstan are categorised on a par with other commercial banks, known as Tier 2 banks, but current law does not extend to them all the tax privileges that conventional banks have.

Originally published on www.gulf-daily-news.com

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