BEST ISLAMIC FINANCIAL INSTITUTIONS IN BRUNEI (GLOBAL FINANCE 2008) : Islamic Bank of Brunei

On 7th July 2005, an announcement was made by the Ministry of Finance that His Majesty Sultan Haji Hassanal Bolkiah Mu’izzaddin Waddaulah, Sultan and Yang Di-Pertuan of Negara Brunei Darussalam has consented for the proposed merger of the Islamic Bank of Brunei Berhad (IBB) and the Islamic Development Bank of Brunei Berhad (IDBB).

A “Vesting Order” was obtained from the High Court of Brunei Darussalam on the 1st of May 2006, effectively transferring all assets and liabilities of both IBB & IDBB and its subsidiary companies to Bank Islam Brunei Darussalam Berhad (BIBD). Thus BIBD was fully operational on 3rd July 2006.

Bank Islam Brunei Darussalam Berhad has 14 BIBD branches located at strategic locations in all the four districts; 11 branches located in the Brunei Muara District, 1 Branch in the Tutong District, 2 located in the Kuala Belait District and 1 located in the Temburong District.

To further cater its obligation to provide the best services and facilities to its customers, BIBD also has the single largest distribution of ATM network’s in the country i.e. 50 locations at every district, on all BIBD branches and offsite locations. As such, it has employed over 500 officers and staff to work at the offices and branches.

BIBD has also subsidiary companies under it, which are Takaful BIBD Sdn Bhd, which provides insurance coverage and investments, and BIBD At-Tamwill Berhad, which provides fixed deposits, vehicle hire purchase and consumer product financing.

The current Board of Directors for BIBD are :

Yang Berhormat,Pehin Orang Kaya Hamzah Pahlawan Dato Seri Setia Awang Haji Abdullah bin Begawan Mudim Dato Paduka Haji Bakar, Minister of Development, Chairman of Bank Islam Brunei Darussalam Berhad

Yang Berhormat,Pehin Orang Kaya Seri Dewa Mejar Jeneral (B) Dato Seri Pahlawan Haji Mohammad bin Haji Daud, Minister of Culture, Youth & Sports, Deputy Chairman of Bank Islam Brunei Darussalam Berhad

Yang Mulia Tuan Haji Bahrin bin Abdullah, Permanent Secretary,Ministry of Finance Director of Bank Islam Brunei Darussalam Berhad

Yang Mulia Iqbal Ahmad Khan,Director of Bank Islam Brunei Darussalam Berhad

Yang Mulia,Tuan Javed Ahmad,Director and Acting Managing Director, Bank Islam Brunei Darussalam Berhad

BIBD’s Corporate Secretary is :

Yang Mulia,Noraini binti Haji Sulaiman, Corporate Secretary, Bank Islam Brunei Darussalam Berhad

The BIBD Syariah Advisory Members are as follows :

Yang Dimuliakan,Pehin Orang Kaya Paduka Setia Raja Dato Paduka Seri Setia Haji Awang Suhaili bin Haji Mohiddin,Chairman of Syariah Advisory Body

Yang Mulia,Dato Seri Setia Haji Awang Metussin bin Haji Awang Baki,Member of Syariah Advisory Body

Yang Mulia,Dr Hajah Masnon binti Haji Ibrahim,Member of Syariah Advisory Body
Yang Mulia Awang Haji Mazanan Bin Haji Yusof,Member of Syariah Advisory Body
Yang Mulia Awang Haji Shukri bin Haji Ahmad Secretary of Syariah Advisory Body

BIBD is always striving to introduce new, innovative and sophisticated Islamic Banking products and services to the public. Amongst the products launched were :

Introduction of the Sukuk Al Ijarah BLNG worth B$100 million on 23rd August 2006, whereby BIBD was appointed by Brunei LNG Sdn. Bhd. to be the underwriter and lead arranger for the Sukuk.

In collaboration with Brunei Shell Marketing (BSM), Ministry of Development and Ministry of Finance, Bank Islam Brunei Darussalam Berhad launched the Electronic Kad Inden to replace the existing Goverment Manual Kad Inden. With the electronic Kad Inden, it gave convenience to Governments offices to purchase fuel and other products available at the fuel stations in Brunei Darussalam.

Ministry of Finance has also appointed BIBD as the lead manager for the Government Sukuk Al Ijarah (short term) worth B$120 million

BIBD Musyarakah Musahamah and Al-Bai Tradable Musyarakah Certificate, the 1st of its kind were introduced. The certificates provide form of investment to the general public.

Launching of the BIBD Kad M to the public, i.e. purchasing of fuel using the card instead of paying cash at participating Shell stations.

Introducing the BBA Baiti Financing for houses in collaboration with Supercrete Trading Sdn. Bhd. i.e. purchasing of houses at affordable rates.

Principal Protected Investment, an Islamic Investment solution with 100% capital protection and 3 year lock-up period.

Best Takaful Provider (Global Finance 2008) : Solidarity Group

Solidarity was established with the vision of becoming the world’s leading takaful Company, generating superior returns for shareholders and policyholders alike. The plans for increase of capital, growth by geographical expansion and acquisition currently being articulated, have highlighted the need for corporate re-structuring in order to focus more effectively on achieving these objectives.

During 2007, the Company had three key areas of activity; General Takaful, Family Takaful, and Asset Management & Investments. These were supported by centralised Corporate Services covering Human Resources, Information Technology, Legal & Compliance, Finance and Corporate Communications.

In order to meet Solidarity’s planned business growth and strategic expansion, during 2007, the Board approved a proposal to convert the Company’s corporate structure into a group holding structure.As a result, Solidarity has recently restructured into an insurance Group with the Company becoming Solidarity Group Holding, having two fully owned subsidiaries – Solidarity Family Takaful Company and Solidarity General Takaful Company – incorporated to carryon the group’s core takaful operations -providing Family & General Islamic Sharia compliant takaful products respectively.

Solidarity’s vision is to be a leading international Islamic-oriented financial services group generating superior returns to shareholders.Solidarity’s mission is to provide a range of Shariah compliant protection, savings and investment products with quality customer service.As a responsible corporate member of the communities it serves, Solidarity values (in alphabetical order):Innovation, Integrity, Social Responsibility, Teamwork & Partnership and Transparency.

The Company is controlled through its Board of Directors. The Board’s main roles are to provide entrepreneurial leadership, approve strategic policies, plans and objectives and ensure that the necessary financial and other resources are made available to meet those objectives. The Board has formed two sub-committees, the Executive Committee and the Audit committee. The roles and responsibilities of these committees have been defined by the Board.

The Legal & Compliance Department is guided in executing its works by the Anti-Money Laundering Manual. The AML Manual contains policies, procedures and guidelines adopted by Solidarity, to ensure compliance and adherence to the requirements of the Anti-Money Laundering Act & Legislation as well as the Financial Crime Module (“FC module”) of the Insurance Rulebook (Volume 3) issued by the Central Bank of Bahrain (CBB), with relevant updates being issued from time to time.

The Compliance Department exists as a mechanism for ensuring that the sales standards of Solidarity Company are met. These standards are derived from the internationally accepted principle of best advice and the regulatory requirements of the financial supervisory bodies in the territories in which Solidarity will write business. It is anticipated that, with time, external regulation will increase and that, as it does, Solidarity’s standards will adapt to accommodate the new requirements.

The Internal Audit department is an independent appraisal activity established within Solidarity to examine and evaluate its activities. The objectives of internal auditing are to assist members of the organization in the effective discharge of their responsibilities by furnishing them with analysis, appraisals, recommendations, counsel, and information concerning the activities reviewed and by promoting effective control at reasonable cost.

The authority and responsibilities of the Department are established by the Audit Committee on behalf of the Board of Directors. Internal audit staffs are authorized, within agreed plan and mandate, to review all areas of the Company and to have full, free, and unrestricted access to all Company activities, records, property, and personnel.

Good corporate governance requires ensuring that the board of directors and the management have established appropriate organizational processes and corporate controls to measure and managing risk across the business. All businesses in a free market are exposed to risks which, while existing from inception, are becoming increasingly complex in so far as source of risk is not only getting wider but also changing rapidly. The Group risk management function aims to establish “a comprehensive and integrated risk management framework for managing company wide risk in order to maximise the company’s value” and to benefit the business in terms of improved performance, increased organizational effectiveness and better risk reporting.
Solidarity’s Strategy depends heavily on continuously strengthening its human resources, especially Bahraini resources, which in turn undergo development and training to meet with the firm’s vision and international standards. Solidarity currently boasts a diverse team of well trained and highly qualified professionals in all areas of practice – including insurance, finance, information technology, management, investment and law.

The group’s support to the insurance and takaful industry in the Kingdom of Bahrain and the region is represented in Solidarity’s continuous efforts to further develop the human capital by providing educational workshops primed to highlight the importance of management skills and its role in developing a solid ground for future economic development.

The Solidarity Group, with its recently established flagship subsidiaries -- Solidarity Family Takaful and Solidarity General Takaful -- in the Kingdom of Bahrain, is going to improve the quality of Islamic financing services not just in the Middle East but worldwide. Takaful Islamic Insurance Company in the Kingdom of Saudi Arabia and Solidarity Takaful SA in Luxemburg are part of our family. We also hold strategic shares in number of Takaful firms operating in the Sultanate of Oman, the Hashemite Kingdom of Jordan, Malaysia and the Kingdom of Saudi Arabia. The Company operations have included several strategic acquisitions, investments and large scale projects. The Company participated in the establishment of First Insurance Company (plc.) in Jordan, and MAA Takaful Berhad in Malaysia. The existing relationship with Al Madina Gulf Insurance Company in Oman was further enhanced by providing a higher level of technical and service support. In Saudi Arabia, Solidarity signed a Memorandum of Understanding with Saudi Shareholders to establish a new joint-venture cooperative insurance company. With a paid-up capital of approximately Saudi Riyals 555 million, this new company will offer a comprehensive range of Takaful products. By merging Solidarity’s industry experience and Saudi Shareholders local market knowledge, this new venture aims to tap the growing demand in Saudi Arabia for takaful products and services. In addition, Solidarity has already obtained a preliminary license to commence its operations in the Arab Republic of Egypt. Solidarity has also applied to the appropriate regulatory authorities in UAE to establish takaful operations, while in Qatar; the Company is seeking a licence to operate within the Qatar Financial Centre. Together with its subsidiary in Luxemburg, Takaful SA, the Company now has a presence, either existing or in progress, in nine countries around the world. This is expected to increase in the next few years, as Solidarity continues to grow its global footprint through both organic and inorganic growth.
Solidarity, being a takaful group, maintains separate books of accounts for Shareholders and Policyholders transactions. The financial statements are prepared in accordance with Financial Accounting standards issued by Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) and International Financial Reporting Standards (IFRS).

First Islamic Equity Product Launched In UK

By Mushtak Parker
LONDON: The London-based ABC International Bank's Islamic Asset Management (IAM) entity, both of which are subsidiaries of the Bahrain-based consortium bank, Arab Banking Corporation (ABC) Arab Banking Corporation (ABC) , has launched the first retail Shariah-compliant capital-protected equity product in the UK under its 'Alburaq' brand.

The savings product, which has a minimum subscription of just £500 and is a Shariah-compliant alternative to a conventional guaranteed equity bond, adds to an increasing number of retail Islamic financial offerings in the UK market, which now includes mortgages, Takaful (insurance), pensions, current and deposit accounts and even escrow accounts for money transfers. Other Shariah-compliant retail products in the process of being launched include ISAs (investment savings accounts) and child trust accounts.

The product was structured by ABC International Bank and is offered in partnership with the Bank of Ireland, which has a long history of providing guaranteed equity bonds to UK consumers. ABC Group ABC Group is one of the largest banks in the Arab world with assets totaling around $32.7 billion at the end of December 2007. The group announced net profits of $125 million for the year 2007.

The government of Prime Minister Gordon Brown has been very supportive of developing the Islamic finance sector under the Labor Party's social and financial inclusion policies. At the same time, it is the stated policy of the UK to develop London into an international hub for Islamic finance, investment and trade. Only yesterday at the Jeddah oil summit, Brown reiterated that oil producers in the GCC states should divert some of their record liquidity surpluses to investment in the developed countries in renewable energy initiatives and other sectors. These funds could be channeled through sovereign wealth funds; through conventional or Islamic capital flows. Bahrain-based Arcapita Bank Arcapita Bank , for instance, was one of the first Islamic financial institutions to invest in alternative energy in the UK in a wind farm project developed by Innogy.

The UK Treasury and Financial Services Authority (FSA), however, are only too aware that the Islamic finance industry in the UK needs to improve customer access to and awareness of Islamic retail financial products. UK Economic Secretary and City Minister Kitty Ussher, who is effectively in charge of Islamic finance at the treasury, at a meeting of the Islamic Finance Experts Group (IFEG) at the treasury earlier this year, stressed that "the UK is at the forefront of developments in Islamic finance and London continues to seize new opportunities. We have made tremendous inroads in the wholesale markets...But there is also an important domestic market, which we want to be accessible and open.

"There are nearly two million Muslims living in the UK and, thanks in part to legislative changes introduced by this government, the Islamic mortgage market is now worth over £500 million. Going forward, the government and industry want to continue to do all it can to see the retail market flourish and ensure that everyone - regardless of faith - has equal access to competitive financial products," he said.

ABC International Bank claims that the Alburaq savings plan provides a new way for those wishing to invest in accordance with their faith and provides savers easy exposure to potentially unlimited returns linked to shares in major companies, all with the added comfort of capital protection and Shariah compliance.

According to Keith Leach, head of Alburaq at ABC International Bank, said, "Alburaq is very excited to be the first to bring a Shariah compliant capital protected product to the retail market in the UK. Over the past few years the UK has seen an increase in the availability of Islamic home finance products, but there remains very few options for Muslims wishing to save money in accordance with their religious beliefs. This new account is also an easy way for Muslim savers to gain exposure to the equity markets, in a secure way. While it is considered permissible within Islam for Muslims to own shares, there are restrictions on the type of companies that are considered allowable. The companies must not be over-reliant on debt nor must they be engaged in activities that conflict with the principles of Shariah. Many of these principles will be similar to those required by ethical investors."

Savers will be able to deposit funds with the Bank of Ireland for five years in an account structured under the Wakala contract. At maturity, savers will receive their initial capital back together with 100 percent of any gain in the performance of a basket of 20 shares in global companies selected from the Dow Jones Islamic Market (DJIM) Titans 100 Index.

Des Crowley, chief executive of the Bank of Ireland UK Financial Services, is confident that "this is a highly innovative product, which is the first of its kind and directly addresses the saving needs of the Muslim community. We have been working with Alburaq for four years providing Islamic Home Finance and (this product) should be seen as the next stage in our development of Shariah compliant products."

The Alburaq fixed-term savings product offer closes on Sept. 5 2008 and investors will have their funds tied up for five years. The maximum opening deposit is £1 million and the promoters stress that there is no cap on the returns; in other words customer's enjoy 100 percent of the calculated return.

Capital protected funds are not new in the market. Several institutions - such as HSBC, the National Commercial Bank, Al-Rajhi Bank, Deutsche Bank and others - have launched Shariah-compliant capital protected funds in the Middle East.

While this product is new in the UK, Islamic equity funds per se are not, although they have had a very mixed record. Al-Madina Equity Fund, the Al-Safa Equity Fund and the Parsoli Global Equity Fund, which were launched at different times over the last decade or so, have all dismally failed. The first two were closed soon after they were launched. The latter has failed to make any impact. The reasons are manifold - the wrong promoters, wholly inadequate marketing strategies and resources, and perhaps the wrong timing.
Source : Arab News