UK’s Islamic banking assets surge 26 percent to $8.2bn in 2023: Fitch Ratings

UK’s Islamic banking assets surge 26 percent to $8.2bn in 2023: Fitch Ratings
Islamic finance gained traction following the 2008 global financial crisis, positioning London as a major hub for Shariah-compliant finance in the West. Shutterstock
Short Url
Updated 01 October 2024
Follow

UK’s Islamic banking assets surge 26 percent to $8.2bn in 2023: Fitch Ratings

UK’s Islamic banking assets surge 26 percent to $8.2bn in 2023: Fitch Ratings
  • UK’s Islamic finance industry to grow to $15 billion in the medium term
  • London Stock Exchange is now the third-largest listing venue for US dollar sukuk globally

RIYADH: Islamic banks in the UK saw their assets surge 26 percent in 2023 to $8.2 billion, reinforcing the country’s position as a key Western hub for Shariah-compliant banking. 

Fitch Ratings, in its latest report, expects the UK’s Islamic finance industry to grow to $15 billion in the medium term, up from $10 billion at the end of 2023. 

This growth will be driven by the conversion of a conventional bank to an Islamic bank, continued asset growth in Islamic banks and funds, and supportive regulations. 

It highlighted that the London Stock Exchange is now the third-largest listing venue for US dollar sukuk globally. The LSE holds a 35 percent global share of US dollar sukuk, with around $80 billion outstanding as of the end of the first half of this year. 

Sukuk, also known as Islamic bonds, are Shariah-compliant debt instruments through which investors gain partial ownership of an issuer’s assets until maturity. 

Islamic finance gained traction as a safer alternative following the 2008 global financial crisis, positioning London as a major hub for Shariah-compliant finance in the West. Countries like Luxembourg, the US, and Ireland have also become notable domiciles for sukuk, the report said. 

“English Law is the governing law for most dollar sukuk and Islamic syndications globally. UK banks are among the key sukuk arrangers and Islamic interbank and derivatives counterparts for Islamic banks,” said Fitch. 

It added: “London Metals Exchange is accessed by Islamic banks in many countries to facilitate cash financing through tawarruq contracts.” 

In Islamic finance, tawarruq contracts involve purchasing goods on credit at a marked-up price and then selling them at a lower price to obtain cash. The focus of these transactions is liquidity, not the possession of the goods. 

Fitch affirmed the growth of Islamic finance in the UK, noting that the country is home to four Islamic banks, all owned by Gulf Cooperation Council members. The report also indicated that the UK is set to establish its fifth Islamic bank, likely boosting competition and adding depth to the sector. 

“The conversion of Ahli United Bank to an Islamic bank, following the acquisition of its Bahraini parent by Kuwait Finance House in 2023, is expected to be completed in 2024,” said Fitch. 

The US-based credit rating agency, however, added that the domestic Islamic finance industry in the UK remains niche and is unlikely to achieve mainstream relevance until at least the medium term. 

“Despite their longstanding presence in the UK and supportive regulations, Islamic banks held only 0.1 percent of the UK banking system assets at end-2023,” said Fitch. 

It added: “Demand drivers are low as Muslims are only around 6.5 percent of the UK’s population, with generally limited awareness of Islamic finance, as well as varying levels of shariah-sensitivity and confidence in the product offering.” 

The US-based agency also said that the UK government plans to launch a Shariah-compliant alternative student finance product after 2025, potentially boosting financial inclusion. 

However, the report said that UK-Islamic funds face stiff competition from leading Western jurisdictions such as Luxembourg, Ireland, the US, and Jersey. 


Wyndham targets midscale hotel segment to meet growing demand in Saudi Arabia 

Wyndham targets midscale hotel segment to meet growing demand in Saudi Arabia 
Updated 12 min 25 sec ago
Follow

Wyndham targets midscale hotel segment to meet growing demand in Saudi Arabia 

Wyndham targets midscale hotel segment to meet growing demand in Saudi Arabia 

DUBAI: US hospitality giant Wyndham aims to extend beyond the luxury market as it eyes the midscale segment to fill a gap in Saudi Arabia’s booming hotel market. 

In an interview with Arab News on the sidelines of the Future Hospitality Summit in Dubai, Dimitris Manikis, president for Europe, Middle East, Eurasia, and Africa at Wyndham Hotels & Resorts, emphasized that while there is a significant focus on high-end hospitality in Saudi Arabia, tapping into the economy and midscale sectors is essential to reaching the Kingdom’s target of 150 million tourists by 2030. 

He highlighted the success of Wyndham’s Ramada brand in the region and discussed plans to introduce more midscale offerings like Wyndham and Wyndham Garden into the Saudi market.

“For us, there’s a lot of talk about luxury in Saudi. It’s all about luxury. But in order to get the 150 million tourists that the Kingdom is actually looking for, you have to start looking at the economy and budget sectors,” Manikis said.

The company is already invested in Saudi Arabia, with 14 operational hotels and more on the way, highlighting its commitment to the Kingdom. 

He further elaborated on the importance of catering to a broader spectrum of travelers, saying: “It’s not just about the luxury in the high end. It’s about a broader spectrum of travelers, and that’s exactly what Wyndham is actually doing in Saudi.”

Wyndham’s regional headquarters are in Dubai, with a satellite office in Saudi Arabia. 

“We have a pipeline of about seven properties as we speak. Ramada is our most popular brand and is the brand that resonates a lot with the Middle East. We’ve opened up Wyndham Garden already in the Kingdom, and obviously there are a couple of other brands that we believe have a great future,” the top official told Arab News. 

Formula One of hospitality 
 
Manikis compared Saudi Arabia’s progress in the hospitality sector to Formula One, drawing a parallel between innovations in the sport and how they later influence the broader automotive industry. 

“In Formula One, whatever you do in cars, five years later, you find the same technology in the mass production. Things that are happening in Saudi Arabia today on technology, on sustainability, on infrastructure or new concepts and ideas, you will find them in five years to be mainstream across so many different places in the world, in hospitality,” he said. 

For Manikis, the Kingdom’s advances are not just about expansion or visitor numbers, but about pioneering new methods that will reshape the future of hospitality. 

“What is happening in the Kingdom is not just about growth, and so many hotels and so many visitors or so many tourists, it’s actually about the new things that they’ve been tested in the market, that will change the future of hospitality in the next five to ten years,” he said. 

Manikis pointed to projects like NEOM as prime examples of innovation, where innovative advancements in energy, food sustainability, and infrastructure are being rolled out. 

“These are amazing things that are happening in Saudi. They get deployed in Saudi and you will find them in the next five to ten years in so many different countries in the world.” 

Middle Eastern Perspective 

Shifting his focus to the wider Middle East, Manikis highlighted the diverse approaches to hospitality in the region. “Everybody, every single country has hospitality at its core,” he said. 

He went on to explain: “The last five to seven years, we have seen what happens in hospitality in Qatar, in Abu Dhabi, we see what is going on near us in Ras Al-Khaimah, in Ajman, in Saudi Arabia, in Bahrain, everybody. The good news about the GCC and the Middle East in general, they have their own needs, their own focus.” 

Manikis showed excitement about how the hospitality industry in the Gulf Cooperation Council is transforming societies. “The good news about the GCC is that each country has its own needs, but they all recognize hospitality as a key contributor to gross domestic product,” he said. 

Manikis highlighted the enthusiasm of the region’s younger generation for hospitality, contrasting it with Europe, and said the passion energizes him during visits. 

Human Element

Despite the rising influence of technology and artificial intelligence in the sector, Manikis emphasized the irreplaceable role of human interaction. 

He acknowledged that AI will play a supportive role, such as chatbots providing customer service, but he warned against overstating its importance. “Technology helps, but we have to be careful. If we want to bring the younger generation into hospitality, we cannot tell them their jobs will be taken over by robots in five years.” 

Manikis offered a glimpse into his Wyndham’s immediate future, saying: “We are signing a couple of deals in India with the developer who is actually doing a deal here in Dubai, and then we’ve got another three deals with that particular owner in India. And then we are looking on a three deal, three sides deal, two in Abu Dhabi and one in Dubai as well.” 


Saudi Arabia and Azerbaijan explore joint sovereign investment fund to boost bilateral economic ties

Saudi Arabia and Azerbaijan explore joint sovereign investment fund to boost bilateral economic ties
Updated 42 min 3 sec ago
Follow

Saudi Arabia and Azerbaijan explore joint sovereign investment fund to boost bilateral economic ties

Saudi Arabia and Azerbaijan explore joint sovereign investment fund to boost bilateral economic ties

RIYADH: Azerbaijan has proposed the creation of a joint sovereign investment fund with Saudi Arabia, aiming to enhance investments in key sectors and potential third-party markets. 

The initiative was discussed during a meeting in Azerbaijan between the country’s Minister of Economy, Mikayil Jabbarov, and Hassan Al-Huwaizi, chairman of the Federation of Saudi Chambers, who led a business delegation from the Kingdom to explore investment opportunities in the nation.

The minister highlighted that the proposed fund could drive investments in priority sectors such as energy, tourism, and infrastructure, crucial for both economies’ diversification agendas, the Saudi Press Agency reported.

Saudi companies are already significantly involved in Azerbaijan, reflecting strong economic ties between the two countries. 

Jabbarov emphasized the presence of major corporations such as Aramco, SABIC, and ACWA Power in Azerbaijan, highlighting the country’s appeal as an investment destination, according to the report.

In addition to the establishment of the fund, discussions focused on the broader spectrum of Saudi investments in Azerbaijan, with key areas identified, including petroleum, renewable energy, and industry, as well as tourism, agriculture, and mining.

Both sides acknowledged the necessity of signing an investment protection agreement to ensure a secure environment for investors, safeguarding the flow of capital between the nations.

Al-Huwaizi stressed the importance of this document, highlighting that legal and financial security is pivotal for attracting more Saudi investments into Azerbaijan. 

He also discussed the potential for Azerbaijani companies to engage in infrastructure projects within the Kingdom, as well as opportunities to export food products to Saudi Arabia. 

The Federation of Saudi Chambers further expressed support for a proposal to hold a regional exhibition showcasing regional products in Azerbaijan, further solidifying trade relations between the two regions.

The visit coincided with the second edition of the Gulf Cooperation Council-Azerbaijan Economic Forum, held in Baku, which focused on fostering sustainability, investments, and partnerships between nations. 

Organized by the Federation of GCC Chambers in collaboration with Azerbaijan’s Export and Investment Promotion Agency, the forum provided a platform for businesses to explore new investment opportunities and strengthen ties. 

A memorandum of understanding was signed during the event, facilitating cooperation on investment projects and trade promotion between the GCC and Azerbaijan.

Azerbaijan’s Minister of Finance, Samir Sharifov, also met with the Kingdom’s delegation, offering attractive incentives to Saudi investors. 

Sharifov outlined key benefits, such as the allocation of free land for manufacturing projects and assurances of smooth capital flows, backed by the stability of the Azerbaijani currency. These incentives aim to make Azerbaijan’s free economic zones more appealing to Saudi investors.

The recent developments underscore the growing economic cooperation between the Kingdom and Azerbaijan, driven by mutual interests in expanding sectors such as energy, infrastructure, and tourism. 

Both nations view this collaboration as a strategic step toward diversifying their economies and boosting bilateral trade.


Closing Bell: Saudi main index closes in green at 12,254

Closing Bell: Saudi main index closes in green at 12,254
Updated 5 sec ago
Follow

Closing Bell: Saudi main index closes in green at 12,254

Closing Bell: Saudi main index closes in green at 12,254

RIYADH: Saudi Arabia’s Tadawul All Share Index rose on Tuesday, gaining 27.44 points or 0.22 percent to close at 12,253.54. 

The total trading turnover of the benchmark index was SR6.43 billion ($1.71 billion), with 116 of the stocks climbing and 104 retreating. 

The Kingdom’s parallel market, Nomu, declined by 0.53 percent to 25,309.05.

The MSCI Tadawul Index edged up by 0.38 percent to close at 1,533.79. 

The best-performing stock on the main market was Al-Baha Investment and Development Co. The firm’s share price surged by 9.09 percent to SR0.24. 

Other top performers were Middle East Specialized Cables Co. and CHUBB Arabia Cooperative Insurance Co., whose share prices soared by 7.79 percent and 7.69 percent, respectively. 

The worst performing stock of the day was Salama Cooperative Insurance Co., as its share price declined by 3.55 percent to SR27.15. 

Al Mohafaza Co. for Education and Ghida Alsultan for Fast Food Co. were the top performers in Nomu, with their share prices climbing by 11.16 percent and 10 percent, respectively. 

On the announcements front, the Capital Market Authority said it has approved Lamasat Co.’s application for the registration and offering of 6 million shares representing 7.41 percent of the firm’s capital in the parallel market. 

In another statement, CMA added that it approved Hedab Alkhaleej Trading Co.’s request to float 800,000 shares representing 10.67 percent of the company’s capital on Nomu. 

The authority also added that it green lighted the request of Arabian Company for Agriculture and Industrial Investments to register and float nine million shares, representing 30 percent of the company’s share capital on the main market. 

Almoosa Health also received a positive nod from the CMA to float 13.29 million shares on the Kingdom’s main index, which represents 30 percent of its share capital. 

“The CMA’s approval on the application shall be valid for six months from the CMA Board resolution date. The approval shall be deemed canceled if the offering and listing of the company’s shares are not completed within this period,” said the authority on all the approvals it made. 


Saudi fertilizer exports to US climb 2% as trade ties flourish

Saudi fertilizer exports to US climb 2% as trade ties flourish
Updated 01 October 2024
Follow

Saudi fertilizer exports to US climb 2% as trade ties flourish

Saudi fertilizer exports to US climb 2% as trade ties flourish

RIYADH: Fertilizer exports to the US from Saudi Arabia saw an annual increase of 2 percent in 2023 as total bilateral trade reached SR112 billion ($29.7 billion), according to new figures.

A report by the US-Saudi Business Council showed that strong oil exports and growing non-oil sectors have fueled and bolstered this economic relationship, with the Kingdom’s exports to the US standing at SR60 billion over the 12-month period.

Of that, $13.7 billion was derived from crude oil, reaffirming the Kingdom’s position as a key oil supplier to the North American country.

In the non-oil sector, exports to the US amounted to SR8.5 billion, according to the Saudi Press Agency.

This came as Saudi Vision 2030 aims to position the nation as a global investment hub, focusing on diversifying the economy beyond oil.

“Trade relations between the US and Saudi Arabia remain a cornerstone of economic engagement between the two countries, reflecting shared strategic interests and evolving global dynamics,” Albara’a Al-Wazir, director of economic research at the US-Saudi Business Council, said.

He added: “As both countries progress, the growth of trade and foreign direct investment will be key to deepening this partnership. FDI serves as a vital channel for the exchange of capital, technology, and expertise, which is particularly important as Saudi Arabia works to diversify its economy beyond oil.”

Fertilizers led the non-oil exports, valued at SR3 billion, making up 35 percent of the Kingdom’s non-oil exports to the US, while organic chemicals ranked second – valued at SR2.6 billion, representing 31 percent of the total.

In 2023, inorganic chemicals, precious and rare metals, and radioactive materials experienced a significant surge of 7.686 percent, reaching $12 million.

US exports to Saudi Arabia also gained strong momentum, totaling $13.8 billion, marking a 20 percent increase from the previous year.

These exports encompassed several key industries, including electrical and mechanical equipment, industrial products, agricultural goods, and pharmaceuticals.

Automobiles continued to be the leading US export to the Kingdom, valued at $2.8 billion which reflects a 32 percent year-on-year increase.

The second-largest export category was nuclear reactors, boilers, machinery, and parts, accounting for 18 percent of total US exports to the country, with a value of $2.5 billion and a growth rate of 38 percent year-on-year.

Aircraft and parts ranked as the third-largest US export category to Saudi Arabia, contributing $1.7 billion.

Texas maintained its lead as the top US state in trade with the Kingdom, with exports totaling $2.9 billion.

California came in second, exporting $886 million, marking a 12 percent increase from the previous year.

 

North Carolina rose to third place with $846 million in exports, experiencing a 17 percent year-on-year growth.

 

“The US is well-positioned to support this transformation through investment in non-oil sectors such as manufacturing, technology, and renewable energy—crucial areas for Saudi Arabia’s Vision 2030 goals,” Al-Wazir said.


Saudi Arabia’s tourism growth key to Vision 2030: Accor CEO 

Saudi Arabia’s tourism growth key to Vision 2030: Accor CEO 
Updated 10 min 37 sec ago
Follow

Saudi Arabia’s tourism growth key to Vision 2030: Accor CEO 

Saudi Arabia’s tourism growth key to Vision 2030: Accor CEO 

DUBAI: French hospitality firm Accor is optimistic about the growth potential in Saudi Arabia’s tourism sector, which is being driven by the Kingdom’s Vision 2030 objectives and rich history, said the company’s top official. 

In an interview with Arab News on the sidelines of the Future Hospitality Summit in Dubai, Sebastien Bazin, group chairman and CEO of Accor, highlighted the pivotal role of the hospitality industry in reducing unemployment among Saudis. 

Bolstering the tourism sector and reducing joblessness is crucial for Saudi Arabia, as the Kingdom embarks on an economic diversification effort aimed at decreasing its dependence on oil. 

The National Tourism Strategy of Saudi Arabia aims to attract 150 million visitors by 2030 and increase the sector’s contribution to the nation’s gross domestic product from 6 percent to 10 percent. 

Bazin said: “I am very bullish about Saudi Arabia. They have a plan, they have a leader, they have a vision, they have the right brands, and they have the financial resources, geography, and history. So, it is the country not to miss.”

He added: “They (Saudi Arabia) have something which is gold in their hands — the population. You have 70 percent of the population under 35 years old. Many of them don’t have a job. They are seeking and asking for a job.” 

The CEO explained that the generosity of Saudi culture would play a significant role in encouraging the country’s youth to enter the travel and hospitality industry. “It is an enormous base to build upon.” 

Bazin also pointed to the Middle East’s emergence as a global tourist hotspot for both international and domestic travelers. He identified several factors fueling tourism growth in the region, including “great airlines, great infrastructure, safety protocols, food and beverage venues, and impeccable weather.” 

Bazin added: “I am very positive. You are going to see a 5 percent to 7 percent demand growth globally in the world of travel and tourism. I think that growth in the Gulf Cooperation Council and Saudi will probably be well above 10 percent. Much faster, much bigger than the rest of the world.”

He further stated that the growth of tourism in the GCC and the Middle East will be driven by the emerging middle class and domestic travelers. 

Regarding the impact of advanced technologies like artificial intelligence on the hospitality sector, Bazin expressed a cautious optimism, asserting that AI should enhance rather than replace human interactions. 

“We know it (AI) is going to be big. It certainly is going to be very important for data before and after your stay; all that seamless journey will probably be Generative AI-driven. During the stay, where you’re going to be with me in the hotel, AI will be instrumental. But I don’t want AI to surpass human interactions,” said Bazin. 

He added: “I want you to say ‘hello’ when you pop in, and I want my people to ask you, ‘How are you today?’ That human interaction is one of the reasons why you travel — to discover somebody else’s culture and religion. So, AI is a critical and important enhancer, but should not be a replacer of what we do every day.”