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Interview islamic trade finance body to expand global reach ceo


´╗┐The Jeddah-based International Islamic Trade Finance Corp (ITFC) plans to strengthen its global network of offices in an effort to increase the use of sharia-compliant banking in merchandise trade."We want to be closer to member countries - to do this we need to decentralise our activities," said Hani Salem Sonbol, chief executive of the ITFC, a member of the Islamic Development Bank Group (IDB). The ITFC, which currently has offices in Jakarta, Dakar and Istanbul, will move more staff there and open a branch in Dubai this year to serve as a gateway to Africa, he added. Islamic trade finance, which follows religious principles such as a ban on interest, accounts for only a tiny fraction of the trillions of dollars of bank-intermediated trade finance conducted globally every year.

But the ITFC, which uses its expertise and funds to facilitate Islamic trade finance, says it is expanding its activities partly through new business with countries outside the traditional core areas of sharia-compliant finance in the Gulf and southeast Asia. Last month, it signed financing agreements with Djibouti, Comoros, Mali and Mauritania, and is exploring transactions in Guyana, the newest member of the IDB Group, Sonbol said. The ITFC approved transactions worth $6.1 billion in the financial year to last October, up from $5.2 billion a year earlier. It more than doubled financing approvals to sub-Saharan Africa; Egypt, Pakistan and Turkey saw some of the biggest individual increases in approvals.

Difficulties in the global economy could dampen further growth but the ITFC aims for around $7 billion of approvals this year, Sonbol said. Traditionally, Islamic banks have not become heavily involved in trade financing as it often requires large balance sheets; they have left such business for Western banks to dominate.

To overcome this, the ITFC has developed a network of more than 70 financial institutions which last financial year provided $4.2 billion via 25 syndicated deals, representing 68 percent of the institution's total trade financing. The rest came from its own resources. Strategic partnerships are growing: Last year, the ITFC closed a $350 million export syndication in favour of Turkey's export-import bank, and in February it signed a partnership agreement with Morocco's largest lender by assets, Attijariwafa Bank. The ITFC's mandate is to promote trade among countries of the 57-member Organisation of Islamic Cooperation (OIC). Trade within the group accounted for 19.5 percent of OIC countries' total trade in 2015, up from around 12 percent in 2011, and the ITFC aims for 26 percent by 2025, Sonbol said. The IDB is the largest shareholder in the ITFC with 37.6 percent of paid-up capital; Saudi Arabia holds second place with 16.9 percent. Last year, the ITFC's general assembly approved an increase of Iran's subscription by 8,500 shares, which once paid would allow it to take third spot behind Saudi Arabia.

Irelands bad bank sells northern ireland loans


´╗┐Ireland's "bad bank" sold its entire portfolio of loans belonging to Northern Ireland-based debtors on Friday in its largest deal to date, cashing in on surging international demand. The loans, which had a par value of 4.5 billion pounds ($7.5 billion), were sold to affiliates of private equity firm Cerberus Capital Management, L. P. for more than the 1.3 billion pounds minimum reserve price, a source familiar with the operation told Reuters. The National Asset Management Agency (NAMA), which paid 1.3 billion euros ($1.8 billion) when it took over the portfolio and had clawed back 100 million euros through disposals by the end of 2012, did not disclose the terms of the transaction. NAMA, one of the world's largest property groups, paid out 32 billion euros to purge Irish banks of risky loans worth 74 billion euros after a real estate crash wrecked the economy and pushed the country into a bailout in 2010. Seen as a major liability to Dublin's finances until quite recently, the state-run agency is now benefiting from a surge of demand from abroad and has been asked by the government to see if can offload all its assets before a deadline of 2020.

"This transaction represents a significant achievement for NAMA. We are satisfied that the sales process will deliver the best possible result for the Irish taxpayer," it said in a statement. The deal follows confirmation this week by liquidators to the collapsed Anglo Irish Bank that they had sold more than 90 percent of a loan book with a par value of 21.7 billion euros, a result that exceeded all initial expectations. The liquidators' sales, which were snapped up by the likes of Lone Star and Deutsche Bank over recent weeks, also came as a boost for NAMA, which will take over the residual book. It had anticipated a far larger transfer of loans.

NORTHERN IRISH BOOST Friday's sale was also hailed as good news for Northern Ireland. At 4.5 billion pounds, the par value of the book is equivalent to about 15 percent of the British-controlled province's economy.

The loans were also secured on some assets in the Republic of Ireland, Britain and elsewhere in Europe, NAMA said. The split between Northern Ireland and other countries was around 50/50, the source familiar with the process said."I believe that this deal is excellent news for the Northern Ireland economy," said the British province's first minister, Peter Robinson."I have made clear the danger to the local economy of leaving valuable assets undeveloped and the threat that these posed to otherwise profitable businesses."