Rocky- Admin Assist
- Posts : 269873
Join date : 2012-12-21
by Rocky Mon 12 Feb 2018, 4:40 am
Standard & Poor's: "Gulf banks have many questions and few answers" 12 February 2018 11:32 p
DUBAI - Standard & Poor's Ratings said in a recent report on the status of Gulf banks and highlighted the challenges they face in restoring and improving their creditworthiness .The Standard & Poor 's report , which received a direct version , entitled : " restore the creditworthiness of banks and the liquidation of the systems in the Gulf region: a lot of questions and few answers .""Gulf banks regularly apply many best practices and international regulations when they become effective, but governments in the Gulf region take time to apply banks' liquidation regulations," the agency said in the report .Faced with the global financial crisis that required urgent and extraordinary action, the G-7 finance ministers agreed to take decisive action by using all available means to support some important financial institutions for their banking system and prevent their collapse .As part of the reforms undertaken by these countries after the global financial crisis, in order to reduce the need for government intervention and related costs for taxpayers, regulators have improved their control and oversight methodologies and renewed on-site inspections .They have also expanded their toolkit to address liquidation regulation in many countries .Although the GCC countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) have taken many of these steps, they are still far from applying bank liquidation regulations in both conventional and Islamic banks .The application of bank liquidation systems requires a significant change in the way governments think and approach their banking systems. According to the Isande B Global Credit Rating Agency, most Gulf governments are currently heavily supporting their banking systems .For example, Qatar has recently provided substantial support to its banking system after the massive withdrawal of foreign funds from Qatari banks following the imposition of sanctions on Qatar by some Arab countries .For Islamic banks, the issue of compliance with Shariah provisions poses an additional challenge in the application of banks' liquidation regulations and the bearing of creditors for loss .It is only a matter of timeAs far as we know, none of the six GCC countries has made significant progress in implementing credit restoration and bank liquidation systems .According to the Financial Stability Board, Saudi Arabia, a member of the G-20, still has to submit a draft liquidation law for public consultation .The implementation of creditworthiness and bank liquidation systems, in our view, requires a profound change in the way governments think and approach to support their banking systems .Gulf governments, not only as shareholders but also to protect the financial stability of their banking systems, have been reluctant to intervene aggressively to save banks .The last intervention in the region was when Qatar injected $ 43 billion into its banking system until 31 December 2017 to help curb the repercussions of the withdrawal of foreign funds following the boycott of several Arab countries by Qatar .The Qatari authorities also intervened in 2009 when they injected capital into Qatari banks to help them cope with the decline in the stock market and property prices .Another example is the UAE Ministry of Finance depositing US $ 19 billion in UAE banks in 2008, which was later converted into additional capital instruments .Similarly, the Abu Dhabi government injected $ 4.3 billion in new capital into its banks in 2009 .Investors have long considered government support to be a stabilizing factor for banks' creditworthiness, given the strong balance sheets of some GCC governments .However, Gulf states are often among the first countries to implement international standards, and therefore believe that their application to creditworthiness and bank liquidation systems is only a matter of time. But the question remains how long it will take .For conventional banks, it is likely to be easy to identify the recoverable debt and may consist mainly of contractually binding instruments to absorb losses at a specified stage ( whether at or prior to the point of inability to meet the obligations ).Most of the recent increases in capital in Gulf banks have created hybrid tools that can accommodate loss rather than injecting capital . For Islamic banks, compliance with Islamic Shari'a may complicate the application of creditworthiness and bank liquidation systems .The complexities faced by Islamic banksThere is a general perception that creditworthiness and bank liquidation systems should be easy to implement in the Islamic finance sector, since the fair sharing of profits and losses among the transaction partners is one of the main principles of Islamic finance, which means that the absorption of loss is normal and automatic. But we recognize that the issue is more complex for these reasons :· Banks conduct some operations in a debt-like format .• Coverage of losses other than those incurred in specific underlying assets is not possible in accordance with Islamic principles .· The types of tools that can be used to absorb loss are unclear .· Asset transfer can cause a problem .Since the aspects of Islamic finance mimic debt contracts, these instruments are likely to be classified at the bottom of the bottom of the list of instruments for loss (ie, their capacity to absorb the loss will probably be very limited ) or they will be completely excluded, To absorb the loss recommended by the Islamic Financial Services Board .Shared investment accounts in murabaha-based profits expose account owners to the risk that the bank will not be able to meet its promise to pay capital or compensation .Similarly, the customer in current account operations is exposed to the risk that the bank will default on the asset. Finally, the Sukuk with the contractual obligations of its sponsor, which covers periodic distributions, and the principal of the loan, classified as unsecured initial bonds, will be subject to the same type of risk .Islamic banks can not use the capital of participating investment accounts in speculative profits to support losses from activities financed from other sources. In Islamic finance, the capital of an investment account participating in speculative profits must theoretically cover losses incurred in the underlying assets .In fact, banks have developed techniques to reduce the risk of joint losses with their customers in order to prevent liquidity risks (such as the risk of mass withdrawals from banks) or the deterioration of the customer base .These include retention of profit equalization reserves or investment risk reserves. This means that if a bank reaches the liquidation stage, the activity that was financed through the investment accounts participating in the Mudaraba-based profits should be excluded from absorbing the loss, assuming that the source of the losses that led to the bank's failure was not the activity. Under the latter scenario, the strict application of Shariah provisions means that the holders of the investment accounts participating in the profits will bear the losses .Taking into account the possible impact of the application of IFRS 9 - IAS 30 - we expect :· A real separation between the management of investment accounts involved in Mudaraba-based profits and other types of financing (such as the separation of activities financed by profit-sharing investment accounts from activities financed from other sources that require profit-sharing investment accounts to participate effectively in losses if required) ).• The attractiveness of joint investment accounts in the Mudaraba-based profits in the medium term has declined in both the customers and the banks themselves .In addition, distinguishing debt instruments that can absorb loss from other debt is not a difficult task .The logic used in profit-sharing investment accounts can also apply to speculative instruments used to acquire specific assets, unless the Mudaraba Agreement is mentioned as being part of the general asset set of banks . While it is easy to distinguish instruments of participation because they are similar to net equities .Furthermore, it is possible, in accordance with Islamic principles, to convert assets that have debt-like characteristics from one entity to another only in the equivalent value (or without deduction ).This complicates the management-led credit recovery plan, or liquidation decision, under which certain assets and liabilities of the troubled bank must be transferred to a viable entity .What banks will need to be put into practice?We believe that the application of creditworthiness and bank liquidation systems in countries where Islamic finance accounts for a large part of the market can provide regulators with an additional tool to help stabilize the financial sector .As we have seen in Europe and the United States, once creditworthiness and bank liquidation systems are in place, they become a reliable alternative to bailouts, which in turn helps maintain financial stability .Similarly, we see an emerging paradigm in other countries, such as Hong Kong, where regulators have introduced the liquidation system as a new additional instrument, even though it appears that the likelihood of the Government providing initial debt support will remain .This approach may also support financial stability, and at this point we can not confirm which way the Gulf governments will go .For Islamic banks in particular, we believe that the effective application of creditworthiness and bank liquidation systems will depend on the identification of the tool that will absorb loss in non-default situations .We believe that the tools available for loss may include participative / speculative products, as there is limited liquidity risk and the reputation of the Bank .These instruments include restricted profit-sharing investment accounts (there is no confusion between the Bank's activity and the activities financed by these instruments) and profit-sharing accounts based on the balance sheet, provided that customers recognize that they are at risk of losing their capital;To receive appropriate compensation for that risk; and to contribute to the Bank's general asset portfolio. The instruments that Gulf banks have used to support their capital over the past three years (speculative instruments) are also potential tools to absorb losses .However, the desire of the market for these instruments when the most obvious characteristics of their absorption of losses has not yet been tested .Another key factor in the success of the creditworthiness and liquidation framework in the GCC is, in our view, better protection of primary debt in the event of liquidation .Customers bear the credit risk of the Corporation in Murabaha or Ijarah or any Islamic financial transaction that establishes a direct and direct link between the risks to the customers and the creditworthiness of the Bank .For these activities, the Bank may be subject to greater capital requirements or to the acquisition of the total capacity to absorb the loss (similar to the above instruments), which will be used to absorb the loss and protect the initial debt .There are two possible scenarios for classificationS & P Global Credit Rating published the "Methodology and Assumptions of Classification of Banks: Additional Absorption of Losses" on 28 April 2015 to take into account changes in global regulations and potential special support through the effective application of bank liquidation systems that could benefit from it Initial debts in case of bank default .Under the additional capacity approach to absorb loss, we evaluate :· Based on legislative and regulatory characteristics, if additional capacity to absorb loss contributes to reducing the risk of default on the level of unsecured initial commitments of the Bank, thereby supporting the credit rating of the issuer .· Characteristics of instruments eligible to be included in additional capacity to absorb loss .· The quality and quantity of additional capacity to absorb loss as a proportion of risk-weighted assets that will support the bank's credit rating more than the credit rating without support .· Interaction between support based on additional capacity to absorb loss and other forms of positive and negative external interventions, including government support, group support, guarantees, short-term incremental support, and other external support .In general, when the country moves to implement an effective creditworthiness and liquidation system, we will review our assessment of the country's orientation to support its banking system and re-evaluate the impact on banks' credit quality .There are two possibilities at this stage :· Support points from additional capacity to absorb loss replace partial or full government support to reflect the additional protection provided by these instruments to primary debt .· If there are support points from additional capacity to absorb loss and government support, we will take the higher support points and consider our credit rating of the issuer .https://www.mubasher.info/news/3226979/%D8%B3%D8%AA%D8%A7%D9%86%D8%AF%D8%B1%D8%AF-%D8%A2%D9%86%D8%AF-%D8%A8%D9%88%D8%B1%D8%B2-%D8%A8%D9%86%D9%88%D9%83-%D8%A7%D9%84%D8%AE%D9%84%D9%8A%D8%AC-%D9%83%D8%AB%D9%8A%D8%B1-%D9%85%D9%86-%D8%A7%D9%84%D8%AA%D8%B3%D8%A7%D8%A4%D9%84%D8%A7%D8%AA-%D9%88%D9%82%D9%84%D9%8A%D9%84-%D9%85%D9%86-%D8%A7%D9%84%D8%A5%D8%AC%D8%A7%D8%A8%D8%A7%D8%AA-
Today at 7:20 am by Rocky
» Did Barzani agree in Tehran to end the presence of Iranian groups in Kurdistan? - urgent
Today at 7:16 am by Rocky
» Al-Sudani: We are establishing a new situation for the global energy market through the Development
Today at 7:14 am by Rocky
» Al-Sudani: The government program devoted a wide scope to the government’s vision for oil and gas in
Today at 7:11 am by Rocky
» Al-Awadi: Ending the work of the UNAMI mission is consistent with the government’s vision in this fi
Today at 7:10 am by Rocky
» utube 5/9/24 MM&C 0:02 / 46:46 PM - Al-Sudani - Golden Opportunity - Private Sector - Contra
Today at 5:34 am by Rocky
» utube MM&C 5/11/24 Iraqi Dinar - IQD Update - International - IraqTiming - 2024 Budget Schedule - Sp
Today at 5:32 am by Rocky
» MM&C Floating the dinar" returns to the forefront.. Will the Central Bank of Iraq resort to it and w
Today at 5:24 am by Rocky
» The Secretary of the Ministry of Defense meets with the Commander of the NATO mission
Today at 5:17 am by Rocky
» Expert: The stability of the economy is linked to the political situation
Today at 5:13 am by Rocky
» A parliamentary request to lift the injustice against 20,000 Iraqi employees
Today at 5:09 am by Rocky
» Parliamentary Finance criticizes the government's failure to send the budget schedules
Today at 5:08 am by Rocky
» Minister of Oil: The 5th and 6th licensing rounds will take place within the framework of exploratio
Today at 5:07 am by Rocky
» Al-Sudani: Iraq is a difficult number in the global market in the field of energy
Today at 5:06 am by Rocky
» Al-Khanjar rejects Al-Halbousi’s request to head Parliament
Today at 5:05 am by Rocky
» Revealing the date of the arrival of the 2024 budget schedules
Today at 5:04 am by Rocky
» Al-Halbousi nominates Talal Al-Zubaie for presidency of the House of Representatives
Today at 5:03 am by Rocky
» "A coup in Iraqi universities"... Replacement of presidents and deans under the new education law
Today at 5:01 am by Rocky
» Al-Sudani: Iraq is a difficult number in the equation of energy and oil wealth in the region and the
Today at 5:00 am by Rocky
» Minister of Oil: We hope to announce an increase in Iraq’s oil reserves to 160 billion barrels
Today at 4:58 am by Rocky
» Iraq's mass graves...stories that did not end with the burial of their owners, and the "legacy of IS
Today at 4:57 am by Rocky
» Pictures: New licenses in Iraq to extract “huge” quantities of oil and gas
Today at 4:56 am by Rocky
» Transport reopens the Baghdad - Samarra railway line
Today at 4:55 am by Rocky
» Al-Awadi: A government decision to provide sovereign guarantees and guarantees to encourage the inve
Today at 4:54 am by Rocky
» Oil clarifies the mechanism for investing grant funds and licensing contracts
Today at 4:51 am by Rocky
» A $700 million agreement is signed between Iraq and Italy to finance these projects
Today at 4:50 am by Rocky
» Iraq recovers 90 billion dinars from social protection violators
Today at 4:49 am by Rocky
» Sudanese officially launches the two licensing rounds and sets the date for stopping gas burning
Today at 4:48 am by Rocky
» An economic vision for the standard of competition for exploratory plots in Iraq
Today at 4:47 am by Rocky
» The Iraqi Islamic Bank announces an increase in its capital to 300 billion dinars
Today at 4:46 am by Rocky
» A communication from the Ministry of Health to the Ministry of Interior in Kurdistan regarding “herb
Today at 4:44 am by Rocky
» Popular agreement to end the “cancer towers” crisis in the oldest villages of Diyala.. Document
Today at 4:42 am by Rocky
» What is the reason for OPEC's decision to stop publishing its estimates of the volume of global dema
Today at 4:41 am by Rocky
» It includes 29 projects in 12 governorates.. Launching the fifth supplementary licensing round and t
Today at 4:40 am by Rocky
» Among them are 8 Chinese companies...an economic view of the criteria for competition over explorato
Today at 4:38 am by Rocky
» Sudanese: Gas burning will stop within 3-5 years
Today at 4:38 am by Rocky
» With the extension of its legislative term.. Will the Iraqi parliament succeed in resolving the budg
Today at 4:36 am by Rocky
» Al-Sudani's angry message to Guterres: We do not need UNAMI.. Describe your belongings and leave
Today at 4:35 am by Rocky
» As a result of corruption charges... Parliamentary signatures were collected to dismiss the director
Today at 4:33 am by Rocky
» 13 countries are competing for 29 fields, and Anbar and Muthanna have the lion’s share... Details of
Today at 4:30 am by Rocky
» Ending the international coalition’s mission...negotiations may take more time
Today at 4:29 am by Rocky
» Oil reveals a mechanism to support services and establish infrastructure projects in the producing g
Today at 4:27 am by Rocky
» Al-Hakim: The future cannot be mortgaged to volatile oil prices
Today at 4:26 am by Rocky
» The New Generation Movement files a lawsuit to dissolve the regional government: It is unable to mak
Today at 4:24 am by Rocky
» Al-Sudani: The government program devoted a wide scope to the government’s vision for oil and gas in
Today at 4:23 am by Rocky
» Al-Rafidain: Loans for purchasing residential units start from 5 to 150 million
Today at 4:21 am by Rocky
» Iraq launches a new licensing round to develop oil and gas fields
Today at 4:20 am by Rocky
» Signing an agreement between Iraq and Italy to finance industrial projects worth $700 million
Today at 4:19 am by Rocky
» Minister of Oil: Soon we will announce the increase in Iraq’s oil reserves to 160 billion barrels
Today at 4:18 am by Rocky
» The Chinese company ZPEC wins the investment in the East Baghdad field - the northern extensions
Today at 4:17 am by Rocky
» utube 5/9/24 Iraqi Dinar | Ali Alaq Announced New Rate Finally Showing New Rate On Tv Screen | Din
Yesterday at 4:55 pm by Rocky
» A leader in the National Bank: We are committed to the federal decision and to postpone the election
Yesterday at 9:28 am by Rocky
» Al-Hakim: Iraq's future cannot be mortgaged to volatile oil prices
Yesterday at 9:24 am by Rocky
» The conflict of the corridors: the path to development from a historical perspective and the door to
Yesterday at 9:22 am by Rocky
» The Kurdistan Region demands that the federal government spend 1.1 billion dinars.. What is the reas
Yesterday at 9:21 am by Rocky
» Tomorrow, Iraq is preparing to launch a complementary round of gas licensing
Yesterday at 9:19 am by Rocky
» A government move to restore the funds of the Trade Bank of Iraq
Yesterday at 9:17 am by Rocky
» The Central Bank informs France of plans to restructure the banking sector
Yesterday at 9:15 am by Rocky
» A government advisor reveals the fate of the budget tables
Yesterday at 9:13 am by Rocky
» Iranian mediation between Baghdad and Erbil... Revealing the most prominent files of Raisi’s visit t
Yesterday at 9:10 am by Rocky
» Reconstruction and development is a priority.. A parliamentary committee follows up and monitors gov
Yesterday at 9:08 am by Rocky
» Al-Hakim comments on the agreements concluded with Türkiye and confirms: Iraq is on the right path
Yesterday at 9:06 am by Rocky
» Tomorrow... Iraq takes a step that will give it gas equivalent to 200% of imported Iranian gas
Yesterday at 9:04 am by Rocky
» A long and disturbing message.. The Iraqi government “blames” the United Nations because of “other p
Yesterday at 9:00 am by Rocky
» The Governor of the Central Bank and the French Ambassador discuss developments in the banking secto
Yesterday at 5:18 am by Rocky
» Al-Bajari: Iraqi companies will have a great opportunity to work after opening the door to investmen
Yesterday at 5:16 am by Rocky
» Transparency: Imports from Sulaymaniyah and Halabja during the past week amounted to more than 10 bi
Yesterday at 5:13 am by Rocky
» Al-Sudani: The delayed projects left great damage to the level of services in Babylon
Yesterday at 5:12 am by Rocky
» Economist: The fluctuation of the dollar is “the balance of speculators”
Yesterday at 5:10 am by Rocky
» {Al-Furat News} publishes the text of Al-Sudani’s request to Guterres to end UNAMI’s work in Iraq
Yesterday at 5:08 am by Rocky
» A former MP accuses Türkiye of transferring its conflict with the workers to Iraq
Yesterday at 5:05 am by Rocky
» A call to the Sudanese to remove American forces from Iraq
Yesterday at 5:03 am by Rocky
» Oil Parliament: Ankara holds Erbil responsible for the oil fines it owes
Yesterday at 5:02 am by Rocky
» The government is silent...the reality of removing American forces from Iraq
Yesterday at 5:01 am by Rocky
» The radiation protection law in the first session of the next legislative term
Yesterday at 5:00 am by Rocky
» A Spanish company raises controversy and a representative reveals a parliamentary movement against i
Yesterday at 4:59 am by Rocky
» Sudanese officially requests the end of the United Nations mission in Iraq / documents
Yesterday at 4:58 am by Rocky
» Because its sessions were not held, the Kirkuk Council faces a judicial complaint, and its members d
Yesterday at 4:56 am by Rocky
» Former US Chief of Staff: We slaughtered huge numbers of innocent people in Iraq and other countries
Yesterday at 4:55 am by Rocky
» The Association of Private Banks counts the percentage of shares traded on the stock market during a
Yesterday at 4:53 am by Rocky
» The European Union and Iraq agree to increase cooperation between them
Yesterday at 4:52 am by Rocky
» American Bank: Expectations to increase Iraq’s oil capacity in 2025
Yesterday at 4:50 am by Rocky
» Central Bank Governor to the French Ambassador: The plan to restructure government banks will change
Yesterday at 4:48 am by Rocky
» Integrity confirms working to conclude a memorandum of understanding with the Kuwaiti Anti-Corruptio
Yesterday at 4:47 am by Rocky
» Highlights of the Prime Minister's visit to Babylon
Yesterday at 4:46 am by Rocky
» The Minister of Transport discusses with a Turkish delegation the latest developments in the develop
Yesterday at 4:44 am by Rocky
» Free of charge.. Issuing approximately 13 thousand unified cards for those covered by social protect
Yesterday at 4:42 am by Rocky
» A parliamentary committee advises the government to deter trespassers: Slums are one of the reasons
Yesterday at 4:41 am by Rocky
» Embassy Protection confirms to “Baghdad Today”: The missions are safe and we have taken proactive me
Yesterday at 4:38 am by Rocky
» Water resources resolve the controversy of the “Wadi Al-Tea” project.. It will nourish the Hamrin ic
Yesterday at 4:37 am by Rocky
» After approving the National Security Strategy...a parliamentary movement to host “responsible” figu
Yesterday at 4:36 am by Rocky
» Al-Hakim calls for the distribution of plots of land to the families of the martyrs of the Popular M
Yesterday at 4:34 am by Rocky
» Order 160 Committee completes the “port scandals” papers... and searches for a legal outlet for impl
Yesterday at 4:33 am by Rocky
» It revealed the details of its contract with four companies to complete the census requirements... P
Yesterday at 4:31 am by Rocky
» Egypt, Morocco and Qatar praise the Iraqi Integrity proposal to establish the Arab Law Enforcement C
Yesterday at 4:30 am by Rocky
» The Iraqi Parliament enters its legislative recess and requires holding an “extraordinary” session o
Yesterday at 4:28 am by Rocky
» The Sudanese has not rested since the morning.. He carried out 12 activities and allocated a trillio
Yesterday at 4:27 am by Rocky
» Blinken's agent: Erbil is a strategic ally of Washington in a 360-degree relationship
Yesterday at 4:25 am by Rocky
» Oil seeks to convert refinery products to “Euro 5”... high quality and environmentally friendly
Yesterday at 4:24 am by Rocky