HSBC appoints new CEO for Sri Lanka, Maldives operations

Patrick Gallagher has assumed the role as Chief Executive Officer (CEO) of the HSBC bank group’s operations in Sri Lanka and the Maldives.

Gallagher is said to have began his new role with “immediate effect”, the Sunday Times of Sri Lanka newspaper reported today.

Gallagher, who since November 2009 has headed up HSBC’s operations in Bahrain, will be replacing Nick Nocolau as CEO for the company’s operations in Sri Lanka and the Maldives.


Afghan ambassador and UN resident coordinator present credentials to President Waheed

Shaida Mohammaad Abdali, the new Ambassador of Afghanistan accredited to the Maldives, presented his credentials to President Dr Mohamed Waheed yesterday (April 29).

During a ceremony held at the President’s Office, Ambassador Abdali also discussed strengthening bilateral ties between the two countries, while Dr Waheed noted both nations’ efforts to consolidate democracy in recent years.

The ceremony was held a day after United Nations Resident Coordinator Tony E. Lisle also presented his credentials to President Waheed.

During the ceremony on April 28, the president spoke of challenges needing to be addressed in the Maldives regarding the judiciary, as well as the country’s health and education sectors.

President Waheed also underlined challenges in overcoming what he called the “difficult fiscal situation” presently facing the country.

Lisle began his tour of duty on April 21. The resident coodinator role requires him to oversee national development programs by collaborating with the various UN agencies operating in the country.


Maldives to establish offshore finance center with ADB assistance

An offshore finance center (OFC) is being established with Asian Development Bank (ADB) assistance, the Ministry of Finance and Treasury has announced.

The ADB has offered its expertise to the Maldives for formulating the legal framework and building the necessary technical capacity to create the OFC, Finance Minister Abdulla Jihad told local media.

“As this is entirely new to the Maldives, we will need to build technical capacity and formulate the required strong legal framework,” Jihad explained to local media.

He further stressed that establishing a OFC would assist with developing the banking and insurance sectors and majorly boost the financial sector in the Maldives, reports local media.

Jihad previously traveled to Mauritius to discuss their country’s OFC practices with bank officials.


Amana Takaful seeking to “kick start” Maldives stock market with landmark IPO

Sharia-compliant insurance company Amana Takaful will issue 800,000 shares in an initial public offering (IPO) on the Maldives Stock Exchange (MSE).

In a first for the country, 20 percent of the shares will be made available to expatriates and 15 percent to overseas applicants. The remaining 65 percent will be offered to Maldivians.

The Sri Lanka-based company hopes to generate Rf16 million (US$1.4 million) in proceeds through the IPO, by selling shares at a low issue price of Rf20 (bundled in packages of 25).

Amana Takaful’s board of directors announced the IPO on Monday afternoon at the Nasandhura Palace Hotel.

CEO of Amana Takaful Maldives, Hareez Sulaiman, said the IPO would “change the way the Maldivian Stock Exchange operates as this will be the first time that Maldivians, expatriates and foreigners will be able to purchase securities in a Maldivian listed company.”

The decision to price the shares low “at a price affordable to any average Maldivian” also promised to “be a kick starter for an active stock market which may benefit the entire economy at large,” the company said in an accompanying statement.

The company expects the Sharia-compliant nature of its business to be a key attraction in the market, it noted in its prospectus, with the “growing religious awareness within the domestic market further reinforcing [Amana Takaful Maldives’] decision to embark on expanding its shareholder base in the Maldives.”

Globally, Director of Amana Takaful Osman Kassim, also chairman of the first licensed Islamic bank in Sri Lanka, Amana Bank, explained that Islamic finance was “a phenomenon worth 1.4 trillion and growing at a rate of 20 percent annually.”

It functioned, he explained, through the prohibition of riba, or interest.

“Taking a return without participating in the risk of the return is not allowed, be it 1 percent or 99 percent. Any additional revenue is riba,” he said. “Even if you give a loan and he gives a gift, and is not in the habit of giving a gift, that is also riba.”

Islamic finance in its current form emerged 40 years ago, Kassim explained, first in Egypt and the Arab Emirates.

“It promises to be a just system. Interest is oppression – the charging of something where nothing is due,” he said, noting that in the wake of the global financial crisis, “All major banks now have Islamic financing products, and the more adventurous have their own Sharia Councils.”

Certain terminology used in Islamic finance was now routinely used in normal banking, he said, also observing a rise in financial offerings that were all but labelled Sharia-compliant.

In its IPO prospectus, the company predicted strong potential growth on the back of a higher disposable income as the rufiya eased against the dollar, brought on by a “significant” decrease in the cost of imports.

The key areas of the Maldivian economy – fishing and tourism – had shown strong growth, the company noted. Tourist arrivals grew 18 percent in 2010, while bed nights grew 13 percent even as capacity grew by almost 3000 beds to roughly 24,000.

Fishing was a key area of interest to the company given the high number of insurables. The industry had registered a slight decline in productivity in recent months, the prospectus noted, but nonetheless annual fish purchases had increased 29 percent and fish exports by volume had risen fourfold. Higher prices had led to 77 percent increase in monthly earnings.

The company has set a target of 30-40 percent growth in the Maldives, identifying a key market as the local, atoll and city councils following the government’s policy of decentralistion.

“Considering the current trends in religious conciousness, it is generally believed that the level of awareness and preference for investing in Sharia- compliant investments would be greater at the grassroots level,” the company noted.

It also indicated its intention to offer a micro-insurance product in the Maldives targeting the expatriate market.

The IPO will open on September 20 and close on October 19. The company has pegged a minimum subscription of Rf 2.4 million (US$156,000) or 15 percent to proceed with the IPO.


Maldives signs UAE banking agreement

The Maldives Monetary Authority will cooperate with the Central Bank of the UAE on issues of technical assistance and battling money laundering and terrorist financing under the terms of a Memorandum of Understanding (MOU) signed yesterday.

The UAE’s Central Bank’s governor, Sultan Bin Nasser Al Suwaidi, signed the deal along with his counterpart within the Maldives Monetary Authority in order to work together to try and ensure banking in both nations is in line with international standards on sound financial practices.

“This MOU puts a mechanism to cooperate in banking supervision [regarding] financial institutions operating in the two countries and exchange of supervisory information, in line with the international standards relating to exchange of information between banking supervisory authorities,” said the Central bank of the UAE in a statement.

The MOU agreement is also said to include assistance and training for staff at the Maldives Monetary Authority both in the UAE and the Indian Ocean at educational institutions that focus on banking supervision and examination.