Standard Chartered executes Profit Rate Swap deal with Aref Investment

The deal was one of the largest derivative deals done using a unique Spot/Spot commodity trading mechanism, which is fully compliant with Islamic Sharia principles. The deal was executed through the Bank's Dubai office.

The transaction is another step in the growth of Islamic banking as it offers hedging capabilities in a Sharia-compliant manner. The Islamic profit rate swap allows both parties to exchange a series of profit payments in a single currency in exchange for another series of payments in the same currency. Standard Chartered, a globally recognized leader in delivering derivative solutions, has now added an Islamic hedging instrument in its growing array of Global markets products. It further reiterates Standard Chartered's position as the leading bank with a global coverage in providing Islamic financial solutions.

This Profit Rate Swap deal follows the success of a previous deal done in Malaysia between Standard Chartered and Bank Muamalat, which was the first Islamic derivative deal done in South East Asia.

'The deal was executed with great success', said Afaq Khan, Chief Executive for Standard Chartered Islamic Banking. 'This is a significant step for Standard Chartered in building capacity and capability in Islamic Banking, both regionally and globally.'

Fred Lee, Managing Director and Head of Global Markets in the UAE for Standard Chartered, said, 'Profit Rate Swaps are a significant step in broadening the range of Islamic capital market instruments and demonstrate Standard Chartered's commitment to be the leading provider of Islamic banking products.'

'The swap is a significant development in broadening capital market instruments' said Dr. Ali Al Zumai, Chairman and Managing Director of Kuwait-based Aref Investment. 'It gives us the flexibility to hedge through a Shariah compliant solution.'

Aref is a Kuwaiti closed shareholding company organized under the laws of the State of Kuwait. It was established in 1975 and is listed on the Kuwait Stock Exchange with a paid up capital of KWD 43.855 million. (over USD 150 million)

Aref enjoys a strong principal shareholding which includes a majority share holding by Kuwait Finance House (51%), in addition to Public Institution for Social Security (13%) and the balance by the general public (35%).

Aref is a finance and investment company and is regulated by the Central Bank of Kuwait, Kuwait Stock Exchange and the Ministry of Commerce. The Company performs its activities in accordance with Islamic Shariah principles. AREF heads a group of diversified affiliates and subsidiary companies, and its principal activities relate to investment in local and international markets, Murabaha financing real estate, banking and finance, including leasing and financial services, education, health care and technology. In addition, AREF also offers its clients traditional financial services and facilities.

The Company holds a significant position amongst the leading investment institutions in the region and maintains a track record of efficient performance, offering a wide range of products and services over the past 30 years.