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Oman International Development and Investment Company (OMINVEST) has said that Alizz Islamic Bank SAOG will become a fully-owned Islamic banking subsidiary of OAB and converted into an SAOC.

In a filing to MSM, it added that the assets and liabilities of Al Yusr Islamic Window of OAB will be transferred to AIB SOAC.

The OAB will be converted into SAOG.

The statement said that OAB has received regulatory approval on the imposed transaction from the Central Bank of Oman, and is in the process of obtaining further regulatory approvals from the Capital Market Authority and the regulatory bodies.

Credit conditions are worsening, as the disruptions caused by the coronavirus outbreak are pushing the global economy into a deep recession and recovery remains uncertain.

“Extended coronavirus-containment measures are pushing the world into the deepest recession since the Great Depression,” S&P said in a report.

“Although we expect the drop in economic activity to be sharp but fairly short, the path to recovery remains very uncertain in its timing and trajectory, until an effective treatment or vaccine are in place,” the report added.

The ratings agency now expects global gross domestic product (GDP) to shrink 2.3 percent this year, far worse than the March estimate of 0.4 percent. Except for China, many major economies would be hit worst in April to June.

Slow recovery is anticipated through the second half of the year before gathering strength into 2021.

Effect on ratings                                                                                                               

According to S&P, in any deep recession or credit crunch, the effect on ratings is more pronounced on lower-rated issuers.

These issuers generally have weaker business characteristics, higher leverage entering the crisis, less financial flexibility and less liquidity to deal with the crisis.

The shape of the recovery will differ significantly by industry. S&P has weaker key assumptions for next year and potentially beyond for the following sectors:

• traditional retailers, retail real estate, movie theater owners

• airlines, hotels

• autos, discretionary consumer goods

• midstream, oil services

Banks are resilient but not immune according to the report.

“Banks entered the crisis with strong balance sheets and are generally expected to show resilience, but they aren’t immune to the longer-term economic implications,” S&P said.

For insurers, capital is king. Insurers with thinner capital buffers and those more exposed to financial-market volatility have accounted for most of the negative rating actions in the past two months, the report said.

“In aggregate, we continue to expect insurance claims to be manageable and future downside pressure will stem from a prolonged macro-economic recovery, even lower for even longer interest rates, outsized exposures to spec-grade and ‘BBB’ rated bonds and any further financial market deterioration,” S&P said.

Severe shock in emerging markets

In emerging markets, social-distancing measures, combined with extended lockdowns in developed economies, are deepening the economic shock.

According to the report, risk aversion triggered unprecedented capital outflows, tightened financing conditions and pressured currencies.

“Risks remain firmly on the downside; longer lockdowns could severely hurt household income, corporate liquidity and banks’ asset quality,” S&P said.

Dubai International Financial Centre (DIFC) on Sunday announced DIFC Presidential Directive No. 4 of 2020, which seeks to help limit the impact of the Covid-19 situation. Effective from April 21, 2020 until July 31, 2020 (the emergency period), the new directive provides greater flexibility to DIFC-based employers and increased protection to employees.

Companies based in DIFC will have the ability to introduce several emergency employment-related measures during the Covid-19 environment to expeditiously deal with the impact of the pandemic.

Employers can now impose reduced working hours, paid or unpaid leave, reduced pay, restrict workplace access and put in place remote working conditions without the consent of their employees for the duration of the emergency period. The primary motive of the directive is to make it easier for DIFC employers to impose temporary changes to their employees’ terms of employment, which in turn will reduce the likelihood of employers having to resort to terminate employment of their staff. This is beneficial to employees in the long run. It is important to note that these measures may only be imposed for the duration of the emergency period and any permanent changes will require employee consent.

The directive ensures that any DIFC-based employee who contracts Covid-19 or has been quarantined by the local authorities to limit the spread of the virus will retain full remuneration. This is in respect of their Covid-19 related sick leave pay and any such sick leave shall not be counted towards their annual sick leave entitlement.

Employers may also defer the visa cancellation process for their terminated employees to avoid any unnecessary hardship for them provided the employers continue to provide basic medical insurance cover. Employees working in the retail, service and hospitality sectors must also be provided accommodation in such circumstances.

The directive also protects employees’ end-of-service gratuity accrued prior to the recent introduction of DEWS. The gratuity payments for a terminated employee’s gratuity payment will be calculated on their basic salary as of February 29, 2020 to ensure that any subsequent reduction of pay does not affect what they receive.

The directive also makes provision for DIFC to create an Available Employee Database for employees who were made redundant in the current crisis, as well as those that are surplus to their employers’ current needs. The aim is to do the utmost to support these individuals find alternative employment.

Additionally, the directive also deals with important considerations of privacy and cyber security for employees working in remote working conditions. Follows the example of other key jurisdictions such as the United Kingdom, DIFC seeks to temporarily suspend the wrongful trading obligations of companies based in the Centre under the DIFC Insolvency Law. It also eases concerns of DIFC company directors that they may be held personally liable for continuing to trade amid the heightened uncertainty created by the Covid-19 pandemic.

Banks in Saudi Arabia have to revisit their digital transformation plans and strive to launch new channels that will sustain delivery of products and services amid the Covid-19 pandemic, according to the findings of a new report released by KPMG Al Fozan & Partners (KPMG in Saudi Arabia), a leading provider of audit, tax and advisory services in the kingdom.

Covid-19 situation has created a dynamic shift in customer expectations and therefore instigated a live test to the existing digital platforms, omnichannel functionalities and mobile capabilities. Banks must be sensitive to this opportunity and create mechanisms to collect, analyse and identify all the improvement opportunities that results from extensive use of digital banking, the report said.

KPMG in Saudi Arabia, has published its analysis of Covid-19 impact on the banking sector and the potential countermeasures to cope with the new normal, based on the results of a high-level survey and discussions with C-suite executives in the sector.

The exercise revealed that the impact of the virus outbreak on overall business to be at medium to high levels and could last for three to nine months. The most impacted segment is SME financing, followed by certain products in consumer finance.

All the banks considered the Saudi Arabian Monetary Authority’s (SAMA) plan as very comprehensive, timely and focused on covering most crucial segments of business; more than half of the respondents to the survey forecast 10-20% of the loan books to undergo restructuring.

It was encouraging to confirm that business continuity management (BCM) measures were found effective in the first two weeks of the outbreak, even though almost all the BCM scenarios did not include a pandemic such the Covid-19.

On the retail banking side, the survey revealed that the closure of travel, hospitality and leisure activities directly impacted credit card utilization. At the same time, volatility in interest rates, deterioration in real estate prices and uncertainties concerning lockdown duration and resulting unemployment led to a significant slowdown in mortgage financing that has reported growth in the first three months of the current financial year.

The KPMG report further offered a set of tools and pointers to navigate in turbulent times and run a risk assessment of the bank in the current, rapidly evolving environment.

Commenting on the report, Ovais Shahab, Head of Financial Services Sector at KPMG Saudi Arabia, said: ” Drastic measures of containment are severely impacting SME and consumer financing. The economic stimulus packages are provided to soften as much as possible economic impacts and stimulate economic recovery.

However, the key question for the banking sector is how to respond to its operational and regulatory challenges while contributing in a positive way to the economic recovery.

“The main challenges for the banking sector are credit portfolio deterioration, capital impacts, liquidity repercussions, cyber risk, contingency plan activation and continuation of banking services,” he stated.

Since banks play a crucial role in implementing the SAMA and government’s stimulus packages, KPMG recommended a six-step action plan that includes identifying potential risky counterparties, making adjustments to provisions coverage, updating liquidity plans, managing recoveries plans, protecting the bank and clients from cyber-attacks, and following a clear and strong communication plan with all stakeholders.

“Banks need to perform a customer-specific assessment in order to offer customized solutions; assess systems and organizational capabilities and proactively revisit the digital transformation plan,” Shahab concluded.

As the number of medical doctors, nurses and health workers who are infected by COVID-19 continues to rise in India, the central government in New Delhi and authorities in various states have announced a slew of steps to protect them and guarantee their welfare in the course of duty.

India is mobilising 2.2 million medical professionals all across the country to care for COVID-19 patients, Preeti Sudan, India’s Health Secretary, told her counterparts in all of India’s states and union territories in a five-page letter on welfare measures for these health workers.

Healthcare professionals will be covered by a 5 million Indian Rupees insurance each for “loss of life due to COVID-19 and accidental death for any other reason on account of COVID-19-related duty,” she wrote, asking state governments to inform doctors and other medical professionals of such steps to encourage them and to increase their morale.

“The insurance is free for the beneficiaries and the premium will be paid by the government. Nominees of any person providing services in treating COVID-19 can claim the compensation if the service provider sustains loss of life.” There is no precise number of medical professionals who have been infected by coronavirus or died from COVID-19 in their line of duty because they are scattered in hospitals all across India, but their numbers have been rising.

There is growing appreciation for the sacrifices made by doctors, nurses and others taking risks in treating COVID-19 patients. Orissa state’s Chief Minister Naveen Patnaik said yesterday that he will treat all healthcare workers who die fighting the Coronavirus as “martyrs.” Orissa will give them state funerals.

Their survivors will receive 5 million Rupees and awards will be instituted to recognise their sacrifices, to be handed out on national days, Patnaik said. This financial compensation will be in addition to the insurance cover announced by the Health Secretary.

“The families of all government personnel, medical and others, who die on COVID-19 duty will continue to receive a full salary until the date of their normal retirement,” the Chief Minister said.

Meanwhile, India’s cabinet on Wednesday met and amended the Epidemic Diseases Act of 1897 to increase protection for healthcare workers who are engaged in COVID-19-related duty. Under the amendment, anyone causing injuries to health workers, can be sentenced to up to seven years in jail and can be fined up to half a million Rupees.

If any damage is done to vehicles or clinics belonging to healthcare workers, the amendment has provisions for compensation amounting to twice the value of the damaged property to be realised from those accused of causing the damage.

The Ministry of Health and Family Welfare on Wednesday reported a rise in COVID-19 infections to a new high beyond the 20,000-mark. At the time of writing, India has had a total of 15,859 active cases, with 652 deaths and 3,960 recoveries.

Shuaa Capital, a leading asset management and investment banking platform in the region, has announced it will provide free expert advisory services and interest-free loans through regulated partners to support UAE-based small and mid-sized technology enterprises (SMEs) that have been directly impacted by Covid-19.

In alignment with the UAE government’s support and relief measures, the financial package aims to help provide the capital and expert guidance tech SMEs will need to emerge from Covid-19 on a healthy footing, said a statement.

 Shuaa’s regulated partners will provide the interest-free loans, while Shuaa sector experts in manufacturing, logistics, construction, healthcare, travel and tourism, retail and real estate will offer free advisory services. To be considered for the support, the tech SMEs need to be active and demonstrate how they have been impacted by Covid-19.

Jassim Alseddiqi, Chief Executive Officer of Shuaa Capital, said: “Shuaa Capital is committed to helping build a sustainable and investable private sector in the UAE, fostering economic growth and prosperity for future generations. Small and mid-sized technology companies are an integral part of the UAE’s economy and society and will spearhead our country’s post Covid-19 economic recovery. Our support package will help empower those firms to continue to create innovative products and services in key sectors for our nation.”

 According to the UAE Ministry of Economy, SMEs represent more than 94 per cent of the total number of companies operating in the UAE, employing about 86 per cent of the country’s private sector workforce and generating 52 per cent of the non-oil GDP. Tech SMEs leveraging cloud computing and storage, artificial intelligence, machine learning, blockchain and the Internet of Things within strategic sectors such as education, construction, logistics, healthcare, eCommerce, agriculture and finance have been key drivers of this development.

 The local banks in Kuwait have allocated KD 2 billion to the soft loan portfolio expected to be granted to small and medium enterprises, as well as companies and clients affected by the consequences of the coronavirus.

The SME loans will hold between 15 and 20 percent of the total two billion dinars, while the rest of the sum will be directed to financing companies and clients affected by consequences of coronavirus.

He noted the two billion dinars was allotted based on a study prepared by local banks in cooperation with the Central Bank of Kuwait and international advisors, on the expectations of the approximate financing need arising from the lack of liquidity of private sector units whose businesses were damaged by the economic closure, and their work stopped due to this pandemic.

Based on a study prepared by the Higher Steering Committee headed by the Governor Dr Muhammad Al-Hashel, it is expected that revenues of the affected sectors in Kuwait will decrease by 15 to 30 percent, under scenarios of the closure for a period of 8 to 12 weeks, since the start of the government closure with varying impact for each sector, he said.

He noted the rate of decline in the global economic activity in the second quarter of 2020 is likely to be the most severe since the Second World War. He indicated that banks will classify accountable loan financing in their portfolios with a different mechanism from the traditional method they follow when calculating the loan allocations.

The source confirmed that local banks will work in support of the companies affected by the crisis while the disbursement of soft loans will be within the framework of employee salaries, rents and other obligations resulting from the recent developments, noting the transfer will be made from the bank directly to the owed entities.

According to official statements, the financing package provided will not include companies that faced trouble in the pre-crisis period or those that operated according to a business model causing them losses. The soft loans will not provide compensation either for lost profit opportunities or losses sustained by those affected by the preventive measures taken to combat coronavirus.

It will not target financing new projects that were included in the companies’ plans for which they can obtain regular commercial loans. Statements added the banks plan not to exceed the documentary cycle to decide the customer’s request for soft financing within 3 or 4 days, in the event that the company meets the conditions and criteria approved in this regard.

As for the major known companies that have good credit history with the banks, they will be dealt with at a faster pace, given that the banks have launched electronic platforms for those who want financing to enter their data. It is noteworthy the recommendations of the Supreme Steering Committee included two tranches to obtain financing, the first of which is for small and mediumsized projects and granting local banks and the National Fund soft loans of two to three years, which includes a one-year grace period, provided that the interest does not exceed 2.5 percent annually.

The general budget will bear benefits and returns for the first two years, then it’ll be shared equally with the client on the third year. For this tranche, financing will be shared between the banks and the fund, with interest being calculated on the part financed by the banks only, provided that the latter will be responsible for managing the debt and the credit risks of the funds provided, while verifying the customer’s use of financing in specific aspects.

Regarding the other tranche of soft loans concerning the affected companies and clients, they will be provided by local banks with the state’s budget bearing the interest for the first year. It will be borne equally with the client in the second year, while the latter year’s will be borne by the client individually.

One of the conditions for granting loans is that the customer must have been regular in paying his obligations before the corona crisis and maintained his national employment rate, and did not distribute any profits to shareholders during the repayment period.

Emirates NBD’s corporate banking has witnessed a 60 percent month-on-month increase in the onboarding of clients to digital channels, as more people opt for the electronic route in light of the coronavirus outbreak.

“New and existing transaction banking clients opt for digital channels for their ongoing cash management and trade finance requirements,” the bank said in a statement.

Since the outbreak exploded in Wuhan, China about four months ago, authorities around the world have been encouraging the public to observe social distancing or stay at home. Consumers have also been advised to go for cashless transactions to avoid contracting the virus.

The bank said that over 70 percent of its corporate client base is now active on the digital platform, smartBUSINESS and smartTRADE portal.

It also said that 96 percent of the corporate banking division’s payment volumes are now processed through digital channels.

SmartBUSINESS payments, smartTrade services and ICCS Collect (remote cheque deposit) are popular among the bank’s clients.

“We firmly believe that digital innovation has to bring demonstrable business benefits to our clients by supporting their objectives and bringing greater efficiencies to their operations,” Ahmed Al Qassim, executive vice president, general manager of corporate banking at Emirates NBD, said.

“The UAE is a key international trade hub and it is encouraging to see UAE companies focused on business continuity as they respond to the ongoing market dynamics around COVID-19 by migrating to digital ways of conducting business,” Al Qassim said.

The UAE has implemented a series of precautionary measures, including the National Disinfection Program, to stem the spread of the coronavirus.

The emirate of Dubai, which has been under a 24-hour curfew for the past weeks, decided to partially reduce restrictions on movement starting April 24.

Residents can now leave their homes between 6 am and 10 pm providing they follow precautionary measures, which include maintaining physical distance from others and wearing a face mask, as shopping malls, commercial outlets, restaurants and cafes reopen their doors.

Payment International Enterprise (PIE) has added a new range of governmental services with a new payment method that allows cash intake for daily transactions at its kiosk network located across Bahrain.

In line with the kingdom’s national safety campaign, PIE kiosks will aid in reducing the crowds at various governmental locations. The kiosks are located in various government entities, and private sector locations such as the General Directorate of Traffic, Electricity and Water Authority, Bahrain Customs, Real Estate Regulatory Authority, Survey and Land Registration Bureau, Central Informatics Organisation and the King Fahad Causeway.

They are also available in Seef Mall, Alosra Amwaj, Alosra Saar, Avenues Mall and other supermarkets across the kingdom.

PIE has been government partner of choice since 2016, and as part of Vision 2030, the cashless society initiative, and government digitalisation, PIE has added governmental services on the kiosks allowing ease of reach and allowing transactions using cash and cards for the services.

The kiosk machines will accept cash payments for eGov services including traffic contravention payments, car registration payments, postal renewals, driving licence bookings, birth certificates and more.

Customers can simply go to any of the nearest TAM machines and make payments without the need to have individuals physically accept such payments and is an excellent alternative for customers who don’t prefer to make payments online.

Fawaz Ghazal, chief executive of PIE, said, “The new service by PIE comes at a quite crucial time amidst the crisis. The services we offer add an additional layer of safety, and convenience that can cater to consumers for their daily governmental services.

“Our fintech solutions are in high demand during the Covid-19 pandemic. We need to step up as innovators especially at a time when the shift to a digital world, and solutions is needed by individuals, businesses and the country as a whole.”

On the occasion of the Arab Financial Inclusion Day 2020, the Arab Monetary Fund, AMF, announced the publication on Digital Identity and e-KYC Guidelines for the Arab Region issued by the Arab Regional Fintech Working Group. This document aims to contribute to the existing dialogue at the regional and global levels on the importance of digital identity, ID, and electronic know your customer, e-KYC, and Customer Due Diligence, CDD, and their impact on financial inclusion and the further steps going forward.

Inadequate access to financial services is a problem facing a significant portion of the population across the world and the region. This can be alleviated via the transformation to digital financial services and the digital access to financial services. Given this fact, the Arab region’s financial services industry and policymakers have taken over the past five years significant steps to recognise and address challenges to meaningful financial inclusion. It is estimated that 60 percent of world GDP will be digitalised by 2022, while this growth in digital financial transactions requires a better understanding of how individuals are being identified and verified in the world of digital financial services.

Digital identity, ID, technologies are evolving rapidly, giving rise to a variety of digital ID systems. Similarly, the ongoing digitalisation of the economy represents a major challenge that requires a balance between remote and digital onboarding for clients and ensuring compliance with regulations aimed at tackling money laundering and the financing of terrorism, AML/CFT regulations. Digital ID systems can offer new possibilities for achieving sustainable development goals if they are inclusive and trustworthy. When designed appropriately, Digital ID systems can be more secure than analogue systems, with stronger, more intelligent, and more easily monitorable data protection measures, which in turn offer better guarantees of data privacy.

Taking advantage of these benefits, however, requires purposeful preventative action and an ongoing commitment to identifying and mitigating potential threats. Absence of such officially authenticated identification may pose disadvantages and undermine the financial inclusion of such individuals. The inability to credibly prove one’s identity does not only hinder financial inclusion but may lead to an individual’s political and social exclusion.

In the financial services domain, absence of a valid and officially authenticated identification renders inaccessibility to the basic yet most crucial facilities like loans, bank accounts, ATMs etc. National governments play a primary role in enacting measures to facilitate the recording of legal identity for its residents. With increasing digitisation, national governments must now focus on implementing robust and digitally enabled identification systems that can increase individual’s access to financial services and more holistic representation in the digital world.

Therefore, it is incumbent that countries establish a reliable supervisory model to introduce efficient Digital ID systems. However, such implementation of systems on a nation-wide scale has its own challenges, namely, the risk of exclusion, political concerns, cost implications, data privacy, protection and security To foster financial inclusion, tiered and electronic KYC regime may be utilized by the Financial Institutions to gain foresight of their customer’s objectives, needs and circumstances or be prepared to say that the client has refused to identify those objectives.

Developments in technology have brought about various technology solutions, known as ‘KYC utilities’ which act as a single repository of customer identity data which is utilized for facilitating easier KYC process. By digitising processes through KYC utilities, the time required for identity checks and verification can be shorten, CDD compliance costs can be reduced and potentially the quality and reliability of customer data will be improved. With the intention of understanding the development of Digital ID and e-KYC programmes among the Arab countries, a questionnaire was circulated to the Regulatory and Supervisory authorities in the Arab Countries. Based on the findings of the survey, it is noted that Digital ID system are still in nascent stages, though there are systems in most countries for a government issued national identity system.

Most countries are still following physical KYC structure with face-to-face interactions (or equivalent) and physical documents being the basis for client on-boarding and verification models. Bahrain and UAE appear to be the frontrunners in the implementation of an e-KYC model. Based on the findings of the survey, a range of action items have been proposed to Arab Countries: Establishment of a unique, legal, interoperable, Digital ID with an ‘identity first’ focus that collects minimal information for creation of an identity.

Support the Digital ID framework by adoption of policies, rules and regulations addressing the risks or concerns associated with the use of Digital ID.

Establish a ‘risk-based’ CDD regime which balances between the AML/CFT objective and financial inclusion objectives.

Prioritize integrity of user data and facilitate processes and procedures for minimalistic sharing of the information during CDD.

Create benchmarks and standards for use of any ‘non-government’ backed identity systems.

Ensure complete, accurate and better integrated databases that can be utilized for customer identification and verification purposes.

Implement a strong governance model to manage the Digital ID and CDD regime.

Provide regulatory clarity, remove barriers and foster enabling regulatory environment for innovation which may provide newer solutions for CDD. Collaborate with regional and international bodies and regulators.