Category Archives: Bahrain

Oxford Business Group focuses on Islamic financial services in first dedicated chapter in the report: Emerging Bahrain 2007

Oxford Business Group focuses on Islamic financial services in first dedicated chapter in the report: Emerging Bahrain 2007

The growing market in Islamic financial services is reviewed in detail by four leading Bahraini banking figures in a round table forum in The Report: Emerging Bahrain 2007, published by the highly acclaimed global publishing, research and consultancy firm Oxford Business Group (OBG).

The round table is contained in a chapter on Islamic financial services, the first ever in the Bahrain annual publication, and the Islamic roundtable discussion is also a major first.

Elise Postigo, OBG’s country director in Bahrain said: “This expanded and directed coverage is vital to investors, with the growth of Islamic banking in the region.

“It is a major OBG innovation, and the new chapter is featured as a response to subscriber feedback, which asked for more intense coverage on Islamic banking.”

In the roundtable discussion, Khalid Al Bassam, Chairman, Bahrain Islamic Bank, focused on the growth in the sector: “In the last seven years or so, the sector has been growing at a very steady pace.

“There have been more entrants into the market and this has led to a higher standard in the industry.

“However, one must realize that Islamic banks are now much better capitalized than perhaps a decade ago.

“Islamic banks have been recording good results so this has helped their equity base to undertake larger transactions.

“I personally believe that the industry will continue to grow.”

Adnan Ahmed Yousif, President and Chief Executive, Albaraka Banking Group, said: “Many newly licensed banks in the region are Islamic and the industry is steadily growing beyond the Muslim world, to such places as the UK.

“Islamic finance is becoming more sophisticated so growth should continue at a fairly rapid rate.

“After all, this is still a nascent industry. Islamic finance provides good investment opportunities for many clients, so I see its popularity increasing.”

Majid Al Refai, Managing Director and CEO of Unicorn Investment Bank, declared he had not found a shortage of qualified Islamic bankers in Bahrain: “On the contrary, I think that Bahrain has one of the most highly skilled workforces in the region in terms of banking in general and Islamic banking in particular.

“Having said that, it’s important for all of us working in the industry to continue to make it attractive for Bahrainis to enter the sector and to provide all entrants to the industry with solid training and career development opportunities.”

Esam Janahi, CEO of Gulf Finance House, said: “The shortage of skilled Islamic bankers is mainly a Western phenomenon, where the industry is still nascent.

“Having said that, in Bahrain, the education system is evolved and there is also an active training and internship programme offered by the BIBF in association with the University of Bahrain, the Bahrain Economic Development Board (EDB) and other conventional and Islamic financial institutions in the kingdom.

“Most institutions run their own independent internship programmes.

“For example, at Gulf Finance House, we have an ongoing programme for graduates under the name of the “Ibda’a Graduate Programme.”

“This programme not only provides not only provides internships and training packages to Bahraini graduates, but also offers them employment opportunities across a wide spectrum of fields including Islamic finance.”

Rated as the premier guide for foreign direct investment into the country’s vibrant economy, The Report is an invaluable guide to the many facets of Bahrain, including macroeconomics, infrastructure, political landscape, banking and sectoral developments, and presents a remarkably in depth profile of the country.

Available in print form and online, The Report features a series of exclusive interviews with key officials and business leaders in what is considered the most extensive, independent, unbiased and accurate intelligence available, and is part of the range of OBG’s publications, which are renowned as leading sources of information on developing and emerging economies around the world.

Al-Salam Bank of Bahrain eyeing Islamic banking in Pakistan

Al-Salam Bank of Bahrain eyeing Islamic banking in Pakistan

The Al Salam Bank, a Bahrain-based Islamic bank, is contemplating starting its operations in Pakistan, The Nation learnt on Friday.

With a vision to become a global force in the Islamic financial services industry by offering innovative and differentiated Sharia-compliant products and services, the bank is negotiating with the government regulators its plan of starting Islamic banking in Pakistan, said sources.

According to the sources, Shaikh of Kingdom of Bahrain visited Pakistan recently and met the then Prime Minister Shaukat Aziz to show his expression of interest to enter into fastest growing Pakistani financial market.

Meanwhile the Qatar Islamic Bank is also planning to starts its operations soon. With the entrance of 2 more Islamic banks into Pakistan, the total number of banks offering Islamic banking services and products will increase to 8 in the next calendar year CY08 whereas the full-fledged Islamic banks have increased to 6 in CY06 from 2 in CY05.
In Pakistan the nationwide full-fledged Islamic Scheduled Banks’ numbers of branches have expanded by 117 during the seven months of the current calendar year (CY07).

According to the State Bank report on Islamic banking sector growth during CY06, the total assets of this segment grew by almost 67 percent to Rs119 billion thus increasing its share in the overall banking system to 2.9 percent from 2 percent in CY05. Infection ratio (gross) stayed at 1.3 percent while ROA remained at 0.9 percent. Building a specialized human resource would help Islamic banking system foster as a successful parallel banking system.

However, in 2006, all the 39 commercial banks made Rs84 billion after-tax profit. But only five large local banks had a seventy per cent share in it, the latest data released by the State Bank revealed.

According to company profile, Al Salam bank was established on 17 April 2006 in the Kingdom of Bahrain with a paid-up capital of US$ 317 million (BD 120 million), Al Salam Bank Bahrain BSC operates under an Islamic retail banking licence issued by the Bahrain Monetary Agency. The Bank’s Initial Public Offering (IPO) of 35 per cent of the paid-up capital, which closed in March 2006, raised over US$ 7 billion (BD 2.7 billion) and was the largest IPO in the Kingdom’s history.

The Bank was subsequently listed on the Bahrain Stock Exchange on 27 April 2006.
The founding shareholders of Al Salam Bank hold 65 per cent of the paid-up capital. They include Emaar Properties, Amlak Finance, Dubai Investment Group, Dubai Holding, Global Investment House, Lebanese Canadian Bank, Al Salam Bank Sudan, and Dubai Islamic Insurance and Reinsurance Company (AMAN).

The interim results posted by the Bank for the half-year ended 30 June 2006 showed net profits of US$ 11.1 million (BD 4.2 million). This performance reflected a return on average equity of just under 9 per cent.

The 14th Annual World Islamic Banking Conference presents predictions of further industry growth, innovation and globalisation

The 14th Annual World Islamic Banking Conference presents predictions of further industry growth, innovation and globalisation

A major challenge for leading institutions is to channel resources and focus on those markets and segments that have the greatest potential for exciting growth.

The concluding day opened with the Leaders & Winning Strategies session where Innovation in Islamic finance and the current challenges were discussed by Michael Chahine, Director and Global Head of Islamic Banking Distribution, Credit Suisse, Fares Mourad, Director and Global Head of Islamic Investment, Credit Suisse & Olaf Ransome, Director (Prime Services) Head of Business Development, Credit Suisse, Zurich.

The Corporate & Investment Banking Summit: Pinpointing the Next Wave of Big Deals focused on exploring key trends in the corporate & investment banking markets, the latest developments in the Islamic capital markets with a specific emphasis on the way forward for Sukuk.

The conference also the focused on the Retail Banking market and analysed the product development and operational capabilities of the industry leaders with a view to capture the consumer banking growth opportunity.

During the Shari’ah & Business Open Forum, a high-profile panel of scholars and bankers tackled the challenges of ensuring greater consistency of Shari’ah interpretation, enabling an effective interface between business imperatives and the Shari’ah board, while addressing the shortage of Shari’ah scholars.

The development of the Singapore market and the attendant risk and regulation of Islamic banks was discussed by Chia Der Jiun, Executive Director (Prudential Policy) of the Monetary Authority of Singapore. He described Singapore as a major international wholesale banking centre with $880bn of banking assets in the Asian Dollar market, with a fast growing wealth management hub of about $600bn AuM (about 20-30% growth over past 5 years) and Islamic real estate funds of over $1.35bn.

With 1,000 attendees from more than 35 countries gathered at the conference, speakers and delegates agreed that the immediate future of the industry is characterized by a strong growth potential especially beyond the traditional markets. While the development of Islamic banking in the GCC markets will continue to lead the way, experts at the conference also predicted significant growth for Islamic banking in Asia and even in markets in the UK, Europe, Africa and North America.

World Islamic Banking Conference concludes

World Islamic Banking Conference concludes

Sameer Abdi, a partner at Ernst & Young Bahrain and the head of the Islamic Financial Services Group, hosted a PowerTable at the World Islamic Banking Conference in Manama.

The PowerTable, entitled Performance, Growth and the Way Forward, focused on four recurring themes: global growth, trends in asset management, the ongoing global credit squeeze and
harmonisation in both Shari’a and standards.

Mr Abdi commented ‘We hear and have heard during this conference a lot about the continuing growth of the industry with projected figures of between $1 trillion and $3 trillion over the next decade. Where is this growth likely to happen? Which sectors should Islamic financial service providers concentrate on? Will the growth be wholesale driven or will it be retail driven? Linked to these questions is the issue of trends in asset management. Will the focus remain on real estate? Is our industry sufficiently diversified?’

Mr Abdi continued, ‘A third focus is of course the global credit squeeze. There have at times been suggestions that Islamic financial institutions will not be affected by the ongoing sub-prime mortgage in the US. However, all financial institutions will be affected by the higher price of borrowing, regardless of the level of liquidity in the GCC. What are the
immediate and the longer-term implications for Islamic banks and other financial institutions? The final piece of the puzzle for us here today is the issue of harmonisation, in both Shari’a and standards. There are two closely-linked issues: do we need harmonisation and, if we do, are we likely to get it?’

Mr Abdi and his panel, comprising Dr. Omar Marwan Kamal, the Executive Vice President of Al Salam Bank; Afaq Khan, the CEO (Islamic Banking) of Standard Chartered Saadiq; R Lakshmanan, the CEO of Sakana Holistic Housing Solutions; Hammad Hassan, the Executive Director of ABC Islamic Bank and Saad Rahman, the Director of Islamic Banking at CALYON, also answered several questions from the floor.

Islamic banking to continue incredible growth

Islamic banking to continue incredible growth

Global business strategy and marketing consultation majors, Mckinsey, Fitch and MTI Consulting, will take centre stage in the Kingdom presenting their research-based studies of the state of the global Islamic banking industry at the 14th World Islamic Banking Conference (WIBC), which begins here today.

With almost 1,000 delegates from over 35 countries attending, WIBC has emerged as the most significant platform for decision-makers to explore new and emerging market opportunities for Islamic finance as well as the largest and most significant gathering of Islamic banking and finance industry leaders anywhere in the world.

The Central Bank Governors of Bahrain and Indonesia Rasheed M. Al Maraj and Burhanuddin Abdullah and Professor Rifaat Ahmed Abdel Karim, Secretary General for the Islamic Financial Services Board would be the keynote speakers. The conference, being held under the patronage of Shaikh Khalifa Bin Salman Al Khalifa, the Prime Minister of the Kingdom of Bahrain, will focus on the financial and regulatory architecture to enable industry growth and containing risks.

The focus would be on the World Islamic Banking Competitiveness Report 2007/08 to be launched at the plenary sessions. A team of McKinsey partners from key international centres will release the report highlighting strategic trends, analysis of the growth and performance of the leading industry players at the event. “It explores the latest developments in Asia, in terms of general market trends as well as government and regulator initiatives to boost the sector. It also highlights the imperative need for Islamic banks to upgrade their internal capabilities and, towards this end, highlighting the challenges and opportunities in risk management as well as the competitive edge that can be gained from best practice processes and operation by Islamic banks,” said said McKinsey partner Ozgur Tanrikulu.

With the booming economies of the GCC nations that are flush with excess liquidity, both with wealthy individuals and government funds, the report has a special look at the untapped opportunities for Islamic banks in asset management, he said.

McKinsey surveys suggested that in Malaysia, Indonesia and the Gulf states, 25 per cent of investors were committed to seeking out and using financial services that were compatible with Shariah principles. Another 50 per cent say they prefer to put their money into Islamic funds where possible, as long as they do not have poorer returns than conventional products. McKinsey said that Islamic banks in general rely too much on the religious credentials when attracting customers, but service was a limitation.

Asset classes offering exciting growth potential and key success factors in Islamic Asset management, challenges to be addressed in risk management portfolios when compared to commercial banks, the rise of Islamic banking in Asia and the key markets propelling growth, strategic marketing for Islamic financial services with focus on product development, branding, service, Marcom, channel operations, areas the Competitiveness Report covered, would come in for discussion at the McKinsey pre conference workshop.

The launch of the new Country Focus session will explore the increasing interest and opportunities for Islamic finance in non-Islamic geographies. For the first time, a high-powered delegation led by UK Trade and Investment and comprising of decision-makers representing major banks and institutions in the UK will be setting up a pavilion, showcasing the emergence of London as a key European centre for Islamic finance.

The incredible growth story of Islamic banking is set to continue through 2008 with significant new players entering the market, while some well established institutions have expanded their geographic footprint and the major international conventional players have further sharpened their Islamic finance capabilities. This has set the stage for discussions over the next two days as WIBC 2007 brings together an unprecedented line-up of more than 60 speakers from the Middle East, Europe, North America and Asia to share new insights into the growth potential of Islamic banking and finance.

“The key focus areas covered to strategically deal with the issues plaguing the Islamic Retail Banking Industry include, Product Development, Branding, Service, Marcom, Channel, and Operations, and we will be presenting a Strategic Framework developed internally at MTI to look at each component separately, and then integrate the sum of the parts to arrive at a holistic solution that is pertinent in today’s landscape,” said Hilmy Cader of MTI Consulting