JEDDAH, 26 September 2006 — The Saudi Investment Bank (SAIB) has launched its new Islamic Banking program — Alasalah. A ceremony at the Al-Rayyan branch in Riyadh initiated the program and the opening of 10 new Shariah compliant branches in the Kingdom.
Abdullah ibn Sulayman ibn Manii, chairman of the Shariah Committee at the bank presided over the ceremony which was attended by Youssef ibn Abdulaziz Al-Farraj and the General Manager of the Saudi Investment Bank, Saud Al-Saleh. Al-Saleh said he was delighted at the launch of the Alasalah program which reflected an important step which he thought enabled the bank to reach a wider range of clients. “This step will result in more than half of the bank’s branches moving to Islamic banking,” he told guests.
Yesterday, Al-Saleh commented on market reaction. “The response was excellent, a very promising start indeed,” he said. “Local and foreign clients have shown a great deal of interest over the last week and we expect this to continue as word spreads.”
Manii said Islamic banking faced objections when it started from those who doubted its benefits and those who were hesitant to adopt it. “Not only has it been accepted but it has also become a requirement from the majority of customers.” He said that Islamic banking currently accounts for around 64 percent of total banking operations in the Kingdom and that percentage was increasing. He added that Islamic banking had realized better profits than traditional banking.
The Saudi Investment Bank is a Saudi Arabian joint stock company established in 1976. A full service commercial bank that specializes in financing the requirements of private sector companies it also provides a full range of personalized and professional banking services to financial institutions, corporations and individuals. Standard and Poor’s rating agency has assigned SAIB (A-) for Long Term and (A-2) for Short Term with a stable outlook. The rating of SAIB reflects its robust financial performance, good asset quality supported by a conservative strategy, satisfactory liquidity profile, and good capitalization. The shareholders of the bank include J. P. Morgan Chase, Mizuho Corporate Bank — formerly, The Industrial Bank of Japan, Saudi public and private institutions as well as Saudi individuals.
The expansion of international interest in Islamic banking in the last few years has prompted many banks and international financial organizations to provide for the increasing demand in Islamic banking services.
Islamic banking has moved from a theoretical concept to embrace more than 100 banks operating in 40 countries with multi-billion dollar deposits world-wide. Islamic banking is widely regarded as the fastest growing sector in the Middle Eastern financial services market. First entering the international financial arena just thirty years ago, an estimated $70 billion worth of funds are now managed according to Shariah law. Deposit held by Islamic banks were approximately $5 billion in 1985 but had grown to over $60 billion by 1994.
The Saudi Investment Bank was one of the first banks to provide personal financial services to the public that enabled the general public to buy expensive goods and services transparently and in accordance with Shariah law. These provisions became popular very quickly.