MANAMA, 12 October 2006 — Bahrain is set to attract more business on the back of Islamic financial institutions over the next few years, despite strong global competition, a senior Bahraini banking official said Tuesday.
Central Bank of Bahrain (CBB) deputy governor, Anwar Khalifa Al-Sadah, said the small Gulf island was poised to attract more Islamic business in the next 3 to 5 years, thanks to Bahrain’s venture in the early 1980s to attract and regulate Islamic financial institutions.
“Bahrain is home to the largest number of Islamic banking institutions in the world today,” he said during a seminar organized by Bahrain Economist Society. “We have 351 financial and insurance institutions registered in Bahrain, more than 30 of them are Islamic.”
Al-Sadah said the number of Islamic financial institutions in Bahrain jumped from 23 in 2001 to 33 in 2005, with the combined total capital of these institutions rising from $946 million in 2001 to $2.24 billion in 2005.
The number of Islamic financial institutions hosted on the Gulf island exceeds the number of any other country in the world, as more than 30 of the 200 plus Islamic banks use Bahrain as a base for their operations. Al-Sadah also said he expected the sector to post strong double digit growth in the next few years, as these institutions expand the services they provide and as international companies enter the sector. The global market for the financial Islamic sector — encompassing only the Islamic financial institutions which operate according to Islamic law — is estimated to be worth more than $200 billion.
Al-Sadah said that various government bodies, including the Economic Development Board, had been working together in the past several years to maintain Bahrain’s position as a financial hub for the region. “What we have learned is that the investors evaluate everything from the minute they land at the airport,” he said.
Al-Sadah attributed the rise and success of the Islamic banking concept, which have been around for about 40 years now, to the global liberalization of financial markets in the 1980s.
Venture Capital Bank deputy CEO of operation and support, Khalid Abdulla Ateeq, who attended the meeting, said that Islamic banks needed to compete with regular banks to ensure the continued support of shareholders.
