Will 2012 be the year of “come together” consolidation for Islamic banks?

Size is often the justification for achieving economies of scale, used to access deals for league table prominence, used as a buffer in a challenging environment, used as defensive measure to ward off unwanted suitors, and so on.

Islamic banks are very much like Islamic (equity) funds. There are hundreds of Islamic banks and funds, but the paid-up capital and assets under management, respectively, is too small to be meaningful. Yet, both, more so Islamic banks, present a unique situation (of an industry risk) of “too small to fail”.

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By Alon Ben-Meir

Due to a host of common denominators in the Arab world including the lack of traditional liberalism, the tribes’ power, the elites’ control of business, the hold on power by ethnic minorities, the military that cling to power, and the religious divide and Islamic extremism, the Arab Spring could sadly turn into a long and cruel winter. These factors are making the transformation into a more reformist governance, slow, filled with hurdles and punctuated with intense bloodshed. At the same time, each Arab country differs characteristically from one another on other dimensions including: history and culture, demographic composition, the role of the military, resources, and geostrategic situations. This combination of commonality and uniqueness has had, and will continue to have, significant impacts on how the uprising in each Arab country evolves and what kind of political order might eventually emerge.

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Continuous effort - not strength or intelligence - is the key to unlocking our potential. - Winston Churchill

How many Malaysian Islamic bankers work in senior positions at Islamic financial institutions in the GCC (Gulf Cooperation Council), Pakistan and the UK? Conversely, how many non-Malaysians work in senior positions at Malaysian Islamic financial institutions?

Does the training and experience in Malaysia for Islamic finance somehow imply that it’s too Malaysia-centric (Shafi school) for GCC (Hanbali, Hanafi, Jafri schools) Islamic financial institutions? Does it somehow imply that there needs to be a “retraining” of Malaysian Islamic bankers to the GCC “way” of Islamic banking, finance and takaful?
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Standard & Poor’s Ratings Services said today that issuers in the Gulf Cooperation Council (GCC) countries face rising refinancing risks over the next three years because the amount of debt maturing in the region will increase significantly between 2012-2014.

Industry experts estimate bonds and sukuk of about $25 billion will mature in 2012, rising to about $35 billion in 2014. Standard & Poor’s believes the region is therefore entering a challenging loan and bond refinancing cycle, especially given the ongoing volatility in capital markets and fears that slowing global economic growth is already curbing corporate debt issuance and heightening refinancing risk in the region.
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By Alon Ben-Meir

November 8, 2011

The Arab uprising must be seen as an integral part of a world in transformation. The technological and informational revolutions that have spurred (and continue to spur) globalization and interconnectedness between cultures make it impossible for tyrants to rule for the entirety of their lifetimes while mercilessly subjugating their peoples to lives of servitude with no prospect of ever tasting the true meaning of freedom.
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The Arab Spring not only cost at least three dictators their jobs but also $56-billlion in lost GDP for the worst affected countries, according to a statistical study by a consulting firm. READ MORE HERE

In many ways, Bahrain is the odd one out in the GCC bloc. The smallest state in the Gulf with the smallest economy and geographic area, Bahrain is also weak on natural resources, unlike its other fellow GCC members. Its Sunni rulers also find themselves in the minority and in the tough position of running a Shia-dominated population - other Gulf states don’t have that acute problem.

And these issues appear to be undoing much of Bahrain’s economic progress of the past few decades. READ MORE HERE

Qatar leaves regional competitors in the dust, rising as one of the most competitive economy in the world. But Arab Spring unkind to competitiveness of liberated Egyptian and Tunisian economies.

Another survey, another glowing review of Qatar. The World Economic Forum’s Global Competitiveness Index 2011-12 finds the gas-rich state the region’s most competitive and emerging as the 14^th most business-friendly country in the world. READ MORE HERE

Gulf states have pledged $150-billion in response to the regional unrest, according to Bank of America Merrill Lynch estimates. But it may not be enough. READ MORE HERE

It was an unlikely public display of affection. Close to 2,000 Syrian expatriates gathered on the streets of Jeddah, carrying Saudi flags and pictures of the Saudi King to thank him for criticising Syrian President Bashar Al Assad and demanding an end to his wretched violence against his own people.

In an unusually frank criticism, the King demanded that Al-Assad end the violence against his own people, breaking the silence in the Arab World over one of the biggest atrocities being committed within the region.

But, “as a number of Saudi youths started joining the gathering [of Syrian expatriates], police intervened and dispersed the people peacefully,” reported Arab News. READ MORE HERE