Gulf banks slow buyout plans due to global crisis
SYDNEY - ReutersEstablished in 2007, Dubai-based Noor Islamic Bank said it planned to become the world’s largest Islamic lender within five years, and would consider acquisitions to reach that goal.
But the global financial crisis dented those plans, and today Noor Islamic is focused on its domestic retail and takaful (Islamic insurance) businesses, with much of its overseas activity concentrated in Turkey and Tunisia.
“There are no plans to acquire any operations,” chief executive Hussain Al Qemzi told Reuters in an interview. The priority is improving efficiency and cost-cutting. Similar stories have played out across the Gulf. Islamic finance is still growing, but a major aspect is missing: the development of big cross-border banks that could spread ground-breaking products and best practice around the region.
Saudi Arabia-based Al Rajhi Bank, for example, moved into Malaysia in 2006 predicting it would have 50 branches there by 2010. It now has about half that number, and a statement by the bank in March said it was focusing on improving operational efficiency; it did not stress expansion. Al Rajhi has also opened one branch in Kuwait and two in Jordan. One exception is Bahrain-based Al Baraka Banking Group, an Islamic institution which has a presence in 12 countries, such as Jordan, Turkey and Pakistan.