Banking

From a slow start, innovative fintech could shake up finance in the GCC

In the West, governments play the role of facilitator in terms of policy and regulation, and in providing the right environment for innovation to flourish, leaving it to the private sector to come up with solutions. However, in the GCC, with regulations lagging in most sectors and the private sector wary of joining in, governments play a more central role in fostering innovation. Still, fintech has begun to bubble up across the region, in payment systems (CashU), peer-to-peer lending (Beehive),...

Qatar Banking – Advantage larger banks

Qatar banking sector overall accounts for 126% of the country’s nominal GDP in 2014 and banks’ credit to GDP stood at 87%. According to Marmore’s report on Qatar banking, the post-crisis growth in loans, deposits, assets and revenues (2009-2014) has been significantly lower than pre-crisis growth (2003-2008), but the overall size of the sector has increased. Qatar banks witnessed a credit growth of 15.5% in 2014, Loan Loss Provisions (LLPs) decreased by 7% with total provisions amounting to USD 0.65bn...

Saudi Mortgage Law: Anticipated Impact vs. Ground Realties

Until the issuance of the Mortgage Law (prior to 2012), the finance sector regulations in Saudi Arabia, in particular the home finance segment was underdeveloped. The lenders were hesitant to provide financing due to ambiguous regulations and challenges associated with enforcing their rights. These risks added to the costs of financing making it expensive for the borrowers. The traditional practice followed by the Saudi banks was to offer home buying loans primarily secured by banks’ automatic deduction of loan repayments...

GCC: Sukuk – Key questions?

KEY QUESTION 1: What are Basel III norms and why are they important for application in Islamic Banking? The Basel III norms were introduced after the 2008 crisis to make the banking system more robust. Under the norms, banks shall hold 6% of Tier-I capital and 2% of Tier II capital. Tier I capital includes 4.5% of common equity and 1.5% of additional Tier-I capital which includes preferred stock and hybrid securities. Basel III norms are mandatory for all banks,...

Japanese Interest in Islamic Banking: Key Questions

Islamic banking derives its basis from the principles laid down in Sharia and unlike conventional finance prohibits payment of and charging of interest. It has caught the attention of the global financial services and banking industry. The growth in Sharia-compliant products and services has happened over the years as financial institutions took their time to understand the principles, and design products and services that comply with those principles. Modern banks started offering sharia-compliant products around mid-1970s. Japan, once an economic...

Unified Stock Exchange for GCC

Several factors argue for the case for a unified stock exchange in the GCC region including increased trade volumes, improved liquidity and lower trading costs on back of economies of scale (MENA Asset Management Policy Perspectives, Markaz Research) . However, the first step towards such unification of stock exchanges requires the union of currencies and harmonizing of monetary operations undertaken by the GCC central banks. Initially proposed in the early 2000 after the successful adoption of the Euro, the approval...