UBS to open Sharia compliant Noriba Bank in Bahrain

Noriba Bank BSC, a financial services institution wholly owned by the UBS Group, will open for business in Bahrain in September 2002.

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By  Massoud Derhally Published  August 1, 2002

Noriba Bank BSC, a financial services institution wholly owned by the UBS Group, will open for business in Bahrain in September 2002.

Noriba is a Sharia-compliant wealth management firm for private investors and institutions. The bank, which is licensed by the Kingdom of Bahrain, will be the global platform for Sharia- compliant banking products and services.

“Noriba will follow a Sharia-compliant investment policy geared towards the requirements of institutions and private clients globally,” said Mohammad Toufic Kanafani, CEO of Noriba Bank BSC, who until a few months ago headed the asset management department at the Jeddah-based Bank Al-Jazira, which manages Shariah-compliant funds. “We will offer a wide range of Sharia-compliant investment vehicles including mutual funds, discretionary portfolio management, private equity, Islamic bonds, real estate, leasing, foreign exchange and Murabaha transactions,” Kanafani added.

When asked if Noriba would be able to compete in what some say is an already saturated Islamic banking market, a senior Islamic banker in Bahrain told, “It all depends on the products the bank will offer, as there is a shortage in Islamic products. If Noriba brings new products into the Islamic banking market, and these products are not currently present and there is demand for them then they [Noriba] will succeed in competing with other players in the market. The most important thing is that there is an added value.”

Many Islamic bankers say there is some US $1 trillion worth of Islamic funds available in the global market that has not been tapped due to a lack of linkages among industry players. The senior banker in Bahrain agrees, and pointed out that “The industry needs asset-backed transactions, transactions that can be traded on Islamic interbank market, like short term paper backed by long term assets which could be traded on an Islamic interbank market.”

Those developing Islamic products and funds include some of the 200 existing Islamic banks as well as conventional banks like Al Baraka Islamic Bank, Al-Rajhi Banking and Investment Corporation, TAIB Bank of Bahrain, National Commercial Bank of Saudi Arabia, Shamil Bank, and National Bank of Kuwait.

The expansion of Islamic banking and the size of assets under management have attracted non-Islamic banks that want a piece of the pie. The Islamic banking market is attractive by virtue of the 1.3 billion Muslims and an estimated $150-$250 billion in assets managed Islamically, a figure growing at 20-30 percent per annum, according to some bank officials.

Currently Citibank, HSBC, Standard Chartered and ABN AMRO have Islamic banking facilities in the Middle East. Citibank, which started serving the Middle East in the seventies, has tailored its products and services to Muslims. Citi Islamic, which operates out of Bahrain, offers a full range of products to corporate and institutional clients, from North Africa to the Far East.

A senior executive in the Islamic banking industry told, "UBS is a half trillion dollar organisation in assets under management, and they don't start something like this unless it adds to the bottom line."

The name of the bank Noriba, when read as two words ‘No Riba’ means no interest in Arabic, a fundamental and core concept of Islamic banking, as Sharia shuns usury.

Noriba Bank BSC obtained its banking licence in May 2002.

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