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Islamic Banks Need to Diversify - Bahrain C.Banker - ASHARQ AL-AWSAT English Archive
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MANAMA, (Reuters) – Islamic banks need to diversify their business models away from deal-making fees to survive in a period without pre-crisis liquidity levels, Bahrain’s central bank said on Tuesday.

“Islamic financial institutions need to build diversified sources of revenue, relying not only on placement and performance fees, but also on the steady stream of income generated by such unglamorous but essential activities as advisory services, asset management and providing financial services to retail clients,” governor Rasheed al-Maraj said.

Islamic investment firms in the Gulf Arab region thrived during a five-year long oil and property boom by earning fees on money they raised for private equity and real estate projects.

This market has not bounced back as investors in the region are still holding onto their funds and companies such as Bahrain’s Arcapita or Gulf Finance House have since struggled to develop a new business model.

“By now it should be clear that there can be no return to business as usual and that financial institutions will only survive in future if they succeed in developing a more sustainable business model that does not rely on high leverage and excessive maturity mismatching,” Maraj also said.

Asharq Al-Awsat

Asharq Al-Awsat

Asharq Al-Awsat is the world’s premier pan-Arab daily newspaper, printed simultaneously each day on four continents in 14 cities. Launched in London in 1978, Asharq Al-Awsat has established itself as the decisive publication on pan-Arab and international affairs, offering its readers in-depth analysis and exclusive editorials, as well as the most comprehensive coverage of the entire Arab world.

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