Ladies and Gentlemen...

Distinguished panel speakers and participants: 

السلام عليكم ورحمة الله وبركاته

Thank you very much for this opportunity to speak today. With the International Financial community approaching the halfway point in its deliberations to resolve the European financial crisis, this conference is a good opportunity to discuss issues related to the future of the Islamic Banking in the context of the current challenges .

Let me first thank Fleming Gulf for their kind invitation.  I must also congratulate Fleming Gulf and their capable team on organizing this important topic, and also on selecting a topic that is not commonly discussed within the context Islamic finance in general and with reference to the industry's ability and capability to grow in particular. 

Ladies and Gentlemen,

We are quite fortunate to have some of the most prominent Islamic bankers here today.  It is quite educational to listen to their perspectives on how the Islamic banking market is developing and what potential lies for the Industry's growth.  I would keenly like to defer to what my other colleagues may want to share with you on the current market trends and how they see various important developments taking place in the Islamic banking markets.

As I said the subject matter of the conference is quite important and needs to be discussed at such platforms which to large extent provide a good opportunity for us to exchange ideas and share knowledge.

Despite the fact that there are important differences between the Islamic Financial System and the current prevailing financial system, but one has to acknowledge that both systems pursue almost the same overall strategic objectives. At the same time we should not just simply conclude that the differences lies on the means and ways both systems are using to achieve the objectives.

The Islamic financial system is built around:

• - Sharia purposes : nature of business should be of Halal nature
• - Mechanism : which means the mode of financing used should
  comply with the Sharia requirements of that mode. and
• - The ultimate end result: the ultimate end result should serve at
  least one or more social responsibility ( Income increase, job
  creation, saving, etc....)

The entire system is built around these three pillars which in turn would result mainly on having a fully integrated socially responsible financial system.

When the current financial crisis started 5 years ago, the causes of which were mainly attributed to ethical issues as stated by the President Obama's statement :

That crisis was born of a failure of responsibility -- from Wall Street all the way to Washington -- that brought down many of the world's largest financial firms and nearly dragged our economy into a second Great Depression,"

(Barak Obama, President of the United States of America).

Soon the international financial community has realized that this is by all means is quite far to be considered as the main reason. Let us see what a current statement would look like :

"It is not the capital position which is the problem, but the fact that sovereign debt as an asset class has lost its risk-free status,"

The above  was a statement from  Mr. Josef Ackermann, Deutsche Bank chief commenting on a plan to enhance the financial  health of Europe's banks expected to be announced on 23^rd of October.      Mr. Ackermann, said that holding on to Greek bonds has cost his bank €400m this year.

The gap between the two statements is too large to be explained but to me as it is the case for many other , it is a failure of the entire system.

As it was expected the G20 finance ministers has backed the European leaders moves to establish a euro zone bailout fund. The main objectives is to rescue indebted nation's  - a move which is widely considered to be an attempt to prevent the possible collapse of the Eurozone.

As an observer and a practitioner  I do  believe  that the proposed reforms will achieve the required stabilization at the short term only, but we still need a more integrated efforts globally to consider other parts of the worlds.  More concerted work in the system itself.

I am quite sure most of you has had seen the DEBTS CLOCK which was initiated by the Economist Intelligence unit in 2009 to count for the global public debts.

According to the EIU the total global public debts  is estimated to reach $ 46 trillions, up from just $ 33 trillion 4 years ago.

The global debts has continued to increase for the last 5 years, suggesting a global disaster bearing in mind the fact that 99.99% of these were mobilized based on the current system's mechanisms.

 Ladies and Gentlemen,

I often face questions such as whether Islamic finance is truly immune.  I have also heard people asking whether Islamic finance is really a full fledge system. My answer was always and would remain so, yes it is a full fledged system because it draws its pillars from a divine source ( Allah Subhanah wa Talla) not a man made solution,  but whether it is fully immune, the answer is no simply because we cannot deny our membership in the international community plus the effects of the natural economics changes .

Islamic finance draws upon values of the Islamic economic and social ethics, or we may call them the values of Islamic finance, thus I can claim with full confidence that the system is highly qualified to provide workable solutions to the current issues or challenges.

These values revolve around the individual and the society.  One of the main purposes of these  values  is  to ensure maximum welfare for the maximum number of people in the society as explained above. 

The values of Islamic finance help develop a unique social support system built upon, for instance, Sadaqaat and Zakah.  I sincerely hope that the Islamic financial services  industry offers more of its innovative contributions to increase the efficiencies of this social support system.

In the meantime, looking at the intersection of Islamic finance, I still see a lot of optimism.  I see a good number of Islamic products such as Sukuk  being used for infrastructure financing and in some cases financing the local debt, which serves an important social purpose.

 Ladies and Gentlemen,

We all know that Islamic finance today represents an industry with over a trillion dollars, and growing.  The Sukuk markets alone have grown over 200 billion dollars.  I know that these numbers sound quite fascinating.  At times, the promise of these numbers tells a little about some other important aspects.

As an International and Islamic banker, I would also like to see and present answers to the following:

• § How many jobs we have been able to create
• § How much difference Islamic finance has made in the life of a
  common man
• § How much of the social good we have been able achieve in the
  countries we operate in

 Ladies and Gentlemen,

I am confident that the Islamic financial services industry would proudly present answers to the above questions in a few years to come.  Leading by example, we at Al Baraka soon look forward to sharing our part of the humble contribution.

For example, I am pleased to note that we have recently developed the Al Baraka Development and Microfinance Strategy to become the first Islamic banking network for doing so.  Our approach in microfinance, for instance, is

quite simple: 

• (1) reducing the cost of microfinance to the customer; and
• (2) providing more than just financing to the customer by offering a comprehensive package, which may enable the customer to graduate out of the poverty. As we commence implementation of this strategy across our global network, we look forward to sharing more details in the near future.

As I said the commitment of the International financial community is very  clear to the extent that one can optimistically predict that no global recession would take place, but of course there would be some slowdown in certain areas of the business.

In my humble opinion, Industry players needs to focus on the following areas considered to be as the main challenges :

• - Improvement of Customer services environment and Marketing research capabilities at both the institutional level and the industry level (Research firms).
• - Industry support institutions need to play effective role to promote the system globally and that it is not just for Muslims.
• - Support institutions need to work as think tanks to find solutions for the operational challenges facing the Islamic banks ( internal credit processes, risk management in light of Sharia, innovation management, consumer awareness programs, etc..). bearing in mind that most of the challenges facing the Islamic financial institutions are of operational nature.
• - Professional training and certification programs.

With this, Ladies and Gentlemen, I conclude.  Thank you everyone.