Bahrain’s banking sector on the rebound
Abdulkarim Bucheery, the CEO of the BBK, and who is also Chairman of the Bahrain Association of Banks (BAB) told the Meet the Press that the half yearly results of the banks showed that banks would see a growth this year.
Bucheery in his cautious forecast about the banking sector said though he was not expecting tremendous growth this year but the business climate has been encouraged by the consumer spending and banks half yearly results.
“What I want to say that sustained pattern of growth is seen a good sign for the banking sector as well as for other businesses,” he said, adding that he was not convinced that the banks would manage to produce much higher yields.
“The retail sector has seen a growth and more on the corporate side which shows the things are moving in the right direction and sends a right signal to the market,” he said.
Talking about the credit situation in the country he said that there have been signs of normalcy coming back to the credit market, the argument augmented by the figures of credit market released by the Central Bank of Bahrain (CBB).
To a question about the consolidation of the banks Bucheery said that the trend was good for the banking industry but the second half of the year might not see such activity.Joining the BAB Chairman, Advisor to the Central Bank of Bahrain on Banking Supervision Richard Ellis said that the chances of any new merger or acquisition were very thin in Q2.
Referring to merger of three Islamic banks, who had already announced the merger subject to the regulatory approvals, he said such moves, would further strengthen the banking sector.
Talking about the Basel III implementation, Richard said that the Central Bank of Bahrain would start holding talks with the sector later this year just to finalise the modalities of the Basel III requirements.
“The process of implementing the Basel III starting January 2013 will be a start of a long journey to be completed by 2019,” he said.
He, however, admitted that implementation was not mandatory and it was a volunteer but the delay was deliberate as Central Bank was awaiting the roadmap from the IFSB on the issue.
“We think it will be not fair to just consult the conventional banks alone and since the IFSB has just released a draft now it will make a sense to have talks with both conventional and Islamic banks on the Basel issue,” he added.
Referring the banks’ capital he said it would be very hard for banks to compete with their peers if the capital is well below to $500 million for commercial banks and $200 million for the investment banks.
He said though boutique banks with a limited capital still can have business if such institutions follow a specialised business segments.
About the capital adequacy he said that Bahrain’s banks have been very well capitalised by all global standards.
“The way of measuring the capital adequacy of the banks is different for each regulator but what I can say with a certainty is that banks in Bahrain are in much better shape than 2011 in terms of capital adequacy,” he explained.
Mohammed Al Mutawa, CEO of Al Baraka Islamic Bank (ABIB) said that the Islamic banks witnessed a steady growth and prospects for the 2012 would remain bright in terms of both increase in assets and profitability.
Al Mutawa, who sits on the BAB board, said that the merger of three Islamic banks was a step in the right direction.
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