SYRIAN BANKING & FINANCIAL SERVICES CONFERENCE SPEECHES

 

Panel Session Two: Opportunities in the Financial Services Sector

Presentation: A Promising Market for Islamic Banks

Faisal Al Khatib
Managing Director
Sham Bank, Syria

 

Background:

About 4 or 5 years ago, Investment Dar which is the number one Islamic investment and finance company in Kuwait, approached our Company in Syria ( Al Shall Management & Investment - Member of Al Shall Group of Kuwait) to submit a request for establishing and Islamic bank in Syria .

At that time the law for establishing Islamic banking had not been issued, but we were confident that it would only be a matter of time, and we submitted jointly, the first request for an Islamic bank in Syria.

In 2004, Al Shall Investment Company of Kuwait, managed to expand the founders group to include Commercial Bank of Kuwait, and Securities Group Company, and by the year 2005, when Law number 35 for establishing Islamic banks, was issued, the number of founders expanded further to include Islamic Development Bank, Al - Muhaideb Holding Company from Saudi Arabia, Kuwait United Investment Company, and Engineers pension fund of Syria.

In addition the number of prominent Gulf and Syrian businessmen was expanded also to include one from Qatar and 12 from Syria. Two teams were formed, one in Syria, and the other in Kuwait, to prepare the requested studies and legal documents. The journey was long with a lot of difficulties and suffering, but we hoped it would be rewarding.

Why are Sham Bank founders and other Islamic banks encouraged by new opportunities at the financial services sector in Syria?

- Syria with its important geographic location, is considered a virgin market with a wide range of development needs in all sectors of the economy, including the Financial Services Sector.

- The new directions of the Syrian Leadership toward Social Market Economy, and encouraging the private sector to take its normal role in economic activity

- The issue of Law No. 35 in May 2005, for Establishing Islamic Banks is considered a good action to complete the long waited changes and modernization of the financial sector, through reintroducing private banking, and going further step by introducing the Islamic Banks for first time in Syria.

- The newly establishing of Syrian Commission on Financial Markets & Securities, which was followed by establishing Damascus Stock and Bonds Market, will organize the trade of the stocks and bonds eventually, which encourage investors to establish new share stocks and holding companies on large scales, and to move from family company towards institutional companies. It is worthwhile to mention here that Sham Bank has submitted to the Syrian Commission the first application for stock public placement, which expected to take place during the period 15th Nov - 4th Dec. 2006.

- Islamic Banking is expected to receive strong response by providing its customers with complete retail, corporate and investment banking services, subject to the Laws in practice, and adhering to Islamic Principals. We believe that 2 or 3 Islamic Banks would satisfy the market needs for the next decade provided that those banks response to the market demand once there is a need to increase its capital.

- The Law No 10 for encouraging investment and its amendment, is still attracting investment in some sectors of the Syrian economy, even though it needs further changes and modernization, along with taxes laws, in order to improve the investment environment and attract more investment to Syria.

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