rasheed mohammed al maraj : challenges facing islamic financial institutions speech by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the 14th annual world islamic banking conference 2007, manama, 9 december 2007. * * * fellow governors, excellencies, distinguished guests, ladies and gentlemen. on behalf of the central bank of bahrain, may i welcome you all to the inaugural plenary session of today ’ s conference. may i take this opportunity to thank the sponsors and organisers of this conference which this year concentrates on the mechanisms to encourage the growth of the islamic banking industry whilst containing its risks. over the last 20 years we have seen the establishment of several of islamic banks and financing companies as well as islamic banking windows as banks have rushed to satisfy the appetite of investors and consumers for sharia compliant products to finance assets from cars and houses to aircraft and project finance. however as banks have flourished in number, there is increasing evidence that banks will find it difficult to maintain the pace of innovation that marked the 1990s. islamic banks seem to be increasingly focused on real estate and asset finance but not moving into other financial or liquid instruments with active secondary markets. perhaps we can take this opportunity to look at the challenges facing islamic banking and see how the industry, its regulators and stakeholders may respond. the first challenge is the success of islamic banking. the sensational growth that has brought islamic banks such high profits over the past five years coupled with high levels of liquidity have meant that islamic banks have not had to fight for funding or ideas. the result is that we are seeing too many islamic banks with the same business models and structures. the availability of plentiful liquidity coupled with the explosion of real estate projects in the mena region have conspired to breed a level of, dare i say it, complacency in some islamic banks. many islamic investment banks are project - driven and do not have a steady source of " bread and butter " revenue to tide them over any slumps in economic activity. this is in contrast to many of the major conventional banks with loan books, overdraft and credit card facilities to provide steady revenue to cover overheads. another challenge facing islamic banks is the multiplicity of sharia boards and judgements. this leads to a lack of homogeneity for some products on the one hand, and a lack of uncertainty by clients as to whether a product developed in one jurisdiction is sharia compliant in

rasheed mohammed al maraj : financial sector education and training in bahrain address by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the signing ceremony : bibf - sii mou, manama, 20 february 2008. * * * good afternoon lord mayor, mrs. ruth martin and other members of the sii team, colleagues from the bibf, ladies and gentlemen, as governor of the central bank of bahrain ( cbb ) and in my capacity as chairman of the bibf, i would like to welcome you all to the launch of a new partnership between the bibf and the securities & investment institute ( sii ). i am delighted to note that the sii is the largest and most widely respected professional body for the securities and investment industry in the uk and that its vocational courses attract over 37, 000 candidates a year. the cbb welcomes and, indeed, supports the bibf - sii strategic partnership which will further deepen the scale and scope of internationally recognized qualifications and training courses offered by the bibf. in bahrain, we recognize and appreciate the value of education and training, so it is no surprise that fostering and nurturing a vibrant training institute, such as the bibf, has been an integral element of bahrain ’ s success as an international financial centre. through the provision of high quality training and education programmes catering specifically for the financial sector, the bibf has helped create a talent pool for banks and other financial institutions to draw from. today, bahraini nationals account for over 70 % of total financial sector employment, which has continued to accelerate over the years. in fact, bahrain ’ s financial sector continues to see the highest value - added per worker. the sector employs 2. 7 % of bahrain ’ s civil service and private sector workforce, while contributing over 25 % of gdp. however, as you are all aware, the financial services industry is one of the most rapidly growing and evolving segments of the global economy. this means that people working in this industry have to keep upgrading their expertise if they are to compete effectively in the market for financial sector jobs. the bibf, with the support of the cbb, is committed to fulfilling its mandate of continuously growing bahrain ’ s talent pool and “ shaping tomorrow ’ s financial leaders today ”. from its modest beginnings, the bibf has grown into a highly respected institution, which delivers a wide range of degree and diploma programmes, professional qualifications and short