A Deloitte Middle East Islamic Finance Knowledge Center (IFKC) report, entitled 'Empowering Risk Intelligence in Islamic Finance', addresses and investigates the important issues in practice and regulation in Islamic Finance in the current market challenges. The report also assesses the impact of Islamic Financial Institutions in different countries, highlighting that Saudi Arabia is one of the main contributors to the Islamic Finance industry, with an estimated 94 billion US dollars in Islamic Finance Assets. This was stated in a press release this week.
Based on analysis provided by Deloitte Middle East Islamic Finance Knowledge Center, the total of the Saudi Arabia Islamic Finance Assets, valued at $94 billion, represent 26 percent out of total Gulf Cooperation Council (GCC) Islamic Finance assets and 8.2 percent out of total Global Islamic Finance assets.
The report also focuses on the governance and structural aspects of an effective risk management framework in Islamic Finance. It presents new findings in the practice of Islamic Finance risk management that offer guidance to boards in managing risk in troubled times. It is based on a survey and group of case studies developed during the second half of 2011, on 20 leading Islamic Financial institutions from the Middle East and South East Asia, with aggregate assets of more than $50 billion. It also includes several interviews conducted with industry leaders and risk management executives.
"Greater pressure has been placed on financial institutions offering Islamic Financial services to galvanize risk exposure and governance capabilities," commented Dr. Hatim El Tahir, director of the Deloitte Middle East Islamic Finance Knowledge Center (IFKC). "Global and regional jurisdictional regulatory reforms are continuing. How this regulation will affect the Islamic Finance sector and the role of IIFS in the economy is yet to be seen," he added.
The Deloitte report finds that Saudi Arabia saw the launch of one the first and most important institutions in the Islamic Finance (IF) Industry. The Islamic Development Bank (IDB) is a multilateral development financing institution established in Jeddah in 1975. Up until today, the (IDB) has contributed over US$ 200 million of technical support to nearly 70 Islamic Financial Institutions (IFI) around the world.
Furthermore, Saudi Arabia saw the establishment of other prominent institutions that played a role in the advancement of IF. This includes the founding of the International Association of Islamic Banks in 1977, with a goal of promoting and facilitating cooperation between Sharia-compliant financial institutions, as well contributing to harmonization of the industry on an international level.
Today, there are four Islamic Commercial Banks operating in Saudi. They include: Al Rajhi Bank, $58.8 billion total assets; Bank Al Jazira, $10.3 billion total assets; Alinma Bank, $9.8 billion total assets and Bank Albilad, $7.4 billion total assets.
Aside from Islamic Commercial Banking, Cooperative Insurance industry evolved considerably in the KSA during the past nine years. There are currently more than 30 Cooperative insurance companies, total assets of over $7 billion with the largest company being The Company for Cooperative Insurance (Tawniya) with total assets of US$ 1.9 billion.
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