Islamic banks unaffected by financial crisis

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The Global financial crisis has failed to have any impact on Islamic banking because the principles of Islamic banking did not permit speculative economic activity such as dealing in derivatives, said Adnan Ahmed Yousef, the President and CEO of Albaraka Banking Group and the head of the Union of Arab Banks.

Adnan Yousef was interacting with the media at a special Ramadan Majlis held at the Atlantis Hotel held by Dubai Press Club and Albaraka Group.

Terming Islamic banking as a remarkable success story in the backdrop of the general gloom in the financial sector, Yousef said Albaraka Group not only remained unaffected by the financial crisis, but also managed to increase profits this year.

Speaking of the crisis, Yousef said though the end of financial crisis had already begun, it will take a long time to get out of the economic crisis. “Proactive government initiatives are a precondition to get over the financial crisis.

The developed countries must listen to Asian countries to avert this kind of situations in future,” he demanded.

Speaking of the performance of banks in the Gulf against the backdrop of the crisis, Yousef said the consolidated balance sheet of GCC banks would prove beyond any shadow of doubt that the impact of the crisis on banks in the region had been minimal. “But that does not mean we remain isolated from the rest of the world.

It is indeed possible for the GCC countries to become more influential internationally. GCC will actually be the fifth major economic block in a few years provided they implement a common currency system and consolidated economic activity across the region further,” he explained.

Appreciating the development strategy followed by Dubai, Yousef said the emirate has achieved in 10 years what most Arab countries failed to achieve in 50 years. “One major factor that sets the UAE apart from most other countries in the region is that it has allowed unfettered access for foreign capital.

The way the Central Bank proactively intervened in the UAE to fight the impact of the financial crisis was also a remarkable example of the UAE’s far-sightedness,” he explained.

Yousef said the central banks across the world should exchange information about corporate debts to avoid future credit crises. “It is important that the debts of corporate entities be made globally public in order for banks to avoid giving risky loans.

This is something very easy to implement as all central banks have the information at their disposal,” he pointed out.