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Key Bahrain cbank instrument bolsters bank push

MANAMA, June 2, 2015

The new Islamic Sukuk Liquidity Instrument (ISLI) introduced by the Central Bank of Bahrain (CBB) will play a vital role in enhancing return for Al Salam Bank-Bahrain and boost its profitability, a senior banking official said.

It would lead to the overall economic development of the kingdom, Al Salam Bank-Bahrain director and group chief executive Yousif Taqi said in a report in the Gulf Daily News (GDN), our sister publication.

“ISLI will play a vital role in enhancing the economic return of our banking activities through smoothing the deployment of excess funds in high creditworthiness scheme,” he said.

“This will also contribute to the Islamic banking industry by offering a wider range of short-term quality assets available for the banks to support their long-term economic growth,” he added.

Al Salam Bank-Bahrain, one of the pioneering Sharia-compliant banks in the kingdom, is amongst the first users of the new instrument.

“We believe that using ISLI will facilitate to boost our profitability, add further flexibility in the management of available liquid funds in the banking system and thus lead towards the achievement of the overall national economic development within the kingdom,” Taqi said.

Previously, Islamic banks in Bahrain have focused on managing their short-term liquidity through the CBB's monthly sukuk issues programme of three and six months sukuk.

Through this new launch, the CBB granted all Islamic retail banks in the kingdom the opportunity to take advantage of an innovative liquidity management instrument to deploy their excess liquidity as a Wakala deposit on a weekly basis, every Tuesday, whereby the excess funds are invested in a portfolio containing high-quality sukuk.

Consequently it helps to manage the bank's available cash more efficiently.

“In addition, ISLI will also bring positive returns to our clients on short-term deposits as well as help accomplish the upcoming Basel III liquidity requirements, especially on high-quality liquid assets given to the nature of the weekly deposits and the risk-free cost associated with it,” Taqi added. - TradeArabia News Service




Tags: Bahrain | sukuk | CBB | Al Salam | Islamic |

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