Manama, Kingdom of Bahrain | Aligned with its role as advocate of the Islamic Financial Services Industry (IFSI), the General Council for Islamic Banks and Financial Institutions (CIBAFI), the global umbrella of Islamic financial institutions, announced the submission of updates to the Financial Stability Board (FSB) on the matter of “Correspondent Banking”.
Correspondent Banking represents an important issue to CIBAFI members, few of whom have a global reach and most of whom are in emerging or developing markets. They largely depend on relationships with other banks to be able to provide basic international services to their customers, however, because of the countries in which they are based, some have suffered particularly from de-risking by international banks.
In previous communications to the FSB, CIBAFI highlighted the decline in Correspondent Banking Relationships (CBR) experienced by Islamic financial institutions as revealed by the Global Islamic Bankers’ Survey (GIBS) 2018. This year, CIBAFI updated this information based on the 2019 survey, which reflects the views of 106 CEOs from Islamic banks in 33 countries.
CIBAFI’s GIBS 2019, conducted in late 2018 and early 2019, revealed that the level of urgency of this agenda has slightly declined this year; de-risking risk moved from the fifth most important risks to the sixth ranking within CIBAFI’s risk dashboard. The data was also analysed this year by bank size to confirm that de-risking is primarily a concern for smaller banks, i.e. those with up to USD 5 billion in assets. Full report of the GIBS 2019 findings will be published in May 2019.
Within the communication to the FSB, CIBAFI highlighted the decline in CBR as a result of ‘de-risking’ within Islamic banks over the last five years as well as the effect of this decline on the products and services of Islamic banks. The data presented compared between last year’s and this year’s results allowing a comprehensive overview of the progress experienced in this regard as well as highlighting how far this agenda is a pressing issue in the Islamic banking industry.
Although the results show that its severity seems to be easing, the decline in correspondent banking remains an issue which could impact severely on some Islamic financial institutions, and CIBAFI therefore very much welcomes the priority which it continues to hold on the international agenda and expresses its appreciation of the work that the FSB does to maintain sound practices of the Financial Services Industry.
Detailed report to the FSB is available on CIBAFI’s website http://www.cibafi.org.
This initiative is aligned with the CIBAFI’s first strategic objective of Advocacy of Islamic Finance Values and related Policies & Regulations. CIBAFI continues to support the Islamic Financial Services Industry through various activities and initiatives, including providing industry stakeholders with a platform to discuss emerging issues, representing the industry at major global financial events, and sharing knowledge through specialized publications and comprehensive training programmes.
About the General Council for Islamic Banks and Financial Institutions (CIBAFI)
CIBAFI is an international organisation established in 2001 and headquartered in the Kingdom of Bahrain. CIBAFI is affiliated with the Organization of Islamic Cooperation (OIC). CIBAFI represents the Islamic Financial Services Industry globally, defending and promoting its role, consolidating co-operation among its members, and with other institutions with similar interests and objectives, with over 130 members from 34 jurisdictions, representing market players, international intergovernmental organisations and professional firms, and industry associations.
For more information about CIBAFI, please visit www.CIBAFI.org
Tel: +973 17357300 Email: media@cibafi.org
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