Bank Al Maghrib Cautious about Opening to Foreign Islamic Banks
By Flah Loubna
Morocco World News
Casablanca, October 9, 2012
The possible entry of well established Islamic banks to the Moroccan banking sector seems to have engendered a mood of disquietude among the local banks that have the monopoly over the Moroccan financial market.
Bank Al Maghrib, Morocco’s central bank abdicated its enthusiastic tone to a more composed and cautious attitude surrendering to the pressure exerted by national banks.
According to the Moroccan daily Al Massae, the Moroccan Central Bank will issue only two licenses to the Islamic banks that had submitted their application request two months ago.
This precautionary measure aims at shielding the national banks from the competition they are likely to face especially with the growing appeal of Islamic banking.
Bank Al Maghrib remains alert to the risks posed by a sudden entry of well established Islamic banks to the Moroccan financial market. Therefore, it opts for a prudent approach in granting licenses to foreign Islamic banks.
Sources close to Al Massae disclosed that the governor of Bank AL Maghrib, Mr. Abdelatif Al Jawahiri, is rather apprehensive about a potential decrease in the performance of national commercial banks once the Islamic banks start to operate in Morocco.
He argues that a gradual overture to these banks will also give time to local banks to develop more knowledge and acquaintance with the Sharia compliant transactions.
Four Islamic banks from Kuwait, Bahrain, Qatar and Saudi Arabia had submitted their application two months ago to the governor of Bank Al Maghrib in order to operate in the Moroccan banking sector.
Standards and Poor’s, a leading provider of financial market intelligence, warned against the unpredictable impact of unrestricted overture to Islamic banks. Al Jawahiri said that Morocco is not bound to grant a large number of licenses in a short of time.
Faisal Islamic bank is likely to be the first bank to receive a permit to open new agencies across the country.
In the light of this agreement, the governor of Bank AL Maghrib scheduled several meetings with the aforementioned bank in order to discuss the legal framework regulating Islamic transactions as well as the geographical distribution of new bank agencies.
Foreign Islamic banks expressed their apprehension about the restrictions issued in the new Banking Law regulating the proceedings of Islamic banks that will operate under the name “Associative Banks.”
Sources close to the daily Al Massae said that there are intentions to prevent the expansion of Islamic banks in Morocco, especially that the international agency Standard and Poor’s predicted a notable increase in Islamic finance in international markets in the period between 2011 and 2015.
Stewart Anderson, The regional manager for the Standard and Poor’s in the Middle East said “The global financial crisis that devastated the financial market nurtured growing interest for Islamic banking.”
Indeed, the appetite for Sharia compliant baking products has been growing steadily in the midst of the global battering marked by market volatility.
Islamic banks diverge from conventional banks in the concept of “interest” and the type of relation established with the client.
In conventional banking, the relation between the bank and the client is that of creditor and debtor, whereas in Islamic banking the relation is that of partners, investors and trader, buyer and seller.
To dodge the illicit aspect of interest and to ensure their viability on the financial market, Islamic banks offer a wide range of products like Musharakah and Ijarah.
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