"The Islamic banking sector is well prepared for the impact of Basel III," so claims Mike Kennedy, head of risk at the UK-based Bank of London and the Middle East. Kennedy was talking to The Islamic Globe yesterday and explained: "Basel III is unlikely to materially change the
existing challenges faced by Shari'ah compliant banks, but will dominate the agenda of many conventional institutions, particularly the more speculative, leveraged banks." He claimed that although Islamic banks have not completely avoided the ravages of the credit crunch and have had their own problems to deal with, most have capital adequacy ratios noticeably higher than those seen in the conventional banking sector. This though, he explained, was more to do with the specific strictures of Shari'ah rather than by design. However, he said that Basel III may create opportunities for Islamic banks to prosper and strengthen their competitive positions. |
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