Despite the financial crisis, Arab banks have continued to deliver excellent performance and have been able to increase their total balance sheets to US$2.3 trillion, according to Adnan Ahmed Yousif, Chairman of the Union of Arab Banks.
Yousif's comments came during a lecture titled "Impact of the Global Financial Crisis on Arab and Islamic Banks," held at the Dubai School of Government (DSG).
Elaborating on the fundamental factors that led to the financial crisis, he attributed the global imbalances, particularly in capital flows during the latter half of the nineties and earlier this decade, to the drop in levels of national savings in advanced economies. On the other hand, an extraordinary increase in savings relative to investment in many emerging markets was another factor that led to the crisis.
Adnan Yousif added: "In the wake of the crisis, Arab and Islamic banks are required to continue adopting cautious policies in terms of lending and preserving liquidity. Governments, in turn, are required to move quickly to establish a wide range of programs that support and strengthen the banking system to enable it to play a natural role in fostering credit flows to businesses and households.
"Even with the sort of actions suggested by the World Bank, IMF or G-20, it is unrealistic to hope that the crisis can be entirely eliminated, even while maintaining a dynamic and innovative financial system. What we need is a widely accepted and resilient financial system that is neither dependent on debt-based structures nor on usury. Such a system would help make crises such as this less frequent and less painful. Furthermore, we may be in need of an Arab version of the American Troubled Assets Relief Program (TARP) to address the problems posed by firms that are considered too big to fail."
With over 30 years of experience in international banking, Yousif has received the Islamic Banker of the Year award from the World Islamic Banking Conference for two successive years. He was elected for the past two years among the top 50 most influential Arab leaders by the Middle East Magazine. He is the President and Chief Executive of Al Baraka Banking Group (ABG), one of the largest Islamic banks in the world. Yousif is also the Chairman of Albaraka Turk Participation Bank, Banque Al Baraka D'Algerie, Al Baraka Bank Ltd. South Africa, Al Baraka Bank Lebanon, Jordan Islamic Bank, Al Baraka Bank Egypt, Al Baraka Bank Syria and Vice-Chairman of Al Baraka Islamic Bank – Bahrain, besides being a board member of all the subsidiaries of the ABG Group. He is also the Chairman of the European Islamic Investment Bank (EIIB), London, and the Union of Arab Banks in Lebanon.
Yousif added: "Conventional banks in the Arab world might be required to introduce Islamic banking products and services, at least from the point of view of achieving the required investment balance. This may enable them to withstand future challenges more effectively."
Yousif has held various senior positions at Arab Banking Corporation (ABC) as a Board Member and Member of the Audit Committee. During his 20-year tenure with ABC, he has served as the Executive Chairman of ABC Services & Investment Company E.C. and ABC Islamic Bank. He was also Senior Vice-President and Head of the Arab World Division, and Head of Global Marketing and Financial Institutions Division at ABC. Yousif commenced his career in 1975 with American Express Bank, Bahrain.
Dr. Tarik Yousef, Dean of the Dubai School of Government, said: "The financial crisis has had a profound effect on the global banking sector and the economy. In his presentation, Adnan Yousif brought to light various aspects that have led to this situation, how authorities around the world have reacted to it and, most importantly, the measures that need to be implemented to reduce the possibility of such situations taking place in the future."
Established in 2005 in cooperation with the Harvard Kennedy School, the Dubai School of Government is committed to the creation of knowledge and the dissemination of global best practices in the Arab world. The institution conducts various programmes that seek to enhance the region's capacity for effective public policies.
