The Dar Al-Maal Al-Islami Group (DM1), which controls one of the world’s largest networks of Islamic banks and investment firms, is restructuring its activities and focusing on financial services.
‘Now that the concept of finance is firmly established, the DMI Group is focusing on building its financial services group and running it as a business,’ DM1 chief executive Omar Ali told MEED in a fax interview in late May.
‘Our restructuring has involved segmenting our franchises, creating prototypes and spreading them in a belt of Islamic countries,’ Ali said. He added that the group, which is based in Geneva, was continuing with the ‘professionalisation and institutionalisation of its franchises.
‘We are continuing to disengage from companies which fail to meet our minimum return on capital requirements.. The Board of Supervisors considers restructuring as a continuing process and it is still discussing ways and means of achieving (these) objectives,’ he said.
DMI covers 17 countries and at the end of 1994 its consolidated assets were $917 million, with $2,800 million in funds under management. Subsidiaries include Faysal Islamic Bank of Bahrain and Islamic Investment Company of the Gulf, both of which are based in Manama. Associated companies include Faisal Islamic Bank of Egypt and Faisal Finance Institution of Turkey.
Bankers say Islamic banking is getting increasingly competitive, with a growing number of products and services becoming available. Conventional banks are also expanding their Islamic business, but Ali did not see this as a threat to DMI. ‘We believe the new entrants to the Islamic banking scene are creating competitive space for Islamic finance. Our investment banking and wholesale franchises in Bahrain and other parts of the world are well positioned to benefit from this.’ The Saudi Dallah Albaraka Group, which has a worldwide network of Islamic banks, has also gone through a reorganisation which concentrated all its banking activities in a single division, to be registered as an offshore bank in Bahrain (MEED 7:6:96).
‘In the next few years we will see the biggest growth in institutions which are focused on the corporate and wholesale sectors of Islamic finance,’ Ali said. ‘Most of the growth will take place in the valueadded new products area of structured finance, capital markets and corporate finance.
The Gulf and South East Asia offer the best prospects for growth in Islamic commercial banking, Ali said. DMI has a representative office in Jakarta and an investment company in Labuan and has links with institutions in Malaysia and Indonesia, as well as being active in capital markets and trade finance in the area. The group recently opened a representative office in Pakistan, where it has interests in two banks.