'The potential for retail banking, particularly in Saudi Arabia, is very high,' he said. 'It is still effectively a virgin market. For example, housing finance is almost non-existent. Every morning at NCB all we talk about is retail banking.' Total consumer bank credit rose from just over SR 10,000 million ($2,667 million) in 1998 to over SR 40,000 million ($10,666 million) by the end of 2001 (Saudi Banking, MEED Special Report, 3:5:02). NCB forecasts that consumer borrowing in Saudi Arabia will rise to SR 60,000 million ($16,000 million) by the end of 2004.

'Islamic banking is the cornerstone of our retail market,' said Shayif, showing that over the last two years Islamic consumer finance has expanded dramatically to account for almost 85 per cent of NCB's total consumer portfolio. 'We have a strong competitive advantage. It is all based on two issues: products - without them you can't compete; and credibility - you must be strong from a sharia point of view.'

Laying out a comprehensive review of the regional banking sector, and the prospects of increased competition in increasingly deregulated markets, Shayif illustrated the relative small scale of regional banks, the threat posed by foreign institutions and the need for consolidation.

'The message is that we need to focus on retail,' he said. 'We need to expand Islamic banking as it will be one of the areas of strongest competitive advantage when the markets open. We need to forget about investment banking and corporate banking with international players. We need to invest in technology and people and build local expertise.'