Company profiles – Ithmaar Bank

Ithmaar Bank is interesting from the point of view of business architecture because it represents Islamic finance. Ithmaar Bank was incorporated into the Kingdom of Bahrain in 1984 initially under the name of Faysal Investment Bank of Bahrain EC (FIBEC).

In 2003, Shamil Bank bought all the assets and liabilities of FIBEC and changed the name to Ithmaar Bank.

The bank’s vision is: “To be the leading international investment bank in the Middle East; and … the world’s leading Islamic financial services group. (1)

The bank’s values ​​are: Experience, Innovation, Transparency, Sophistication and International Focus. Sophistication is a value that is not often seen in business. To these values ​​could be added the bridge between Eastern and Western cultures.

Bahrain’s location is key to understanding the success of this fast-growing bank. As the corporate video shows, Bahrain offers access to markets, attractive costs for doing business in the Middle East, and the strength of regulation that conforms to international standards.

The chairman of the board of directors is Khalid Abdulla-Janahi. The side shows only limited information about it:

“Mr. Janahi has a BA in Computer Science and Accounting from the University of Manchester, UK.” (1)

About Michael P. Lee, the CEO and board member, we learn much more. Mr. Lee began his investment banking career at Merrill Lynch in 1973. In 1992, Mr. Lee became Senior Advisor to the Bahrain Ministry of Finance and National Economy, providing strategic advice on the development and regulation of the Center. Bahrain International Finance and Investment. Now he has lived in Bahrain for 16 years. Mr. Lee holds a Master’s degree (with honors) in Philosophy, Politics and Economics from the University of Oxford. (1)

The business model contains:

– Investment banking
– Islamic Finance
– Private equity (recently launched Ithmaar Kazyna CIS Regional Energy Fund)
– private banking (wealth management, investment placement)
– Group business development (New Business Development for Ithmaar Bank and its subsidiaries and affiliates. Institutional management and relationships with VIP clients, Intra-group links). And also a new fund that was launched: Latin American Real Estate Fund.
– Fusions and acquisitions

In the corporate brochure, however, we learn that this business model is not an integrated entity, but a conglomerate of individual companies:

Bank of Bahrain and Kuwait BSC, (BBK), Ithmaar Development Company (faith hotel development), First Leasing Bank (FLB), Solidarity Group (one of the largest Islamic insurance companies in the world), Faisal Private Bank (FPB), Faysal Bank Limited (FBL), Shamil Bank

That for the layman like me, one needs a basic understanding of Islamic finance, for example about the nature of interest (how about the myth that interest rates are not allowed to rise)?

“Riba is a loan on the condition that the borrower will repay the lender more and better than the amount borrowed.” (two)

And about the global knowledge that in Islamic countries interest is prohibited:

How is interest illegal?

The definition of interest has already been mentioned and is prohibited. If we explore the Qur’an, we will come across at least four places where Allah has mentioned interest.

The first is in verse 275 of Surah Al-baqarah.

“Those who devour usury will not stand except as is the one whom Satan with his touch has driven mad. That is because they say,” Commerce is like usury, “but Allah has permitted commerce and prohibited usury ” (two)

How this is incorporated into Islamic (business) finance is (to me) still uncertain …