Syed Tariq Husain is a seasoned banker with 30 years of diversified experience of local and global markets. He trained and worked in the early years of his career with Chartered Accountancy firms Deloitte and Touche, Ernst & Young and PWC. His banking career started with ANZ Grindlays Bank in 1987 as Senior Auditor and later he rose to the position of Country Treasurer and Strategic Planning Manager.
In 1997 he was appointed as Head of Global Islamic Finance and Director Global Structured Finance by ANZ Investment Bank, London to developed a full range of Islamic financial products. Before joining Emirates Global Islamic Bank he worked with Dubai Investment Group, Dubai with responsibility for developing Islamic finance capabilities including launching a listed Takaful company and establishing an Islamic European Property Fund.
Tariq Husain is a Chartered Accountant from Pakistan, Canada, England & Wales and MBA from York University, Canada.
As Islamic banking continues to grow in popularity in Pakistan, Emirates Global Islamic Bank has stood out as a strong performer in Paksitan’s highly competeive banking sector. Blue Chip talks to Emirates Global Islamic Bank President and CEO Syed Tariq Husain about Islamic banking in Pakistan and his vision for the future.
When did you join Emirates?
Tariq Husain: “I joined it three and a half years ago. I was working in Dubai and came back to Pakistan in August 2005. The group had applied to the State Bank and the State Bank wanted the Chief Executive to be in place before they took the application any further. I was the first employee and began to set it up. It took a year and a half to get the formal license, so in February 2007 we commenced operations.”
What prompted interest in Pakistan’s banking sector?
TH: “There was the IMF meeting in Dubai around 2003 and Shaukat Aziz had come over and met with Sheikh Tariq Bin Faisal Al Qassimi who is our Chairman and also from the Sharjah ruling family. At that time the Pakistan government was going through the process of seeing whether they could bring Islamic banking into the country. I think Sheikh Tariq felt encouraged to put in an application and there was support from Shaukat Aziz so we got the license. Along the way the Al Rajhi family from Saudi Arabia who knew Sheikh Tariq personally asked if they could come into the bank as sponsors because they own the largest Islamic Bank in the world – the Al Rajhi Bank of Saudi Arabia. They came in as equal partners with Emirates Investment Group.”
The bank has demonstrated very strong performance over the years, what do you think has contributed to its success particularly in today’s volatile environment?
TH: “Islamic banks are generally more stable especially in times of crisis and that is a precedent now not only in Pakistan but internationally as well. In our case, we got good professionals. From a start where nobody knew us, today we have 42 branches in 25 cities so we have expanded our footprint throughout Pakistan. The negative vibes people previously had about Islamic banking where basically the names and terminology changed but the substance didn’t – now it is being done properly.
So Islamic banking has been doing well. The awareness is growing and business is coming. Our business growth projections are very impressive.”
Why do you think Islamic banking is becoming the preferred choice for customers?
TH: “Because we are new, we don’t have baggage form the past, we don’t have non performing loans, we don’t have old IT systems which need updating – everything is new with good people and good IT systems. We are customer-centric, we are looking for business, we believe that the edge we get initially will come from the use of technology which will enable good service to customers. If you find that the service and pricing is as good as any bank in the market, you will choose Islamic banking. We do not want people to come to us simply because we are Islamic. People should come in and they should expect quality service, pricing and products as good as they would get anywhere else. The growth rate we expect to see is substantial. The joint vision that was developed between Islamic banks and the State Bank, we are targeting a market share of 12% by the end of 2012, so in four years our growth rate will go up from the present 5% to 12% which represents a growth rate of over 50% per annum. The strategy we have of reaching out to customers is very important. This will not only include traditional outlets which are braches but also using technology – telephone banking, ATMs etc. We should be right up there with the best of the banks.”
Do you think people trust Islamic banks more than conventional banks?
TH: “Some will but others will wait and see. We have grown up with traditional banks and it is not always easy to move away from institutions you have been banking with for a long time. Ironically, what has happened in the last year because of the global crisis and banks failing and being supported by governments, the perception now is that the edge that foreign banks had as being more stable and almost invulnerable to economic cycles no longer holds.”
In Pakistan, what challenges have you faced?
TH: “Setting up and getting the license was a major challenge. We expected to get it before we actually did. The huge challenge here is human resources. We need to get people who have not only the skills but also an awareness abut the difference between Islamic and conventional banking. The question is: what does an Islamic bank do which makes it a better place to bank then a conventional bank? The fact that an Islamic bank takes more risk with its customers. If you have a business or are setting up a business and want financing, typically new businesses do have problems. But if I am there sharing the risk with you, something like venture capital, then you are more likely to succeed. If you succeed I am more likely to get my money back – our interests are aligned. If we actually went down that route, a lot more businesses would succeed, especially SMEs, which are typically the drivers for growth in most economics. If that happened, the economic landscape of Pakistan would change.
If you talk to people about Islamic banking, even if they do not know much about it, people say that it might be religious but they also expect it to be more fair and more equitable than conventional banking. There is a general feeling that conventional banking is more exploitative.
If you have taken a loan from me and I have taken security and if I feel that you are in trouble, it is probably in my interest as a conventional bank to quickly go in, take the security, sell it and get it. An Islamic bank is slightly different as it is in my interest to sit down with you and see if we can work it out together – perhaps extend the financing, make the terms softer and make it work as we are sharing risk and it is in both of our interests that we come to a good commercial resolution.”
What recommendations would you make regarding the regulatory/legal framework governing Islamic banking in Pakistan?
TH: “The framework at the moment is that all rules apply equally for all scheduled banks so the rules are the same for Islamic banks and conventional banks. However, there are still some State Bank products which have not been developed for Islamic banks so we are slightly behind and that needs to come in. For example, if I am a conventional bank and run out of liquidity, I can go the State Bank window, to a REPO, and get liquidity for two or three days. An Islamic bank cannot do that as there is no equivalent facility. That means an Islamic bank has to keep more liquidity within the bank to cater for any unforeseen event. That means I am slightly less efficient because the rules are not absolutely the same. We have been pushing for a money market instrument where we could work in the interbank market and meet our reserve requirement. We have been lobbying for that for many years. We have an extra layer of regulation in a sense: not only do I have to do everything conventional banks are doing; after that the next layer of regulation comes from Sharia. We have a Sharia advisor and a Sharia committee who go through everything we do. They are very meticulous. We have to adhere to their requirements too. It is slightly more difficult than conventional banking but in the long run it will be well worth it because of that we are going to see higher growth rate and greater penetration into the banking sector, that will only be a good thing.”
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EGIBL is backed by leading investors from United Arab Emirates and Saudi Arabia, who are committed to the cause of Islamic banking.
The sponsoring shareholder of the bank, Emirates Investments Group LLC is an investment company in the United Arab Emirates. The dynamic investment Group sources unique business development opportunities and works closely with established companies through partnerships. With an initial focus on Financial Services and Real Estate, Emirates Investments Group is expanding its portfolio with investments in the Trading, Industry, Aviation, Oil and Gas sectors.
Shiekh Tariq Bin Faisal Al Qassimi, a member of the ruling family of Sharjah, is the Chairman and co-founder of Emirates Investments Group.
The other major shareholder of Emirates Global Islamic Bank Limited is Al Rajhi family of Saudi Arabia. This group is also a major shareholder in the Al Rajhi Bank of Saudi Arabia which is the largest Islamic bank in the world with assets over SAR 100 Billion.
Emirates Global Islamic Bank Limited (EGIBL), a dedicated Islamic Commercial Bank, commenced operations in February 2007. The bank has a network of branches operating across all four provinces in urban and rural areas of Pakistan.
Incorporated in Pakistan and sponsored by leading investors from the United Arab Emirates and Saudi Arabia, EGIBL is a major player in the rapidly growing Islamic banking industry, offering Riba-free yet highly competitive banking products, based on the teachings of the Quran and Sunnah. EGIBL believes in making a positive contribution to society by continuously striving to provide Halal alternatives to conventional banking products, complemented with superior service and cutting-edge technology.
Syed Tariq Husain is a seasoned banker with 30 years of diversified experience of local and global markets. He trained and worked in the early years of his career with Chartered Accountancy firms Deloitte and Touche, Ernst & Young and PWC. His banking career started with ANZ Grindlays Bank in 1987 as Senior Auditor and later he rose to the position of Country Treasurer and Strategic Planning Manager.
In 1997 he was appointed as Head of Global Islamic Finance and Director Global Structured Finance by ANZ Investment
Bank, London to developed a full range of Islamic financial products. Before joining Emirates Global Islamic Bank he worked with Dubai Investment Group, Dubai with responsibility for developing Islamic finance capabilities including launching a listed Takaful company and establishing an Islamic European Property Fund.
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