Manama: Mahmood Rafique, Editor: The ongoing integration process between Bahrain Islamic Bank (BisB) and National Bank of Bahrain (NBB) is not a merger as both distinct brands would complement each other moving forward.
Hassan Jarrar, the Chief Executive Officer of BisB told a Zoom press briefing that NBB has pumped a much-needed capital providing an ample opportunity to BisB to focus on its core business and traditional business model.
“BisB-NBB integration, which is the first of its kind transaction in Bahrain, where a conventional bank buys the majority stake in the Islamic bank without compromising on the nature of license.”
Under the process, which had been initiated a year ago, a major stake of 80 per cent has been acquired by the NBB while after the completion of integration process both institutions will still work as independent entities to cater for the needs of its Islamic and conventional banking clientele.
For example, he explains, we still have almost 3000 independent investors and the integration which was announced a year ago where certain departments will be integrated in order to enhance efficiency, to save costs but keeping in mind the integrity of both institutions. Both institutions are licensed and regulated by the different regulatory departments within the Central Bank of Bahrain (CBB) and each bank has its own separate board and own separate and independent board sub committees, as well separate management. Each brand brings its own advantage, we are very grateful the way integration has been conceived and being implemented.
“NBB came in as an elder brother and injected capital that took tremendous load off from back and the shoulders of the BisB in fact it really freed us to focus on other aspects of the bank. The integration process is going well as in fact we are a head of timeline as we beat the deadlines lines in the integration process that also requires the shari’ah board guidelines.”
Explaining on any physical branch expansion plan, he said the BisB has no immediate plans to open new physical branches, nor we have selling new products as the focus will be on digitization for future banking. In digitization, he said, we are already on the right path, but the bank would continue to take care of traditional clientele, those who still want to visit physical branches.
“We have to create a balance between digital and conventional banking services. The recent school projects were few but important milestones in the bank’s forward-looking approach on innovation and providing state-of-the-art solutions for the clients.”
Talking about the launch the Riffa Innovation Hub in line with its simplification through digitization strategy, had been an incredible experience as being the first of its kind where BisB converted Riffa branch into a Café style. “We provided a chance a small Bahraini company to utilize the space, for two years we have charged BD1 a month so that business can become sustainable rather than drowning in the rents and overhead expenses and I hope we can duplicate this model in other areas of the Kingdom and give chance to a difference Bahraini start up or small business.”
Replying to a question about postponement of loans where many banks are facing liquidity issues, he said the BisB was well prepared as pandemic brought many challenges for the banking sector. “When the whole thing started, we at the bank started a war room situation as we could see the liquidity crunch was coming.”
However, he said, we at the BisB like other many institutions had become exceptionally liquid, as it becomes a demand and supply issue for the banks.
“Even at the BisB, we have allowed certain deposits to leave as we do not want to keep excess liquidity for obvious reasons. In terms of slow business and restricted spending during the pandemic initially the travel and tourism sector hit hard. “Traveling became so restricted, as part of the precautionary measures initiated by the Government to combat the pandemic resulting in revenue or business loss as a lot of money spent on tickets, hotels, restaurants, entertainment, gifts, shopping etc., was not happening any way. In addition, a lot of investments by the SME and medium sized businesses had been kept on hold were main reasons of excess liquidity reported by the banks.”
Talking about BisB-NBB synergies he said the integration would yield a positive results but the first and the foremost thing would remain not to allow duplication. “You look at certain administrative costs, you look at telecom, advertising, soft goods or hard goods it will help in cost effectiveness at each tier of the business, and you need to develop a centralized vendor system for more purchasing power. The other bright aspect of integration which can’t be gauged immediately is employment pool while allows employees of the both intuitions for example a job swap within the both intuitions.”
