Bank Al Baraka Lebanon has a new management and new dynamics. The bank, which has five branches here and operates according to Islamic banking principles, is part of the Dalla Al Baraka Group, whose principal shareholder is billionaire Saudi financier, Sheikh Salah Kamel. The group includes banks and asset management operations in the Middle East. Executive spoke to the chairman of Al Baraka Lebanon, Tameem Jad, about the restructuring and development of the bank in Lebanon and the region.
In the middle of last year, you became CEO of Al Baraka Bank in Lebanon. What was the focus of your activities?
Al Baraka bank has been operating here since 1992, but it was not very active. The bank needs a lot of things and for the last six months we have been restructuring. When I started here, I checked all our business: 70% of all our business was Murabaha, which is a finance product. This is not the main concern for Islamic banking. The core of the restructuring activities is focused on developing three [Islamic banking products], MUSHARAKA, MURABAHA and MUDARABA.
Did you make changes in terms of systems and internal structure?
We now have computerized everything through a new system called Midas, for which we bought the license. At the same time, we changed the bank’s people culture. We took graduates from the Lebanese American University, from where we recruited five to ten people, or almost 10% of the staff, for management positions. Of our employees, 70% are new.
Have you also increased your overall staff?
Yes, by 20% in 2003. Very soon it will be 50%, when we open two further branches here in Beirut.
How did you develop Al Baraka’s reach in the market?
One can do many things in Islamic banking. I visited some small industries involved in producing aluminum and plastics, as well as paper recycling, where we could easily do some business. They need machines. We buy the machines, either by financing it or through Musharaka [or partnership financing]. This gives people good opportunities to start very strong business with Africa. We have also designed a new product that offers people a chance to go on the Haj. We can give you this as a Murabaha and received a license from the Shari’a court to sell it. This is one product that we implemented here in Beirut and passed on to all banks in the group.
Are you targeting retail customers and what are your expectations for 2004?
We are aiming, first, at small and medium enterprises. We need to develop our network to at least 20 branches. I expect this year to be very hard. What you have seen here has been achieved in only six months. I spent 16 hours each day in the office. Sometimes I sleep there, to see my aims accomplished.
Do you have further plans?
We are going to do a lot. We are expecting investors to join our bank here and the Tafal Insurance [affiliate company established last year]. From our part of the business, Sheikh Saleh Kamel and I are going to establish a new business that will act as a consultant to all business coming through the bank.
Did you increase the capital of the bank?
Islamic banking is mainly asset management. In Islamic banking the capital is with the investors. Islamic banks need capital but not like traditional banking. The Lebanese central bank knows very well about this. We are going to increase the capital, by the way, to $50 million, and I already own a share in this bank. Would you consider going public?
We are thinking about it now. After working on each of our banks and increasing the capital where necessary, we are expecting in 2004 or the middle of 2005 that the group will start with a private placement. Later, we will move to an Initial Public Offering. We have many people who are willing to go to the IPO. Did the Al Madina scandal create any pressure on your relations with customers or investors?
I don’t know what happened at Al Madina but it did not affect our business. Since I came here, my business has increased more than 50%. Saudi shareholders are increasing their business in Lebanon because they believe the country will improve. You have liquidity in the market, and it needs investment outlets. I think what’s happening in the world now will give people better opportunities to establish friendships and relations, and encourage Lebanon and others. Hopefully, peace will come to the region.