Faisal Al Saud_ banker par excellence by DIMAPUNONG


More Info
									                     Prince Muhammad Faisal Al Saud

                        By Abdel Aziz Dimapunong

          Founding chairman, Amanah Islamic Bank (1992-1998)

His Highness, Prince Muhammad Faisal Bin Al Saud of the Faisal Group of
banks is truly an Islamic banker par excellence. This is the finding of the
Islamic Banking Research Institute in its search for personalities who could
have been the founding fathers of Islamic banking. The other excellencies
in banking are His Excellency, Sheikh Saleh Abdullah Kamel of the Al
Baraka Group, and His Excellency, Dr. Ahmad Muhammad Ali, President,
Islamic Development Bank.

We shall stand corrected if there is any other founder that we might have
missed. We are of the opinion that to be dubbed as among the founders of
Islamic banking, the banker should have been involved in the
developmental stage of Islamic banking in the 1970s. And it should not be
later than December 31, 1979. This is because by the onset of the 1980s,
Islamic banking had already taken roots, and some Islamic banks and
financial institutions were already stable.

This issue is focused on His Highness, Prince Muhammad Al Faisal Al
Saud, son of the late King Saud. Writing about His Highness has been
made easy by recent developments in the world of Islamic banking and
finance. During the recent 31st Annual Meeting of the Board of Governors
of the Islamic Development Bank in the state of Kuwait last May 31, 2006, a
ceremony was held to award the IDB Prize in Islamic Banking and Islamic
Financial Services for 2005. The recipient of the award was Prince
Muhammad Al Faisal Al Saud. It was received for His Highness’ by Mr.
Muhammad Abdul Rahman. The Prize was awarded to His Highness in
appreciation for his distinctive efforts in the field of developing the concept
and business of Islamic financial services.

The recognition of Prince Muhammad Faisal Al Saud by the Islamic
Banking Research Institute is reckoned basically by his pioneering effort in
organizing a chain of Islamic bank and financial institutions the early
1970s. That refers to the establishment of Faisal Islamic Bank of Sudan, the
Faisal Islamic Bank of Egypt and several other Faisal establishments. On
the other hand, the prize awarded him by the Islamic Development Bank
was specific recognition for his involvement in Islamic Banking and Islamic
Financial Services for year 2005. It was also a specific recognition for his
role in having firmly established the first Islamic financial institution,
namely Dar Al Mal Al Islami.

In the world of global Islamic banking, there is no mistaken that the name
“Faisal” refers to His Highness, Prince Muhammad Faisal Al Saud.
Furthermore, in this global industry, the name “Faisal” has come closely to
the meaning of Islamic financial institution.

After three decades of developments, Islamic banking evolved from one
with transparency in ownership into one with fortified layers of
stockholdings that provides shields of protection to shareholders. Simply
stated, the owner of a bank does not have to be the chairman or a member
of the board. He does not have to be visible. This is partly a result of
changing environment in the new millennium. Therefore, in our write up we
do not go further into piercing the veil of corporate existence.

Faisal today in Switzerland. What used to be known as Faisal Finance
(Switzerland) SA is now known as Faisal Private Bank (Switzerland) SA.
This is according to a press release of the Faisal Private Bank (Switzerland)
SA, dated October 3, 2006. This was made official by a decision of the
Swiss Federal Banking Commission that awarded a full banking license to
Faisal Finance (Switzerland) and renamed it as Faisal Private Bank
(Switzerland) SA, making it the first Islamic private bank in Switzerland.
Faisal Finance (Switzerland) SA used to be a securities dealer duly
licensed, regulated and supervised by Swiss authorities. .

According to the press release, the principal shareholder of Faisal Private
Bank Switzerland is the Bahrain-based Ithmaar Bank, which is regulated by
the Central Bank of Bahrain. It further says that Ithmaar Bank recently
launched its public offering on the Bahrain stock exchange last February
2006. As a result, US$360,000,000 worth of shares was issued as fully paid-
up capital of Ithmaar Bank. This bank is the former Faysal Investment Bank
of Bahrain, a provider and manager of Sharia compliant investment
products in the Middle East. Ithmaar acquired 79.6% ownership in Faisal
Finance (Switzerland) S.A.

The recent launching of Faisal Private Bank Switzerland is a recent
landmark development. It does not belong to the organizational history of
Islamic banking and finance. The ownership of the original Faisal Finance
has changed. However, the press release claimed that the new Faisal
Private Bank Switzerland SA is part of the Group which pioneered the
Islamic banking and finance industry. According to Marco Rochat, Chief
Executive Officer of Faisal Private Bank (Switzerland) SA, Faisal Private
Bank Switzerland is “the synthesis of over 15 years of experience in the
Swiss private banking arena with a distinctive ethical heritage”. This, he
said, “will enable us to continue delivering an innovative platform for an
international clientele which trusts our private bankers because they are
also accountable for their values.”

Faisal Private Bank Switzerland is being managed by a management team
that includes renowned names as PricewaterhouseCoopers, KPMG, DMI,
Leman Capital and SGS. The team is headed by Khalid Abdullah Janahi as
chairman of the Board. He has expressed his confidence in the success of
the Faisal Private Bank which he said will be guided by the principles of the

Faisal’s Dar Al Mal AI lslami Trust. The Faisal group has long been based
in Geneva. In 1981, Prince Faisal organized Dar Al Mal Islami Trust with $1
billion authorized capital and administered from Geneva. Soon, this amount
rose to a $3.5 billion Trust. Prince Faisal had established the Dar Al Mal Al
Islami in Geneva as a financial services conglomerate. The objective of
Prince Faisal was to foster the spread of Islamic banking across the Muslim
world. With its precious metal as part of its business, it made a net profit of
$7.9 million in 1982. The operations of Dar Al Mal Islami cover the
Bahamas, Bahrain, Guinea, the Isle of Jersey, Luxembourg, Niger, Senegal,
Sudan, Switzerland, the United Arab Emirates, and the United Kingdom.
The office of Dar Al Mal Islami in Bahrain handles investment in the Gulf
area. Its office in the Bahamas handles international operations. By March
1984 the Faisal group had almost $400 million investments.

Faisal in Sudan - Sudan In 1974 encouraged foreign capital investment.
Foreign banks were urged to establish joint ventures in association with
Sudanese capital. Banking transactions with foreign companies operating
in Sudan were facilitated so long as they follow the rulings of the Bank of
Sudan. The monetary consideration played a big role. Investors were
required to transfer a minimum of £Sd3 million into Sudan. Several foreign
banks took advantage of this open door policy, most notably the Faisal
Islamic Bank. The principal investor of this bank was the Saudi prince,
Muhammad Faisal Al Saud.

Consequently the Faisal Islamic Bank of Sudan was officially established in
1974 pursuant to the Faisal Islamic Bank Act. The Faisal Islamic Bank of
Sudan enjoyed privileges denied other commercial banks. This includes
full tax exemption on assets, profits, wages, and pensions. The investors
were also guaranteed against sequestration and nationalization.

By September 1984, there were seven Islamic banks in Sudan that are
based on the principles of Islamic banking. Paramount of these was the
Faisal Islamic Bank of Sudan.

Faisal in Egypt. In the 1970s. Prince Muhammad Faisal Al Saud had been
so busy establishing Islamic banks and financial institutions around the
world. The pioneers include the Faisal Islamic Bank of Egypt which is now
performing very well. This bank now has over half a million investment
accounts and its total assets amount to more than 2 billion U.S dollars. It
had consistently updated itself particularly in terms of capitalization. It has
now an authorized capital stock of US$ 500 million of which US$132 million
worth of equity has been subscribed and fully paid up.

Boosting its resources, the Faisal Islamic Bank of Egypt has also built up
alliances with several banks like the Commercial International Bank of
Egypt. This is a financial institution that is engaged in wholesale banking
and financial brokerage. Also, through its Commercial International Life
Insurance Company, the bank offers life insurance products and services.

The Faisal Islamic Bank of Egypt is also in alliance with the National
Societe Generale Bank, MISR International Bank, Egyptian American Bank,
Housing & Development Bank, Delta International Bank, El Watany Bank of
Egypt, Egyptian Gulf Bank, and Piraeus Bank Egypt.

Faisal in the Bahamas. From the Middle East, Prince Muhammad Faisal,
crossed the Pacific Ocean, and established firmly the first Islamic financial
Institution in the Bahamas. It is known as Dar Al Mal Al Islami. This house
of Islamic funds in the Bahamas performed not only Islamic banking but
Islamic Da’wah as well. Many employees of this bank, natives of the
Bahamas Island, became Muslims as a result of their association with
Prince Faisal and their employment in Dar Al Mal Al Islami. I happen to
have met some of them some years ago.

Faisal across the Muslim world. In the 1970s, the name Faisal has become
a trademark in the area of Islamic banking. This name is borne by Masraf
Faisal Al Islami Bahrain, Masraf Faisal Al Islami Niger, Masraf, Faisal de
Guinea, Masraf Faisal de Senegal, and the Faisal Finance Institution
Istanbul. By 1983, Prince Faisal played a major role in the establishment of
more Islamic investment and insurance companies including the Faisal
Islamic Bank in Bahrain, the Kibris Islamic Bank in Cyprus, the Islamic
Bank in Vienna, Austria, and other banks in Senegal, Niger, and the

With the establishment of these Islamic banks and financial institutions
around the world, from Egypt to Geneva and the Bahamas, there is no
doubt Prince Muhammad Faisal bin Al Saud is among the founders of
Islamic banking.

In a broader since, Prince Muhammad Faisal also deserves the award of
being the Father of Islamic Economics in modern society.

This article: “Prince Muhammad Faisal, banker par excellence” by Abdel
Aziz Dimapunong was originally posted at:
http://www.dimapunong.blogspot.com. Please visit this site for more
articles about Islamic banking. 2006. All rights reserved.

To top