Summit News

Staffing a key hurdle for Islamic banks

ZURICH/LONDON (Reuters) - A shortage of qualified staff is a key obstacle for the booming Islamic banking sector, but indiscriminate hiring could put the sector’s reputation at risk, top industry executives said on Tuesday.

Afaq Khan, chief executive of Islamic Banking at Standard Chartered STAN.L, echoed confidence across the industry that it would be one of the few areas in global banking largely untouched by the U.S. subprime mortgage crisis.

But he said a chronic staff shortage could crimp growth and expose the industry to insufficiently qualified staff.

“A lot of Islamic finance institutions are coming to the fore, and there is a (shortage) of trained Islamic bankers,” Khan, who runs Standard Chartered Saadiq, told the Reuters Islamic Banking and Finance Summit. “There is a bottleneck.”

The industry’s reputation, he said, could be on the line.

“The risk I see is that the weakest link will break the chain,” Khan told reporters in London. “Reputation will be damaged for the industry as a whole for the error of one.”

The head of Swiss bank Mirabaud’s Middle East unit said the rapidly growing industry was already paying premium wages.

“A few very talented people definitely deserve what they’re earning, but you also have a lot of people in this market who will not be able to deliver,” Dubai-based Gilles Rollet told Reuters in a telephone interview.

“I wouldn’t be surprised in a year’s or two year’s time if some of these people will be on the street,” he said.

A possible shake-out of less qualified people would benefit the nascent sector, Rollet said.


Standard Chartered’s Khan said the industry was also suffering from a shortage of sharia scholars with strong English and appropriate training in corporate and financial law, as the industry’s breakneck growth outpaces the speed at which specialists in Islamic law are trained.

“They are coming in, but my humble request to the sharia scholars is that they take on the best and the brightest as apprentices,” he said. “This is not a theoretical matter; you have to be there, in the thick of things.”

Asia-focused Standard Chartered began offering Islamic finance products in Malaysia in the early 1990s and set up its Islamic bank in 2004 out of Dubai, later expanding into Bangladesh, Pakistan, the United Arab Emirates and beyond.

Mirabaud, one of Switzerland’s oldest private banks, set up shop in Dubai last year and plans to expand its staff to 16 people by the end of this year, from seven at present.

Unlisted Mirabaud’s customers are ultra-wealthy individuals and institutional investors. Assets under management stood at 25 billion Swiss francs ($22.91 billion) in October, representing a 25 percent rise from a year earlier.

The goal for the Dubai unit was to provide 5 percent of all of Mirabaud’s assets by 2010, Rollet said.

Between 10 and 20 percent of clients were demanding that Mirabaud put their money into sharia-compliant assets, Rollet said, a number comparable to what other banks say. The rest would take the products if the return was good.

Reporting by Clara Ferreira-Marques and Douwe Miedema, editing by Will Waterman