The largest bank in Saudi Arabia has decided to turn itself into a fully Islamic bank in the next five years after coming in for criticism from the country's Islamic scholars. The state-run bank's decision came amid a $6 billion initial public offer -- the largest ever equity sale in the Arab financial world.
National Commercial Bank, or NCB, which has assets worth $116 billion, according to Reuters, works along Sharia-compliant Islamic banking guidelines but also follows certain Western banking conventions. NCB's decision to transform itself into a fully Islamic financial institution comes after some members of the Council of Senior Scholars, the country’s highest religious body, said that it will not be possible to invest in the bank’s share offer because too much of its business was non-Islamic.
"Religion comes above everything," Sheikh Abdullah al-Mutlaq, one of the council members, told state television, according to Reuters.
While securities analysts said that such criticism of the bank’s policies will not hamper the bank's public listing, NCB held a meeting on Thursday to discuss with the components of its board, such as the bank's chief executive, chairman and other officials, on how to make it Sharia-compliant.
By June, two-thirds of the bank’s assets were Islamic in nature while the remaining was conventional, according to Reuters. The Sharia board has certified that 78 percent of NCB's financing deals, 92 percent of its liabilities and 73 percent of its income, were Sharia-compliant.