Dubai Islamic Bank teams up with Hawkamah

By Habhajan Singh
Dubai Islamic Bank (DIB), the world's first Islamic bank, recently signed a "founding member's" agreement with a regional corporate governance outfit to show its commitment towards strengthening its corporate governance standards.
Hawkamah Institute, an autonomous association of corporate governance practitioners, regulators and institutions, is an international association with a primary mandate to develop corporate governance best practices in the Middle East region.
Launched in February 2006, Hawkamah is working to create a system of governance that promotes institution building, corporate sector reform, good governance, market development and increased investment and growth across the region.
DIB's corporate governance standards are clear, consistent and fully in line with international best practice, said a statement released by the Dubai-based bank which also operates in Pakistan and Sudan.
"Corporate governance plays a critical role in the development of modern businesses as it enhances investor confidence and helps in developing the capital markets of the region," said Hawkamah executive director Dr Nasser Saidi (left, in picture) in the statement.
He said that Islamic finance has experienced unprecedented growth so far, but the enactment and implementation of well defined corporate governance structures is essential if trust and confidence is to be maintained.
DIB chairman Mohammed Ibrahim Al Shaibani said Islamic financial institutions (IFIs), by their very nature, have a responsibility to enact precautionary and prudential measures that are specific to their unique structure.
In the statement, DIB chief executive officer Abdulla Hamli said the recent growth within the Islamic banking sector has been unprecedented, and the players are now seeking new and innovative ways to implement the necessary checks and balances to maintain customer, stakeholder and shareholder confidence.
"The Shariah Supervisory Board has become an indispensable aspect of our corporate governance and will be well paired with the objectives of Hawkamah, which aims to ensure these standards are being met to better protect all those associated with the bank," he said.
Conventional governance standards seek to address the separation of ownership and management by ensuring that actions of the management are kept inline with the interests of shareholders and stakeholders, the bank said.
(This story appeared in The Malaysian Reserve on Feb 4, 2009. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)