Tarek Amer, Chairman of National Bank of Egypt, affirmed that the 40-year-old Islamic banks in Egypt have not achieved success, noting that the market share of these banks ranges between 3% to 4%, and its profits do not exceed 1%, down from the profits achieved by commercial banks in Egypt.
Amer told Al-Masry Al-Youm that budget committee in the lower parliament (People’s Assembly) invited him to discuss the sukuk issuance law (as alternative for bands), but he found heated debates about Islamic and commercial banks.
Amer said that commercial banks help the local economy, adding that 90% of banks in Saudi Arabia are commercial ones, as their Islamic banking system in 1980s failed.
Amer called on clergies not to be involved in the banking system as it is science that necessitates experts.
Amer noted that the only difference between sukuk and bonds is that the first has an Islamic attribute and the second has a commercial one both give interest, but the difference is that Islamic banks called it “ijarah”.
Amer said that sukuk market from 2007 to 2012 reached USD 95 billion globally, in which Malaysia, Indonesia and Gulf countries work, while bonds market reached USD 29.9 trillion for the same period, meaning that it is better for Egypt to issue bonds for global markets. Egyptian government is capable of issuing bonds with USD 2 billion annually, while it will issue sukuk with only USD one billion infrequently.
Amer said that bonds have long-term maturity dates ranging from 10 to 20 years, while sukuk has short-term maturity dates raging from 5 to 7 years.