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BANK PEMBANGUNAN SHOWCASED IN PIONEERING GLOBAL RESPONSIBLE BANKING REPORT

~ISLAMIC FINANCE & THE PRINCIPLES FOR RESPONSIBLE BANKING~

 

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Thursday, 10 June 2021, Kuala Lumpur – Bank Pembangunan Malaysia Berhad (“BPMB”) welcomes the launch of a new global report looking at responsible banking. The report, launched today by the Islamic Finance Council UK (“UKIFC”), in partnership with Malaysia-based International Shariah Research Academy for Islamic Finance (ISRA) and the Global Ethical Finance Initiative (“GEFI”), is the third report in a 4-part thought leadership series that aims to assist and encourage active engagement in support of the UN Sustainable Development Goals (“SDGs”) by the global Islamic finance sector.

 

UKIFC Senior Adviser Sultan Choudhury formally announced the report, to an audience of over 3,000 financial practitioners, at GEFI’s flagship annual Ethical Finance Summit.

The report provides an analysis of responsible banking in the Islamic finance sector, assessing the level of engagement with the Principles for Responsible Banking (“PRB) amongst banks in Organisation of Islamic Cooperation (OIC) member states and analysing the approaches used by 9 Islamic finance signatories. It also features notes from interviews from various leading financial institutions from all around the world such as Al Baraka Banking Group, Gatehouse Bank, Gulf International Bank (“UK) and Jaiz Bank who have all shown notable leadership in responsible banking. 

 

The PRB, which launched in 2019, is the world’s leading framework for responsible banking and is underpinned by six Principles that help signatory banks to align with the SDGs and the Paris Climate Agreement.

 

BPMB became a PRB signatory in May 2020. The commitment forms part of an ambitious 3-year strategic transformation plan that will see the bank focus on delivering sustainable impact to the economy, society and the environment. The bank’s impact assessment framework is aligned with the SDGs. 

 

BPMB’s President/Group Chief Executive Officer, Arshad Mohamed Ismail said, “As one of Malaysia’s leading development financial institutions, we are honoured to be featured in this report as this signals our commitment to the UNEP FI Principles for Responsible Banking. This is in line with our focus to support the nation’s progress through digitalisation, sustainability and inclusivity. Being sector agnostic, we will continue to assess our projects and ensure they positively impact the people, environment and national development.”

 

“Islamic finance is naturally aligned with the SDGs and the low level of engagement with the Principles for Responsible Banking (PRB) in the OIC region means there is a huge opportunity. Through our Global Islamic Finance and SDGs Taskforce we have the platform to work with UNEP FI and PRB signatories to increase awareness, promote understanding and encourage adoption of the Principles amongst the Islamic finance sector,” said UKIFC’s Board Member, Omar Shaikh.

 

 

Head of United Nations Environment Programme Finance Initiative, Eric Usher said, “UNEP FI welcomes this comprehensive report and analysis of the penetration rate and engagement of Islamic finance institutions with the Principles for Responsible Banking. We look forward to welcoming more Institutions engaged in Islamic finance, growing our community in the Organisation of Islamic Cooperation (OIC) member states, and we recognize the need for further engagement and participation amongst these institutions.”

 

“This series of reports also sheds light on the natural alignment of the Maqasid al Shariah with many areas of the SDGs. Frameworks such as the Principles for Responsible Banking can provide an accelerated pathway for Islamic finance institutions to meet the SDGs, furthering their journey of positive impacts on society and the environment, while continuing to enhance stakeholder value,” Eric Usher elaborated.

 

With its underlying Shariah principles, Islamic finance is naturally aligned to responsible banking and is well-positioned to lead the financial services sector’s efforts towards achieving the SDGs. However, while a small number of organisations are making significant progress the report has highlighted the pressing need to raise awareness, in OIC member states and beyond, of responsible banking and the benefits to be achieved by integrating Shariah compliance with sustainable finance strategies and becoming PRB signatories.

 

 

TAKEAWAYS FROM THE REPORT INCLUDE:

  • 49 of the 57 OIC member states do not contain any PRB signatory organisations.
  • When the PRB was launched in 2019, 14.3% of the founding signatories were based in OIC member states. Now only 10.0% of the 221 PRB worldwide signatories are based within OIC member states despite the OIC member states having a collective population of over 1.82 billion (24% of the total world population).
  • Of the 61 countries containing PRB signatory organisations, 13.1% are OIC member states.
  • Within the 8 OIC members states that contain PRB signatories there are 22 signatory organisations, located in Africa (50.0%), Europe (27.3%) and Asia (22.7%).
  • 38 PRB signatories offer Islamic finance products and services, which equates to 17.2% of all PRB signatories.
  • The majority of Islamic finance institutions that are PRB signatories, 27 of the 38 organisations, are based outside OIC member states, across Europe, Asia, Africa, Oceania and the Americas.
  • Only 3 of the 38 institutions offering Islamic finance products or services are fully Shariah-compliant, namely Al Baraka Banking Group (Bahrain), Gatehouse Bank (UK) and Jaiz Bank (Nigeria).  
  • The most popular Islamic product / service offered by non-OIC member states signatories is corporate finance, with 40.7% of signatories offering this. Amongst OIC member states the most popular product / services are personal banking and personal, business and corporate banking, at 27.3%.

 

PRB signatories are currently underrepresented in OIC member states, suggesting the PRB should increase its activities within OIC member states. Awareness of the PRB in OIC member states could be increased through working groups, targeted awareness and outreach activities. Given the mutual benefits of becoming PRB signatories to both Islamic finance institutions and the responsible banking industry, increasing engagement should be treated as a priority.

 

~ends~

 

NOTES FOR EDITORS

The Islamic Finance Council UK (UKIFC) is a specialist, not-for-profit, advisory and developmental body focused on promoting and enhancing the global Islamic and ethical finance industry. It has helped six countries develop enabling regulatory frameworks for Islamic finance, enhancing financial inclusion to over 15 million people, established the award-winning Ethical Finance Round Table series running since 2010, launched the world’s first joint venture between Islamic finance and the Church of Scotland, and delivered development sessions to over 500 Islamic scholars across the globe. In 2020 the UKIFC, alongside the British Government’s Treasury department, established the Islamic Finance and Sustainable Development Goals (SGDs) taskforce, which will be anchored in London.

 

UKIFChttps://www.ukifc.com/

 

SDG Taskforce - https://www.ukifc.com/sdg/

 

About Bank Pembangunan Malaysia

Bank Pembangunan Malaysia Berhad (“BPMB”) was incorporated on 28 November 1973 as a development financial institution to assist small and medium-sized entrepreneurs. BPMB’s role includes the provision of various financing facilities, training and advisory services, particularly to Bumiputera entrepreneurs. Today, BPMB provides medium to long-term financing to the strategic sectors of the economy.

 

Owned by Minister of Finance (Incorporated), BPMB has been accorded the highest rating of ‘AAA’ by both RAM Rating Services Berhad and Malaysia Rating Corporation Berhad. It is regulated and supervised by Bank Negara Malaysia under the Development Financial Institution Act 2002.

 

With a Group Total Assets value of RM25 billion (as at 31 December 2019), the BPMB Group is well-positioned to meet the financing and business development needs of Malaysian businesses. 

 

For more information, please contact: 

 

Anita Ramly

Head, Corporate Communications

Bank Pembangunan Malaysia Berhad

Tel: (019) 332 4809

Email: anita.ramly@bpmb.com.my

 

Izzat Ratna

Senior Executive, Corporate Communications

Bank Pembangunan Malaysia Berhad

HP: (012) 642 1889

Email: izzat@bpmb.com.my