Saudi Arabia’s biggest bank has responded to criticism of its operations from Islamic scholars by pledging to convert itself into a full-fledged Islamic bank within about five years.
The decision, made as the bank launches a $6 billion initial public offer of its shares, the largest-ever equity sale in the Arab world, shows how Saudi Arabia’s conservative brand of Islam can have a big impact on business decisions in the kingdom.
State-owned National Commercial Bank (NCB), which has about $116 billion of assets, currently has a mixed business — most of it conforms to Islamic principles such as bans on interest payments and pure monetary speculation, but some of it does involve conventional banking.
Last week some members of Saudi Arabia’s highest religious body, the Council of Senior Scholars, said investing in NCB’s share offer was not permissible because too much of its business was non-Islamic.
“Religion comes above every thing,” Sheikh Abdullah al-Mutlaq, one of the members, told state television.
Clerics’ opinions in Saudi Arabia have affected a wide range of Saudi business practices, including the growth of health insurance and the use of residential mortgages; women are not permitted to drive, a significant cost for some families and businesses.
