An interesting feature in this week’s Economist (“Face Value: Godly but ambitious”) focuses on Adnan Yousif (pictured right), who in 1980 with the Bahrain-based Arab Banking Corporation was one of the first to establish an Islamic-finance practice and is now the chairman of the Union of Arab Banks and chief executive of Al Baraka Banking Group. At the time, a glut of petrodollars in the Gulf was largely invested in bonds [namely American] whose yield was verboten under sharia. Twenty years later, “there were more than 200 Islamic banks and Mr. Yousif was leading from the front.” That said, what the industry lacked, and still lacks today, Yousif argues, is a veritable, global Islamic bank. “Today $700 billion of global assets are said to comply with sharia law. Even so, traditional finance houses rather than Islamic institutions continue to handle most Gulf oil money and other Muslim wealth.”

To fill the gap Yousif wants to create “Istikhlaf” (”doing God’s work”), a sharia-compliant investment bank which will be listed on the Bahrain Stock Exchange and NASDAQ Dubai via an impending, $3.5 billion fourth-quarter IPO, following a $6.5 billion private placement that will comprise its capital base. Per analysts, such larger Islamic banks will be crucial for the industry to realize its growth potential and to compete with Islamic windows or subsidiaries of Western conventional banks that have large market shares in wholesale banking services (Deutsche Bank, HSBC and Citigroup dominate the field presently).

The piece also touches on the practical concerns surrounding the fundamental viability of the concept of Islamic banking itself. Namely: “the rules for Islamic finance are not uniform around the world. A Kuwaiti Muslim cannot buy a Malaysian sukuk (sharia-compliant bond) because of differing definitions of what constitutes usury. Indeed, a respected Islamic jurist recently denounced most sukuk as godless. Nor are banking licences granted easily in most Muslim countries. That is why big Islamic banks are so weak. Often they are little more than loose collections of subsidiaries. They also lack home-grown talent: most senior staff are poached from multinationals.”