Aligned with its role as an advocate of the Islamic Financial Services Industry (IFSI), the General Council for Islamic Banks and Financial Institutions (CIBAFI), the global umbrella of Islamic financial institutions, announced that it has submitted to the Financial Stability Board (FSB), updates on the matter of “Correspondent Banking”.

In previous communications to the FSB, CIBAFI highlighted the decline in Correspondent Banking Relationships (CBR) experienced by Islamic financial institutions as revealed by the Global Islamic Bankers’ Survey (GIBS) 2019. This year, CIBAFI updated this information based on the 2020 survey, which reflects the views of over 100 CEOs from Islamic banks in 35 jurisdictions.

CIBAFI expressed its appreciation of the work that the FSB does to maintain sound practices of the Financial Services Industry.

CIBAFI’s GIBS 2020 revealed that the level of urgency of this agenda has further declined this year; de-risking risk moved from the sixth most significant risks to the tenth ranking within CIBAFI’s risk dashboard. This year, the region where the most considerable decline had occurred is North Africa. A total of 38% of Islamic banks from North Africa region reported a “significant decline” in CBR, which means that the majority of respondents have experienced adverse effects as a result of de-risking over the last year. CIBAFI GIBS 2020 Report was launched in 16th June 2020 and will be available for download soon.

Although the results show that its severity seems to be easing, the decline in correspondent banking remains an issue which could impact severely on some Islamic financial institutions. CIBAFI therefore very much welcomes the priority which it continues to hold on the international agenda and expresses its appreciation of the work that the FSB does to maintain sound practices of the financial services industry.

Detailed report to the FSB is available on CIBAFI’s website http://www.cibafi.org.

This initiative is aligned with the CIBAFI’s first strategic objective of Advocacy of Islamic Finance Values and Related Policies & Regulations. CIBAFI continues to support the Islamic Financial Services Industry through various activities and initiatives, including providing industry stakeholders with a platform to discuss emerging issues, representing the industry at major global financial events, and sharing knowledge through specialized publications and comprehensive training programmes.

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