MANAMA: BMI Bank in Bahrain has now completed five quarters of profitability as it works to establish itself as a bigger player in the kingdom.

It has also opened four new branches with plans to open a further two in Tubli and Salmabad before the end of the year but even this expansion is not good enough for chief executive Jamal Al Hazeem.

“There are too many banks in Bahrain and many are too small so the future lies in consolidation and mergers,” said Mr Al Hazeem who joined BMI Bank in 2010.

“We have transformed ourselves from a bank involved in international syndications to one that concentrates on the local market and in that time we have probably increased our market share here from four per cent to about 7pc.

“But the situation remains that the local market is saturated and we need consolidation so that there are fewer players but larger financial institutions so that they can compete both locally and regionally.

“Greater size would reduce the possibility of something going wrong at a bank because it is too small.

“Even some of the bigger banks in Bahrain would be regarded as small elsewhere in the region,” he said.

‘The boards of financial institutions and shareholders should look to be the drivers behind consolidation for the good of the industry,” he added.

“They should be looking at what is good for the institution rather than what they see as important to the individual stakeholders.

He said Bahrain could perhaps learn lessons from the way Malaysia consolidated its financial sector.

“What happened there was that their central bank established a three-tier banking structure,” he said.

“There if you had capital above a certain level, you were in the top tier and you could provide a complete service.

“If you were on a lower tier, there were restrictions and if you were in the third tier, there were more restrictions.

“That encouraged institutions to either raise more capital or merge and for Malaysia it worked.

“Bahrain has one of the most interactive central banks where it is easy to discuss things with them and they are always prepared to listen,” he said.

“There are other areas in the Gulf where central banks just tell people what to do.

“The industry here should be working with the central bank to bring about the level of consolidation needed to ensure the future of our industry and its ability to compete and offer the range of products and services that are needed,” he added.
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