Bahrain is one the most liberal and peace loving of the Arab states in the Middle East. What is striking about Bahrain is its respect for other faiths, though it is by itself a devout Muslim State. Here there is no fear of public scorn for a westerner, as may be evidenced in the not too distant neighbors such as the rigid Saudi Arabia. In fact Bahrain boasts of four churches and one synagogue, an ever standing mark of secularism, religious accommodation and good will for the brotherhood.
One can be amazed at the towering edifices that stand as testimonies of Bahrain’s business acumen and astuteness. It is common knowledge that Bahrain is the financial services hub of the Middle East. What propelled Bahrain to achieve such a colossal record? Perhaps nothing but pure foresight and pragmatism.
The mantle of leadership fell on Bahrain in the ’70s, when Lebanon which donned the title until then, got stuck with its own civil war and could not cope. Bahrain fully exploited this void by swiftly creating tax-havens to lure the banking and insurance industry. It has now become an international and regional wholesale banking centre, not only for the Middle East but even beyond.
Bahrain opened up it banking sector with the issue of an offshore banking license in 1975. Since then, a labyrinth of financial service institutions such as commercial banks, money changers, investment banks etc. have set up wards in Manama. Add to this, representative offices, foreign exchange dealers and a host of insurance firms, the list is endless as far as the financial services industry of Bahrain is concerned. Banks from the US, the UK and Europe abound in Bahrain apart from the regional outfits. Islamic banking is also fast catching up in Bahrain’s banking sector. As of today, Bahrain is the most diversified of the Gulf economies with its non- oil sector growing nearly 80% year-over year. The legal system is also very transparent in Bahrain and that is an added attraction for the expatriate investors.
Lately there has been a feeling that Bahrain is becoming crowded with too much banking. But each bank has been consistently increasing its top and bottom lines, indicating that there is still enough elbow room. As a matter of fact, Bahrain’s banking industry has never witnessed any scandal or crisis or stress ever since it established firmly in the financial fabric of the regional economy.
However, the real challenge before Bahrain’s banking industry is one of meeting the global competition. There are moves in the direction of consolidation and merger between regional outfits so that they can stand up to the onslaught of the international giants. One such move is the merger between Al- Ahli Bank and United Bank of Kuwait.
Aside banking, Bahrain is also noted for its insurance foray in the Middle East. Lured by the excellent commercial infrastructure and a mature financial ambience, many international insurance players have set up shop in Bahrain. Bahrain also witnesses considerable re-insurance business additionally.