Saudi’s National Commercial Bank pledges conversion to Islamic bank after pressure from scholars

Grand Mufti of Saudi Arabia, and head of the Council of Senior Religious Scholars

Oct 20 (Reuters) – 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 involves conventional banking. Some other banks in Saudi Arabia are also mixed.

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…

I wonder how they got away with the bank being partly un-Islamic this long?