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Come back on Algeria and its banking system

  • 40,4 million people as of 01/01/2016 (Office National des Statistiques)
  • Muslims reach 97,9% of the population (source : PEW Research center, "Table : Religious Composition by Country Percentages, le 18 décembre 2012).
  • The National Banking Access rate is 30% (Global financial development report 2014)
  • 1 banking desk for 25600 inhabitants in 2014 (Bank of Algeria Report 2014)
  • 18 conventional banks
  • 2 Islamic banks

The Algerian banking system was born in 1962 and has evoluated through different stages.

The activities

The Bank essentially works with small and medium size companies, it also propose some services to standards individuals and has a specific range of products and services for the high net worth clients.

(We will see the mains activities on discussion item)

The Regulatory Context

Given there is no specific regulation for Islamic Finance in Algeria, it is the conventional regulation protocol which applies to any banking activity.

The regulation rules are defined according the below categories of requirements:

1- Formal Requirements

2- Authorisations & Licences Requirements

3- Internal controls

4- Mandatory declarations

5- Mandatory prudential controls

6- Rules of good behaviour

7- Bank Secrecy

8- The Tax requirements

The activities

  • Corporate Banking
  • Investment Banking
  • Wealth Management
  • Retail Banking
  • Trade Service

The Products & Services

All the below P & S provided are shari'a compliant and approved by the Shari'a board on a case by case basis.

The Market

According to the previous Directeur General Statement: " Algeria is the most promising market both in the North Africa and the whole continent". (Source : Al Maghreb Newspaper).

  • Almost 98% of the population is Muslim
  • Islamic Finance 2.42 % VS Conventional 97.58%
  • 30% banking access rate / 1 desk for 25600 inhab.
  • 12% population has no bank account for religious reasons.
  • Only 48% of algerian adults heard about the Islamic Finance.
  • 88% banking activity = 6 National banks.

The Clients

  • Approximately 5700 clients in 2014.
  • Essentially small & medium size companies.
  • No real information about the nature of privates clients (no segementation...)

  • Core Business, Products & Services.

  • Economic Analyses & Competitors.

  • Market & Clients

  • Strengths and Weaknesses (SWOT)

The Islamic banking

Welcome to Al Salam Bank Presentation

Introduction

  • The Islamic banking
  • The Bank story & the Algerian banking industry
  • Activities and regulatory context

A banking system that respects the principles of the Shari'a in its activities providing products or services.

  • The Islamic banking is much more involved into the transactions it enters into since one of the basic principle is the Profit and Loss sharing.
  • The purpose of its role is more polyvalent according to the products & services provided, the bank has much more responsibilities because of that direct implication.
  • All underlying aspects of the transaction have to comply with Shari'a rules (origin of funds, purpose of transaction, no speculation nor Riba, absence of uncertainty, etc...
  • Banking System with its own standards (AAOIFI based in Bahrein - IFSB in Kuala Lumpur).
  • Its own Risks management policies (because of the Shari'atic risks).

-> The Islamic Investment Banking

Investment banks raise capital for big companies through securities operations in the financial markets, they coordinate fusions - acquisitions and they provide advisory and complex analyses service on various instruments like islamic funds, islamic private equity, real estate, syndicated lending, sukuks etc...

-> The Corporate Banking

It consists in managing the corporations or businesses by responding to their financial and banking needs.

-> The Wealth Management

This activity of the Bank is a combination of personal investment management, financial advisory, and planning disciplines directly for the benefit of high-net-worth clients by constructing them an entire investment portfolio and advises financially on how to prepare for present and future financial needs.

Algeria and Al Salam Bank History

Composition of Algerian Banks Deposits

Decembre 1962

14/04/1990

26/08/2010

Creation of the Algerian Dinar and the Central bank of Algeria.

Prescription n 10-04 of August 26th, 2010 concerning the monetary policy and also the credit activities : the foreign participations in banks can be authorized only within the framework of a partnership with resident national shareholders of which represents 51 % at least of the capital.

Law 90-10 of April 14th, 1990 is going to open the activity to the national but also foreign private capital structures.

Going forward, several big foreign banks implant a branch (BNP, SG...) as well as financial institutions (Arab leasing corporation, Cetelem of Algeria).

- Autonomy of the central bank which becomes the bank of Algeria

- Separation between the regulatory authority of the banks and the authority of supervision.

- Banking monopoly on bank transactions. The activity maybe exercised only by banks or financial institutions. It is the bank responsability to choose its model of universal bank or specialized financial institution.

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Until the end of the 60s, the banking industry consisted essentially of private and foreign operators but at the end of this period, it becomes exclusively public.

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2009

2001

2010

1990

1962

2015

1988

2009

The government proceeds to a restructuring of both the public large companies, and the banks which are transformed into joint-stock companies subject to the Commercial Law Code.

Law of complementary finance in 2009: Setup of a partnership protocol as a modality to facilitate the foreign investors placements.

In January 2015, in Algeria:

- 20 banks ( 6 public banks and 14 private)

- 9 financial institutions

- 7 Foreign represantative Banks

- Ibrahim Asnoun

- Christophe Barthélémy

- Mokrane HACENE

Come back on Al Salam history

  • Subsidiary of the Al Salam Group, Al Salam Bank Algeria arose from a collaboration between the United Arab Emirates and Algerian in 2006.
  • Other locations: Bahrein, Soudan, Singapore and Seychelles.
  • Al Salam Bank Algeria branch is leaded by:
  • The current Shareholders structure:
  • The Bank obtained its licence on September 10th, 2008
  • It really started the activity in 2010
  • The share capital was initially 7,2 billion dinars
  • It was increased to 10 billion dinars in 2009 (minimum requiredin the recapitalization of banks policy by the Central Bank.
  • As of today 6 banks opened in 6 years and 3 other structures about to be launched, and totally the bank currently emploies 218 people (32 implentation staff, 59 control staff, 127 executives).

The bank activities and the regulatory framework

http://afrique.lepoint.fr/economie/finance-islamique-l-algerie-se-jette-a-l-eau-16-06-2016-2047193_2258.php

Discussion

Market & Clients

Economic Analyses & Competitors

Core Business, Products & Services

Economic Analyses & Competitors

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