Bank of Bahrain and Kuwait (BBK) is planning to revive the erstwhile Al Khaleej Islamic Investment Bank, which was a joint venture with The International Investor (TII).

When TII went for a merger with Al Baraka Group last year, Al Khaleej became a dormant entity. "We are evaluating all options on Al Khaleej. We may revive it so that Al Khaleej can deal with Islamic products exclusively," said Dr Farid Al Mulla, general manager.

BBK has big plans including establishing presence in other Gulf countries.

Dr Farid said there were times when the non-performing asset (NPA) levels were bad. "But we have been able to bring down the NPAs to a comfortable level," he added.

The Bahrain Monetary Agency (BMA) is encouraging banks to strengthen risk management systems in the wake of the talks surrounding the introduction of Basel 2 accord. The new accord is not only about bringing NPAs down, but it is about being more systematic. It will also help introduce new risk management mechanism.

BBK is the largest commercial bank in Bahrain with assets worth 1.3 billion dinars. Farid said BBK wants to encourage customers to use the electronic channels in a much bigger way. "We want to push customers to use ATMs as an established delivery channel," he added.

BBK has well developed e-banking services, call-centre services, mobile banking, messaging services and is the number one card issuer in the country.

On the issue of difference in provisioning norms in GCC countries, he said there had been coordination among central banks on the issue. In order to standardise norms, they are holding discussions.

Dr Farid also underlined the need for a healthy legal system in GCC for the banking system to grow in a scientific way. More than talks on opening market, we need to work towards a strong legal system for the financial services industry.

He said, in the GCC, the financial market has developed faster than the legal system.

"Look at the electronic activity; there is no proper legal system to protect electronic banking. In the era of paperless transaction, there is nothing much a court can do in case of a dispute," Farid said.

Though there are good regulations, the ability of the court to understand the various aspects of the regulations is still questionable. Farid said, "I don't say that the GCC states have not developed a legal system.''