Barwa Bank has been appointed as one of five Joint Lead Managers for the UK's £200m debut sovereign sukuk. The Qatari lender takes its place alongside HSBC, Standard Chartered, National Bank of Abu Dhabi and CIMB of Malaysia. Of the five banks involved, Barwa Bank is the only Qatari bank selected and the only wholly Shariah-compliant mandated bank on the panel. Britain's first sovereign sukuk delivers on the government's commitment to become the western hub of Islamic finance. Very strong demand for the sukuk is expected, resulting in a price that delivers good value for money.
Islamic Bank of Britain plc (IBB) has appointed Sultan Choudhury as Chief Executive Officer (CEO) and Director. He previously held the position of interim Managing Director of IBB. IBB is celebrating its 10 year anniversary this year and Mr Choudhury is the Bank’s longest-serving employee. He joined IBB when it was formed in 2004 and has since set up the Bank’s Head Office operations and Branch Network. Mr Choudhury has also led the development and implementation of IBB’s full product range and service delivery channels. As CEO, Mr Choudhury is working with IBB’s new parent company on plans to expand property finance to businesses, including development finance.
UK-based retail lender Islamic Bank of Britain (IBB) plans to broaden its product range to win business both locally and across Europe, aided by the backing of its new Qatari shareholder Masraf Al-Rayan. IBB is developing its commercial property business to widen fee-based income as it aims to post a profit for the first time, newly-appointed CEO Sultan Choudhury said. Masraf Al-Rayan in February injected 75.8 million pounds ($129 million) into IBB to support its expansion plans. The bank's property finance business has doubled in size in the last year, which could allow IBB to expand later into Europe, said Choudhury, adding its retail operations would remain focused in the UK. IBB also aims to buy some of the 200 million pounds of sukuk that the British government will issue this week.
Gatehouse?Bank has completed its first real estate financing deal. The £11.7m deal funds a joint venture between Princeton Property Partners and Resolution Property, and will turn an office block in Fitzrovia into eight flats. Meanwhile, Gatehouse Bank has hired Nick Westoby from RBS, Arnaud Schaller from Credit Agricole and Eduardo Martin from Banco Popular Espanol to bolster its real estate financing unit. Gatehouse said it has financing deal worth more than £500m in the pipeline.
QIB-UK, a subsidiary of Qatar Islamic Bank (QIB), is offering real estate investment opportunities for premium clients looking to purchase properties in London. The bank’s network gives interested clients early access to residential real estate opportunities. They will enjoy privileged introductions to opportunities in the London real estate market both for buyers and investors alike. In addition, the bank offers a full suite of Shari’ah-compliant structured commercial real estate financing products including investment, residential development and mezzanine financing to clients.
Last week, Britain mandated five banks to arrange a 200 million pound ($336 million) sukuk issue which could be issued in coming weeks, subject to market conditions. Britain's choice of HSBC, Qatar's Barwa Bank, Malaysia's CIMB, National Bank of Abu Dhabi and Standard Chartered as arrangers appeared designed to ensure easy distribution and tight pricing. But the choice was notable for excluding all of Britain's six full-fledged Islamic banks; none was included in the mandate. That could reduce the impact of the issue in developing expertise and depth in Britain's Islamic banking sector. It may also limit British banks' access to the issue.
Bahrain’s Gulf Finance House has become entangled in a dispute with a former executive at its Dubai-based private equity unit who the company alleges falsified invoices to siphon almost $5 million into bank accounts controlled by him. David Haigh, who was the deputy chief executive of GFH Capital until resigning this March, was arrested shortly after he arrived in Dubai about a month ago and has been in detention since. Legal authorities in Dubai are weighing criminal charges, according to an emailed statement from GFH, while the company has also filed a civil suit against him in the Dubai International Financial Centre. Mr. Haigh denied the GFH allegations.
Willis Group Holdings P.L.C. is set to offer sharia-compliant commercial real estate coverage in the United Kingdom. The coverage will be offered through the Islamic insurance platform developed by Cobalt Underwriting Services Ltd. The policy retains price neutrality, meaning premiums are equivalent to those in a conventional insurance policy. In March, Cobalt Underwriting added QBE Insurance Ltd.'s European division to its platform.
The UK government's decision not to choose a local Islamic bank as an arranger for its sukuk is a lost opportunity to promote the homegrown Islamic finance industry, according to Harris Irfan, of European Islamic Investment Bank. Malaysia’s CIMB, Qatar’s Barwa, National Bank of Abu Dhabi, Standard Chartered and HSBC have been chosen to lead the sale.
Insurance broker Willis Group Holdings will offer sharia-compliant commercial real estate coverage in Britain for the first time. New York-listed Willis will offer the coverage through the Islamic insurance platform developed by London-based Cobalt Underwriting. The policy retains price neutrality, meaning premiums are equivalent to those in a conventional insurance policy. Cobalt's platform uses a syndication model to help spread risk across a panel of underwriters, allowing multiple insurers to pool their capacity while each can subscribe to their desired level of risk though individual Islamic windows. The risk is priced by a lead insurer and other firms must then subscribe under similar terms.
Henry Thompson will take over the role of London-based Gatehouse Bank's new boss with immediate effect. He substitutes current chairman and chief executive Fahed Faisal Boodai, who will remain in his role as executive chairman. Thompson had been working in Shariah-compliant finance at Arcapita as head of legal before. Gatehouse, which offers investment banking services, has been aiming to get a foothold in London’s wealth management sector and recently opened a new office in Mayfair. Boodai said Thompson brings with him sector knowledge, which complements the activities of Gatehouse Bank.
The first UK-Bahrain Islamic Finance Summit was held in London and highlighted the importance of co-operation in the area of educational and training development in Islamic finance. The BIBF presented a paper on that topic, saying that a million professional Islamic finance jobs are expected to be created worldwide by 2020. The paper highlighted several trends and facts within the Islamic financial sector. It also highlighted that this has produced a paradigm shift from an educational standpoint in Organisation of Islamic Co-operation countries and will generate multiple specialised training opportunities for human capital development within the sector. The BIBF team also participated in many panel discussions during the event, focusing on investment, education, and regulation.
Iran's Bank Mellat filed an application for a judicial review against the UK Government in the Administrative Court on 16 April 2014. In its final ruling last June, the UK Supreme Court found that by imposing domestic sanctions against Bank Mellat, the UK Government acted both “unlawfully and irrationally”. Following the UK Supreme Court decision, Bank Mellat had asked the UK Government to withdraw its 2010 listing proposal to the EU Council. It was hoped that this may have been sufficient to convince the EU Council to give up on its own sanctions against the bank. However, the UK Government has refused to withdraw the proposal. The UK Government has also now applied for permission to intervene in support of the EU Council’s appeal against the first European Court decision.
London-based European Islamic Investment Bank (EIIB.L) will propose a capital reduction plan next month to enhance returns for its shareholders, after the firm swung back into profit in the 2013 financial year. EIIB will seek shareholder approval for the plan, which could potentially take the shape of a share buyback or a tender offer, during its annual general meeting in June. The firm posted a pre-tax operating profit of 1.5 million pounds in 2013, compared to a 10.1 million pounds loss a year earlier. Under its 2012-2016 strategy, EIIB is restructuring its business by exiting higher-risk private equity investments, seeking more stable income streams such as asset management and advisory services under its EIIB-Rasmala brand.
London-based RiverCrossing Capital Partners, a new Islamic investment firm, has launched its first product, a U.S. real estate fund, as part of a plan to offer non-traditional asset classes to institutional investors in the Gulf. The firm will develop asset-based funds with a non-cyclical nature, chairman Mohammed Abdulmalik said. RiverCrossing's first fund will have a target investment horizon of five years and focus on medical offices, self-storage facilities and senior and student housing in the United States, he added. RiverCrossing aims to raise $45 million in the first tranche of its Alternative Real Estate U.S. Fund this quarter, reaching a total of $125 million with a second tranche in the next 12 to 18 months.
Britain could become the first truly global Islamic finance centre if the government sets its mind to attracting infrastructure investment, according to Gatehouse Bank’s chairman Fahed Faisal Boodai. He estimates the industry is worth $1.5 trillion, and the sector is growing at around 20 per cent per year. Chancellor George Osborne is raising £200m with a sharia-compliant bond, the bank alone expects to buy £30m to £40m of the sukuk, and predicts bids for the debt to run into the billions of pounds. However, one problem is finding investment opportunities which meet stringent sharia standards. More certainty is needed if the government wants to unlock Islamic investment into infrastructure on the grand scale needed.
UK Universities Minister David Willetts has launched a 12-week consultation period on Shari’ah compliant student loans with the aim of getting more Muslim students into higher education in the UK. The Department for Business, Innovation and Skills (BIS) has been developing a model alternative finance product which would be Shari’ah-compliant and could potentially be offered alongside traditional loans. This model finance product has been developed by experts in Sharia-compliant finance and has received preliminary approval from the Islamic Bank of Britain’s Sharia supervisory committee. The consultation seeks to determine whether the alternative finance model identified would be acceptable to anyone who might be deterred from the conventional system.
The Bank of England is studying ways to increase the number of Shariah-compliant assets that Islamic financial institutions can use in their liquidity buffers. Currently, sukuk issued by the AAA-rated Islamic Development Bank are the only assets that meet the central bank’s criteria for use in the liquidity buffers of the 22 Islamic financial institutions operating in Britain. In addition to reducing risks, expanding the eligible list could improve growth prospects for the industry and remove a potential entry barrier to the sector. The Bank of England’s proposal is in line with the approach of Basel III global banking regulations, which allow sukuk issued by high-rated sovereigns to be included in the liquid assets buffer without a haircut. Sukuk issued by sovereigns with lower credit ratings and other non-financial issuers could also be eligible, subject to haircuts and caps.
Premier of Bermuda, Craig Cannonier, and Finance Minister Bob Richards are in London this week to lead efforts to bring Islamic finance business to the Island. The pair will attend the Global Islamic Finance and Investment Group (IFIG) Conference and speak to a number of industry stakeholders. The objective of the IFIG Conference is to highlight the necessary regulatory frameworks for Islamic finance and to outline strategies for successful international collaboration. In addition, the Premier is due to meet with UK Government Minister Mark Simmons of the Foreign and Commonwealth Office and representatives of the UK Treasury. Bermuda has already established partnerships with the main financial centres in a range of Muslim countries and has signed double taxation agreements with Qatar and Bahrain.
Sharia-compliant investment is rapidly growing in the UK and has become a “financial powerhouse”, according to specialist asset manager London Central Portfolio (LCP). The UK government has taken a number of steps to promote London as a place for Muslims to invest, including launching an Islamic Finance Task Force and issuing Sharia bonds. According to LCP, London has taken in over £11.7 billion worth of Islamic investment in the last 10 years, making it the largest Islamic financial centre in the western world. However, there are still limited investment options in the sector when compared to the wider financial market. In order to address this issue, LCP and Simply Sharia have teamed up to organise a series of roadshows to look at the best Islamic investment opportunities in the market today. The events will be hosted by Signature Tax and will take place in Manchester, Birmingham, Leicester and London.