London-based Gatehouse Bank has purchased the leasehold interest in the Marriott Residence Inn ("Residence Inn"), Manhattan, New York for an undisclosed amount. The Bank, assisted by Arch Street Capital Advisors, LLC, has acquired the property in partnership with a US-based hotel operator. The Residence Inn is a 17-storey, recently redeveloped building located on 48th Street in Midtown East, Manhattan. The property features 211 guestrooms of multiple room configurations including studios, suites and a penthouse. All rooms include a fully equipped kitchen. The Residence Inn is an extended stay, select service brand of Marriott International that is among the strongest performing brands under the Marriott umbrella.
London-based Gatehouse Bank is developing new business lines and widening its investor base as the Islamic wholesale lender looks to build a more stable revenue stream. The bank remains focused on real estate in Europe and the United States but wants to expand its investor base beyond Kuwait, its traditional source of funds, while generating more deals outside the British property market. New chief executive Henry Thompson, who joined in April this year, says he wants to reduce the bank's dependence on transaction fees. This comes after fee and commission income dropped more than two-thirds during last year, partly because of lower deal activity in Britain. The bank also plans to launch an online retail deposit product in December and is considering structuring private investment funds.
Plans to levy capital gains tax on property owners who hold their homes through a company structure risk discouraging investment in the private rented sector, tax specialists and investors warn. Scott Nicol, vice-president of Gatehouse Bank, which channels Middle Eastern investors' money into UK property, said he was also worried about the proposals. Gatehouse backed Sigma Capital last year to develop 6,600 privately rented houses in a deal worth £700m. If all the homes are built, Sigma will become Britain's biggest private landlord.
From 2002 UK banks, led by Lloyds and HSBC, tried to appeal to British Muslims by offering specialised mortgage products differing in structure. The lender generally buys the property outright and leases it to the consumer, charging a rental fee in addition to taking repayments. However, the mainstream market’s foray into the sector did not go as planned and Lloyds ceased offering the products in 2010 with HSBC following suit in 2012. Sharia home purchase plans can be more expensive than standard mortgages, with the Islamic Bank of Britain charging variable rates of 3.99% and 3.59% for 20% and 35% deposits until 30 June 2016. However, the market may simply need more competition to drive rates down.
Islamic finance is a trillion-dollar industry with many financial institutions, corporations and governments keen to embrace it as a profit-making alternative to mainstream financial dealings. The book "Heaven’s Bankers: Inside the Hidden World of Islamic Finance" by Harris Irfan asks the reader to consider whether the Islamic world can bring something of benefit to the Western world, and vice versa. Irfan’s intentions might be noble, but I suspect that here in the West he faces a real struggle. The big banks and companies hit by the financial crisis are determined to recover and some are increasingly wary of Islamic banking for all kinds of reasons.
Looking back at Islamic finance in the UK over the last eight years is rather like looking at a roller coaster, with peaks of excitement and troughs of depression. On the one hand, in 2006 Gordon Brown MP, announced the ambition for Britain to be the global gateway to Islamic finance and trade. However, the excitement of these early developments was followed by a trough. The UK is already the world’s pre-eminent centre for international conventional finance. It also has a very strong position in international Islamic finance. These developments pose an important competitive challenge to Islamic finance centres such as Kuala Lumpur, Bahrain and Dubai. Each has a very strong domestic Islamic finance market, and a significant level of international reach, but lacks the overall scale and credibility of London.
The 9th Durham Islamic Finance Summer School 2014 will take place on 1st-5th September 2014 at the Durham Centre for Islamic Economics and Finance, Durham University Business School, Durham University, UK. The Durham Islamic Finance Summer School is an essential learning and training programme in the field for current and aspiring Islamic finance professionals and academics. Registration form is attached together with further information.
The Islamic Bank of Britain has once again joined forces with the National Zakat Foundation (NZF), a charity which collects and distributes funds to Muslims in the UK. The coming months will see the Bank and NZF roll out a number of activities for the benefit of IBB 's customers, including a Q&A event held via Twitter, NZF's Zakat education guide, available to download on the IBB website, private consultations for IBB customers with NZF Zakat specialists, a Zakat payment service, and an exclusive Zakat video Q&A from NZF. The aim of the IBB and NZF partnership is to promote a better understanding of Zakat amongst British Muslims.
Euroclear UK and Ireland (EUI) is to bring to the market the first UK Soverign Sukuk bond. The £200 million Sukuk bond will primarily be issued in Brussels-based Euroclear and will settle in EUI and Euro Bank from 2 July. EUI is to provide an issuance, settlement and safekeeping service for this premier UK government Sukuk bond. UI already holds £1.3 trillion worth of gilts on behalf of clients. Euroclear Bank has a strong history of providing post-trade expertise in sharia compliant debt – last year Euroclear Bank partnered with Borse Dubai to support asset servicing for clients purchasing bonds on NASDAQ Dubai’s Sukuk trading platform.
In his Keynote Address at the 2014 London Sukuk Summit on 18 June, Jaseem Ahmed, Secretary-General, Islamic Financial Services Board, noted that the high growth rate of the Islamic finance industry has led to the emergence of Islamic finance sectors that have attained systemic importance in a number of key economies in Asia and the wider Gulf and Middle East. The second aspect of the global IF industry he highlighted is that rapid growth of Islamic finance is taking place in a group of nations that display wide variation in their market, institutional and policy and regulatory development. The IFSB Secretary General noted that the key priority is to find the resources and organisational modes and partnerships that help committed jurisdictions to meet the challenges they face, and wish for assistance in addressing.
The Islamic Bank of Britain plc (IBB) has accredited a new fully Sharia compliant auto-enrolment Pension Scheme: the Islamic Pension Trust. It has been launched to address the need for a Sharia compliant pension scheme to meet the criteria for automatic enrolment, as defined by the Government. This means that employers in the UK can meet their legal obligation to automatically enrol eligible Muslim employees into a qualifying workplace pension scheme. Eligible employees - i.e. those who are not in a company pension scheme, earning more than £10,0000 a year (2014/2015) and aged over 22 but under State Pension Age - represent a large proportion of the Muslim population.
A new loan called a ‘takaful’ will be made available in Great Britain to allow Muslims to fund their studies without contravening their beliefs. The money allocated - and the repayment amounts – will be equivalent to the set-up for all other students, who must pay university fees of up £9,000 a year. But the co-operative system will see repayments paid back into a communal fund and used to finance future students who choose to join it, so all members benefit equally. That will allow those paying the tackaful to view it as a charitable donation – rather than a loan. However, the earliest the change can be introduced is 2016 and it could be later, because new legislation is needed.
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.