United Kingdom

A New era looms for Islamic Bank of Britain as £24.1m takeover offer is recommended by its directors

Islamic Bank of Britain's directors responded favourably to a £24.1m offer from Qatari bank Masraf Al Rayan (MAR). The offer comes through MAR’s wholly owned subsidiary, Al Rayan (UK) Limited. MAR’s offer was first muted in October 2012 when the previous offer from IBB’s majority shareholder Qatar International Islamic Bank (QIIB) lapsed. The offer is being recommended by the independent IBB directors who consider it to be fair and reasonable. The offer from Al Rayan (UK) will provide IBB with a new parent company with plans to grow the bank and inject additional capital to fund that growth. The advisory firm Cattaneo provided financial advise to the Islamic Bank of Britain, legal advice was provided by Eversheds. MAR received legal advice from CMS Cameron Mckenna.

Islamic Bank of Britain launches two buy-to-let products

The Islamic Bank of Britain has launched two Sharia compliant buy-to-let products. The first of the products is a two-year fix available to those with a 25% deposit at a rate of 5.09%, fixed until 31 December 2015. The second two-year fix is available at 65% LTV at a rate of 4.69%. An administration fee on £995 applies and both products provide finance of between £30,000 and £500,000 across the UK and £750,000 in central London. The products have no early repayment charges for clearing the finance in full. The provider said the loans are available to landlords of any faith.

Osborne sukuks up to Islamic finance, but will it work?

The first sukuk proposed by Osborne will only be valued at £200m, but it would make Britain the first non-Islamic country in the world to issue sovereign sukuk. However, ensuring that the sukuk are watertight in their compliance with sharia will be the acid test for Osborne. If they’re not, they are rendered pointless and a huge waste of time and money. If Osborne’s sukuk have a successful debut, it will herald a greater level of fiscal openness and consensus between the Islamic world and Britain. But it is highly unlikely this policy will make a difference to the life of the average British Muslim, and issuing a few culturally-catered bonds will not even begin to address the rampant inequality and instability of a British economy.

London, Dubai, Kuala Lumpur fight for Islamic finance crown

London has long been the default centre for international firms to issue sharia-compliant bonds, but it faces a mounting challenge from Dubai and Kuala Lumpur. The final result of the three cities' rivalry may not be known for years, but thousands of jobs and large amounts of direct investment in companies and real estate are likely to depend on the outcome. The most high-profile - and most cut-throat - area of competition between the three centres is arranging sukuk. Other areas of competition include Islamic insurance, known as takaful, and asset management. London has led in attracting sukuk issues by big international companies because of the massive size of its conventional financial markets and its globally respected legal system. However, its position looks weakest among the three centres from a long-term perspective because it is not located within a natural pool of sukuk issuers and European customers will remain a limited group.

Gatehouse Bank appoints Natale Giostra as Head of Real Estate Finance

Gatehouse Bank announced the appointment of Mr Natale Giostra as Executive Vice President and Head of Real Estate Finance, based at its City of London offices. The Real Estate Finance department forms part of Gatehouse's business growth strategy and strives to create a new focus on UK and Continental European jurisdictions. Mr Natale Giostra has joined Gatehouse Bank from CBRE, where he led the UK debt advisory team. With more than 12 years experience working in real estate banking in several countries, Giostra brings with him a solid background in the origination and distribution of senior and mezzanine real estate loans, loan sale, and acquisition of distressed CRE loans.

Islamic Finance Grabs Headlines in London and Istanbul

Prime Minister David Cameron of the United Kingdom has announced that the U.K. will become the first non-Muslim country to issue a Sukuk, with a £200 million issue planned for early 2014. Cameron also announced plans for a new Islamic index on the London Stock Exchange. These initiatives are all part of a grand plan by the U.K. government to turn London into a global capital of Islamic finance. At the same time, the World Bank Global Islamic Finance Center in Istanbul is the result of the collaboration between the Turkish government, Turkish private-sector entities and the Bank Group, aiming to create a “center of excellence” for the development of Islamic finance. However, there is a need to strengthen its legal foundations and develop robust regulatory and supervisory frameworks globally.

A mecca for sukuk

David Cameron, the British prime minister, announced plans to issue sovereign sukuk as early as next year at the ninth annual World Islamic Economic Forum in London on October 29th. The convention marks the first time the event has been held outside the Muslim world. That is a testament to the rising global clout of Islamic finance. The Gulf states have been at the forefront of the boom, other countries like Turkey are emulating the Gulf model. However, the prospects in the wider Middle East, e.g. Egypt and Lybia, are less clear. Despite Islamic finance’s being the toast of the town in the City of London this week, the struggle to make it work in the heart of the Muslim world continues.

Cobalt Underwriting CEO champions London's Islamic insurance appeal

London's Shariah-compliant start-up Cobalt Underwriting has now written its first risk, via its agreement with capacity provider XL Group, to cover the deal to acquire a high-profile property portfolio. It has underwritten a property acquired by PARC Property Holding, advised by Amiri Capital, to acquire Park Crescent West. Cobalt CEO Richard Bishop believes the agreement serves to demonstrate that insurance should have a place at the forefront of the government's plans to promote Islamic finance in London. Furthermore, he reminded Islamic business leaders that insurance capacity that meets their needs is available in London.

Abu Dhabi Islamic Bank arranges Islamic financing deal for London property

Abu Dhabi Islamic Bank (ADIB) has arranged a £20 million (Dh118.02 million) structured Islamic financing transaction to fund the development of Westbourne House, a prime 1980s commercial property in central London, combining office and retail space. ADIB’s financing package for Westbourne House was specifically tailored to meet the investors’ aims of acquiring, refurbishing and reselling high-value luxury properties to overseas buyers. The deal marks ADIB’s debut in London’s real estate market at a time when the British government is promoting the city as a centre for Islamic finance.

United Kingdom: Measures Restricting The Access Of An Iranian Bank To The UK Financial Market Found To Be Disproportionate And Unlawful

Iranian Bank Mellat appealed against a decision upholding measures taken by the Treasury to restrict its access to the UK financial market. The Treasury had directed that all persons operating in the UK financial sector were prohibited from having any commercial dealings with the Appellant or its UK subsidiaries. The Appellant argued the Treasury had failed to give adequate reasons for its decision. The High Court and Court of Appeal both dismissed the appeal, however the Supreme Court allowed it. One of the central issues raised was that the lower courts found that the justification for the order was not a problem specific to the Appellant, but a problem with Iranian banks in general. However, the order made no attempt to impose restrictions on other Iranian banks. In that regard, the measure was arbitrary, irrational and disproportionate. The order was also found to be invalid on various procedural grounds.

Takaful: The Islamic state

Takaful insurance has struggled to find traction in the UK. Despite this, this year has seen several Shariah?compliant products launch in the UK. Faithsure and in May, XL Group began providing Shariah-compliant products for large corporates on a global basis. However, the lack of takaful players could be due to the industry’s youth and stiff competition in personal lines of insurance business according to analysts. Sheikh Bilal Khan, sharia scholar at law firm Linklaters, believes there is potential for Takaful products if they are branded and marketed correctly. But the lack of state regulation on sharia-compliant products creates a real lack of trust in the market, he adds. Yet perhaps the demand among Muslim?run SMEs is where the true potential lies. Faithsure's Asif Khan certainly seems to think so. He's confident that Muslim businesses would not only be aware of Takaful insurance but also actively opt for it.

TFI’s Shariah JV fund acquires properties in UK

Barwa Bank’s investment banking division, The First Investor (TFI) and Investra Investments have announced the first two property acquisitions of their UK joint venture fund. The fund invests in income-generating property in the distribution, logistics and light-industrial sector of the UK, targeting net quarterly dividends of 7%-9% per annum and capital appreciation over three years. Both TFI and Investra have seeded the fund with approximately QR56mn capital from their respective balance sheets. TFI and Investra have put together an institutional grade investment programme in collaboration with Pelham Associates as well as internationally renowned lawyers, tax advisors and administrators to deliver best in class governance, investment management and risk management. TFI and Investra will be continuing their investment programme in the UK distribution, logistics and light-industrial sector until Q1, 2014.

London-based Gatehouse Bank plans to seek licences in M'sia

London-based Gatehouse Bank is considering applying for two or three licences in Malaysia in universal banking, investment banking, and or, wealth management to expand its business in Asia. The bank, which recently commenced operations in Malaysia via a representative office in Kuala Lumpur, would closely discuss licensing options with the Securities Commission and Bank Negara, according to chief representative of Gatehouse Bank in Malaysia Richard Thomas. The establishment of the representative office will be the first step in a two-year larger strategic plan to apply for a full-fledged licence. In these two years, the bank will conduct and collect research as well as analyses of the risks and rewards of investing in Asia.

Aston Martin confirms Investindustrial Partnership

Aston Martin has confirmed that the Investindustrial partnership has been completed. The deal brings £150m of investment in the form of a capital increase. The investment underpins a significant new product development programme of more than half a billion pounds over the next five years. Aston Martin production will remain at the luxury British marque’s global headquarters at Gaydon in Warwickshire, a purpose-built facility where the current range of sports cars is assembled. Details of this year’s first quarter results will be announced to bondholders later in May.

XL Group seeks to tap Islamic demand for insurance products

Insurance major XL Group and Islamic specialist Cobalt underwriters will offer sharia-compliant insurance for companies buying commercial property, paving the way for Islamic investors to tap London’s subscription-based insurance market for the first time. The new offering will allow multiple insurers to take part in Islamic insurance deals, adding scale to the fledgling sharia-compliant insurance industry in the UK. Under Islamic insurance, premiums are reflected as contributions, capital is segregated from the participants' funds and there is transparency on cost. It's necessary to abide by the scholars' principles on how things should be structured.

UK aims to boost role in Islamic finance

Prime Minister David Cameron is looking to Southeast Asia to boost the UK’s role in Islamic finance. It’s the Bank of England he needs to convince first, say Shariah-compliant lenders based in Britain. Central bank rules require lenders to hold easy-to-sell assets as protection against short-term funding shocks. Most are off-limits for Islamic banks because they pay interest. Cameron visited Malaysia last year to build on a pact to promote bilateral engagement in the industry and created an Islamic Finance Task Force in March. Britain’s six Shariah-compliant lenders will struggle to grow unless regulators adapt bank liquidity rules or highly rated borrowers issue sukuk in pounds.

Shariyah Review Bureau partners with Simply Sharia Human Capital

Simply Sharia Human Capital (SSHC) is now offering the Islamic Finance Qualification (IFQ) in collaboration with the Shariyah Review Bureau (SRB). The SRB-SSHC partnership will deliver the internationally recognised and UK-certified IFQ across the Gulf region. The IFQ is accredited by the Chartered Institute for Securities and Investments (CISI), equipping candidates with a practical understanding of Islamic finance principles, products and models of business. The qualification will prepare candidates with knowledge of Islamic finance including Sukuk, Takaful, Mudaraba, Musharaka and Murabaha as well as offer an insight into the influence of Shari'ah in a business context.

KFH in collaboration with GUST organises scientific trip to Britain

Kuwait Finance House (KFH) organized in collaboration with the Islamic Finance Club at Gulf University for Science and Technology a scientific trip for a delegation of the university students to the United Kingdom. The trip that lasted for 7 days aimed to develop scientific knowledge in Islamic finance and increase awareness of the latest development of this industry. 17 students from various majors of the university participated in this trip. Moreover KFH organized, on the sidelines of the visit, a lecture on the principles of Islamic economy and its impacts on the lives of communities.

‘US, UK banks refusing Islami Bank’

Banks in the United Kingdom and the United States are not accepting transactions made through the Islami Bank Bangladesh Limited after allegations surfaced about its alleged funding of militant groups across the globe. The matter came to light when a team of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) met the central bank Governor. According to BGMEA, banks in the United Kingdom and the United States are not accepting export bills and documents through the Islami Bank Bangladesh. Apparel sector’s apex body has requested Bangladesh Bank Governor Atiur Rahman to resolve the issue, saying many of its members were facing troubles. The bank posted a clarification on its website and denied the charges.

UK launches 1st Islamic finance task-force

The UK government launched on Monday the first Islamic finance task-force to help to cement London's status as the western hub for Islamic finance. It will support development of the UK's Islamic finance sector, increasing inward investment and strengthening the economy. The Task Force will include major industry figures to ensure that the UK's offer is promoted at home and abroad by both the public and private sector. The Islamic finance Task Force will be co-chaired by Financial Secretary to the Treasury, Greg Clark and Baroness Warsi, Senior Minister of State at the Foreign and Commonwealth Office.

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