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Islamic bank launches Sharia'a mortgage in Scottish expansion

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Published Date: 03 April 2009
By Jane Bradley
BRITAIN'S only Islamic retail bank is to make its first foray north of the Border, with the introduction of a Sharia'a-compliant mortgage product.
The Islamic Bank of Britain (IBB), which is based in Birmingham, announced at yesterday's International Islamic Finance Conference in Edinburgh that it is to launch its "Home Purchase Plan" in Scotland.

It is understood the launch is just the begi
nning of a wider push into Scotland – which is likely to include the opening of a physical branch and back office operations as well as the introduction of online retail banking for Scottish customers.

The mortgage is open to people of all faiths, but in compliance with Sharia'a law, it will not use any interest-bearing instruments like bonds or derivatives to finance homes. It instead uses its own cash or deposits from customers to fund loans.

Sultan Choudhury, commercial director at IBB, said: "We are really excited at the prospect of IBB's entry into Scotland, which we see as making a significant contribution to the region.

"The region is an important financial centre and is currently working hard to establish itself in the global Islamic Finance market, steered by the Islamic Finance Council UK. IBB has collaborated closely with the IFC as part of its impending launch in Scotland with the shared objective of putting Scotland on the map."

The product has been adapted from that available in England to conform with Scots law.

Owen Kelly, chief executive of Scottish Financial Enterprise, which co-hosted yesterday's conference, said: "IBB's entry to the market adds another option for bank customers in Scotland and widens the range of organisations operating in the industry."

Tariq Masood, chairman of the Glasgow-based Islamic Finance Council, added: "IBB's entry into Scotland is a key growth indicator for the UK's Islamic finance industry and a huge step forward for Scotland's ethical retail community."



The full article contains 319 words and appears in The Scotsman newspaper.
Page 1 of 1

  • Last Updated: 02 April 2009 8:57 PM
  • Source: The Scotsman
  • Location: Edinburgh
 
1

zeno,

www.thinkhumanism.com 03/04/2009 11:02:29
Presumably the IBB is not a charity and has to at least break even if not make a profit. Presumably this implies that those to whom it lends money pay back more than the amount advanced, even if it is just a nominal amount required to cover the servicing of that loan. What do they call this difference in money? Interest? If it has another name, isn't is just what everyone else would call interest?
2

tattiebogle,

auld reekie 03/04/2009 20:35:00
I have worked abroad in some Muslim Countries. It is not a perfect World despite their marketing hype, but I do respect their Banking system, and their family virtues with reservations. It works.
However I have serious reservations on the Political front with this Bank being under Sharia law. I am not a Muslim and neither is the UK a Muslim Country. I do not think we can have two Law systems running in this Country - it will not work. Muslims are trying hard to get Muslim enclaves in the UK leading to total control of the Law and the Country. They are six centuries behind the Catholics in World domination and a Religion (albeit the same Religion). I have no desire or wish to have UK women wear a veil and be subserviant to a man albeit three feet behind, and share their husband with three other unknown woman as a co-wife. Or be divorced via mobile phone with three text messages.
In summary I see this as a political move to slowly enroach on a Christian Country, with Christian based rules and Religion, however suspect they may be on face level.
In summary, yes lets have a Muslim Bank because it is real banking principles, but under UK law.
Refer to the Australian's Prime Minister's recent speech when he spelt ou the facts of life to all for Australia. In summary if you do not like it then leave, thats the way it is. Good on him.
3

cml500,

East Kilbride 03/04/2009 20:57:43
I would like to echo Tattieboogle's comments . For over three hundred years (ever since the English bribed the Landed and Rich traders of Scotland) we have been fighting to retain our our own disticnt law separate from that of England. To date we have suceeded but one wonders if ths is an attempt to introduce a two tier system by the back door. Unlike those who have travelled abroad I do not have the experience of Isalamic countries, but I am sure that if I were in Pakistan and facing prosecution for some offence e.g.something not considered an offence here I would not be allowed to be judged under Scottish Law. As they say if you cannot abide by the laws of the country go to one where the laws suit you
4

322,

Edinburgh 06/04/2009 21:19:16
"IBB's entry into Scotland is a key growth indicator for the UK's Islamic finance industry and a huge step forward for Scotland's ethical retail community."

I presume Tariq Masood is refering to the ethics of Sharia Law and not Scots Law - Scots can not serve two masters or is it three.




In law a person can not serve two masters,
5

Active Sassenach,

Luton, England 11/04/2009 18:37:45
The Scotsman has been uncritically reading press releases again. #1, zeno, spot on. #2, tattiebogle, fine on conflict of laws but otherwise off topic. #4, 322, spot on.

http://www.islamic-bank.com/islamicbanklive/FinancialInformation/48/Home/1/Home.jsp

The IBB has not made a profit since it floated on AIM. As per the link above, it foresees no profit in 2009 and will be raising new capital. HSBC makes its Sharia finance offer via AMANAH finance and I see that HSBC Client Holdings Nominee (UK) Limited holds 4.32% of IBB shares but it is not clear on whose behalf. The report for 2008 is here:

http://www.islamic-bank.com/imagesupload/IBB_AnnualReport_2008.pdf

It made a loss of £5.9 million after paying its key management (directors and senior management) £1.4 million including pension contributions.

How does it propose to finance its campaign on the Scottish mortgage market and what will it do with the business acquisition costs? Defer them as an asset in the balance sheet?

I see that its consumer finance advances have an impairment charge against them of 12.5% of the balances. I hope it does a better job of vetting its mortgage customers.

 

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