LONDON, 16 February 2005 — UK high street Bank Lloyds TSB on Monday launched its debut Islamic banking current account, thus joining the ranks of ABC International Bank, Ahli United Bank, HSBC, The Royal Bank of Scotland, Bank of Ireland, and Islamic Bank of Britain in offering Shariah-compliant retail banking products to customers.

The Lloyds TSB Islamic Current Account, according to the bank, is to help cater for the banking needs of Britain’s two million or so Muslims; and is the first step toward offering a dedicated range of Islamic financial services to Muslims who currently use conventional current accounts or opt out of traditional banking services altogether. The bank plans to launch a suite of Islamic retail and trade finance products before the end of 2005.

“The Muslim community,” confirms Gordon Rankin, current accounts director at Lloyds TSB, is one of the fastest growing in the UK and is very much part of the fabric of British life.

However, until now their banking needs have been largely un-catered for and many British Muslims have often had to bank in a way that is against their principles.

“Our research shows that over three quarters of British Muslims want banking services that fit with their faith — and that’s exactly what we aim to provide, beginning with our new current account.”

Rankin claims that the Lloyds TSB Shariah-compliant current account “will make Islamic banking mainstream. It will give customers all the benefits they can expect from one of the country’s biggest high street names — access to around 2,000 branches across the UK and the ability to bank online, over the phone or using a Cashpoint.”

While the Islamic account is primarily marketed in areas with large Muslim populations, the product is available to anyone interested in faith-based financial services. Former governor of the Bank of England, Lord George, has reiterated in the past that if Islamic financial products prove to be competitive in the UK market, there is no reason why they cannot become attractive and acceptable to all Britons irrespective of whether they are Muslims or non-Muslims.

The bank is keen to stress that the current account complies fully with Islamic law (Shariah). This means that it will offer no interest on credit balances and will charge no interest on overdraft facilities simply because the account does not offer such a facility, but it will provide a debit card and unlike some other Shariah-compliant accounts, will not charge a fee or require a minimum balance. All other charges on the account will be the same as on the Lloyds TSB Classic account.

The funds held by Lloyds TSB on all Islamic current accounts will also be held and invested in accordance with Islamic financial principles, most probably on overnight or short-term Shariah-compliant Murabaha commodity contracts on the London Metals Exchange (LME).

The account is being piloted in selected Lloyds TSB branches across the UK, including London’s Edgware Road, with its large expatriate population from the Gulf Cooperation Council (GCC) states; as well as at Lloyds TSB branches at Temple Row and Saltley in Birmingham; and at the George Street and Leagrave branches in Luton, both with large Muslim populations mainly from Pakistan, India, and Bangladesh.

The entry of Lloyds TSB into the nascent Islamic banking market in the UK is another boost for the globalization of the sector.