LONDON, 10 August 2004 — After almost two years of deliberations, Britain’s Financial Services Authority (FSA) yesterday finally granted a banking license to Islamic Bank of Britain (IBB), which its promoters claim is “Britain’s first stand alone Islamic retail bank.”
Michael Carter, managing director of Islamic Joint Venture Partners BSC, the Bahrain-based holding company of Islamic House of Britain (IHB) which applied for the FSA license, confirmed that IHB had indeed received the authorization by the FSA to operate as a retail Islamic bank, under the name Islamic Bank of Britain Plc.
“We are absolutely delighted IHB has received the financial watchdog’s authorization, which establishes us as the first stand alone Islamic retail bank in the UK and Europe,” stresses Abdul Rahman Abdul Malik, chairman of IHB and a former CEO of Abu Dhabi Islamic Bank.
IBB is the third Islamic bank operating in Europe, the other two being Arab Albanian Islamic Bank in Tirana and Bosna International Bank in Sarajevo, both of which have the Jeddah-based Islamic Development Bank (IDB) as a shareholder.
IBB, which is headquartered in Birmingham in the Midlands, plans a soft launch next month with its first branch in London’s Edgware Road, which is popular especially with GCC residents and visitors. The aim is then to open another branch in Birmingham followed by one in Leicester, all metropolitan cities with large Muslim populations.
The aim is also to leverage a technology-based banking service, using state of the art delivery systems, offering in due course a full range of Shariah-compliant banking products and services, including initially current accounts with debit cards, savings accounts, and consumer financing products.
It is hoped that by November, IBB will operate nationally via telephone and postal banking. The bank also plans to introduce an Islamic mortgage product by the end of the year and an Internet banking service in early 2005.
IBB has appointed a Shariah Advisory Board of international repute including Justice Taqi Usmani of Pakistan, Sheikh Nizam Yaquby of Bahrain, and Dr. Abdul Sattar Abu Ghuddah of Syria.
IBB has another urgent task at hand. It plans to increase its capital base up to 50 million sterling pounds. “We intend to increase our capital base very shortly by issuing additional shares via a public offering in the UK, and private placement in the Arab world and Asia,” confirms Michael Hanlon, managing director of the IBB.
Indeed, IHB will apply for the shares to be admitted for trading on the Alternative Investment Market (AIM) section of the London Stock Exchange (LSE), which is designed for new companies such as IBB. However, the promoters envisage a transfer of IBB to a full LSE listing in two years time.
All this is very ambitious. The reality is that in absolute terms IBB is a small bank with huge potential.
Its establishment, according to Iqbal Asaria, chairman of the Muslim Council of Britain’s Business & Economics Committee, comes at the end of a unique partnership between the Muslim community and the regulatory authorities in the UK. The license to IBB, says Asaria, also marks the launch of fully regulated Shariah-compliant products for the Muslim community.
This puts an extra responsibility on IBB to get its act right from the beginning - in terms of its vision, message, ownership, products, compliance, and marketing.
The UK market is big enough for more than one player. As long as Shariah financial principles are adhered to, customers are at the end of the day going to choose products and services according to flexibility, structure, pricing, costs, marketing and convenience. An Islamic bank tag per se is not a license for every Muslim to bank with such an institution.
