FSA Gives Green Light To UK’s First Islamic Bank

by Philip Morton, Investors Offshore.com

12 August 2004

The UK’s financial services regulator has given the go-ahead for the country’s first purely Islamic bank to begin trading.

The Financial Services Authority’s decision means that the new bank, known as the Islamic Bank of Britain (IBB), will be able to offer its shari’ah compliant services to the UK’s 1.8 million Muslims from its Birmingham headquarters from next month.

“There are also some 600,000 Muslims who visit the UK during the summer months to escape the Middle East heat. They will be part of the target market,” said IBB Managing Director Michael Hanlon.

The bank is planning to open a small network of branches in London and other cities, offering full postal and telephone banking services by November. It also has plans to open spin-off operations in the Islamic communities of mainland Europe over the next three years.

“As Islamic banking operates without the use of interest, the products that we offer our customers are structured in a different way to those in conventional banks,” explained Hanlon.

Many aspects of finance and investment have been hitherto off limits to British Muslims who wish to comply with Shari’ah law as this code prevents the taking of profit from interest or investing in firms connected to the alcohol, tobacco or pornography industries.

The bank’s seed capital of £14 million, required for the banking licence, is provided by investors from the Gulf, including members of the royal family in Qatar, as well as British Muslims. The bank is soon expected to offer its stock and float on London’s Alternative Investment Market (AIM)

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