QIIB mulling sale of its Islamic bank in Britain

IBB confirmed it had received an approach by QIIB, which currently owns a controlling 88.41% stake, to take over the remaining shares with a view to a possible sale as it considers the strategic future of the UK bank.

Masraf Al Rayan, the biggest Islamic bank in Qatar, had said on Monday that it had begun negotiations to acquire a 70% stake in IBB, with the remaining 30% stake to be bought by the Qatar government.

“QIIB has also indicated that it has begun initial, non-binding discussions with certain potential third party purchasers, which include Masraf Al Rayan; there has been no approach by Masraf to IBB,” IBB said in a statement.

QIIB mulling sale of its Islamic bank in Britain

Founded in 2004, IBB was the first standalone Islamic retail bank in the UK with a high street presence with five branches and around 50,000 customers, offering financial services that adhere to Islamic principles such as a ban on interest.

IBB’s founding shareholder QIIB took full control of the bank in 2011, in a deal valued at the time at around 25mn pounds ($38.65mn), as part of a plan to develop an international banking business compliant with sharia laws.
But the Shariah lender has struggled to turn a profit since inception, reporting a full-year loss of £8.9mn in 2011.

Speaking to Reuters in April, Sultan Choudhury, managing director at Islamic Bank of Britain, said he was confident the bank could gain traction and become profitable within the next three years.
QIIB has until July 5 to make an offer under UK financial regulations. IBB said it will make a further announcement on the matter in due course. No details of the size of the possible deal were disclosed.
The UK is the largest Islamic finance centre in Europe, accounting for $19bn of $1.7tn in global assets and is home to five fully sharia-compliant banks, data from the UK Islamic Finance Secretariat (UKIFS) estimates.

The close ties between the Gulf countries and the UK has led to a flurry of activity aimed at capitalising on the two-way traffic.

Britain’s largest standalone Shariah bank, Bank of London and the Middle East (BLME), is awaiting regulatory approval to start operations in the Gulf this year, whilst Abu Dhabi Islamic Bank, the second-largest Islamic lender in the United Arab Emirates, opened its first branch in London in May.

URL: http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=510908&version=1&template_id=48&parent_id=28