Islamic bank set to boost Scots operation

Published on Monday 23 March 2009 20:47

BRITAIN'S only Islamic retail bank is set to launch its first operation north of the Border to offer Shari'a-compliant financial products to Scottish consumers.

Sultan Choudhury, commercial director of the Birmingham-based Islamic Bank of Britain, yesterday told The Scotsman the institution was "very seriously considering the Scottish market".

It is understood that there could be an announcement on establishing the operation in Scotland as early as next week.

The news comes as part of a wider push to boost Islamic business north of the Border.

Scottish Financial Enterprise (SFE) and the Islamic Finance Council (IFC) is to hold an Islamic Funds Conference in Edinburgh on 2 April to give representatives from sovereign wealth funds in the Gulf the chance to meet Scottish fund managers.

And Omar Shaikh, executive board member of the IFC, yesterday revealed he had put forward a proposal to Scottish ministers to create a powerhouse for UK Islamic investment in Scotland, while a new range of Shari'a-compliant investment products are set to be launched by Scottish institutions in the coming weeks.

Shaikh said a "conduit facilitation vehicle" north of the Border would act as a resource point for Scottish – and other UK – firms considering launching a Shari'a-compliant product, while also attracting inward investment from the Gulf states.

Shari'a law prohibits the payment of fees for the renting of money, as well as investing in businesses that provide goods or services considered to be contrary to its principles. He said: "Nowhere in Europe has anything like that. If we can get this up and running, it will present us with a global opportunity to do business with the Gulf."

The Islamic Bank of Britain currently has eight branches – all in Birmingham, London and Manchester – offering current and savings accounts, as well as mortgage products.

Choudhury said: "We are very keen to enter the Scottish market and have a presence up there. We already have some customers in Scotland and are keen to expand our customer base."

Graham Burnside, head of banking and finance services at law firm Tods Murray, which is hosting the conference, said Shari'a products were attractive to both the Muslim and non-Muslim community, due to their lack of exposure to many of the elements which have contributed to the downfall of many western banks, adding that Scots law made the country an ideal hub for Islamic investment.

He said: "It is important to promote Scotland as a hub for the development and expansion of Islamic finance.

"The flexibility and strength of Scots law, with its unique mixture of the Anglo-American and continental legal traditions, can provide the basis for creating a range of financial products and services which are both customer friendly and Shari'a compliant."

A Scottish Government spokesman said: "We consider all proposals to attract fresh inward investment to Scotland and help create new jobs, something which is vitally important in the current economic climate."