Qatar's QIIB mulls sale of UK Islamic Bank
Doha, June 8, 2012
Qatar International Islamic Bank (QIIB), parent company of Islamic Bank of Britain, is considering the sale of the UK's only sharia-compliant retail lender as it struggles to gain scale in the UK market.
Islamic Bank of Britain (IBB) confirmed it had received an approach by QIIB, which currently owns a controlling 88.41-per cent 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, said on Monday that it had begun negotiations to acquire a 70-per cent stake in IBB, with the remaining 30 per cent 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; there has been no approach by Masraf to IBB,' IBB said in a statement.
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 25 million pounds ($38.65 million), as part of a plan to develop an international banking business compliant with sharia laws.
But the sharia lender has struggled to turn a profit since inception, reporting a full-year loss of 8.9 million pounds 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 $19 billion of $1.7 trillion in global assets and is home to five fully sharia-compliant banks, data from the UK Islamic Finance Secretariat estimates.
The close ties between the oil-rich Gulf and the UK has led to a flurry of activity aimed at capitalising on the two-way traffic.
Britain's largest standalone sharia bank, Bank of London and the Middle East, is awaiting regulatory approval to start operations in the Gulf this year, while Abu Dhabi Islamic Bank , the second-largest Islamic lender in the UAE, opened its first branch in London in May.-Reuters