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Islamic finance still active in the UK as the credit crunch deepens

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UK’s economy is seeing a further deterioration, with a deepening recession, banking bail-outs and big-name retailers going bust. However, one sector of the market still active is Islamic Finance which is now both cheaper and more accessible. Most recently, alburaq, a UK Islamic ‘mortgage’ provider, has responded to interest-rate cuts by improving its range of Shari’ah-compliant Home Purchase Plans.

‘Our new product range means our new customers now have products priced from the equivalent of 5.49% on their home finance,’ explains Keith Leach, Head of alburaq. He continues: ‘The new year could bring even lower rates for our customers. If rates continue to fall as predicted, from March 09 many of our customers could be paying a rate equivalent to 4.5% or less.

In addition to the improving prices, there are plenty of other advantages for those choosing alburaq’s Islamic alternative. Recently, banks have been criticised for varying margins; imposing collar rates and reducing the range of mortgage products they offer. ‘Collar rates’ have made the headlines recently as many mortgage holders have discovered to their cost that their mortgage payments will not fall inline with the general drop in rates.

alburaq works very differently, as Leach explains: ‘When applying for a mortgage, the public would be well-advised to study carefully what margin will be applied, for how long it is guaranteed and whether there is a ‘collar’ rate. One of the distinguishing features of our products is that we fix our margins so these are clearly known from the outset and we don’t have a ‘collar’ on our rates. In addition, we don’t tie-in our customers for when we offer incentives, like fees assisted or cashback offers. We also allow unlimited overpayments, which isn’t always available with other Islamic or conventional mortgages.’

Leach continues: ‘Unlike many of the UK banks, we continue to offer a full range of products and we are still offering buy-to-let finance – which has almost disappeared from the conventional market.’

About alburaq

Alburaq is a brand name belonging to ABC International Bank plc (a subsidiary of the Arab Banking Corporation), a major Middle-Eastern banking group in which government agencies of Kuwait, Abu Dhabi and Libya have significant share-holdings. ABC was founded in 1980, and is headquartered in Manama, Bahrain. The Group has a well-established international network including offices in Paris, Milan, Frankfurt, London and of course the Arab world. ABC Group is one of the largest banks in the Arab world, with assets totalling approximately US$33 Billion (December 2007).

Islamic banking is a faith-based system of financial management, which derives its principles from the Shari’ah – Islamic ethics derived from three sources: the Holy Qur’an, the Hadith (sayings of the Prophet Muhammad pbuh) and the Sunnah (practices and traditions of the Prophet Muhammad pbuh).

For Muslims, giving or receiving interest (known as ‘Riba’ in Arabic), is strictly forbidden. All of alburaq’s products are free of from Riba, and operate in accordance with Shari’ah principles. Prior to launch, all alburaq products are reviewed by a Shari’ah Supervisory Committee (SSC), composed of respected Islamic scholars. Products are only launched once their structure and associated contracts have been approved by the SSC.

 
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Publié par le décembre 28, 2008 dans UK

 

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Islamic Bank of Britain (IBB) launches dedicated website for advisers and brokers

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The Islamic Bank of Britain (IBB) has launched a dedicated website for mortgage advisers and IFAs which offers Sharia compliant home purchase plans and commercial property finance.

The website aims to enable advisers to re-sell IBB’s Sharia compliant products, with registered intermediaries able to submit leads and applications to the bank online, track the progress of deals and access printable copies of product literature.

Registration to the site is free and subject to compliance checks. However, only agents who are Financial Services Authority (FSA) regulated for the home purchase plan can use the full application and tracking service.

Intermediaries can introduce business to IBB in two ways: the referral of basic customer contact details, which pays a 0.2 per cent procuration fee for completed business; or a completed online client application, which pays a procuration fee of 0.35 per cent.

Advisers are also offered support from regional sales consultants who can guide agents through the application process and explain how IBB’s products differ from conventional finance products. The bank also has a dedicated helpline for intermediaries.

Sultan Choudhury, the commercial director at the IBB, said: « Our unique position, as the UK’s only Islamic Retail Bank, has meant we have remained largely insulated from the credit crunch. « As a result, British consumers are increasingly considering products such as the home purchase plan. »

Source: FT Adviser, December 16, 2008

 
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Publié par le décembre 16, 2008 dans UK

 

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The global financial crash and a sustainable future for humanity, London Conference – December 13, 2008

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Global Vision 2000 the independent international think-tank is hosting an emergency conference on the Global Financial Crash and a sustainable future for humanity ». This will take place all day on Saturday 13th December 2008 in London at 43 Lancaster Gate. An emergency conference is being called to address the unprecedented « black swan » event of the unfolding global financial crash. All attempts by the Government are failing to resurrect a bankrupt financial sector and the financial collapse will deepen with more bubbles expected to burst and impacting severely on the real economy. The economy is being haemorrhaged, asset prices are plunging, banks are insolvent, mass unemployment stalks the land and social strife beckons.

It is time to ask what is really going on ? The conference will be presenting an unique diagnosis and prescription which the Government, politicians and media need to heed. There needs to be a dialogue with those who have a holistic, radical and sustainable prescription for finance, the economy and society. As we are fast facing the final or finest hour of humanity there is a need to move to nothing less than an « Universal Paradigm shift » which liberates our money, banks and economy from neoliberal free market fundamentalism, financial usury capitalism, bankers and debt bondage.

The UK’s leading monetary reformers and sustainability experts will be gathering to present radical solutions, solutions which address the fundamental causes as opposed to symptoms. Bailouts to those who have caused the problem in the first place is an outrage and partial nationalisation will not do. So what needs to be done for the common good? You are invited to end the dialogue of the deaf, dumb and blind as we will not get out of this prolonged crisis until fundamental change inherent in a paradigm shift is envisaged.

Canon Peter Challen, Daud Pidcock, Muhammad Rafeeq, Alistair McConnachie, Tarek el Diwany, Jamal Harwood,  Nafeez Ahmed,  Dr.Irfan Alawi,  Dr.Mustafa Ali,  Francis Malleady, Roy Tindle and Robert Corfe will be making powerful presentations as a community of collaboration presenting viable alternatives which need to move from the fringe to the mainstream. Daud Pidcock will be launching his magna carta « The other Road to serfdom » and Robert Corfe his « Social Capitalism ». This movement is destined to gather momentum and you are invited to listen and pay heed and become part of the solution rather than the problem. Join your hands and lend your ears for the day with us.

The Editors

Full details of the conference (Pdf)

For further details :
Contact : Tel. : 07818 082011 or 07988785331
Email : myaseen@globalvision2000.com
www.globalvision2000.com

 
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Publié par le décembre 11, 2008 dans UK

 

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Islamic Finance: ethical alternative to conventional Finance ?

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ACCA is the global body for professional accountants, with 325,606 students and 122,426 members in 170 countries worldwide. A recent ACCA paper – Islamic Finance : An Ethical Alternative to Conventional Finance ? – explores the basic tenets of Islamic finance, the role of the UK in leading its development and whether it is a serious alternative to conventional finance.

Once seen as a marginal industry by some, Islamic finance is now recognised as a vital and thriving market. It has been widely acclaimed as the fastest growing sector within the world of finance and positions itself as an alternative model. Some suggest much of the current problems might have been avoided in an Islamic system (for example, because short selling and derivatives are generally prohibited). Advocates of this view point to the fact that funds adhering to Islamic (Shari’ah) investment principles have so far avoided the worst effects of the credit crisis.

ACCA has the most diverse student and member base amongst the world’s accountancy bodies, thousands of whom live in countries with a thriving Islamic finance market in the Middle East, Malaysia and Pakistan. This is why ACCA is keen to play its part in increasing the understanding and development of this sector.


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  • Richard Aitken-Davies is the President of The Association of Chartered Certified Accountants ACCA. Among the main points he emphazises on regarding the Islamic finance sector :
  • the need to raise awareness of the principles of Islamic finance, with particular emphasis on the embedded principles of ethics and social responsibility
  • further development of Islamic finance will require a wider range of products to stimulate competition and provide the best service to the public
  • while it is not possible for UK regulation to distinguish Islamic finance from other forms of banking on a non-secular basis, there is a need to ensure a level playing field as far as possible
  • however, Islamic banks are not a panacea – they are increasingly beginning to feel the effects of the slowdown, due to the interconnection with the global financial system.

Source: ACCA Global Blogs

 
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Publié par le décembre 8, 2008 dans International, UK

 

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La Banque islamique européenne d’investissement (EIIB) investit dans l’extraction du diamant

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La Banque islamique européenne d’investissement (EIIB) basée à Londres vient d’investir £ 1,8 million dans la société sud-africaine DiamondCorp, laquelle intervient dans l’extraction du diamant. EIIB avait lancé en avril dernier un fonds de private equity basé sur les règles de la charia.

EIIB announces private equity investment in DiamondCorp

European Islamic Investment Bank plc (“EIIB”) announces that its Private Equity business has invested £1.8 million in DiamondCorp plc (“DiamondCorp”), the South African diamond mining company.  Following the investment, EIIB will have a 9.735% shareholding in DiamondCorp.  DiamondCorp will offer to EIIB representation on DiamondCorp’s Board.

EIIB launched its Private Equity and Corporate Advisory business in April 2008 to invest in Sharia’a compliant private equity transactions.  The business, headed by Robin Henshall and supported by Marcus Scott, focuses on Europe, the Middle East and Africa and targets the Natural Resources, Energy, Agriculture, Real Estate, Transport & Logistics, Consumer Luxury Goods, Retail and Support Services sectors.

DiamondCorp is a South African diamond mining company listed on the Johannesburg Stock Exchange and the AIM market of the London Stock Exchange.  The Company is developing the Lace kimberlite mine (“Lace”) and the project, which is more than twelve months ahead of schedule, will begin mining before the end of 2008.  At peak production, Lace is expected to produce more than 500,000 carats of gem diamonds per year.

Robin Henshall, Head of Private Equity and Corporate Advisory, said: “We are delighted that our Private Equity business has already delivered its first investment.  DiamondCorp is a perfect example of our target strategy; the company has a highly experienced management team, the business is producing revenue and the profit potential is highly attractive.  The diamond market has strong underlying fundamentals, including the long-term supply shortage which, we believe, will lead to a strengthening in diamond prices.  DiamondCorp has excellent prospects and EIIB’s investment will enable the Company to maximise its potential.”

Source : EIIB

 
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Publié par le décembre 8, 2008 dans Afrique, UK

 

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UK business schools offer Islamic Finance masters programmes

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Islamic finance principles may be a thousand years old but they have attracted the attention of the West only recently. Now business schools are offering specialist masters programmes on the subject.

While the world’s financial systems are shaken to their foundations, global stock markets tumble and thousands of bankers are made redundant, one area of finance goes from strength to strength. Islamic banking and finance principles may be a thousand years old but they have attracted the attention of Western financial services companies only recently. Now business schools are offering specialist masters programmes on the subject.

Islamic banking and finance must comply with Islamic law, or Sharia. This is governed by a number of fundamental principles and prohibitions and there are many differences from conventional finance.

“There is the absolute prohibition on the charging of interest,” says John Board, director of the International Capital Market Association (ICMA) Centre, part of Henley Business School at Reading University. ICMA runs an MSc in investment banking and Islamic finance, taught jointly with the International Centre for Education in Islamic Finance in Kuala Lumpur. “This leads to the question: how do you raise money in a way that is commercially sensible but does not involve paying interest?

“And on the investment side, there is a range of prohibited activities. For example, Islamic investors may not invest in businesses that trade in alcohol or pork-related products, or are involved in certain types of entertainment.”

Other restrictions include not being able to sell something unless you own it, or to invest in companies with high levels of debt. Taking all the restrictions into account, many conventional financial products, such as deposit accounts, mortgages, credit cards, insurance, bonds and many derivatives, such as futures and options, are out of bounds to Islamic investors.

Until recently, certainly in non- Islamic countries, there was little on offer for people who wanted Sharia-compliant banking and finance. However, substantial growth in this market over the past five to ten years, partly driven by Middle Eastern countries investing oil revenues, means more institutions are beginning to offer appropriate products and services. Islamic assets under management are about £400 billion, according to the Islamic Financial Services Board, an industry body.

Today Islamic finance and banking touches everything from large capital infrastructure projects to retail banking. HSBC in the UK, for example, has Sharia-compliant bank accounts and mortgages. And the increase in Islamic finance activity means there is a need for postgraduates with knowledge in this area. “There is a big demand for Islamic finance as a professional activity,” Board says.

Bangor Business School, at Bangor University in Wales, has launched a one-year full-time Islamic banking and finance MSc. “The aim is to provide students with an understanding of the key principles, products and services,” says Philip Molyneux, professor of banking and finance and the school’s head.

“The Islamic banking module, for example, starts by looking at the theoretical foundations and development of Islamic banking practices, the key features of different types of products and how products are offered without charging interest.”

Another module focuses on Islamic finance. “That looks at financial instruments, for instance investing in mutual funds, and what are and are not permitted investments.”

The Bangor programme also covers conventional banking and finance, as does the programme delivered at the ICMA Centre. Several other business schools offer an Islamic finance orientated elective as part of a general finance MSc.

Employment prospects are looking good. Despite the fallout from the credit crunch, Islamic finance specialists are much in demand, both in the Islamic world and in non-Islamic financial firms.

Source :  Steve Coomber, Times Online, December 3, 2008

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Publié par le décembre 7, 2008 dans Formations, UK, UK

 

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The International Real Estate Finance Summit ’08

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IREF ’08, London December 16-17, 2008
Access to the GCC, islamic direct equity & finance
Building Bridges for Future GCC and UK Real Estate Relations

The current turmoil in the global financial markets may have dented investor confidence and precipitated investor caution in the short-term, but for the discerning, specialised and bespoke investor there are some surprisingly good deals in the global real estate market.

The current market conditions especially the fall in the volumes of real estate transactions, says Tony Horrell, CEO, European Capital Markets, is « driven by global credit conditions which made debt both less available and more expensive… It may well take another year before debt markets stabilize and in the meantime we are likely to see increased distress selling. High growth markets perceived as oversold are likely to attract the most attention from buyers. With the high velocity of pricing change come opportunities for buyers. The range of opportunity will increase for those able to commit equity in the next 12 months. »

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Publié par le décembre 6, 2008 dans Dubai, Middle East, UK

 

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