Islamic Bank of Britain (IBB), the country’s only sharia-compliant retail lender, has received a 75.8 million pound ($124 million) injection from its new Qatari owner to support the bank’s expansion plans.
The investment bring IBB’s capital to 100 million pounds, after it was acquired in January by Masraf Al Rayan, Qatar’s largest Islamic bank by market value.
This will allow IBB to grow its retail operations and develop its commercial business, targeting both British and Gulf-based firms, Sultan Choudhury, IBB’s interim managing director, said in a statement.
“Future plans feature an expansion of property finance to businesses, including development finance. The bank will also expand its services for Gulf-based customers looking to invest in the UK.”
The January deal valued IBB’s entire issued share capital at 24.1 million pounds; the fresh cash could help it compete with Britain’s other Islamic banks, which focus mostly on corporate banking services.
These include Bank of London and The Middle East, European Islamic Investment Bank, Gatehouse Bank, and units of Qatar Islamic Bank and Abu Dhabi Islamic Bank .
Founded in 2004, IBB has around 50,000 customers, offering services that adhere to Islamic principles such as a ban on interest payments.
Birmingham-based IBB is reviewing its distribution strategy to help it expand across Britain, which will include the use of agencies, outlets located in the premises of other businesses, said Choudhury. IBB currently offers its products through five branches and two agencies.
“IBB’s retail banking operations will remain in Birmingham. However, it will also create a stronger presence in London from where IBB’s commercial and GCC (Gulf Cooperation Council) operations will be based.”
IBB was previously majority-owned by another Qatari lender, Qatar International Islamic Bank, which had been in discussions with Masraf Al Rayan over a sale since mid-2012.
IBB has struggled to turn a profit since its inception; it posted a loss of 6.99 million pounds in 2012 versus a loss of nine million pounds a year earlier.