Islamic Banking in Britain

 By: Ali Sheikh
The United Kingdom has almost two million Muslims. The British Muslim population is using more and more 'Islamic' banking. The government encourages the industry to integrate Muslims into the banking system and attract petro-dollars from the Gulf.

In London, any Muslim can open a Shariah (Islamic law) Account. The United Kingdom was the first European country to allow the opening of Islamic banks. Islamic finance is growing in the world at high speed, especially in the United Kingdom. The British authorities are not strangers to this evolution.

In June 2006, Gordon Brown, then Chancellor of the Exchequer, has said he wanted to make London "the western gate" of Islamic finance. Today, the city has become the capital of Islamic finance in the West, said Michael Ainley, Head of the FSA (UK Financial Services Regulatory Authority). London is the traditional hub of innovation, diversity and flexibility needed to address this issue for profit. Mr. Ainley recalls the story, "Lord Eddie George, Governor of the Central Bank, and Sir Howard Davis, former chairman of the FSA has seen an opportunity for the City." "It was, he says, attracting capital from the Gulf and British Muslims and integrating it into the banking system. The process began in early 2000 after discussions with several people wishing to start an Islamic bank; the Islamic Bank of Britain (IBB) was established. It is the first fully Islamic bank in the West.

Islam forbids the use of "Ribah", which can be understood as interest or usury. A traditional bank account with a fixed interest credited is "Haram" (sinful). The basic principle of this fund is to share risks and profits. In addition, Shariah prohibits investment in illicit industries (alcohol, weapons, pork, pornography) and companies whose debts are too high.

This growing industry is looking for qualified personnel. The Institute of the UK stock exchange in London and Ecole Superieure des Affaires of Lebanon launched a graduate diploma in Islamic finance, the "Islamic Finance Qualification" a few months ago. For Ruth Martin, General Manager of IBS, "we aim to train personnel adapted to Islamic banks. The students are from different backgrounds and come from different countries. We have people from Johannesburg, Paris, Beirut, London, Dubai, and even Australia. After 25 years of banking career, Nigel Denison wanted "a recognized degree and have an overview of Islamic finance. He completed training a few months ago and learned about the legal sector and the various products. "This is particularly important since everything is moving very quickly in this sector," he says.

Islamic finance offers excellent opportunities for banks and bankers who profit from this growing market. Khaled-Ur Rahman, deputy director of the BWI agency on Edgware Road admits "Even if these products are not the cheapest or very competitive, people are receptive to these products." What explains their success? They can boast the stamp "Halal", which allows an efficient differentiation. Thus, aside from BWI, a dozen other international banks in the United Kingdom offer Islamic products to individuals. All the big names from HSBc to Barclays and NatWest to Lloyds.

This market has developed in size and at the same time it has been internationalized. Total assets reached today by the Islamic banks are $ 500 billion, according to a conservative estimate.

Another reason for the success of Islamic banking is the services offered to customers. According to Rahman Khaled, the variety of languages spoken in the agency attracts clients. His employees speak Bangla, Urdu, Moroccan, Lebanese, Arabic and French. Most clients are from immigrant families, they are happy to communicate in their language of origin to the bank. In this cosmopolitan center of London, the Arab, South American and Africa are numerous.

In any event, some see in this form of alternative finance a challenge to the traditional banking system that encourages its customers to incur debts beyond measure. Thus, for Dr. Khan Nin who's a BWI client, "It gives a positive image of Islam in the West". The voluble psychiatrist says Islamic finance offers transparent credit options, without trying to deceive people, without encouraging them to live on credit, unlike traditional banks, where people are trapped by heavy interest rates.
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