I July 2014
LOCAL & NATIONAL NEWS
I9
UK Islamic banks disappointed over plans for sukuk www.pi-media.co.uk
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Islamic banks in the UK are disappointed that the British government has not included any of them as issuers of its first Islamic bond. The UK is staking its claim as the western centre for Islamic finance by becoming the first non-Muslim country to sell a government bond that complies with the religion’s ban on interest, selling £200 million in a five-year investment. However, Islamic banks based in London have expressed surprise that they were not included as one of the five institutions hired to issue the bonds, or sukuk. Malaysia’s CIMB, Qatar’s Barwa, National Bank of Abu Dhabi, Standard Chartered and HSBC have been chosen to lead the sale after what the Treasury called an open and competitive process. “The government’s decision not to choose a local Islamic bank as an arranger is a lost opportunity to promote the homegrown Islamic finance industry,” said Harris Irfan, of European Islamic Investment Bank, which says it has supported London’s development as a centre of Islamic finance.
Britain has six Islamic banks, which are expected to be active buyers of the new bond. “We are pleased that progress is being made on the UK government sukuk as it is important for the UK Islamic banks and the industry,” said Humphrey Percy, chief executive officer of Bank of London and The Middle East, the biggest Islamic bank in Europe. “Naturally we are disappointed that no UK Islamic bank has been selected as an arranger, however BLME will be actively participating in the issue for liquidity purposes and on behalf of our customers.” However Sultan Choudhury,
managing director of Islamic Bank of Britain, a largely retail bank, said he was unsurprised by the UK’s choice of issuers, which he saw as a commercial decision. “I understand where the government is coming from,” he said. The UK’s sukuk will use an ijara structure, where investors receive a share in the agreed rental income of certain assets, in this case three central government offices. Britain has been working on plans for a sukuk for years and rejected a previous planned sale after deciding that the structure was too expensive to set up. www.pi-media.co.uk
UK to re-open embassy in Iran The UK is set to re-open its embassy in Iran, the foreign secretary has announced. In a written statement to the UK parliament Hague said that bilateral relations had improved and that he had spoken to the Iranian Foreign Minister, Mohammad Javad Zarif. “I telephoned Foreign Minister Zarif to discuss the progress we have made to date and our common interest in continuing to move forward in the UK-Iran bilateral relationship,” said Hague. Hague added, “I have therefore now decided the circumstances are right to reopen our embassy in Tehran. There are a range of practical issues that we will need to resolve first. However it is our
intention to reopen the Embassy in Tehran with a small initial presence as soon as these practical arrangements have been made.” However, Iranians will still have to apply in Istanbul and Abu Dhabi for visas to the UK because the embassy in Iran will only have a “limited range of services”. The foreign secretary said that the concern has been that “staff would be safe and secure, and confidence that they would be able to carry out their functions without hindrance,” adding, “Iran is an important country in a volatile region, and maintaining embassies around the world, even under difficult conditions, is a central pillar of the UK’s global diplomatic approach.”
Diplomatic relations were suspended after Iranian protesters attacked the British embassy in Iran in 2011. The UK responded by expelling Iranian diplomats from the UK.
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