Islamic bank Al Rayan forays into Scotland



Al Rayan Bank is expanding its product range and adding an office in Scotland, its top executive said, after a year of strong growth for Britain’s only Islamic retail lender despite uncertainty stemming from Brexit.
Islamic retail banking is still a rarity in the West, but the experience of Al Rayan could encourage other Islamic banks to explore markets outside the Middle East and Southeast Asia.Birmingham-based Al Rayan, formerly the Islamic Bank of Britain, is growing beyond its traditional client base and now estimates around a third of its customers are non-Muslims.
While the potential for regional expansion has been dimmed after Britain’s vote to leave the European Union, Al Rayan has seen its balance sheet grow by around 40 percent this year, said Chief Executive Sultan Choudhury.
Its retail business has grown by 24 percent over the past 12 months, with both deposits and real estate finance assets surpassing 1 billion pounds ($1.25
billion) this year, Choudhury said in an interview.
The bank was launched in 2004 with a retail focus, but an acquisition by Qatar’s Masraf Al Rayan in 2014 saw a capital injection of 100 million pounds that helped expand its business lines.
Over the past 18 months Al Rayan has branched out into commercial real estate and private banking, and it plans to offer products targeting SMEs, Choudhury said.
“As part of those developments, we will look at new products and expand in existing markets as well.”
Brexit could have a silver lining for the bank as well. The EU’s consumer credit directive does not make allowances for sharia-compliant products, which has left mainland Europe out of reach for most Islamic retail banking efforts.
“More autonomy, due to Brexit, will accelerate the pace of Islamic financial products in the UK.”
Britain has actively encouraged Islamic finance, including through a sovereign Islamic bond issued in 2014.
A devaluation of the pound and a flattening of London property prices due to Brexit have also led to increased demand for some products catering to expatriates, he added.
Al Rayan will offer buy-to-let mortgages through its Glasgow office, adding to government efforts to build an ethical financial hub in Scotland.

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