Qatari bank set to buy ailing UK lender IBB

Masraf Al Rayan, a Qatari Sharia-compliant lender, says it is in negotiations to acquire a 70 per cent stake in Islamic Bank of Britain through a capital raise.

Qatar's Masraf Al Rayan is in discussions to become the biggest shareholder in Islamic Bank of Britain (IBB), a troubled Sharia-compliant lender.

Masraf Al Rayan, the biggest Islamic bank in Qatar, announced after a board meeting on Monday that it had entered negotiations to obtain a controlling stake in IBB through a capital increase.

"Masraf Al Rayan will acquire 70 per cent of the bank and the government of the state of Qatar will acquire the remaining 30 per cent," the bank said. "This is subject to obtaining approval of the official authorities in the state of Qatar and the United Kingdom."

The bank said it would also acquire "two major share portions of two Qatari companies operating in the industry of maintenance of oil and gas fields", subject to approval from authorities.

Masraf Al Rayan did not disclose how much it planned to pay for the IBB stake.

IBB, the first stand-alone Sharia-compliant lender in the UK, was created to offer financial services to Muslims in Britain.

The UK's Financial Services Authority approved the establishment of the bank in 2004, with the backing of Gulf investors including Abdul Rahman Abdul Malik, the chief executive of Abu Dhabi Islamic Bank at the time. He then became the chief executive of IBB.

However, the British bank has failed to make a profit since being set up. Qatar International Islamic Bank (QIIB) injected £20 million (Dh112.6m) of fresh capital into IBB in 2010 at a price of 1 pence per share after losses at the bank. IBB has reported a full-year loss of £8.9m for last year.

In April last year, QIIB bought the remaining 19.05 per cent of the company's shares for £4.8m.

Masraf Al Rayan stock rose 0.5 per cent yesterday, after the talks were revealed, to 27 Qatari riyals. QIIB's stock fell 0.4 per cent to 49.3 riyals.

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Published: June 6, 2012 04:00 AM


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