First UK Islamic bank opens doors

The new Islamic Bank of Britain's branch on the Edgware Road

The UK's first Islamic law compliant stand-alone High Street bank opened in London on Wednesday.

The Islamic Bank of Britain's first branch is on Edgware Road, conveniently located for London's Arab community.

The venture was given the go-ahead by City regulator the Financial Services Authority in August.

The bank will be run according to Islamic law, or Sharia, which forbids interest payments and stipulates that charges should be agreed in advance.

Expert checks

All banking services will be overseen by a Sharia Supervisory Committee - experts in the interpretation of Islamic law and how it can be applied to personal finance products - the bank said.

PRINCIPLES OF ISLAMIC BANKING All money must be invested in purely ethical industries The giving or receiving of interest is forbidden Money cannot be simply traded for money Money can be used to buy goods or services, which can then be sold for a profit

The committee will meet on a regular basis to review all contracts and agreements relating to transactions, as well as to advise and sanction any new products or services.

From Wednesday, the bank will offer savings accounts at its Edgware branch and also nationally via postal and telephone banking.

The savings account will not offer interest on savers' funds; instead the bank will trade in Sharia compliant investments and share the profits with savers.

Expansion plans

Current accounts and finance products, such as loans, will be available in November, with mortgages, credit and charge cards and small business banking accounts available in 2005.

The bank plans on setting up other branches around the country, in Birmingham and Leicester in November 2004, with a further eight branches planned in 2005.

Internet banking will be launched in April 2005.

"We are delighted to be opening our first branch," said Michael Hanlon, managing director.

"It marks a new era in Islamic banking in the UK and the beginning of our work to broaden our product offering and branch network."