Diversification of Islamic Financial Insturments
185
Figure 24: Number of Islamic Banks in Western Markets
Source: The city UK
Out of the 5 fully fledged Islamic banks, only one of the banks Al Rayan Bank PLC (formerly
known as Islamic Bank of Britain) established in 2002 is a retail bank. The other banks have
focused more on investment banking and on more high net worth clients. The remaining four
fully fledged Islamic banks (namely: European Islamic Investment Bank (EIIB), Bank of London
and the Middle East (BLME), QIB (UK), Gatehouse Bank) are primarily investment banks with a
business model relying on
 Fee-based services such as private banking or asset management.
 Proprietary trading.
 Providing finance to large customers where most of the finance provided is then
syndicated to other banks or sold in the market (if constituted as marketable securities
such as Sukuk) with some being retained on balance sheet.
All four of the other Islamic banks in the UK are investment banks. While established in
London, their field of operations is not limited to the UK; instead they aim to operate
internationally. Structurally these banks can be divided into two groups
EIIB and BLME do not have a single controlling shareholder. They also have a relatively large
amount of shareholders’ funds. This gives them much greater capacity (compared with the
other two) to use their balance sheets when providing finance or engaging in proprietary
trading and investment.
QIB (UK) plc was until recently called European Finance House Ltd but from inception has
been a subsidiary of Qatar Islamic Bank. Both QIB and GB are subsidiaries and have a relatively
small amount of shareholders funds. Accordingly, their business model will major on fee-based
activities with a relatively small amount of proprietary trading. Where customer finance is
provided, virtually all the finance provided will need to be syndicated as the bank’s own
balance sheet is relatively small.
Profiles of leading Islamic Banks in United Kingdom
Al Rayan Bank PLC (formerly known as Islamic Bank of Britain) is a commercial bank was
established in 2004 to offer Sharia compliant financial service products to customers of any
faith. The bank has branches in London, Birmingham, Manchester and Leicester and agencies
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