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26 October, 2004

Ethical Investment Research Services (EIRIS) has published a new report highlighting developments in the field of Islamic finance.

The past two years have seen significant developments in Islamic banking and finance in the UK, highlights include:

The Financial Services Authority (FSA) recently gave approval for the new Muslim owned UK based, Islamic Bank of Britain to start taking deposits from September 2004. 

In July 2003, HSBC, the UK's biggest bank, became the first mainstream institution to launch an Islamic home finance product specifically aimed at British Muslims, following the 2003 Budget’s abolition of the previous 'double payment' of stamp duty required on the purchase of homes via Islamic mortgages.

EIRIS’ report notes an increasing trend for more products to be aimed specifically at British Muslims.  In addition to complying with religious prohibitions on interest, Islamic finance products are increasingly incorporating more and more criteria that are popular with SRI (socially responsible investment) funds.

Niaz Alam, Head of Social Issues at EIRIS, said  "As over half the UK's 1.8 million Muslims are aged under 25, the scope for further growth in developing Islamic financial products is considerable. Whilst the diversity of opinions amongst Muslims means that some products can never satisfy all competing religious viewpoints, moves over the past two years by mainstream banks and regulators to develop Islamic financial products have been widely welcomed for helping to open up the UK market. For international banks, the added attraction of developing this area is the potential synergy for their operations in Muslim countries."

In the coming year, EIRIS will use its experience as Europe's leading independent provider of information on ethical issues for investors with different ethical viewpoints to:

• Develop information services for clients interested in offering Sharia compliant products
• Introduce new customised information services for Muslim investors and clients
• Promote further dialogue about Islamic finance issues  in the UK and Europe

1. Islamic Bank of Britain plc received a licence to take deposits on 6 August 2004, FSA reference number 229148, www.fsa.gov.uk . The application was initiated by Joint Venture Partners (IJVP) a Bahrain-based Islamic investment house supported by some UK Muslim venture capitalists
2. Office for National Statistics http://www.statistics.gov.uk
3. Successful  experience of Islamic financial products co-existing with conventional banking products in Malaysia  presents a very positive outlook as Malaysia which has a very similar financial regulatory structure to the UK has actively set a target for Islamic investments  to constitute some 20% of the country’s financial sector by 2010.

Press contact: Scott McAusland, Public Information, 020 7840 5703 for a full copy of the report

Research contact: Niaz Alam, Head of Social Team, 020 7840 5712

Note to editors:

The Ethical Investment Research Service (EIRIS), established in 1983, is an independent research organisation helping investors to make informed and responsible investment decisions. EIRIS is one of the leading analysts of corporate behaviour researching almost 2700 companies globally. It has research partners in nine countries. EIRIS' 70 institutional clients include 17 of the top 25 UK pension fund managers. Clients include Schroders Investment Management Ltd, ABN Amro Bank and Newton Investment Management Ltd (a Mellon Asset Management company), as well as the FTSE4Good index. EIRIS does not promote one particular view on ethical or socially responsible issues.

Scott McAusland
Public Information and Media Officer

Ethical Investment Research Services (EIRIS)
80 - 84 Bondway, London. SW8 1SF

Tel +44 (0)20 7840 5703
Fax +44(0)20 7735 5323

http://www.eiris.org