3 December 2008 - Islamic Bank of Britain today announced a proposal to raise approximately £7.49 million, before expenses, by way of a Placing of 127,470,000 new Ordinary Shares, at 5.875 pence per Placing Share ("the Placing"). The net proceeds of the Placing will be used to provide the Company with additional capital.
The 127,470,000 Placing Shares are being placed with HE Sheikh Thani Bin Abdulla Bin Thani Jasim Al Thani ("Sheikh Thani"), an existing shareholder. Sheikh Thani is considered by the Panel on Takeovers and Mergers ("the Panel") to be acting in concert with Qatar International Islamic Bank (Q.S.C) ("QIIB") and Qatar Islamic Insurance Company (Q.S.C) ("QIIC"), (together "the Sheikh Thani Concert party").
Following the Placing the Sheikh Thani Concert Party will own 44.98 percent of the enlarged share capital of the Company. The Placing is therefore conditional, inter alia, upon the approval by the shareholders who are independent of the Placing ("Independent Shareholders"), voting by way of a poll, in a General Meeting, of the waiver from the obligations of Rule 9 of the Takeover Code to make a general offer for the issued share capital of the Company, that the Sheikh Thani Concert Party does not already own ("the Waiver").
The Company is seeking to increase the authorised share capital and additional authorities pursuant to sections 80 and 95 of the 1985 Act in order to facilitate the Placing and to provide future headroom.
The Placing is being undertaken to facilitate IBB's current growth strategy, allowing it to raise capital immediately from an existing shareholder. The capital is required for the following reasons:
- Regulatory capital. The Board is conscious of its responsibilities to ensure that IBB has sufficient regulatory capital to manage and grow the business. The Board closely monitors the Company's capital position to ensure compliance with the FSA's capital requirements through the Internal Capital Adequacy Assessment Process (ICAAP). New capital is required to support the future growth in customer assets, including the new House Purchase Plan ("HPP") product, and ensure that an appropriate buffer is maintained over the minimum regulatory requirement.
- Funding. New capital is required to initially fund new long term customer assets, until longer term customer deposits are established. This is intended to help ensure that IBB continues to achieve its liquidity and funding requirements.
- Growth in new areas. It is intended that new capital will be used to fund growth in new areas including the creation of a dedicated premier banking channel.
- Profitability. IBB's strategy is to deliver an improvement in profitability and to expedite the achievement of break-even while minimising credit risk and efficiently using capital. New capital is required to take advantage of the growing Sharia'a-compliant home finance market.
- Achievement of a strong credit rating. The Directors believe that IBB's financial stability and market reputation is important to its success within its chosen markets. The Directors believe that an improved capital base will enhance the Bank's standing and credit rating with financial markets, customers and other stakeholders.
In order to take advantage of market conditions, the opportunities outlined above and in the light of regulatory requirements, the Board believes that it is in the shareholders' interests to strengthen the Company's capital base with the proposed Placing.
Commenting on the move, Gerry Deegan, Managing Director of Islamic Bank of Britain said, “This is really positive news for IBB. The injection of capital by an existing investor strengthens IBB’s already firm position, and will help accelerate its growth strategy. It also paves the way for IBB to raise further capital in the near future.”
He continued, “As the only, full-service, wholly Sharia'a compliant retail bank operating in the UK, IBB remains relatively insulated from the challenging market conditions that have impacted the conventional banking sector. IBB is in a strong position to exploit its unique advantage and is poised for further growth in 2009.”
Notification has also been given of a General Meeting of the Company to be held at 9.30am on 19 December 2008. The resolutions being proposed are the approval of the Waiver, the increase in the authorised share capital by 225 million shares to 725 million shares, the granting of authority to allot the additional authorised share capital and to authorise the allotment of shares for cash and to adopt new Articles of Association for the Company.
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About Islamic Bank of Britain
Islamic Bank of Britain has pioneered Sharia’a compliant retail banking in the UK and has launched a wide range of products, including Current Accounts, Savings Accounts and Personal Finance. The bank was also the first to introduce Sharia’a compliant Business Banking to the UK, and now offers a wide range of institutional and business banking products and services, including Commercial Property Finance.
Several of the bank’s products remain unique in the UK retail market (e.g. Sharia’a compliant Personal Finance and Sharia’a compliant Savings Accounts).
The bank is authorised and regulated by the Financial Services Authority and meets UK banking regulations and strict safeguards for customer deposits. All products offered by the bank are fully approved by the bank’s Sharia’a Supervisory Committee (SSC).
Sharia’a compliant banking operates without the use of interest. The products that are offered are structured in a different way to those provided by conventional banks.
Whilst the bank offers products and services that are designed in accordance with Sharia’a principles, it is an inclusive bank and welcomes customers of all faiths.
Notes to editors:
Interviews with Islamic Bank of Britain are available on request. The bank should only be referred to as “Islamic Bank of Britain”. If abbreviated please use “IBB”.
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Issued by Islamic Bank of Britain, Edgbaston House, 3 Duchess Place, Birmingham B16 8NH