Dubai’s Noor Islamic Bank plans to create the world’s largest Sharia-compliant lender within five years through acquisitions that will see it target the UK.
Noor, which is 25pc owned by the government of Dubai and 25pc by the emirate’s ruler and has only been in operation for two days, plans to spend between $500m (£250m) and $1bn on individual acquisitions in Europe, Asia and North Africa.
Noor chief executive Hussain al-Qemzi told Reuters: “We aim to be the largest Islamic bank within five years. Acquisitions will be the main way because there is no time to grow organically.”
Britain has established itself as the leading Islamic finance centre outside the Islamic world and, with 1.8m Muslims, is almost certain to be on Noor’s list. The UK Government has already altered the law so house buyers using a sharia compliant mortgage pay the same stamp duty as those using a traditional home loan. It is also planning to offer a state-backed sukuk, or Islamic bond.
Britain has three wholly independent Islamic banks that are registered by the Financial Services Authority; the Bank of London and the Middle East, the European Islamic Investment Bank and the Islamic Bank of Britain. Other high street lenders and investment banks sell Sharia-compliant products.
Demand for investments and financial services that comply with Islamic law – which includes a ban on the receipt of interest – is growing among the world’s 1.3 billion Muslims. Rating agency Standard & Poors last year estimated the market to be worth $400bn, and growing at 15pc-20pc annually.
Noor’s backers put $860m into the project and may pledge more when the lender starts selecting acquisitions by the end of March. It plans to make its first move before the year-end.