Gatehouse enters Islamic finance fray - Islamic Finance News
25th April 2008
The London mayoral election, which culminates on the 1st May, is not the race that is taking place in the city. London itself is in the race. It wants be the global center of the Islamic finance industry, which currently boats US$500 million in assets. Fortunately for the city, the negative debates on Islam arising from the election campaigns have not spoilt its chances. Not yet, anyway.
Pushing London’s agenda to be a global Islamic finance hub into the limelight, again, is Gatehouse Bank, which has just been granted a license by the UK’s Financial Services Authority (FSA) to operate as a Shariah compliant wholesale investment bank. The fact that it took Gatehouse Bank less than six months to obtain the license shows that the regulator is keen to spur the growth of the Islamic finance industry in the country.
Gatehouse Bank CEO David Testa (pic) even admitted that the quick approval is partly due to FSA’s increasing familiarity with the issues surrounding Islamic banks in the UK environment. He was quick to add that the bank, which submitted its application last November, did its part in speeding up the process by presenting “a coherent, focused and comprehensive business plan, backed by a market-leading operating system”. Meanwhile, industry players believe that the bank will be a boon to the UK. Mohammed Amin, a tax partner at PricewaterhouseCoopers UK, told Islamic Finance news, “I welcome the award of the license to Gatehouse as it will expand the Islamic finance industry in the UK.” Gatehouse Bank, which is 100% owned by Securities House in Kuwait which had invested GBP100 million (US$198 million), aims to be a “natural bridge” between the Middle East and other major financial markets, and no other city makes a better bridge than London, Testa contended.
He said the bank is entering the market at a time when London is poised to become the western center of choice for Islamic finance. “Gatehouse Bank will bring together the opportunities being generated in the Gulf countries and other key Islamic centers with the world’s largest fi nancial markets, which traditionally have been accessed via the City of London,” he said in an interview.
His target clients include Gulf-based corporates and financial institutions wanting to access the global capital markets, European and US conventional clients seeking to diversify their funding base, Islamic investors funding investments in Europe, North America and Asia as well as selected jurisdictions in the emerging markets. “We can already see demand for Shariah compliant finance products around the world and so will select the opportunities we feel are strongest. Part of the vision is to create a bank centered in London, but with a global reach, and our strategy reflects this,” said Testa.
When asked what sectors will be Gatehouse’s main focus in its first year of operation, the CEO revealed that Islamic capital markets, institutional wealth management, treasury markets and providing Shariah advisory services will be top of its agenda.
"We believe that these are variegated platforms that will provide an ideal base to build our business on. We already have a road map to develop new products to help clients meet their business needs in a fully Shariah compliant way," he explained.
And how does Gatehouse intend to compete with the existing wholesale investments bank in Europe and the Middle East? Testa claimed that the bank will rely on its "unique selling points".
"First, we benefit greatly from having a sole shareholder, Securities House in Kuwait, which is celebrating its 25th anniversary this year. It focuses on equity investments and we have a tremendous synergy as we will focus on leverage opportunities, with our emphasis on Islamic capital markets and institutional wealth management products.
"We are also differentiating ourselves by our immediate focus on putting in place a market-leading distribution and placement team - this is key to our value-added proposition and, I believe, will enable us to emphasize to clients both in the US and Europe, as well as the GCC, our ability to diversify their sources of funding and widen their investor base."
The bank is also positioning itself to provide a unique platform from which to provide Shariah advisory services, with a team led by a "uniquely qualified individual" to spearhead Gatehouse’s efforts. He, however, stopped short of revealing the identity of the Shariah expert. Currently, the bank’s Shariah supervisory board boasts the industry’s most prolific Shariah finance experts: Sheikh Nizam Yaquby, Dr Abdul Azizi Al-Qassar, Mufti Muhammad Nurullah Shikder and Syakh Haytham Tamim.
Testa said the bank’s greatest tool to achieve all the targets stated above is its people. "We have recruited a highly capable management team, from the back offi ce to the front, all of whom have the relevant experience to ensure Gatehouse makes an immediate impact on our Islamic finance activities."
Testa himself has an impressive track record, which includes the GBP225 million (US$445 million) Shariah compliant buyout of Aston Martin from Ford Motor Company, the US$1.1 billion syndicated commodity Murabahah fi nancing for Arcapita Bank and Dar Al Arkan’s US$600 million Sukuk Ijarah.
With the rising price of oil, demand for Shariah compliant investment products will equally soar and Gatehouse will have no problem in building its clients portfolio. If Gatehouse succeeds in its plan, London may well be coveting the global hub title earlier than expected. Hopefully, the new London mayor won’t pull the city from the race.
By Arfa’eza A Aziz
www.islamicfinancenews.com
For all media enquiries, please contact:
Sarah Boyce
Gatehouse Bank plc
Tel : +44 (0)20 3170 5558
Email : sarah.boyce@gatehousebank.com