BIRMINGHAM-based Islamic Bank of Britain has announced it is to raise £20m through a new share placing. Shares will be subscribed by Qatar International Islamic Bank (QIIB), an existing shareholder in the bank.
The bank plans to issue two million new shares, priced at 1p each and the proceeds will be used to provide the company with sufficient regulatory capital to manage and grow its business.
The bank needs to raise finance after recording successive losses during 2008-09.
QIIB is considered by the Panel on Takeovers and Mergers to be acting in concert with Qatar Islamic Insurance Company, HE Sheikh Thani Bin Abdulla Bin Thani Jasim Al Thani and Mohsen Moustafa – together known as the Concert Party.
Following the placing, the Concert Party will own 88.20% of the enlarged share capital of the company of which QIIB will own 80.95%.
The new placing is therefore conditional on approval from existing shareholders.
Gerry Deegan, managing director at Islamic Bank of Britain, said: “Qatar International Islamic Bank was instrumental in establishing Islamic Bank of Britain as one of the first Islamic banks in the West and this capital injection demonstrates its continuing commitment.
“This is very good news for Islamic Bank of Britain’s shareholders, staff and customers as well as for the Islamic banking sector in the UK.”
In March, Islamic Bank of Britain announced a pre and post-tax loss for the year ended December 31, 2009 of £9.5m, whioch compared with a loss of £5.9m in 2008. The loss resulted from the difficult banking environment.
Since then, the bank said it had seen an improvement in its levels of business, in particular, the Home Purchase Plan.
However, it said this had not been reflected by a corresponding growth in the asset base due to the lack of capital and available funding.
In addition, customer deposits that have not been used to fund asset growth produced lower returns due to declining yields in the Islamic inter-bank markets, ultimately affecting the company’s margin.
“The company continues to face challenging trading conditions and continues to review its operating cost base in light of future plans and potential efficiency improvements,” it said in a statement.
The bank expects to publish its interim results for the six months ended June 30 in September.
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