Friday, October 03, 2008

Non-Muslims Turn to Islamic Bank as a Safe Option

THE BIRMINGHAM POST: Growing numbers of non-Muslims are turning to Islamic banking as customers spooked by turmoil in the Western banking system increasingly see the sector as a safe haven.

The Birmingham-headquartered Islamic Bank of Britain said it had seen significant growth in non-Muslim customers since the onset of turbulence on financial markets as Islamic banks, bound by strict religious principles, are largely seen as insulated from the credit crisis.

Islam’s prohibition on the charging or paying of interest - riba - as well as rules on the kinds of investments they can make are among the reasons Islamic banks are coming through the crisis unscathed.

Islamic Bank of Britain head of marketing Steven Amos said: “Our core business will always be Muslims but the numbers of non-Muslims are really picking up.

“We’ve had massive interest and it’s down to the number of reasons why we’re insulated from the credit crunch.

“There were two reasons for the credit crunch. The first is liquidity - banks lending to each other on the money markets - but Islamic banks do not borrow or lend on money markets because interest is not allowed.

“The second reason Islamic banks are insulated is to do with assets - everything has to involve an underlying asset or service and if you are going to trade in an asset you have to own it first.”

The explosion in complex derivative products over the last few years has left Western banks reeling from exposure to toxic assets often far-removed from their everyday activities.

In contrast the more risk-averse Islamic finance system did not embrace this kind of deal.

“Conventional banks didn’t know what they were buying in these derivatives but we have no exposure to subprime as we just don’t deal in it full stop.

“That is one of the fundamental reasons we are insulated.”

Stipulations that you must own the asset you are trading in also mean practices such as short-selling are not a feature of Islamic banking. Non-Muslims Turn to Islamic Bank as a Safe Option >>> By Anna Blackaby, Business Staff | October 3, 2008

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Anonymous said...

hey dincha know dimwits don't "call a spade a spade"

Anonymous said...

dincha know dimwits when they don't "call a spade a spade"

Anonymous said...

Why the surprise?
Before British Building Societies were allowed to trade as banks, they would only lend mortgages in proportion to the savings they had deposited.
There are still some good "Mutual Lenders."
Islam has not reinvented the wheel, and to think that Islamic Banks are somehow immune to the International Money Markets id fraudulent.
If you enquire you will see they are backed by Eastern Bank holdings, and what is the majority of those banks income from?
It is our money going around and around again.
The illusion is created these these "islamic banks" don't make or pay interest.
Of course they do!
They have just invented a useful illusion to fit their religious proclivities.
Why have the Muslims in Britain been quite happy to use the banks here to buy their property empires until now?
I think it's called hypocrisy.
Just another battle-front for the jihad against Western Democracy.

Mark said...

Excellent synopsis, Anonymous.