Scottish investment managers to expand into Islamic finance

Scotland has ambitions to set itself up as an Islamic finance hub, and a growing number of investment managers are likely to offer Sharia compliant products going forward, which could create more jobs north of the border.

After the recent International Islamic Finance Conference in Edinburgh, the Islamic Bank of Britain (IBB) announced it was to offer a Sharia-compliant mortgage product in Scotland.

The Scotsman reported that IBB was due to open a branch and back office operation north of the border. The bank tells us it actually has no such plans, and will initially offer the product online.

However, Omar Shaikh, a board member of the Islamic Finance Council in Glasgow, reckons some kind of expansion is likely going forward.

"In the medium term, IBB will most likely be looking to open a Scottish branch, possibly more than one, depending on the uptake of the products."

Possibly more pertinent though, is the fact that a growing number of Scottish asset managers are looking to offer Islamic funds in attract investment from the relatively liquid Gulf region, as well as other regions with a large Muslim population.

Scottish Widows Investment Partnership manages 60m of institutional money on Islamic terms, and Aberdeen Asset Management has acquired an Islamic fund licence in Malaysia, with the aim of expanding the 70m it already manages on this basis.

Mohammed Amin, head of Islamic finance, UK at PricewaterhouseCoopers, says: "I would expect a growing number of Scottish investment managers to enter the Islamic finance space going forward. Those that do are likely stay close to their head office, which would create job roles in Scotland."

Shaikh says that although there's great potential in the Islamic finance space in Scotland, not enough is being done to attract investment. The IFC therefore wants the creation of a dedicated Islamic Finance House in Scotland.

"There are a lot of opportunities in Islamic finance, and we want to accelerate the growth in Scotland in a more coordinated way."