LEADING PROVIDER OF "ISLAMIC MORTGAGES" IN THE UK WELCOMES BUDGET BOOST

• 09/04/2003

The bank with the longest-standing Islamic home finance business in the UK today welcomed aspects of Gordon Brown's latest budget that will help the bank in its efforts to offer a better service to thousands of Muslim customers in the UK.

Ahli United Bank (UK) PLC ("AUBUK"), whose business roots in the UK go back to 1966, is to date the only significant provider in this country of "Islamic Mortgages" that comply with the strict principles of Islamic Law. Ensuring this compliance, though, raises the costs of the "Mortgages" to its customers - not least because to date it has usually entailed a double payment of stamp duty. AUBUK has been closely involved with a working party recently set up by the Bank of England to look at ways of reducing these costs. It believes this week's budget will do much to help the "Islamic Mortgage" product to develop.

Keith Leach, Manager of Islamic Home Purchase Plan at AUBUK, said: "We have offered "Islamic Mortgages" to our customers since 1996 and currently have an Islamic portfolio approaching £50 million. Reducing the stamp duty payable on each transaction will enable "Islamic Mortgages" to compete on a more equal basis with conventional mortgages and should increase their appeal significantly."

NOTE TO EDITORS

1. The payment or receipt of interest is strictly prohibited under Islamic Law. Instead of providing an interest bearing mortgage, AUBUK offers to help the aspiring Muslim homeowner by purchasing the target property itself. Under its "Manzil Home Purchase Plan" the customer agrees to make a series of payments to AUBUK for a period of up to 25 years. The customer is then able to purchase the property at the end of the payment period. These payments include both purchase instalments and rent. This provides AUBUK with a market return on its capital without recourse to interest.



2. Page 9 of the Budget 2003 Press Release PN O5 states: "Modernisation allows for fairer treatment of property purchases by individuals financed by certain types of alternative mortgage products. From 1st December 2003, and in certain circumstances before then, individuals using such products will be able to benefit from this fairer treatment, putting the stamp duty treatment of purchases financed this way on a level footing with purchases financed by conventional mortgage products. The Government believes that a range of individual consumers will benefit from increased choice in the mortgage market."



3. The Governor of the Bank of England, Sir Eddie George, told a conference of the Council of Mortgage Lenders on March 27th 2003 that "Islamic Mortgages" would be "both a useful business opportunity for those companies involved in the provision of housing finance and a welcome diversification of our financial system".



4. There are approximately 1.6 million Muslim citizens of the UK, including an estimated 250,000 homeowners. AUBUK has to date been the only significant provider of "Islamic Mortgages" in the UK. It distributes its Manzil Home Purchase Plan directly from its London office, through professional intermediaries and via a distribution arrangement with the West Bromwich Building Society.



5. AUBUK, formerly known as the United Bank of Kuwait, has been active in the UK mortgage market since 1984. It is the UK subsidiary of Ahli United Bank, which was formed in 2000 through a series of mergers and is today one of the fastest growing and most profitable regional banking groups in the Gulf. Based in Bahrain, Ahli United Bank generated net profits of nearly US$60 million in the year to 31st December 2002 and had total assets of US$5.1 billion as at 31st December 2002.

For further enquiries, please contact:

John Crocker
Deputy Chief Executive Officer
Ahli United Bank (UK) PLC
Tel: 020-7487-6800

Alan Stevenson
Head of Residential Lending
Ahli United Bank (UK) PLC
Tel: 020-7487-6944

Keith Leach
Manager, Manzil Home Purchase Plan
Ahli United Bank (UK) PLC
Tel: 020-7487-6667

Duncan Campbell-Smith
The Maitland Consultancy
Tel: 020-7379-5151