UK - Gatehouse nimble in picking up business

Gatehouse Bank plc, one of five standalone Islamic banks in the UK, says the industry is starting to benefit from the 2008 financial meltdown of conventional banks.
The London-based wholesale investment bank's business has picked up across all segments, particularly over the last six months, its chief executive officer Richard Thomas told Business Times.

While people were more receptive to Islamic finance in the wake of the 2008 crisis, it took time for that interest to translate into actual transactions, he said.

"I'm now taking business from conventional banks because I'm more nimble and have a different business model. We're not part of that mega-debt culture," Thomas said in an interview on the sidelines of the Global Islamic Finance Forum in Kuala Lumpur this week.

Thomas, who has been involved in the Islamic finance industry for 31 years, noted that this pick-up in business was also being experienced by many other Islamic banks in the world.

"We (Gatehouse) have seen a pick-up mainly in corporate asset finance, real estate, also the trade-related business."

Gatehouse, which focuses on merchant banking, specialises in real estate investment. Over the last six months, it has made six real estate acquisitions amounting to almost STG200 million (RM984 million).

The bank, which obtained its licence in April 2008, is wholly owned by The Securities House of Kuwait.

Thomas expects the bank to show its first quarterly profit in the final quarter of this year. Last year, it posted a loss, as did its four rivals, of STG12 million (RM59 million).

"We don't expect to show any more losses," he remarked.

Its rival, Bank of London and The Middle East, recently announced that it had made a healthy return to profitability in the first half of this year.

Expansion is currently on Gatehouse's mind as it seeks to tap liquidity in other parts of the world.

"We'd like to have Malaysian capital in the bank," Thomas said, adding that part of the bank's policy is to reach Asia through Malaysia.

While it is unlikely that the bank will set up a presence in Malaysia, Thomas does not rule out alliances with other banks here.

Thomas believes that Islamic banks will continue to have good growth prospects in the UK as long as their offerings do not imitate those of their conventional peers.

Out of the five Islamic standalones, only the Islamic Bank of Britain is a retail bank. The others are investment banks.

Each bank has its own area of specialisation "so we haven't got to the point where we're stepping on each other's toes", Thomas said.

Gatehouse, whose client base is an equal mix from the Middle East and the UK, has 40-odd employees and is looking for more.

"London is definitely an Islamic finance hub. It has been for a long time focused on liquidity and treasury products, but it's now expanding to other areas."

Source : http://www.btimes.com.my/Current_News/BTIMES/articles/gateh/Article/index_html - Oct 28, 2010