European Islamic Bank gets green light for UK

LONDON, March 9 (Reuters) - The European Islamic Investment Bank (EIIB) on Thursday became the first investment bank compliant with Sharia law to get the go ahead to invest and take deposits in Britain.

The authorisation by the UK's Financial Services Authority opens the way for EIIB to proceed with plans for an initial public offering on London's AIM market in the second quarter.

''It's our intention to seek a listing on the London Stock Exchange in the not too distant future,'' John Weguelin, managing director of the bank, told Reuters.

He said the firm would open for business at the beginning of April and the plans were for a listing in the second quarter but subject to market conditions.

EIIB follows the Islamic Bank of Britain, which in 2004 became the first bank licensed by a non-Muslim country that operates entirely in line with Sharia law, under which Muslims must not pay or receive interest.

Investments in industries related to alcohol, gambling, pork or weapons are also banned.

The bank hopes to capture customers from the Middle East where investors are flush with cash from high oil prices.

The founding shareholders of EIIB included individuals and institutions from the Gulf, including a number of Islamic banks, as well as individuals and companies based in Europe.

The bank expects to offer a range of investment banking services, including Islamic treasury and capital markets, asset management, including private banking, trade finance and correspondent banking, plus advisory and corporate finance.

The customer base will be Islamic investors from the Gulf and Asian markets looking for Sharia-compliant investment products and also Muslims in the western World.

Weguelin said there was also growing interest from investors in the West for ethical investments and Sharia-compliant products fell into that category as well.

''We intend bridging the gap between the conventional western financial markets and the Islamic financial markets,'' he said.

Weguelin said the bank currently had 28 staff and was actively hiring. ''We are specifically looking for people with asset securitisation skills, structuring skills and private bankers.'' The EIIB was incorporated in the UK in January 2005 and submitted a formal application in August for authorisation from the FSA.

UK stockbroker Evolution is set to act as EIIB's nominated adviser if flotation plans go ahead.

REUTERS SHR VC2022