HSBC scraps Sharia compliant mortgages
The bank will cease to offer Sharia complaint products and services in the UK, the UAE, Bahrain, Bangladesh, Singapore and Mauritius. Existing customers will not be affected by the changes.
Instead, the lender will focus its Islamic finance offering to customers in Malaysia and Saudi Arabia, and maintain a limited presence in Indonesia.
A spokesman for the lender said its decision to pull Islamic mortgage for new customers is down to a “strategic review of its business.”
The lender first started offering Islamic finance in 2003, but added that Sharia mortgages are a small business line for it in the UK.
The lender’s Islamic arm, HSBC Amanah, has around 3,000 home finance customers. The book is currently worth £350m. HSBC’s total UK mortgage portfolio is in excess of £70bn. Islamic law prevents Muslims from paying or receiving interest.
Under Islamic mortgages the bank technically buys a property which is rented to the customer on a 25-year term until sufficient payments have been made to match the purchase price, plus a small profit.
Following the restructuring, HSBC will retain 83% of the Group’s Islamic business revenue.
Other providers who still offer Sharia compliant products include the Islamic Bank of Britain, United Bank UK, Alburaq and Ahli United Bank UK.