The value of the Sharia-compliant portfolio is £17m (€20m), and it includes more than 350 home-purchase plans.
Bank of Ireland originally teamed up with Arab Banking Corporation’s UK operation Alburaq in 2008 to offer what was then the UK’s first Shariah-compliant structured deposit for Muslim customers.
The idea was to bring home ownership and investment opportunities to a community that had been traditionally excluded from property ownership in the UK if they wanted to invest in accordance with their religious beliefs.
The portfolio has been bought by Offa, the UK’s leading Islamic property finance fintech, which said the transaction was a landmark deal.
Confirming the sale of its remaining Alburaq home-finance portfolio, a spokesman for Bank of Ireland said: “The Alburaq product has not been available for new customers since 2009. The sale of the small remaining portfolio will provide customers with access to a wider range of Sharia-compliant property re-financing options.”
Offa is the first financial institution to buy an Islamic home-finance book in the UK. Its team, based in Birmingham, says it has constructed a unique and pioneering Sharia-compliant funding structure to minimise legal and tax issues.
The company aims to modernise Islamic property finance using modern software and paperless systems and says its ethical approach to finance includes not charging interest and not investing in sectors deemed harmful to society such as alcohol, tobacco, and the arms trade. This approach is said to be increasingly attracting non-Muslim customers.
Amir Firdaus, chief financial Officer at Offa, said: “It is testament to Offa’s abilities that Bank of Ireland has agreed to sell their Islamic home-finance portfolio to us. This marks another chapter in Offa’s ambitious growth plans.
“Members of the Offa executive team are already very much familiar with Alburaq’s clients, having helped distribute this book almost two decades ago, and we are delighted these customers are now coming home to us.
“Those who have been transferred as part of this purchase, and are eligible, will now have access to a wider range of Sharia-compliant property re-financing options. We are now focused on ensuring a seamless migration for customers to our servicing platform.”
Founded in 2019, Offa is the UK’s first bridge-finance provider operating in accordance with Islamic principles. It says faith is at the core of its brand, enabling British Muslim property investors and others seeking ethical capital to access Sharia-compliant finance as they move up the property ladder.