Friday, August 10, 2018
Partner Simon O’Neill has been working closely with Community Finance Ireland to introduce Ireland’s first Shariah compliant financing product
Developed for Community Finance Ireland (CFI), An Irish charity dedicated to providing loans to community groups which has extended an excess of EUR90 million (US$105.41 million) to over 500 organizations, has added a Shariah compliant financing facility to its mix of products, effectively introducing the Republic’s first generally available Islamic financing instrument. Structured as a Murabahah-based financing product to fund the acquisition of properties by Muslim community groups or social enterprises.
“There are currently a number of initial applications being reviewed from a credit perspective,” Simon O’Neill, a partner with Philip Lee and who worked on the product with CFI, told IFN. Through the non-interest bearing structure, social enterprises would be able to secure up to EUR500,000 (US$585,630) in financing to purchase real estate, provided the acquisition would facilitate projects benefiting the community.
Although a popular Sukuk listing destination, Ireland has seen little Islamic financing activities domestically despite amending its tax code back in 2010 to facilitate Shariah compliant transactions. None of the banks in Ireland offer Islamic alternatives, a stark contrast to the UK which houses six fully-fledged Islamic banks and over 20 financial institutions offering Shariah compliant products.
CFI’s Murabahah property financing, which has been in development since 2017, would serve as a proof of concept underscoring the demand and viability of Muslim-sensitive financial products in Ireland. However, this is but a first step for the Republic in introducing Islamic financial products for its third-largest religious group. Islamic finance in Ireland offers an even bigger opportunity in the context of Brexit as UK based Islamic banks may lose the opportunity to passport in Europe in the event of a hard Brexit.
Simon shares with IFN Editor Vineeta Tan the details on the upcoming product. Listen to podcast below.