The Arab Banking Corporation and Bristol & West are to offer a home finance product for the UK's Muslim community.
Introduced under the brand name alburaq, the product will operate in accordance with the Islamic financing principles of diminishing Musharaka, which means co-ownership or partnership and avoids paying interest.
The product is devised, guided and marketed by ABC, one of the biggest Islamic banks which is owned by the governments of Kuwait, Abu Dhabi and Libya. It will be sold through ABC's London arm, with B&W providing product support, processing and financial resources.
There are around two million Muslims in the UK with estimated savings of over £1bn.
ABC media relations director Keith Leach says “The net cost of an alburaq package is broadly comparable with the cost of an equivalent mortgage, thanks in part to last year's Budget which exempted co-ownership schemes along these lines from the need to pay double stamp duty.”
B&W head of market development Julie Blunden says: “We have worked closely with ABC and its Sharia board for the past 18 months to ensure we provide a product which offers the strictest Sharia compliance and yet is modern and flexible and will not place our Muslim customers at any financial disadvantage in comparison with conventional mortgages.”