BLME returns to healthy profits

First it was the shareholders of Islamic Bank of Britain (IBB) at their general meeting in August 2010 approving a 20 million pounds capital injection from founding shareholder Qatar International Islamic Bank (QIIB). This was an effective bailout of IBB which gives the UK's only dedicated Islamic commercial bank some much-needed breathing space.
BLME, the wholesale Islamic bank which claims to be the largest Islamic bank in Europe, was the first of the five Islamic banks in the UK to report "a healthy return to profitability" for the first half of 2010.
One area in which BLME is setting the pace is Islamic trade finance and structured trade finance. According to Massoud Janekeh, director of Islamic Capital Markets at BLME trade finance should be a natural home for Islamic finance funded either through a Murabaha sale or a Tawarruq structure.
The preferred structure for BLME is for the trade finance fund to enter into a wakala with the originator and the originator to invest in murabaha on behalf of the fund. Under this structure the fund can appoint the originator to manage the day to day activities for procuring the investment, yet from accounting perspective retaining an exposure to the underlying risk.