Sharia Compliant Regulatory Reporting Solutions

Regulatory Reporting for UK Islamic Banks

STB-Reporter has been the leading product for regulatory reporting in the UK for some time - now it is available for Islamic Banks in the UK.

Banking
Securities
Inland Revenue
Central Bank of Ireland
Building Society Reporting

There are thought to be about 1.8 million Muslims in the UK or roughly 3 per cent of the population. There are also estimated to be about half a million regular Muslim visitors to the UK and approximately 12 million Muslims living in the EU.

The main principle of Islamic finance and banking products is that all forms of interest are forbidden. The Islamic financial model works on the basis of risk sharing. The customer and the bank share the risk of any investment on agreed terms, and divide any profits or losses between them. Additionally, investments should only support practices that are not forbidden – trades in alcohol, betting and pornography are not allowed. An Islamic bank is not permitted to lend to other banks at interest.

Islamic financial products are available in the UK from a number of High Street banks which offer current accounts and mortgages tailored for Muslims. The UK is home to the first wholly Sharia compliant retail bank in the West, Islamic Bank of Britain, which was authorized by the regulators in 2004. The FSA has also authorized the European Islamic Investment Bank which is the first such investment bank.

Financial institutions in the UK are set for the biggest overhaul of regulatory and compliance systems for many years.

Deposit takers, principal position takers and other firms must now plan for the implementation of new capital standards reporting and the roll-out of the Integrated Regulatory Reporting regime.

Building Societies must plan for these changes, and also for statistical reporting to the Bank of England.

STB-Reporter provides for all this. Download "STB-Reporter New UK Regulatory Reporting Requirements" for our review of how you will be affected and by when, and what planning you should do now.

As well as support for Integrated Regulatory Reporting (IRR) with new forms such as the PSD, RMAR and MLAR and Basel II reports, STB-Reporter supports all standard bank returns to the FSA and BOE. Use the menu below to check if a particular return is supported:

UK Financial Services Authority - Banks

The Bank of England, in order to collect the data needed to help HM Treasury to manage the UK's economy, and Financial Services Authority, to execute their supervisory role, have a couple of things in common: they don't like to be kept waiting, and they also want your numbers to be right first time.

STB-Reporter offers the highest level of functionality available today covering all areas of regulatory reporting. STB's customers enjoy a fully automated solution for the full suite of regulatory reports required by the Bank of England and FSA, whether an overseas branch, or a full UK Incorporated institution with a Trading Book.

In just a few clicks you can compute all of the values for your reports, and when they pop up on screen, they helpfully appear just like the forms you use already. This is just one example of how STB's approach to forms-handling technology is unmatched elsewhere in the industry.

Complete return and cross-return validation is performed for you, allowing you to adjust any mistakes. And full BEERS transmission is included so all figures are sent directly to the Bank of England

With increasing pressure for electronic reporting, STB-Reporter is the economic solution - powerful functionality, economic to own, effectively supported. And it's the winning product, by a long way, when it comes to removing competitive installations that have failed to deliver. You cannot go wrong.

STB Systems are the only vendor in the UK with a regulatory reporting solution for the FSA and Bank of England that is used by wholly Sharia compliant banks.

STB-Reporter massively reduces the amount of time spent compiling reports and, by completely automating the process, eliminates errors associated with unwieldy paper or spreadsheet-based audit trails.

STB's policy has always been that there are no extra charges. All updates to regulatory returns are provided as they occur - whatever the size and scale of the changes. Think about that with the upcoming changes arising from Basel II with the second capital accord, and you might want to give STB a call now. STB fully supports the move to Mandatory Electronic Reporting and XML and XBRL as this becomes more widely adopted. For further information select the following link: http://www.stbsystems.com/newsindex/article2604.htm

STB are working closely with industry bodies and the regulator to ensure that as changes are made to the reporting and outputs, the impact on STB clients is minimalised. You can be sure that STB-Reporter will continue to provide whatever formats and returns are introduced as a part of our guarantee.

One of the most important issues for the regulator is that of Islamic deposits. The UK definition of a deposit is: “a sum of money paid on terms under which it will be repaid either on demand or in circumstances agreed by the parties". In other words, money placed on deposit must be capital certain. For a simple non-interest bearing account this is not normally a problem. The bank will safeguard the customer's money and return it when the terms of the account require it to do so. However, with a savings account there is a potential conflict between UK rules/law, which require capital certainty, and Sharia law, which requires the customer to accept the risk of a loss in order to have the possibility of a return.

Islamic banks resolve this problem by offering full repayment of the investment but informing the customer how much should be repayable to comply with the risk-sharing formulation. This allows customers to choose not to accept full repayment if their religious convictions dictate otherwise.

Some of the principal Islamic banking products supported by STB-Reporter are:

Commodity murabaha - Islamic banks use this product to replace conventional inter-bank deposits. It involves the sale and subsequent re-purchase of a commodity (normally a base metal which is traded on a major exchange such as the London Metal Exchange). It is structured in such a way that it is essentially similar to a loan granted by the seller to the buyer. The difference in the sale and re-purchase price earns the seller a return which is broadly equivalent to interest.

Ijara – A leasing agreement in which the bank buys and then leases an asset (for example consumer durables or a property) to its customer for a specified rental over a specified period of time. The bank may have the right to adjust the rental charge in line with changes in the cost of finance. This method can be used for home buying purposes ("Islamic mortgages"). This usually entails the customer making capital payments in addition to the rental charge. The customer’s ownership in the property increases and the bank’s decreases by a similar amount with each such payment. Once all payments have been made, ownership of the property passes to the customer.

Murabaha - A form of credit that enables customers to make purchases without taking an interest bearing loan. The bank buys the goods for the customer and re-sells them to the customer on a deferred basis, adding an agreed profit margin. The customer then pays the sale price for the goods over instalments, effectively obtaining credit without paying interest. Benefits for the market and for consumers.

STB-Reporter generates the fastest grab of market share wherever STB goes - there are reasons. Please contact us directly or via Information & Feedback, and we'll let you know the remarkable percentage of our clients that used to use some other system! Regulatory Reporting from STB Systems.

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