Pay by Bank app enables people to make ‘digital debit’ payments for goods and services via their banking app, with payment made directly from their current account.
HSBC and first direct join Barclays, Bank of Scotland, Halifax, and Lloyds Bank, who have all signed up to deliver Pay by Bank app to their customers.
Rajiv Garodia, Managing Director of Pay by Bank app, said, “We’re delighted to formally welcome HSBC and first direct on board as they begin integration of Pay by Bank app into their mobile banking apps. We now have six of the UK’s biggest financial institutions, alongside a growing number of retailers and merchant acquirers, committed to delivering Pay by Bank app to their customers. This widespread support will usher in a new era of ‘digital debit’ mobile payments using Pay by Bank app, an entirely secure way to pay and be paid.”
Paul Stoddart, Deputy CEO of VocaLink, said, “Pay by Bank app is a transformational service responding to customer demand for fast, secure and convenient payments via mobile. We are excited to be bringing Pay by Bank app to both HSBC and first direct customers.”
Pay by Bank app provides a simple and convenient way for users to make a purchase online, via their bank app. Transactions take place in near real-time and you can see your account balance before you pay, helping manage your money more easily. The payment is made directly from your bank account and uses secure digital ‘tokens’, meaning you never reveal any financial details (including account details) to retailers when shopping. Crucially, verification is handled by your existing, trusted bank app.

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If it gets parliamentary approval, this will be the second Scottish independence referendum after 2014, when the region had voted to remain a part of the UK.

“I will take the steps necessary now to make sure that Scotland will have a choice at the end of this process. A choice of whether to follow the UK to a hard Brexit, or to become an independent country able to secure a real partnership of equals with the rest of the UK and our own relationship with Europe,” Sturgeon said.

Polls since the Brexit vote have shown that support for Scottish independence has been relatively unchanged since the first referendum in 2014.

UK Prime Minister Theresa May is expected to deny permission for another referendum. May was quick to react to Sturgeon’s announcement, hitting back at her claim that the government had put up a ‘brick wall’ over Brexit arrangements.

“We’ve been working closely with the devolved administrations,” said the PM. “We’ve been listening to their proposals and recognising the many areas of common ground we have, such as protecting workers’ rights and our security from crime and terrorism. The tunnel vision that the SNP has shown is deeply regrettable. It sets Scotland on a course for more uncertainty and division. This is at a time when the evidence is that the majority of the Scottish people do not want a second independence referendum.”

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Camille Paldi 

March 14, 2017: With proper regulation, legislation, and dispute resolution, Islamic finance, sukuk (Islamic bond) and takaful (Islamic insurance) have tremendous possibilities in the United States at this moment in time. Modes of Islamic finance, including musharakah, mudharabah, murabahah, tawarruq, salam, and istisna’a, can enhance the capitalist performance of the USA and help Americans compete with the rest of the world.

Sukuk or Islamic bonds may be utilised to gain capital for businesses, the state and federal government, and individual entrepreneurs. Islamic finance is gaining popularity around the world and it is time for the United States to tap into the global Islamic finance, sukuk, and takaful markets and compete on the global stage.

As of date, East Cameron Gas [$165,670,000 (2006)], General Electric [$500,000,000.00 (2014)], and Goldman-Sachs [$500,000,000.00 (2014)] have issued sukuk. The states of Illinois and New York have both tabled legislation allowing for sukuk transactions. Ernst and Young predicts that the sukuk market may reach $900 billion worldwide by 2019.

The sukuk instrument is growing in popularity around the world as an innovative financing instrument and a way to raise funds for various projects and business expansion, and increased competitiveness, which attracts ethical and creative investors worldwide. The UK recently announced that it is the first Western nation to issue a sukuk (£200 million). The USA should join the competition.

The topic of Islamic finance is being taught at Drake University, American University, Pebble Hills University, Harvard University and the University of Pennsylvania Wharton School of Business. All major US banks and law firms now have Islamic finance departments, usually with staff from overseas and/or located in other countries. There exists an opportunity now for Americans in Islamic finance.

This short article aims to briefly discuss the regulatory and legal aspects of Islamic finance, sukuk, and takaful in the United States.

In order for the sukuk business to thrive in the USA, each state should pass a law enabling sukuk transactions. Islamic finance and sukuk should be incorporated into federal commercial law. In addition, as each state regulates the insurance industry, each state should also pass a takaful or Islamic insurance law. Takaful should also be incorporated into federal insurance regulations and laws.

Furthermore, dispute resolution in the United States may need to be adjusted in order to accommodate Islamic finance, takaful and sukuk as well as sukuk bankruptcies. The East Cameron Gas sukuk bankruptcy was successfully settled through the US judicial system. However, additional adjustments may be necessary in order to successfully adjudicate Islamic finance transactions, including takaful and sukuk bankruptcies inside the United States.

In terms of the takaful business, the US has a state-regulated insurance system whereby each state determines its own licensing requirements for insurers. In order to obtain a licence, a company must demonstrate that it has the experience and management capability to run the company and show that it is financially sound. Insurers are also required to justify their premium rates. In addition, companies must fulfil the solvency requirements set by the state. Furthermore, there may be limits on the types and concentration of investments made with ‘held’ reserves. These issues should be addressed in the state and federal takaful laws.

The biggest challenge in introducing takaful, sukuk and Islamic finance in the US is the First Amendment of the US Constitution, which prohibits the making of any law respecting an establishment of religion or impeding the free exercise of religion as well as the Establishment Clause. In Murray v Geithner, a case was filed against the Federal government challenging the permissibility of bailout money provided to AIG under the Emergency Economic Stabilization Act (EESA) legislation saying it violated the Establishment Clause. The Act gives the Treasury the ability to purchase troubled assets from any institution.

In this case, EESA was used to purchase $40 billion in AIG shares. AIG conducts takaful business in Bahrain and the US. The plaintiff alleged that tax dollars were going towards the financing of Shari’ah products and activities.

The court found that the EESA legislation and the AIG bailout were created for a secular purpose and did not violate the First Amendment of the Constitution. Although there is a green light for Islamic finance in the USA, Islamic financial institutions may be at a disadvantage in possibly not being able to gain access to federal funds. Islamic institutions may also experience compliance issues as well as legal challenges. Islamic finance is currently offered by Devon Bank, University Bank, LARIBA, Whittier Bank and Guidance Residential all across the United States.

According to CNBC, Islamic banks’ capital grew from $200 billion in 2000 to close at $3 trillion in 2016. This figure is expected to grow to $4 trillion in the 2020s. There are now more than 300 Islamic banks and 250 Islamic mutual funds globally. Islamic finance constitutes approximately 5-6% of the global financial system, and growing. Ernst and Young predicts that Islamic finance will grow 19.7% annually through 2018.

At this point, there are 25 Islamic financial institutions operating in the USA with the top three being The American Islamic Finance House, University Bank’s subsidiary University Islamic Finance, and Harvard Islamic Finance Program. J P Morgan started Islamic banking in 2013. Standard Chartered conducts Islamic finance worldwide through its Islamic ‘Saadiq’. These banks are overseen by federal regulators, such as the Federal Reserve System, and must also comply with local regulations.

The Islamic bank LARIBA Bank of Whittier (CEO: Yahia Abdul Rahman), operating in California, has assets of $10.6 million and offers banking and home financing across the USA. Saturna Capital, an investment advisor and fund management company, manages more than $3.5 billion in assets, which are invested in Shari’ah compliant mutual funds.

The opportunity cost for the USA in not participating in this global market is quite large. On the other hand, the United States could introduce the rules and regulations required to engage in the worldwide Islamic finance, sukuk, and takaful business. Interest-free financing options may enhance the system currently in use in the United States and offers a chance for Americans to diversify their portfolios, attract global investors, enhance liquidity and compete in the global village.

Camille Paldi is CEO of the Franco-American Alliance for Islamic Finance (FAAIF)

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Housing Minister Gavin Barwell said the project is part of the government’s pledge to build 400,000 new affordable homes.

Work will begin early this year and will be available to buy from 2018. The project is designed to boost housing stock quickly to help tackle a shortage of homes.

May has promised to focus her efforts on helping those who are ‘just about managing’ to make ends meet, and those who are struggling to get on the property ladder or save enough for a deposit.

“This first wave of partnerships shows the strong local interest to build thousands of starter homes on hundreds of brownfield sites in the coming years. One in three councils has expressed an interest to work with us so far,” said Barwell.

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May 12, 2015: A £1billion infrastructure project that will link Battersea to the London Underground is another step closer due to a pioneering new method of financing agreed between the GLA and Lloyds Bank Commercial Banking. On May 11, they confirmed that the United Kingdom’s first ever Consumer Price Index-linked Sterling bond has been issued in a £200m deal that will contribute to the cost of the new Tube link.

The bond was developed by Lloyds Bank Commercial Banking and is a first in the Sterling bond market. It has enabled the GLA to raise finance in the most cost effective manner, and by taking this approach the Authority is expected to deliver the best possible value for Londoners by potentially saving up to £40m over the next 25 years.

An extension to the Northern Line is essential to the regeneration of Vauxhall, Nine Elms and Battersea and will lead to the creation of 24,000 jobs and 18,000 new homes.

Working with Lloyds Bank Capital Markets team, the GLA was able to hold a competitive dialogue with Sterling institutional investors and concluded that it was better value-for-money to issue bonds linked to CPI, rather than the traditional Retail Price Index.

The Mayor of London, Boris Johnson, said, “This deal demonstrates the continuing lure of London to investors with an eye for a world-leading transaction. These wise heads realise the incredible potential of our city and my team will draw on every possible source of funding in order to ensure the mega infrastructure projects we need to continue to thrive are able to move off the drawing board and into reality.”

James Garvey, Managing Director, Head of Capital Markets at Lloyds Bank Commercial Banking, said, “We are delighted to have led this milestone transaction for the GLA. The bond was structured to meet the financing requirements of the GLA drawing on demand from the growing volume of CPI-linked liabilities in the UK pension industry. In securing first mover advantage, the GLA has raised finance at a very competitive cost. This transaction is a great example of our Helping Britain Prosper plan in action, in which we have committed to support £30 billion of infrastructure projects in the National Infrastructure Plan by 2017.”

Tom Pearce, Managing Director at Rothesay Life, said, “Lending to high quality institutions such as GLA is core to Rothesay Life’s low risk asset strategy and we are delighted to have made this investment in London infrastructure.”

Securing funding through a cost effective bond issuance programme has become increasingly important to UK local authorities as they look at alternatives to the traditional funding route of the Public Works Loan Board (PWLB). This is the GLA’s second bond issuance via Lloyds Bank after an inaugural £600 million issuance in 2011 to part fund the CrossRail project.

The bond issue, which will pay the investor a CPI-linked coupon of 0.34%, is expected to save the GLA £40million over the next 25 years.

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