Depositors refuse to cash in: MP criticises Bank of England as Albaraka closes

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The Independent Online
WHEN banks close because they are in dispute with the Bank of England, angry customers are usually to be found pounding on the doors demanding their money back. Not so the 10,000 customers of the Albaraka International Bank, a Saudi Arabian-owned organisation which has offices in Mayfair, above a mosque in Whitechapel Road in the East End, on Edgware Road and at Sparkhill in Birmingham.

Yesterday they went on strike and refused to withdraw their money, despite the owners' announcement on Wednesday that the bank was closing and that pounds 83m on deposit was to be handed back to customers. Rashid Master, a spokesman for the bank, said that far from a run, eight customers had come into the head office, 12 into the Whitechapel branch and six into Edgware Road. 'We had a meeting of 45 big customers. We told them they would have to take their money away but they wouldn't,' he explained.

The decision to close is likely to have an impact on the Asian community out of proportion to the bank's size, since it is the only bank in Europe operating on the strict Islamic principle that interest is forbidden. Instead, it pays a share of profits from investing money. Keith Vaz, the Labour MP campaigning for depositors in the failed Bank of Credit and Commerce International, said that he had complained about the way banks specialising in Asian customers were treated, at a meeting 24 hours earlierwith Brian Quinn, a Bank of England director.

'I expressed great concern about the way the Bank is not even-handed in supporting community banking. Mr Quinn held out Albaraka as a model bank which carried out Islamic banking in a proper way and said he was quite happy with them,' Mr Vaz recalled.

'In principle there is no conflict between Islamic banking and the Banking Act,' the Bank of England said. The decision to close Albaraka was the management's but came after it failed to satisfy the Bank that its ownership structure met new international guidelines.

Owned by the super-rich Sheikh Saleh Abdullah Kamel of Jeddah, the bank will have no problem repaying depositors in full.