Placing, Code Waiver and Notice of General Meeting

RNS Number : 9417I
Islamic Bank of Britain Plc
26 November 2008

ISLAMIC BANK OF BRITAIN PLC
Placing, Code Waiver and Notice of General Meeting
Islamic Bank of Britain PLC ("IBB" the "Company" or the "Bank") today announces that it proposes to raise approximately �7.49 million
before expenses by way of a Placing of 127,470,000 new Ordinary Shares, at 5.875 pence per Placing Share ("the Placing"). The net proceeds
of the Placing will be used to provide the Company with additional capital.
Introduction to the Placing
The 127,470,000 Placing Shares are being placed with HE Sheikh Thani Bin Abdulla Bin Thani Jasim Al Thani ("Sheikh Thani"), an
existing shareholder. Sheikh Thani is considered by the Panel on Takeovers and Mergers ("the Panel") to be acting in concert with Qatar
International Islamic Bank (Q.S.C) ("QIIB") and Qatar Islamic Insurance Company (Q.S.C) ("QIIC"), (together "the Sheikh Thani Concert
party"). Following the Placing the Sheikh Thani Concert Party will own 44.98 percent of the enlarged share capital of the Company. The
Placing is therefore conditional, inter alia, upon the approval by the shareholders who are independent of the Placing ("Independent
Shareholders"), voting by way of a poll, in a General Meeting, of the waiver from the obligations of Rule 9 of the Takeover Code to make a
general offer for the issued share capital of the Company, that the Sheikh Thani Concert Party does not already own ("the Waiver").
The Company is seeking to increase the authorised share capital and additional authorities pursuant to sections 80 and 95 of the 1985
Act in order to facilitate the Placing and to provide future headroom.
Reasons for the Placing, Current Trading and Prospects of the Company
Reasons for the Placing
To support IBB's current strategy, it is seeking to raise some capital immediately from an
existing shareholder, Sheikh Thani. The capital is required for the following reasons:

* Regulatory capital. The Board is conscious of its responsibilities to ensure that IBB has sufficient regulatory capital to manage
and grow the business. The Board closely monitors the Company's capital position to ensure compliance with the FSA's capital requirements
through the Internal Capital Adequacy Assessment Process (ICAAP). New capital is required to support the future growth in customer assets,
including the new House Purchase Plan ("HPP") product, and ensure that an appropriate buffer is maintained over the minimum regulatory
requirement.

* Funding. New capital is required to initially fund new long term customer assets, until longer term customer deposits are
established. This is intended to help ensure that IBB continues to achieve its liquidity and funding requirements.

* Growth in new areas. It is intended that new capital will be used to fund growth in new areas including the creation of a
dedicated premier banking channel.

* Profitability. IBB's strategy is to deliver an improvement in profitability and to expedite the achievement of break-even while
minimising credit risk and efficiently using capital. New capital is required to take advantage of the growing Sharia'a-compliant home
finance market.

* Achievement of a strong credit rating. The Directors believe that IBB's financial stability and market reputation is important to
its success within its chosen markets. The Directors believe that an improved capital base will enhance the Bank's standing and credit
rating with financial markets, customers and other stakeholders.

In order to take advantage of market conditions, the opportunities outlined above and in the light of regulatory requirements, the Board
believes that it is in the shareholders' interests to strengthen the Company's capital base with the proposed Placing.

The Board will continue to review the Company's financing structure and opportunities for profitable growth and expect to raise further
finance in the future to fund anticipated activity as and when the opportunity arises.

Current Trading
The Bank announced its unaudited Interim Report on 19 September 2008 and this showed an improved result for the half year to 30 June
2008, with the operating loss reduced by 21 percent to �3.1 million compared to the same period last year (6 months ended 30 June 2007: loss
�3.9 million). This was achieved through an increase in operating income of 22 percent to �2.6 million, and a 6 percent reduction in
operating expenses to �5.7 million. The Chairman's statement noted the continued steady growth despite the adverse market conditions and the
investment that the Bank had made in new products and technological infrastructure which would serve as a platform for further growth.

Prospects for the Bank
The Company's strategy is to focus on secured finance funded by capital and longer term deposits whilst increasing fee and commission
income as a proportion of revenue.

The challenging market conditions currently being experienced in the financial services and property sectors make it difficult to
forecast future revenues with certainty. Despite these conditions, as the sole full-service wholly Sharia'a-compliant retail bank operating
in the UK, the Directors believe that IBB is well placed due to its low exposure to unsecured higher risk assets.

In July 2008, IBB extended its secured finance offering to the residential market by launching its Sharia'a-compliant Home Purchase Plan
("HPP") product. The HPP product provides the opportunity for IBB to grow its customer finance assets in a capital efficient manner
(residential owner - occupied property backed secured finance requires less regulatory capital than other financing products). The Directors
believe that this product is well placed to take advantage of current market conditions and demand from the Sharia'a-compliant home finance
market.

New and existing savings products will be used to attract longer term customer deposits. These will be used to fund asset growth, while
providing an attractive return to customers. IBB expects to launch a notice savings product in the near future to enhance the customer
offering in this area.

IBB plans to drive profitability and to increase fee and commission income through the distribution of third party investment products
to affluent customers and the creation of a dedicated premier banking channel operating through IBB's branch network.

Principal Terms of the Placing

The Company is proposing to raise approximately �7.49 million (before expenses) by a Placing of 127,470,000 new Ordinary Shares at 5.875
pence each.

Sheikh Thani has agreed to subscribe for the entire Placing. This placing letter is conditional upon the approval of the Waiver by
Independent Shareholders.

The proceeds (after expenses) of the Placing are expected to amount to approximately �7.35 million and will be used for the activities
described above.

The Placing Shares will, if issued, rank pari passu with the existing Ordinary Shares and are expected to be admitted to trading on AIM
within five days of the Placing becoming unconditional.

Future Intentions

The Board does not intend that any changes will be introduced to the Company's business as a result of the Placing. In addition, each
member of the Sheikh Thani Concert Party have confirmed that, as a result of the Placing, they have no intention to change the strategic
plans for the Company, the locations of the Company's places of business or the continued employment of its employees and management,
including any material change in the conditions of employment nor will there be any redeployment of the fixed assets of the Company.

Takeover Code Waiver

Prior to the Placing the Sheikh Thani Concert Party owns in aggregate 118,356,746 ordinary shares representing 28.25 percent of the
issued share capital. Upon completion of the Placing Sheikh Thani's holding will increase from 36,399,619 ordinary shares representing 8.69
percent to 163,869,619 ordinary shares representing 29.99 percent of the issued share capital (as enlarged by the Placing) and the interest
of the Sheikh Thani Concert party will increase to 44.98 percent.

The Panel has agreed, subject to the approval of the Independent Shareholders voting by way of a poll, at the General Meeting, to waive
the obligation for any member of the Sheikh Thani Concert Party to make a general offer to Shareholders under Rule 9 of the Takeover Code
that would otherwise arise as a result of the Placing.

The Company and each member of the Sheikh Thani Concert Party has entered into a standstill agreement, a summary of which will be set
out in the circular being sent to shareholders today.

Related Party Transactions
Sheikh Thani is a substantial shareholder who directly and indirectly holds more than 10 percent of the issued share capital of the
Company. The issue of the Placing Shares to Sheikh Thani therefore constitutes a related party transaction for the purposes of AIM Rule 13.
The Directors having consulted with Grant Thornton UK LLP, the Company's nominated adviser, consider that the terms of the related party
transaction with Sheikh Thani to be fair and reasonable insofar as Shareholders are concerned.

Due to cost constraints and timing issues, the Board has determined that it would not be practical to issue a prospectus which would
have permitted the participation of all Shareholders in the Placing.

Notice of General Meeting
Included in the Circular being posted today is a notice of a General Meeting of the Company to be held at 9.30am on 19 December 2008.
The resolutions being proposed are the approval of the Waiver, the increase in the authorised share capital by 225 million shares to 725
million shares, the granting of authority to allot the additional authorised share capital and to authorise the allotment of shares for cash
and to adopt new Articles of Association for the Company.

For further information please contact:

Islamic Bank of Britain Plc:
Gerry Deegan - Managing Director 0121 452 7300
Grant Thornton UK LLP (Nominated Adviser):
Gerald Beaney 020 7383 5100
Charles Cattaneo 0121 232 4000

END

This information is provided by RNS
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