How does it work?
The way it works is simple and easy to follow:
- Open an account for a fixed term of 5 years with a single lump sum deposit for any amount from £500.
- We will invest your funds in a Shariah compliant way so at the very least, you can expect to receive your initial deposit back… Investing to protect your savings does not conflict with the profit and loss sharing principles of Islamic banking. Shariah scholars are fully supportive of prudent investment especially when personal savings are at stake.
- In addition, we aim to provide you with a profit which is calculated by reference to any percentage rise during the 5 year term in the value of a basket of 20 Shares in companies selected from the Dow Jones Islamic Market Titans 100 Index… Shariah scholars permit investments in some companies providing the activities of those companies do not conflict with the principles of Shariah.
Shariah Compliance
The alburaq Savings Plan follows the basic Shariah principles of Wakala, whereby your savings are held in an account and we invest the funds on your behalf in Shariah compliant investments.
The profit, if any, is added to your account at the end of the investment period. We may earn a fee from investing the funds, which in the case of this account is paid by the third parties that we deal with when investing your funds rather than by a deduction from your initial deposit.
Our Shariah Supervisory Committee oversees all our activities to ensure the strictest on going Shariah compliance.
Partnership
The alburaq Savings Plan is brought to you by alburaq working together with the Bank of Ireland. alburaq is one of the UK’s leading providers of Shariah compliant financial services and is part of the Arab Banking Corporation Group, one of the most respected banking names in the Arab and Muslim world.
The Bank of Ireland is one of Europe’s leading retail banks. Your account will be opened with the Bank of Ireland and all funds deposited are held separately and will be kept segregated from the Bank of Ireland’s other activities.
alburaq also work with the Bank of Ireland for the provision of our range of Shariah compliant home finance and buy-to-let products, details of which can also be found on this website.
Will I get a return?
Any return is linked to the performance of a basket of 20 Shares in major companies selected from the Dow Jones Islamic Market Titans 100 Index (see list of selected companies below) over a 5 year period. As share values are likely to rise and fall over the deposit term it is impossible to predict what the return, if any, there will be.
| Company | Sector |
| ASTRAZENECA | Pharmaceuticals |
| BASF | Chemicals |
| BG GROUP | Oil and Gas |
| BP | Oil and Gas |
| EISAI | Pharmaceuticals |
| ENI | Oil and Gas |
| ERICSSON | Telecommunications |
| GLAXOSMITHKLINE | Pharmaceuticals |
| L’OREAL | Cosmetics, Beauty and Perfumes |
| NOVARTIS | Pharmaceuticals |
| NTT DOCOMO | Telecommunications |
| RECKITT BENCKISER | Health and Personal Care |
| RIO TINTO | Mining |
| ROCHE HOLDING | Pharmaceuticals |
| SANOFI-AVENTIS | Pharmaceuticals |
| SCHNEIDER ELECTRICAL | Electrical Distribution Products and Solutions |
| SHARP | Electronics |
| SHIN ETSU | Chemicals |
| TOTAL | Oil and Gas |
| WOODSIDE PETROLUEM | Oil and Gas |
| Share listing accurate as at 12 June 2008, shares may be removed from the list and replace by another share from the Dow Jones Islamic Market Titans 100 Index. Please see Terms and Conditions for more details. | |
It is also a principle of Shariah compliant investing that there should be no guarantee of a return.
The Shariah compliant investment techniques we use mean that your deposit is not invested directly in the 20 companies and any return is linked to the percentage growth in the basket as a whole. As your deposit is not directly invested in Shares you will not be eligible to receive dividends or the opportunity for re-investment of the dividends.
How is my return calculated?
- At the end of the initial offer period, the price level of the basket of 20 Shares is taken. This is referred to as Price Level 1.
- At the end of the 5 year term the second reading is taken, referred to as Price Level 2. This level is calculated as the average of 13 readings taken each month during the last 12 months of the 5 year term*.
- If Price Level 2 is higher than Price Level 1, we calculate the percentage increase and this is the profit that you will earn.
- If Price Level 2 is lower than Price Level 1 there will be no profit earned but you will still receive your original investment amount back, the value of which may be eroded by the effects of inflation.
* The effects of averaging; Using an average of 13 readings during the final year may provide a different Price Level 2 at the end of the Fixed Term than a reading taken on a single date and this may have an effect on profit, if any, at the maturity. The effect would be to limit your profit if the final reading at the end of the fixed period were higher than the calculated average, however if the final reading were to be lower than the calculated average then your profit would be greater, thereby protecting gains above Price Level 1 made during the final year.
Examples of how returns are calculated
The graph below shows the historic performance of the 20 Shares selected from the Dow Jones Islamic Market Titans 100 index that comprise the basket, over a ten year period from 1st January 1998 to 1st February 20083 (1st January 1998 = 100).
To help illustrate how we calculate any return we have selected two five year periods on the graph using periods when the basket value has fallen over a 5 year period and when the basket value has risen over a 5 year period.
Illustration of the value of the Basket of selected 20 shares:
1998 - 2008
It is important to remember that past performance must not been seen as an indication of future performance and the value of the Shares that comprise the basket can go down as well as up.
EXAMPLE
Illustration 1
The initial deposit - £10,000
Price Level 1 is 119.50 on the 1st January 2003
Price Level 2 is 227.39 on the 1st January 2008
Percentage increase is +90.28%
This means the sum returned is £19,028 (which includes the initial deposit of £10,000)
Illustration 2
The initial deposit - £10,000
Price Level 1 is 164.23 on the 1st January 2000
Price Level 2 is 137.71 on the 1st January 2005
Percentage decrease is 16.15%
This means the sum returned is £10,000 (which is the initial deposit of £10,000)
- Where prices for the shares within the basket are historically unavailable these have been removed from the basket, however the basket has been equally weighted throughout. Data for the illustrations provided by Bloomberg
- Price Level 2 is calculated as an average of the 13 readings from 1st January 2007 to 1st January 2008
- Price Level 2 is calculated as an average of the 13 readings from 1st January 2004 to 1st January 2005
Calendar
Offer Period: 12th June to 5th September 2008
Start date: 26th September 2008
Final date: 26th September 2013
Term: 5 years
Minimum opening deposit: £500
Maximum opening deposit: £1,000,000
Additional amounts: None – after the closing date
Withdrawals: None – until the end of the fixed term
Return paid: At end of fixed term
All dates are inclusive. If any of these dates are not an Index Trading day, the following Index Trading day will be used unless this Index Trading day is in a new month, when the preceding Index Trading day will be used.
Is the alburaq Savings plan right for me?
As a Shariah compliant investment it is our duty to highlight the features and benefits of the alburaq Savings Plan and also the potential risks and drawbacks.
Is it right for me?
| Yes if you... | No, if you... | |
Wish to invest your funds in accordance with the Shariah |
Might need access to your funds during the investment period of five years |
|
Have between £500 and £1,000,000 to invest |
Wish to receive dividend income that comes with investing directly into the stock market |
|
Wish to have an investment which is linked to the performance of a basket of Shariah compliant shares |
Wish to receive a profit on your funds for the short time between the date your account is opened and the start of the investment ter |
|
Can leave your money untouched for five years |
Do not want the risk that your investment will not provide a profit at maturity |
|
Want your capital to be secure throughout the investment term |
If you are unsure in any way about whether the alburaq Savings Plan is right for you, we recommend you take independent professional advice.
Legal information
The Governor and Company of the Bank of Ireland is authorised by the Financial Regulator in Ireland and by the Financial Services Authority for the conduct of UK Business. Bank of Ireland deposit accounts are deposit products as defined under the Financial Services and Markets Act 2000. The Bank of Ireland subscribe to the Banking Code. A copy of the Code is available on request. Bank of Ireland, 1 Donegall Square South, Belfast, BT1 5LR. The Governor and Company of the Bank of Ireland is incorporated in the Republic of Ireland with limited liability and registered in England and Wales with branch number BR000459.
alburaq is a registered trade mark of ABC International Bank plc ("ABCIB") and the brand under which Islamic products are provided. ABCIB is authorised and regulated by the Financial Services Authority and is registered in England and Wales, Registration No. 2564490 - Registered Office: 1-5 Moorgate, London EC2R 6AB. The Governor and Company of the Bank of Ireland is ABC's appointed provider of the Shariah Compliant savings plan and is authorised to use the alburaq brand name under licence.
ABCIB does not offer any advice or personal recommendations as to the suitability of the alburaq Shariah compliant savings plan in meeting individual needs. We will provide information on the features of the product and generic benefits to the investor as a whole. You will need to decide for yourself or seek professional advice to ensure that this product meets your specific needs.
“Dow Jones®”, “Titans®” and “Dow Jones Islamic Market Titans 100 IndexSM” are service marks of Dow Jones & Company, Inc. Dow Jones has no relationship to Bank of Ireland, other than the licensing of the Dow Jones Islamic Market Titans 100 Index and its service marks for use in connection with the Savings Plan. The Savings Plan is not sponsored, endorsed, sold or promoted by Dow Jones, and Dow Jones makes no representation regarding the advisability of investing in the Plan.
