Computershare a standby servicer for Tolkien Sukuk

Al Rayan Bank ropes in Aussie company unit in UK’s RM1.4b deal tied to Islamic-style home purchase plans


UK-based Al Rayan Bank plc has roped in a unit of an Australian- listed global financial administration company for the issuance of the UK’s largest pound sukuk.

Homeloan Management Ltd (HML), a subsidiary of Computer-share Ltd, will play the role of a standby servicer in the issuance of the Tolkien Funding Sukuk No 1 plc (Tolkien Sukuk).

Computershare Loan Services’ role as a standby servicer means that it is ready to continue the administration of the issuance, if problems materialise.

“We’re delighted to be working alongside Al Rayan Bank as they make financial history in the UK,” Computershare Loan Services CEO Andrew Jones said in a statement. He added that the agreement reflected its advanced technology, as well as the safety and security of the data under its management. Computershare Loan Services administers over US$100 billion (RM414 billion) of assets across the globe, operating in the US, Ireland and the UK. In the UK, it manages

£67 billion (RM361.8 billion) in assets, which represents more than half of all outsourced mortgages in the UK.

The Tolkien Sukuk, which came on stream in February, making it the UK’s first deal tied to Islamic-style home purchase plans (HPPs). It also opened up a new space in the structured finance markets.

The sukuk was Al Rayan Bank’s inaugural securitisation of residential finance-backed security, a Shariah-compliant alternative to a conventional residential mortgage- backed securitisation (RMBS).

The £250 million deal opens up potentials in the Shariah-compliant RMBS space, allowing conventional investors to tap the new investment stream.

The Tolkien Sukuk securitises a static pool of HPPs originated by Al Rayan Bank to its retail clients in England and Wales, according to an S&P Global Ratings initial rating document on the issuance.

A HPP is a Shariah-compliant form of financing an individual customer for the acquisition of residential property, having a similar — although not identical — economic effect to a conventional mortgage loan. Each HPP contract is governed by the English law and is also compliant with Shariah law, it added.

The rating agency also observed that HML, as the back-up servicer, would be appointed from the closing to become a successor servicer if the original servicer was terminated.

It said HML has an ‘Above Average’ servicer ranking from S&P Global Ratings, and has gained practical experience in servicing HPP contracts.

“Given a limited range of potential successor servicers of HPPs, which is a burgeoning and niche product in the UK, we consider the availability of an experienced back-up servicer an important mitigating factor for the operational risk in this transaction,” it added.

Legal advice on the issuance was provided by Norton Rose Fulbright’s London team, and joint lead manager for distribution was Standard Chartered plc’s (StanChart) financial institution team in London. Shariah certification of the structure was provided by the Shariah supervisory committees of both Al Rayan Bank and StanChart, the bank said.

Al Rayan Bank badges itself as the UK’s oldest and largest Shariah- compliant bank. It has wide Shariah-complaint product offerings — including Shariah-compliant current and savings accounts (CASA), HPPs and business banking CASA.