This partnership will provide a forward flow arrangement, allowing ColCap UK to offer home financing to customers without the need to source funds independently.
Forward flow arrangements refer to agreements where one party commits to purchasing certain assets, typically receivables or loans, on a continuous or recurring basis over a set period of time.
The key elements of this type of arrangement include ongoing commitment, as the buyer agrees to purchase assets continuously over time, pre-set terms, risk mitigation processes, and capital flexibility, as the capital inflow is predictable, enhancing stability and liquidity.
This partnership with ColCap UK will provide Gatehouse Bank with further means of fulfilling growth goals, allowing the bank to continue to meet the demand from both UK and overseas customers for Shariah-compliant products, while ColCap will diversify and expend into new market segments.
Gatehouse Bank will continue to independently offer ethical originations and services for UK customers, as well as residential property finance in England and Wales for UK residents, UK expats and international homebuyers and landlords.
These originations will be placed directly onto the bank's balance sheet through its own home finance proposition, meaning the bank will hold the full responsibility for these services.
The agreement also includes a sale of circa GBP 100 million of Gatehouse Bank’s beneficial interest in its existing home finance portfolio. As of 31st December 2023, the bank’s home finance portfolio totalled over GBP 1.2 billion.
Gatehouse Bank had a considerable increase in demand for its products and services over the last five years and this agreement highlights its credibility as a Islamic finance provider in the UK.
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