Linklaters LLP has advised University Bank on its sukuk issuance in the United States. This is believed to be the first sukuk to be governed by the laws of the United States, in this case, the laws of the State of New York.
The U.S. dollar-denominated Shariah compliant perpetual sukuk issuance is intended to be recognised as Basel III-compliant, Additional Tier 1 capital by U.S. regulators, and is believed to be the first sukuk to be included within the Additional Tier 1 capital resources of a bank in the United States. The sukuk is limited to an annual profit rate of 5.75% and has no maturity date.
University Bank (a subsidiary of University Bancorp Inc.) is a community bank headquartered in Ann Arbor, Michigan which specialises in Islamic banking and mortgage subservicing for the credit union industry.
The Linklaters team on this transaction was led by Capital Markets partners Jonathan Fried (Dubai) and Matthew Poulter (New York), Financial Regulation partner Robin Maxwell (New York) and Global Head of Islamic Finance, Neil Miller.
The transaction represents a significant chapter in the evolution of sukuk. This is the ninth publicly announced Additional Tier 1 capital sukuk, and Linklaters has advised on all nine issues.
University Bank focuses on profitable growth through niche financial services provided locally, nationally and via the Internet. These niches are Community Banking, Credit Unions, Islamic Finance and Federal Housing Administration Lending.