London bid to be key centre for Islamic finance
As the global market for Islamic financial services has grown three-fold over the past decade, so London is setting out its stall to be the key, according to a new report Monday.
The study by the International Financial Services London (IFSL) on Islamic finance, co-sponsored by the UK Trade and Investment Department, said the expertise in London is represented by 23 banks, nine fund managers and a number of international law firms offering Islamic service, while there is a secondary market in Sukuk valued at two billion dollars a month and a growing market for retail mortgage business.
IFSL’s report also found that daily trading in commodity-based agreements through the London Metal Exchange is a key mechanism for the management of assets and liabilities by Islamic financial institutions and the 23 UK banks outnumber more than four times those of any other country in Western Europe.
Britain is also ahead of the rest of Western Europe in establishing fully Sharia compliant banks, with three of the 23 UK banks having set up there since 2004.
These are The Islamic Bank of Britain, The European Islamic Investment Bank and The Bank of London and The Middle East.
Britains Minister for Trade and Investment Lord Digby Jones welcomed the report and congratulated IFSL for producing an in depth and informative report.
He said in a statement “London’s position as the premier Western centre and partner of choice for Islamic finance is a huge step in the right direction”.
“The results of this report will help shape UK Trade and Investment strategies to position the UK as a world leader and investment destination of choice”, he added.
The global market for Islamic financial services, as measured by Sharia compliant assets, is estimated to have reached 531billion dollars at end-2006, having grown by over 10 percent a year from about 150 billion dollars in the mid-1990s.
Islamic commercial banks accounted for 75 percent of the assets 397 billion dollars, and investment banks 13 percent, 66 billion dollars.
The British Government takes a view that developing Islamic financial services helps to combat social exclusion while also giving additional weight to London’s status as a global financial centre.