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Wednesday, 23 January 2008

London Stakes Bid to be Key Western Centre for Islamic Finance

As the global market for Islamic financial services has grown three fold over the past decade to $531bn in 2006, so London is setting out its stall to be the key western centre for Islamic finance.

The cluster of 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 $2bn a month and a growing market for retail mortgage business according to a new report by IFSL on Islamic Finance co-sponsored by UK Trade and Investment.

IFSL’s report also found 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: Switzerland has five and France and Luxembourg each have four.

The UK 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.

Duncan McKenzie, IFSL's Director of Economics said "Evidence of London's growing role in Islamic finance is shown in the UK being the only western country to feature prominently, 9th with $10bn, in a global ranking of Sharia compliant assets by country."

Minister for Trade and Investment, Lord Digby Jones welcomed the report and congratulated ISFL for producing an in depth and informative report. He said:

"London’s position as the premier Western centre and partner of choice for Islamic finance is a huge step in the right direction, but we mustn't become complacent. UKTI is working hard in partnership with our delivery partners, including IFSL to ensure the UK's offering in this ever expanding sector and London’s status as the global financial centre continues. The results of this report will help shape UKTI strategies to continue positioning the UK as the world leader and investment destination of choice."

UK educational institutions are taking the lead in positioning the UK as a leading centre of learning in Islamic finance. The Securities and Investment Institute, the Chartered Institute of Management Accountants and Cass Business School have each worked collaboratively with overseas partners to offer qualifications that can be accessed by students around the world.

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