Potential Regional Hubs For Islamic Banking
BMI View: The UK's plans to issue a sukuk bodes well for the country seeing rapid growth in Islamic Banking. Given the lack of coherence on a global level, we expect regional hubs to emerge with London best placed to service Europe's demands. Elsewhere, Nigeria and Thailand look set to see rapid growth from a low base and become centres of Islamic finance for Africa and parts of Southeast Asia, respectively.
The UK's decision to enter the Islamic Banking sector bodes well for the country becoming a major centre of the US$1.5bn industry. The UK chancellor, George Osborne, announced plans for Britain to issue a GBP200mn sukuk - the first country outside the Muslim world to issue an Islamic bond. Whilst precise details on the sukuk have yet to be clarified, it is likely to be backed by rent on government property. Benefitting from first mover advantage, as well as its position as a global financial centre, it is likely that the UK will be a key growth driver in Islamic Banking over the coming years.
The UK has already witnessed several high-profile shari'a-compliant deals such as the GBP150mn Qatari investment in the Shard building and the £1.5bn Dubai investment in the London Gateway, the UK's first deep-sea container port. In addition, the UK has more sharia-compliant banks than any other western European country. Whilst Paris and Amsterdam are also looking to develop Islamic Banking sectors, it is likely that London will gain pre-eminence. Indeed, we have previously noted that a constraint on Islamic Banking's global growth is the lack of a standardised framework with the Middle East competing with Malaysia to become the global 'home' for Islamic Banking (See 'Islamic Banking: Growth Slowing, But Huge Potential Remains' July 18). Given the lack of coherence on a global level, London is therefore well placed to meet the growing demands for Islamic Banking in Europe.
|Britain Trying To Get A Share Of The Pie|
|Global Islamic Bond Issuance|