Britain to Lead the World in Islamic Finance

THE DAILY TELEGRAPH : London is bidding to become a leading centre for sharia-compliant finance, according to the UK's foreign minister for the Middle East

London has set its sights on becoming the world centre for the Islamic finance industry according to the UK's foreign office minister for Middle East.

Speaking at The Telegraph's Middle East Congress on Wednesday, Tobias Ellwood, under secretary of state at the Foreign Office, said the capital had ambitions to stand alongside Dubai and Kuala Lumpur as a global hub for Islamic finance.

Britain became the first country outside the Muslim world to issue an Islamic bond, known as Sukuk, last year.

The £200m bond attracted healthy investor interest and was the first step in encouraging wider investment from the region to the City of London.

Britain was also committed to promoting a "peaceful and prosperous" Middle East and expanding trade ties with the region, which topped £35bn last year, said Mr Ellwood. Read on and comment » | Manu Mair, and Mehreen Khan | Thursday, February 28, 2015

Britain: "A World Capital for Islamic Finance"

GATESTONE INSTITUTE: "I want London to stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world." — David Cameron, Prime Minister, Great Britain.

But critics say that British ambitions to attract investments from Muslim countries, companies and individuals are spurring the gradual establishment of a parallel financial system based on Islamic Sharia law. The Treasury also said some sukuk Islamic bond issues may require the government to restrict its dealings with Israeli-owned companies in order to attract Muslim money.

The London Stock Exchange will be launching a new Islamic bond index in an effort to establish the City of London as one of the world's leading centers of Islamic finance.

Britain also plans to become the first non-Muslim country to issue sovereign Islamic bonds, known as sukuk, beginning as early as 2014.

The plans are all part of the British government's strategy to acquire as big a slice as possible of the fast-growing global market of Islamic finance, which operates according to Islamic Sharia law and is growing 50% faster than the conventional banking sector.

Although it is still a fraction of the global investment market -- Sharia-compliant assets are estimated to make up only around 1% of the world's financial assets -- Islamic finance is expected to be worth £1.3 trillion (€1.5 trillion; $2 trillion) by 2014, a 150% increase from its value in 2006, according to the World Islamic Banking Competitiveness Report 2012-2013, published in May 2013 by the consultancy Ernst & Young.

But critics say that Britain's ambitions to attract investments from Muslim countries, companies and individuals are spurring the gradual establishment of a parallel global financial system based on Islamic Sharia law.

British Prime Minister David Cameron announced the plans during a keynote speech at the ninth World Islamic Economic Forum, which was held in London from October 29-31, the first time the event has ever been held outside the Muslim world.

"Already London is the biggest center for Islamic finance outside the Islamic world," Cameron told the audience of more than 1,800 international political and business leaders from over 115 countries.

"And today our ambition is to go further still. Because I don't just want London to be a great capital of Islamic finance in the Western world, I want London to stand alongside Dubai and Kuala Lumpur as one of the great capitals of Islamic finance anywhere in the world." » | Soeren Kern * | Thursday, October 31, 2013

* Soeren Kern is a Senior Fellow at the New York-based Gatestone Institute. He is also Senior Fellow for European Politics at the Madrid-based Grupo de Estudios Estratégicos / Strategic Studies Group. Follow him on Facebook.

London wird zum Mekka

Großbritannien will als erstes westliches Land eine Staatsanleihe nach geltendem islamischen Recht ausgeben. Das hat Premierminister Cameron auf dem Londoner World Islamic Economic Forum angekündigt. Cameron will dadurch islamische Investoren anlocken und den Finanzplatz London weiter ausbauen.

Islamic Investment: David Cameron Moves to Make London a Mecca for Middle East Wealth

The Shard, the tallest building in Europe

THE INDEPENDENT: Moves to turn London into a leading centre of Islamic finance will be announced by David Cameron today amid soaring Middle East investment in Britain and around the world.

The Prime Minister will signal his determination to tap into the rapidly growing global market for Islamic investments, which are forecast to reach £1.3 trillion next year as oil-rich states fund major building projects.

He will set out plans to establish a new Islamic index on the London Stock Exchange, which will help investors comply with Islamic finance principles, such as bans on investing in alcohol, tobacco and gambling. He will also detail proposals for Britain to become the first country outside the Muslim world to issue its own Islamic bonds, known as sukuk. » | Nigel Morris | Tuesday, October 29, 2013

Islamic Finance Australia: Dr. Mohd Daud Bakar
Dr Muhammed Daud Bakar (international scholar), a member of shariah Advisory council of Dow Jones Islamic Market INDEX, AAOIFI, of many financial institutions around the world including the Central Bank of Malaysia.

In my interview with him we will talk briefly about Islamic finance in Australia and some of the opportunities and challenges that are facing the industry.

In this interview:
a. What is Islamic finance?
b. Australia and Islamic finance
c. The Regulatory challenge
d. Risk management...

Interview by Almir Colan, Lecturer (Islamic Finance, Islamic Capital Markets), La Trobe University (School of Economics and Finance)

BBC: Islamic Finance 'In Double Digit Growth'

Aston School to Step Up Research on Islamic Finance
FINANCIAL TIMES: Dubai-based trading company Surgi-Tech has awarded Aston Business School £1.5m to set up an Islamic Finance and Business Centre at its campus in Birmingham.

The centre will allow Aston to increase teaching and research into Islamic finance, which has been expanding as Muslims seek alternatives to Western finance that are compliant with sharia law. >>> Jonathan Guthrie | Monday, February 15, 2010

Unadulterated Dhimmitude! Boris Johnson Calls for a Day of Fasting to 'Help Understand Muslims'
You fast if you want to; this gentleman’s not for fasting! – Mark

MAIL ONLINE: London Mayor Boris Johnson today encouraged people to undergo a day of fasting to help them gain a better understanding of their 'Muslim neighbour'.

Speaking during a visit to the East London Mosque and London Muslim Centre he said Muslims in the capital were 'challenging traditional stereotypes' to show they wanted to be part of the mainstream.

Mr Johnson's visit coincided with the holy period of Ramadan in which participating Muslims fast from dawn until sunset.

He said: 'Whether it's in theatre, comedy, sports, music or politics, Muslims are challenging the traditional stereotypes and showing that they are, and want to be, a part of the mainstream community.

'That's why I urge people, particularly during Ramadan, to find out more about Islam, increase your understanding and learning, even fast for a day with your Muslim neighbour and break your fast at the local mosque.

'I would be very surprised if you didn't find that you share more in common than you thought.'

He added: 'Muslims are at the heart of every aspect of society. Their contribution is something that all Londoners benefit from.

'Muslim police officers, doctors, scientists and teachers are an essential part of the fabric of London.

'Islamic finance is contributing to the economy by changing the way Londoners invest, save, borrow and spend. >>> | Friday, September 04, 2009

The Dangers of Shariah-compliant Finance in the USA

Vatican Says Islamic Finance May Help Western Banks in Crisis
BLOOMBERG: The Vatican said banks should look at the rules of Islamic finance to restore confidence amongst their clients at a time of global economic crisis.

“The ethical principles on which Islamic finance is based may bring banks closer to their clients and to the true spirit which should mark every financial service,” the Vatican’s official newspaper Osservatore Romano said in an article in its latest issue late yesterday.

Author Loretta Napoleoni and Abaxbank Spa fixed income strategist, Claudia Segre, say in the article that “Western banks could use tools such as the Islamic bonds, known as sukuk, as collateral”. Sukuk may be used to fund the “car industry or the next Olympic Games in London,” they say.

Pope Benedict XVI in an Oct. 7 speech reflected on crashing financial markets saying that “money vanishes, it is nothing” and concluded that “the only solid reality is the word of God.” The Vatican has been paying attention to the global financial meltdown and ran articles in its official newspaper that criticize the free-market model for having “grown too much and badly in the past two decades.”

The Osservatore’s editor, Giovanni Maria Vian, said that “the great religions have always had a common attention to the human dimension of the economy,” Corriere della Sera reported today. >>> By Lorenzo Totaro | Wednesday, March 4, 2009

Hat tips: Always On Watch and Infidel Bloggers Alliance

The Dawning of a New Dark Age (Paperback – Italy) >>>

Western Companies Seen Eyeing Islamic Bonds

REUTERS: LONDON/MANAMA - Cash-strapped Western companies are considering issuing Islamic bonds to tap Middle Eastern investors but face a challenge in choosing the right instrument, bankers and asset managers said.

Companies, especially in the UK and France, are looking to Islamic compliant investors as alternative sources of finance as the global crisis restricts their usual funding routes.

"There is a lot of interest from corporates to issue sukuk. My feeling is that as liquidity in the West gets scarce, they will look into the Middle East," said London-based Adnan Aziz, head of sharia advisory and structuring at asset manager BMB Group.

British retailer Tesco (TSCO.L) issued its first sukuk -- or Islamic-compliant debt --in 2007 for its Malaysian unit as well as raising conventional debt.

Islamic bonds do not pay interest, which is banned under Islamic law or Sharia, and are structured as profit-sharing or rental agreements, underpinned by physical assets such as real estate or commodities.

"We have discussions with clients, conventional issuers in Europe and we pitch both solutions, (bonds and sukuk) that is going to be a trend going forward," said Vikrant Bhansalim, who works for French bank Societe Generale (SOGN.PA) in London.

"In today's world the corporate sector is interested in the right price, the format is not as important," he said. >>> Reuters | Tuesday, February 10, 2009

The Dawning of a New Dark Age (Paperback & Hardback) – Free delivery >>>

REUTERS:
Indonesia Reports Strong Demand for First Retail Sukuk >>> Reuters | Tuesday, February 10, 2009

SMART BRIEF: Report Details Growth of U.K.'s Islamic Finance Sector

A report by International Financial Services London found that the Islamic finance sector in Britain, with $18 billion in assets, is much larger than that of Pakistan, Turkey, Egypt and Bangladesh, countries where Islam is the primary religion. The report also states that the U.K. leads Western countries in the number of financial institutions focused on Muslims and sharia-compliant products. >>> The Telegraph | Tuesday, February 10, 2009

The Dawning of a New Dark Age (Paperback & Hardback) – Free delivery >>>

Government Seen Helping Islamic Finance
INTERNATIONAL HERALD TRIBUNE: KUALA LUMPUR: Islamic banking is set to rise from its modest 2 percent share of bank assets as the government encourages growth and Muslims overcome their suspicion, sharia lender Gatehouse Bank said on Tuesday.

Islamic finance, which rejects interest-based lending and speculation in favour of profit and loss sharing between venture partners, has been in Britain since the 1970s, but only a small number of Muslims have embraced it.

In recent years, Britain has been viewed as the European leader in providing Islamic financial services, aiming to serve both domestic Muslim markets as well as tapping into the vast wealth of Gulf investors.

"The government is very keen on social inclusion and economic inclusion and it feels that still there are areas of the UK where there's not enough economic inclusion," Gatehouse Chairman Richard Thomas told reporters on the sidelines of an Islamic finance forum in Malaysia.

"So they feel that if they open up alternative finance such as Islamic finance then that will allow people to be included in the British economy in a way they weren't before."

He did not give estimates for the Islamic finance industry's growth.

Britain intends to issue its own sovereign sharia-compliant sukuk debt in a rolling programme worth around 2 billion pounds, although it has said legal barriers still remain and it will make a final decision later. >>> Reuters (Reporting by Liau Y-Sing) | Novemebr 18, 2008

THE GUARDIAN: Standardisation Moves to Help Sharia Finance-scholar

KUALA LUMPUR, Nov 18 (Reuters) - Efforts to standardise the reading of the sharia will not stifle the Islamic finance sector, a leading sharia scholar said on Tuesday, dismissing concerns that the industry risks being smothered by too much regulation.

A lack of standardisation in Islamic finance contracts is one of the biggest complaints among bankers in the $1 trillion industry, but there are also worries that a growing effort to harmonise across the globe could create a one-size-fits all approach in structuring deals.

"In Islamic law we encourage debate, research, scholarship and it is an ongoing process which cannot be stopped by anybody," Sheikh Nizam Yaquby, a highly regarded scholar, told reporters on the sidelines of an Islamic finance forum.

"However, for the purpose of standardisation, it is important to have certain prudential rules and basic contracts especially repetitive ones to be accepted among a group."

Sharia scholars are experts in Islamic law and international finance. They are seen as the industry's gatekeepers as they sit on the Islamic boards of institutions and rule on whether or not proposed products are sharia compliant.

Islamic law is open to diverse interpretations, resulting in some financing structures that aren't accepted by all Islamic markets.

An Islamic finance structure called bai bithaman ajil that is popular in Malaysia, for example, is not accepted by Middle East markets as Islamic.

Under bai bithaman ajil, a bank purchases an asset for its customer and sells it to him at a profit, with the sum to be repaid in instalments.

Recent attempts to harmonise industry standards include a plan by the International Swaps and Derivatives Association to launch standards next year for over-the-counter sharia-compliant derivative contracts. >>> Reuters, Tuesday November 18 2008

The Dawning of a New Dark Age – Paperback (US) Barnes & Noble >>>
The Dawning of a New Dark Age – Hardcover (US) Barnes & Noble >>>

Businessmen, Financiers, Investment Companies, Mortgage Providers and Banks Are All Rushing In Where Angels Really Would Fear to Tread
The Risky Business of Islamic Finance >>>
Mark Alexander (Paperback)
Mark Alexander (Hardback)

United Kingdom: Shari’ah-Compliant Bonds, Sukuks, to Be Introduced; Aim: To Turn London into World Centre of Islamic Finance
FINANCIAL TIMES: The government will step up preparations this week for the launch of sharia-compliant bonds, known as sukuk, as it seeks to turn London into the world centre of Islamic finance.

Kitty Ussher, the Treasury minister, will tell City leaders she is launching a three-month consultation process and could use next spring’s Budget to put in place any legal changes that might be needed to launch the first western government sukuk.

Ms Ussher believes that the scheme will entrench London as “a global gateway to Islamic finance” and help Britain’s Muslims, who sometimes struggle to find sharia-compliant retail products such as mortgages.

The bonds could be used as vehicles to allow Muslims in Britain to invest in National Savings products through banks and post offices.

Islamic bonds are structured to pay profits or rent from an underlying asset or business, rather than interest, which is outlawed under sharia religious law.

Unlike conventional bonds, sukuk are akin to Islamic “investment certificates” representing ownership in the underlying asset. Returns are paid to investors in line with their proportional ownership.

The sukuk market has grown dramatically in the past five years. Nearly $40bn (£19.1bn) of these bonds have been issued this year, from virtually nothing in 2001. UK Treasury paves way for Islamic bonds (more) By George Parker, Lina Saigol and David Oakley

Mark Alexander

The Sukuk Goes From Strength to Strength
MIDDLE EAST BANKER: Sukuk is the hot topic in Islamic finance, and we will soon see the industry reach a value of some tens of billions, as Michael Saleh Gassner from IslamicFinance.de writes.

Islamic finance has for some time missed investment opportunities for Muslims that offer a predictable return with low risk. The majority of investment opportunities are based either on stock markets with high volatility or on real estate transactions. The investment galaxy for the Islamic investor is lacking the variety of instruments to create an efficient portfolio in line with portfolio theory and financial planning. Sukuk certificates meet the pressing need for a medium term investment and reached, in 2004, a market volume of nearly US $7 billion. This volume will multiply in coming years to tens of billions of dollars annual volume. Already a number of world-class borrowers have used the new Islamic Sukuk market: Germany; the IMF Group; and Sovereign states like Qatar and Malaysia. Reasons to issue Sukuk and the structures behind them (more)

Mark Alexander

Islamic finance has “bright future”
KUWAIT TIMES: LONDON: Islamic finance, so described because of its adherence to sharia law, has a bright future in a world awash with petrodollars and with growing interest from traditional banks, experts say. According to the American credit agency Standard and Poor's, assets in the sector have grown to $500 billion, driven by growth of more than 10 percent per year for a decade. It is also benefiting from gathering interest in the eyes of the public, as trade and investment between East and West improves.

"Mounting demand around the world for sharia-compliant financial products and services is fuelling the Islamic banking industry's buoyant expansion," said Standard & Poor's credit analyst Anouar Hassoune in a report published this week. Sharia-compliant products appeared in their modern form in the mid-1970s with the foundation of the Dubai Islamic Bank, and the Islamic Development Bank, opposed to investments in certain industries and the paying of interest (riba in Arabic). 'Halal' finance attracts scores (Read on)

Mark Alexander

More Signs of West’s Capitulation to Islam and Shari’ah in Economic Markets
FINANCIAL TIMES: The British government will announce on Monday that it is set to become the first western state to issue Islamic bonds, seeking to meet what it believes is a significant demand for this financial product both inside and outside the UK.

In what ministers believe will be an important gesture to Britain’s Muslim community, the Treasury will say Monday that it is paving the way for the launch of the first Sharia compliant UK government bonds by 2008.

The move, to be announced by Ed Balls, the City of London minister, is unprecedented by any western state.

Sharia compliant bonds have hitherto been issued by the governments of Pakistan and Malaysia and also by corporate issuers around the world, but never by a western state.

The UK will not only be looking to issue these government bonds on wholesale financial markets. It will also be looking at using Sharia compliant bonds to allow Muslims in Britain to invest in domestic National Savings products through banks and post offices. UK to issue west’s first Islamic bonds (Read on) by James Blitz and Gillian Tett

Mark Alexander

The seeds of capitalism’s own destruction are being sown!
It was reported in the Financial Times on Saturday last week (March 17, 2007) that Aston Martin (James Bond’s favourite sports car) has been sold by Ford Motor to a consortium which is to finance the LBO (leveraged buy-out) according to strict Islamic principles. This deal appears to be the deal they don’t want you to know about, since it has hardly been reported in the mainstream media at all.

Ford Motor agreed to the sale for £479m to a consortium organised by Dave Richards, a motor racing entrepreneur.

The financing of this LBO “will be financed in an exclusively shariah-compliant way”, David Testa said, the executive director of West LB, the German bank appointed to arrange £225m of the quasi debt finance to back the LBO. It is believed that this is the first time that Islamic finance has been used in the West for an LBO. The Islamic financial focus has arisen because Investment Dar and Adeem Investment Co are two Kuwaiti groups that invest in accordance with Shari’ah principles of investment, which eschew, of course, conventional Western, capitalist-style financing arrangements.

It is said that there is a rapid growth in the Islamic finance sector, a sector which is said to have grown substantially and is said to have assets already in excess of $300bn, or approximately £155bn, worldwide. Further, it is worth noting that Western investment banks like West LB, Deutsche Bank, Citigroup, and Barclays are becoming more and more involved in Islamic finance, too.

The Financial Times went on to say that we shall have to wait and see to know whether these financiers will also ban “factors deemed to be non-Koranic” such as “martini-swilling spies to market the iconic brand”.

It should be noted that it would seem fair to say that the 'great and the good' in the world of Western finance have little realisation of the implications of their greed, or else, if they do, then they are insouciant about them. For capitalism, this really must be a step in the wrong direction. The élite in the business world seem not to realise, still less understand, that Islamic economics is not the same as Western capitalism. These two economic systems are diametrically opposed, just as Islam is diametrically opposed to Judeo-Christianity.

It is sad to say that we are sowing the seeds of our own destruction, and the people at the top are too dumb to see it!

CNBC World - Islamic Finance: Applying religion to economics


©Mark Alexander

By giving tax advantages for Shariah-compliant finance in his budget, Brown starts turning the world of finance Islamic green!
The chancellor has introduced legislation which will now treat these Sukuk transactions as being similar to conventional bond transactions, thereby removing the tax disadvantage for its use.

This change should lead to a sharp increase in the usage of these kinds of Islamic financing instruments - not only by businesses which want to be Shariah-compliant, but also by other businesses which want to diversify their investor base and tap into the immense pool of Islamic finance in the oil rich Middle East.

The chancellor has not only created the framework for London to emerge as the leader in the global Islamic finance industry but his changes are likely to be replicated in many other countries.

Islamic finance will move from being niche to the mainstream as a viable and valid financing option for all. - Darshan Bijur

BBC: Changes to the tax system unveiled in the Budget will potentially make the UK a key world centre in the development of Islamic finance - a market currently estimated to be worth $400bn globally.

Islamic finance is based on Islamic principles and jurisprudence (Shariah).

The basic Shariah prohibitions are on the earning (or payment) of interest, speculation, contractual uncertainly and transactions which are overly advantageous to one party at the expense of another.

The Shariah also prohibits any participation in weapons, pork, gambling, pornography and alcohol businesses.

Overcoming most of these prohibitions is very difficult in the conventional finance system.

The Islamic finance industry has thus developed various Shariah-compliant structures in order to provide investment opportunities and to meet the financing needs of businesses and investors who want to comply with the Shariah. Islamic finance: From niche to mainstream by Darshan Bijur

Mark Alexander