Dubai: The United Kingdom is trying to build infrastructure to develop Islamic finance through regulations in insurance, sukuks, mortgages, taking it a step closer for it to become a western hub, United Kingdom’s economic secretary to the treasury department told Gulf News.
“UK aims to be a western hub for Islamic finance and build on our global importance as a financial centre, we think Islamic finance as a new potential growth market and so we want to be a part of it,” Andrea Leadsom, economic secretary to the treasury, United Kingdom told Gulf News.
“We think we have made quiet good strides towards developing our Islamic finance market,” said Leadsom said.
The UK hosted the World Islamic Economic Forum last year and soon after that the government issued a £200 million sukuk, which was the first bond issue outside of the Islamic world.
“It was a huge success … we instructed the book runners to try and spread the issue as far they could across the Islamic world. We wanted it to be a commitment from the UK to support the development of Islamic Finance market, ” Leadsom said.
The sukuk was oversubscribed 12 times, displaying enormous appetite from central banks, sovereign wealth funds across the globe.
The UK government is not planning to issue more sukuks, but would like to see more of companies and governments to issue more such bonds.
“There are plenty of other countries considering the application of sovereign sukuk for their financing needs,” said Leadsom.
Because of its status as a top global financial centre, London has attracted a large amount of Islamic business; more than $34 billion till 2013 worth of sukuk, have been issued through the London Stock Exchange.
But competition from cities where Islamic funds originate is increasing. Kuala Lumpur is building its credentials as a centre for foreign companies to issue sukuk outside their domestic markets, while Dubai revised regulations to attract sukuk issuance and trading.
“We are also looking to promote Islamic insurance and we also taken steps to develop insurance regulations and insurance products that are Sariah compliant,” Leadsom said.
“We are also looking at Sharia-compliant mortgages and student loans and also opportunity finance for inward investment for example some of our house building in the UK,” she added.
The Bank of England is also looking at helping with the liquidity requirements of Islamic Banks. There are six Islamic banks and 16 others offer Islamic products.
“We have a reasonable amount of involvement in Islamic finance in the UK and very importantly our big accountants and law firms, about 25 have Islamic departments, which advise on sahriah compliance,” Leadsom said.