UK well positioned for rapid global growth in Islamic finance

A new report from TheCityUK reveals Britain’s premier position as the leading Western centre for Islamic finance and the considerable opportunities for further growth in the sector.


A new report from TheCityUK reveals Britain’s premier position as the leading Western centre for Islamic finance and the considerable opportunities for further growth in the sector.

As the fourth most significant centre for Islamic finance among non-Muslim-majority nations after Singapore, Sri Lanka and South Africa, the UK is well-placed to capitalise on this rapidly growing global sector and take a leading role in setting international Sharia compliant standards [1].

The report, ‘Global trends in Islamic finance and the UK market’, shows that globally the market for services in the sector increased 7.5% year on year in 2015 to a record $2trn worldwide [2].

In Britain, TheCityUK estimates that assets of UK-based financial institutions offering Islamic finance services totalled more than $5bn in 2016. Over 20 banks across the country offer Islamic finance services – more than double the number located in the US – five of which are fully Sharia compliant.

The UK has become the leading centre of Islamic finance education and training globally. It is also increasingly a centre of innovation and development for the use of FinTech in Islamic finance products.

Miles Celic, Chief Executive Officer, TheCityUK, said,

“The Islamic finance sector is a rapidly expanding part of the global financial system. Currently, Sharia compliant assets make up just 1% of global financial assets, yet around one in four of the world population is Muslim. There is enormous potential for further growth. Given the UK’s position as a world-leader in innovation and development within the sector, we’re well-placed to capture this opportunity.

“Infrastructure development is a key area where greater use of Islamic finance instruments could be encouraged. A number of significant projects across the country, including The Shard, Battersea Power Station regeneration and the Olympic Village in London and over 6,500 new homes in the North West and Midlands have seen Islamic finance play a significant funding role. Current trends suggest that this will continue to grow in the years ahead.”


The report also underlines other areas of trail-blazing by the UK in Islamic finance: the UK was the first Western nation to issue a sovereign sukuk, which was oversubscribed with very strong demand and order totalling around £2.3bn. Today, a total of 65 sukuk have been listed on the London Stock Exchange (LSE) with a total value of $48bn.


Miles Celic concluded,


“The UK’s Islamic finance sector has benefitted from range of supportive government policies over the past decade. To ensure its continued success and expansion, government, regulators and industry must continue to work together. We have an opportunity not just to grow the sector and maintain the UK’s pre-eminent position in Islamic finance, but also to become a leading player in setting international Sharia compliant standards.”

End
Notes to editors

[1] Thomson Reuters And ICD, ‘The Islamic Finance Development Indicator’, 02 December 2015

[2] TheCityUK, ‘Global trends in Islamic finance and the UK market’, 11 September 2017

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