London to bolster Islamic finance credentials

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The British government launched a campaign to promote London as a centre for Islamic finance, seeking to counter growing competition in that industry from rising centres such as Dubai and Kuala Lumpur.

A task force including Britain's Financial Secretary to the Treasury Greg Clark, ministers of state and private sector executives will advertise London around the world, the British Foreign Office said on Monday.

The group will try to attract foreign investment to Britain by facilitating Islamic financial business, including investment in British infrastructure by Islamic sovereign wealth funds, the Foreign Office said in a statement.

Because of its status as a top global financial centre, London has attracted a large amount of Islamic business; more than $34 billion worth of sukuk, Islamic bonds which are structured under religious principles such as a ban on interest payments, 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 announced in January that it would revise regulations to attract sukuk issuance and trading.

Britain has introduced legislation facilitating Islamic finance, and in 2009 it came close to issuing Europe's first sovereign sukuk. The issue was ultimately postponed indefinitely because the government felt it would not provide value for money, Farmida Bi, European head of Islamic finance at law firm Norton Rose in London, told Reuters.

The World Islamic Economic Forum, a conference of Islamic financiers to take place in London this October, will be an early opportunity for the new British task force. It will be the first time the forum is held outside of an Islamic city or Asia.

Some other parts of Europe are also showing increased interest in Islamic finance as much of the conventional financial industry struggles.

The European Central Bank and the Malaysia-based Islamic Financial Services Board, a global standard-setting body, are conducting a joint study on policies affecting Islamic finance in Europe.

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Please post responsibly. Commenter Rules

Posted by: Telcoguy

I think you are right about Malaysia, Bahrain however is not so clear. True, they put in place the most advanced legal and regulatory system for financial institutions in the GCC but unfortunately the events there have damaged them quite badly as banks moved their staff out of the country. I think this has left the top spot in the GCC open and Dubai has a chance overtake Bahrain, even Doha if they decided to do so would have a chance I think

Posted by: keenobzerver

Malaysia and Bahrain are the leading Islamic financial centers in the world.
Bahrain has set the standard with the most advanced legal and regulatory systems, and are beign referenced around the world.

The banks that have moved out are traditional banks, none of the islamic banks have moved out of Bahrain.

Posted by: jon

malaysia is building its credentials? dubai? this article is so wrong in many ways. malaysia is pretty much the most advanced countries in regards to sharia based financial instruments. bahrain is established its self as the gulfs financial hub, but it isn't mentioned no where in this article. dubai is no where compared to those two countries, and sorry to say it will never catch up to them.

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