IslamicFinance.de

According to Al Rayan Bank CFO Amir Firdaus, Islamic finance is reinforcing the UK’s position as a global financial hub. London is the leading centre for Islamic finance outside the Muslim world, with assets of UK-based institutions that offer Islamic finance services totalling more than $5bn. More than 20 banks in the UK offer Islamic services, and five of these banks are fully Sharia-compliant, including Al Rayan Bank. Al Rayan currently provides Islamic financial products to more than 85,000 customers in the UK. Last year, Al Rayan became the first bank in the world to issue a public sterling sukuk in a non-Muslim country. The London-listed £250m securitisation was rated AAA by Standard & Poor’s and Aaa by Moody’s Investors Service and was significantly oversubscribed. The appeal of Islamic finance is growing steadily, more than a third of Al Rayan Bank’s customers are currently believed to be non-Muslim.

Fixed term deposit accounts, which pay an “expected profit rate” instead of interest, beat the best fixed rate bonds when it comes to earnings. HM Revenue & Customs (HMRC) confirmed that profits from Sharia accounts would count towards the personal savings allowance. Where returns are the economic equivalent of interest (and meet certain other criteria) they are taxed as if they are interest - and will be included within the definition of savings income, according to HMRC. This means Sharia compliant savers will be able to take advantage of the new £1,000 tax free interest earnings allowance if they are a basic rate taxpayer (£500 for higher rate taxpayers).

The London Stock Exchange already boasts 53 Sukuk issues, raising more than $38bn. It has a mounting presence in Sharia-compliant Exchange Traded Funds (ETFs) too, with seven available based on Islamic indices. In addition, Takaful has reached a new high in the UK, with premiums estimated to have reached $30bn in 2012. However, since the launch of the Sovereign Sukuk, there has been a general hush around the subject, with the Government not considering another one in the near future. While investors will find a number of other commercial funds to take its place, curiously, there remain few opportunities to invest in Sharia-compliant residential funds. That gap in the market has been seized by the residential funds and asset manager, London Central Portfolio (LCP).

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, Tobias Ellwood. 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. Mr Ellwood also celebrated notable sharia-compliant investments that have been used to fund some of the capital’s largest developments, including The Shard and the Olympic Village. The sovereign Sukuk market, which makes up only 0.1pc of global financial assets, is predicted to expand by 20pc a year.

Islamic finance is a trillion-dollar industry with many financial institutions, corporations and governments keen to embrace it as a profit-making alternative to mainstream financial dealings. The book "Heaven’s Bankers: Inside the Hidden World of Islamic Finance" by Harris Irfan asks the reader to consider whether the Islamic world can bring something of benefit to the Western world, and vice versa. Irfan’s intentions might be noble, but I suspect that here in the West he faces a real struggle. The big banks and companies hit by the financial crisis are determined to recover and some are increasingly wary of Islamic banking for all kinds of reasons.

Muslim borrowers will be allowed to use Shariah-compliant Home Purchase Plans (HPP) under a change to the Government’s Help to Buy scheme aimed at extending the range of home buyers able to access taxpayer-backed funding. HPPs split ownership of a property between the borrower and their bank, a financing arrangement that accords with Islamic law that prevents muslims from using conventional mortgages that see borrowers paying interest to a lender. Sajid Javid, Financial Secretary to the Treasury, launched the updated scheme on February 11 at an Islamic finance conference in London.

An analysis by the Daily Telegraph shows that Gulf Finance House (GFH), which plans to buy Leeds United, is short of money. The investment-banking group held less than £4million in cash in June 2011, which is £800million less than the cash sum at the end of 2008. As a subordinate company to GFH, GFH Capital claims to have the money for the acquisition and not to be involved in the financial shortage of its parent company. However, further details on this issue are not revealed.

Read more on: http://www.telegraph.co.uk/sport/football/teams/leeds-united/9597049/Lee...