The city of London is emerging as the key Western centre for Islamic finance against the backdrop of a three-fold growth of Islamic financial services over the past decade to $53bn in 2006.
Standard & Poor’s has estimated that the potential market for Islamic finance could be $4 trillion, over seven times its current size.
According to a new report by International Financial Services Limited (IFSL) on Islamic Finance co-sponsored by UK Trade and Investment the cluster of expertise in London is represented by 23 banks, nine fund managers and a number of international law firms offering Islamic services. In addition, there is a secondary market in Sukuk valued at $2bn a month and a growing market for retail mortgage business.
IFSL’s report also found that daily trading in commodity-based agreements through the London Metal Exchange was a key mechanism for the management of assets and liabilities by Islamic financial institutions and the 23 UK banks outnumber more than four times those of any other country in western Europe: Switzerland has five and France and Luxembourg each has four.