UK The country where Islamic financing is most common in Europe is England. As a financial centre, London is a magnet for many Muslim investors due to the minor time difference. The UK’s Muslim population, of roughly two and a half million people, use Islamic finance products prolifically. The beginning of Islamic finance in the UK dates back to the eighties. Founded in 1982 to operate in the field of housing finance, Al Baraka International was the first Islamic financial institution in the UK. In 2005, the UK’s first Islamic investment bank was established, the European Islamic Investment Bank. Some of the retail and investment banks operating in the UK include Abu Dhabi Islamic Bank, Al Rayan Bank, Bank of London and the Middle East, Gatehouse Bank, and QIB UK.
Outside of the UK, there are just a few initiatives in Europe leading the charge for Islamic finance. Luxembourg is the first eurozone country to issue national interest-f ree bills and to offer 49 shariacompatible funds. The first Islamic bank in Germany, KT Bank AG, was established in 2015. In Switzerland, Islamic insurance and takaful services are offered rather than broader Islamic financing. There are no Swiss laws specifically addressing Islamic finance so the Islamic finance products are subject to the same regulations as conventional instruments. However, the Swiss legal system is, generally, shariaf riendly, given that Swiss contract law is based on two key principles: the freedom of contract and the freedom of form.
AFRICA With $500 million worth of sukuks issued in Africa in 2018, the continent accounts
In 2014, the UK strengthened its position
for only 0.5% of the world’s sukuks in
as the centre of Islamic financing in
circulation. However the large Muslim
Europe, when it became the first non-
population, currently underbanked and
Muslim country to issue sovereign sukuk.
underserved, could be “a solid foundation on which Islamic financial assets, and
The London Stock Exchange is now a preferred global market for sukuk issuances. London aims to be the leader in shariacompatible finance in the West. There are five licensed Islamic banks in the UK today and over 20 traditional banks offer Islamic financial products. Apart f rom this,
therefore profits, can grow rapidly,” say Moody’s analysts. One clear example is Nigeria’s Sterling Bank, whose Islamic banking section experienced a 24% growth in profits last year despite a 16% contraction in total assets in the Nigerian commercial banking segment, according to Moody’s.
there are 65 interest-free bonds with a total amount of $50 billion on the London stock exchange, along with Islamic funds of $700 million assets.
EUROPE After the 2008 crisis, Islamic finance began to seem relatively safe to Western banks. Interest-f ree bonds were a positive signal for new markets. Islamic funds provide an opportunity to reach a large amount of liquidity, and Islamic banks enable profits f rom local Muslim communities.
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SOUTH AMERICA In South America, Islamic finance is just getting started. With the opening of Trustbank Amanah in Suriname in 2017, the region had its very first Islamic Bank. The other South American country opening up to Islamic finance is Guyana, with the support of the Islamic Development Bank. While there is currently no regulation on Islamic finance in Guyana, and also no Islamic bank, the country received $900 million in financial and technical assistance from the Islamic Development Bank over a three-year period, starting in 2018. The money will be used to develop Guyana’s economic infrastructure, rural development, educational capacities and improve trade and competitiveness. The establishment of Islamic banking institutions is planned for later.