• Global Islamic finance market pause in 2009 following further big rise in 2008
• Islamic banks exposed to falling real estate market and to liquidity constraints
• Sukuk market recovery in 2009 but tested by defaults
• UK remains leading Western provider ranked eighth globally
The global market for Islamic financial services is estimated to have risen by 25% to reach $951 billion by end-2008. The Islamic Finance report from International Financial Services London (IFSL), the independent organisation promoting financial services throughout the world, notes that the Islamic finance sector is feeling the influence of the downturn in the global economy with asset growth likely to have paused for breath in 2009.
Parts of Islamic finance face particular challenges: some Islamic banks are exposed to the downturn due to the falling real estate market and to liquidity constraints. The sukuk market, despite a 30% recovery in issuance from a low of $15 billion in 2008 to $20 billion in 2009, is being tested by its ability to deal with several defaults. A $10 billion loan by Abu Dhabi staved off the threat of a potential default by Dubai World on its repayment on the Nakheel $4 billion sukuk in December. Quality sukuk issuers continue to attract demand from investors.
Reflecting the economic downturn, there was less activity in London in 2009: with two Sukuk listings on the London Stock Exchange following three in 2008 and 12 in 2007. There were three fund launches in 2009 compared with six the previous year. No further licences to sharia compliant banks were sought to add to the five established since 2004, and the one independent takaful operator in the UK ceased to take new business in 2009.
IFSL’s report indicates, however, that the UK’s position as the key Western hub for Islamic Finance remains strong. London’s total of 22 banks offering Islamic finance products, is greater than that of any other Western country. This is buttressed by the UK’s uniquely strong infrastructure of professional support for Islamic finance deals and transactions, including twenty major law firms and the Big Four accounting firms. This has yet to be seriously rivalled, although both Paris and Frankfurt are gradually developing capabilities. The LSE’s 20 sukuk listings worth $11bn is second only to Dubai.
Duncan McKenzie, IFSL’s Director of Economics said “The UK is the only western country to feature prominently in provision of Islamic finance and remains in eighth position with assets of $19 billion in a global ranking of sharia compliant assets by country.”
Click here to view PDF of Islamic Finance 2010 report
• Islamic banks exposed to falling real estate market and to liquidity constraints
• Sukuk market recovery in 2009 but tested by defaults
• UK remains leading Western provider ranked eighth globally
The global market for Islamic financial services is estimated to have risen by 25% to reach $951 billion by end-2008. The Islamic Finance report from International Financial Services London (IFSL), the independent organisation promoting financial services throughout the world, notes that the Islamic finance sector is feeling the influence of the downturn in the global economy with asset growth likely to have paused for breath in 2009.
Parts of Islamic finance face particular challenges: some Islamic banks are exposed to the downturn due to the falling real estate market and to liquidity constraints. The sukuk market, despite a 30% recovery in issuance from a low of $15 billion in 2008 to $20 billion in 2009, is being tested by its ability to deal with several defaults. A $10 billion loan by Abu Dhabi staved off the threat of a potential default by Dubai World on its repayment on the Nakheel $4 billion sukuk in December. Quality sukuk issuers continue to attract demand from investors.
Reflecting the economic downturn, there was less activity in London in 2009: with two Sukuk listings on the London Stock Exchange following three in 2008 and 12 in 2007. There were three fund launches in 2009 compared with six the previous year. No further licences to sharia compliant banks were sought to add to the five established since 2004, and the one independent takaful operator in the UK ceased to take new business in 2009.
IFSL’s report indicates, however, that the UK’s position as the key Western hub for Islamic Finance remains strong. London’s total of 22 banks offering Islamic finance products, is greater than that of any other Western country. This is buttressed by the UK’s uniquely strong infrastructure of professional support for Islamic finance deals and transactions, including twenty major law firms and the Big Four accounting firms. This has yet to be seriously rivalled, although both Paris and Frankfurt are gradually developing capabilities. The LSE’s 20 sukuk listings worth $11bn is second only to Dubai.
Duncan McKenzie, IFSL’s Director of Economics said “The UK is the only western country to feature prominently in provision of Islamic finance and remains in eighth position with assets of $19 billion in a global ranking of sharia compliant assets by country.”
Click here to view PDF of Islamic Finance 2010 report
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