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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Britain to become first non-Muslim country to launch sharia bond

Britain to become first non-Muslim country to launch sharia bond

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Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
David Cameron to unveil £200m Sukuk at the World Islamic Economic Forum in London on Tuesday

By Harry Wilson12:01AM GMT 29 Oct 2013

Britain is set to become the first non-Muslim country to sell a bond that can be bought by Islamic investors in a bid to encourage massive new investment into the City.

David Cameron will say in a speech on Tuesday at the World Islamic Economic Forum in London that the Treasury is drawing up plans to issue a £200m Sukuk, a form of debt that complies with Islamic financial law.

The new sharia-compliant gilt will enable Britain to become the first non-Muslim country to tap the growing pool of Islamic investments that is forecast to top £1.3 trillion by next year.

The Prime Minister will say that it would be a “mistake” to miss the opportunity to encourage more Islamic investment in the UK and that the City of London should rival Dubai as a centre for sharia-compliant finance.

“When Islamic finance is growing 50pc faster than traditional banking and when global Islamic investments are set to grow to £1.3 trillion by 2014, we want to make sure a big proportion of that new investment is made here in Britain,” Mr Cameron will tell an audience of senior officials from Islamic countries.

Among those at the meeting are Sultan Hassanal Bolkiah of Brunei, King Abdullah of Jordan, Afghan president Hamid Karzai and Prince Salman bin Hamad Al Khalifa, Crown Prince of Bahrain.

The World Islamic Economic Forum has never been held before in a non-Muslim country and highlights the growing role London is playing in the Islamic finance industry.

The London Stock Exchange is preparing to launch an Islamic Market Index to help the managers of sharia-compliant funds identify new investment opportunities.

The UK’s plans to issue its own Sukuk could lead to billions of pounds of British gilts being sold to Islamic investors, enabling the Treasury to diversify away from its traditional sources of funding.

“For years people have been talking about creating an Islamic bond – or Sukuk – outside the Islamic world, but it’s just never quite happened,” Mr Cameron will say. “Changing that is a question of pragmatism and political will. And here in Britain we’ve got both.

To comply with sharia law, Islamic investors are forbidden to receive interest. Sukuks avoid this problem by ensuring the fixed return investors receive on the debt is linked to the profit generated by an underlying asset.

The value of Sukuks already listed on the London market has reached $34bn (£21bn) over the past five years with nearly 50 bonds quoted by the London Stock Exchange.

Sharia-compliant funds have already been used to fund some of the capital’s largest developments, including the Shard and the Olympic Village.

More than 20 banks currently offer Islamic financial products and services in the UK, more than any other Western country, with the number expected to grow further.

The Government has put securing links with growing financial centres in Islamic countries and fast-growing Asian markets at the heart of its plans for the City.

Earlier this month the Chancellor, George Osborne, announced a deal with China to make London a leading centre for the growing trade in renminbi-denominated assets and to make it easier for Chinese banks to set up investment banking operations.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10410467/Britain-to-become-first-non-Muslim-country-to-launch-sharia-bond.html

Rapaport

Rapaport
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
Well UK has realised where most money is and heading towards it!

Also Islam is growing rapidly in UK, more than 70% in some UK cities over last decade so not surprising...

Hmmmm..... Oil wealth

Cheers!

Zaiban


Senior Equity Analytic
Senior Equity Analytic
i think we need one in Sri Lanka as well in order to attract the Qatari, Emirati, Bahraini funds... its about time

Jiggysaurus

Jiggysaurus
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@Rapaport wrote:

Also Islam is growing rapidly in UK, more than 70% in some UK cities over last decade so not surprising...

Excessive growth in extremist cults bring with it problems for normal non-cult peeples.
http://www.thedailybeast.com/articles/2013/10/25/american-student-slashed-in-london-police-eye-muslims-patrols.html

glwking

glwking
Manager - Equity Analytics
Manager - Equity Analytics
@Zaiban wrote:i think we need one in Sri Lanka as well in order to attract the Qatari, Emirati, Bahraini funds... its about time
No. I don't agree. Hardline groups will take this a reason and protest on the road and attack minorities. Good example is a halal issue.

As I remember, islamic sharia finance unit of LOLC was attacked by a hardline group in Gall some time ago.

glwking

glwking
Manager - Equity Analytics
Manager - Equity Analytics
@Rapaport wrote:Well UK has realised where most money is and heading towards it!

Also Islam is growing rapidly in UK, more than 70% in some UK cities over last decade so not surprising...

Hmmmm..... Oil wealth

Cheers!
British Census: Islam Fastest-Growing Faith in England; Christians Drop to 59% of Population - See more at: http://cnsnews.com/news/article/british-census-islam-fastest-growing-faith-england-christians-drop-59-population#sthash.Fj4JKZES.dpuf

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@Jiggysaurus wrote:
Excessive growth in extremist cults bring with it problems for normal non-cult peeples.
http://www.thedailybeast.com/articles/2013/10/25/american-student-slashed-in-london-police-eye-muslims-patrols.html

Bigotry is the state of mind of a bigot: someone who, as a result of their prejudices, treats other people with fear, distrust, hatred, contempt, or intolerance on the basis of a person's ethnicity, religion, national origin, gender, sexual orientation, disability, socioeconomic status, or other characteristics. (source - wikipedia)

I find it extremely distasteful that this chap jiggysaurus (a bigot) continues now for the 3rd or 4th time to insult various religions such as islam, buddhism by refering to them as cults etc, on this equity forum.

non cult bigot person jiggy, kindly show tolerance & respect to others who may not be like you.

shame on you.

K.Haputantri

K.Haputantri
Co-Admin
Guys please refrain from insulting religions.

ansar


Manager - Equity Analytics
Manager - Equity Analytics
@Jiggysaurus wrote:


Excessive growth in extremist cults bring with it problems for normal non-cult peeples.
http://www.thedailybeast.com/articles/2013/10/25/american-student-slashed-in-london-police-eye-muslims-patrols.html

GUYS  WITH NO HOPE IN THEIR RELIGION TRY TO SATISFY BY INSULTING OTHER.

DEAR"Jiggysaurus"
YOU MUST FIRST FOLLOW YOUR RELIGION PROPERLY.
THEN YOU, YOUR RELIGION, WILL NEVER DISGRACE  OTHERS.

I feel so sorry for him

Sorry readers............ If I have diverted the forum[/quote]

K.Haputantri

K.Haputantri
Co-Admin
@ansar wrote:
@Jiggysaurus wrote:


Excessive growth in extremist cults bring with it problems for normal non-cult peeples.
http://www.thedailybeast.com/articles/2013/10/25/american-student-slashed-in-london-police-eye-muslims-patrols.html

GUYS  WITH NO HOPE IN THEIR RELIGION TRY TO SATISFY BY INSULTING OTHER.

DEAR"Jiggysaurus"
YOU MUST FIRST FOLLOW YOUR RELIGION PROPERLY.
THEN YOU, YOUR RELIGION, WILL NEVER DISGRACE  OTHERS.

I feel so sorry for him

Sorry readers............ If I have diverted the forum
Please refrain from using all capital words and also drag religion here again. All religions are sacred to their folllowers. I do not approve of what jayasuriag said either, and also of your insinuation of his religion, because both are offensive. Action will be taken without further warnings.

traderathome

traderathome
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Jiggysaurus wrote:
@Rapaport wrote:

Also Islam is growing rapidly in UK, more than 70% in some UK cities over last decade so not surprising...

Excessive growth in extremist cults bring with it problems for normal non-cult peeples.
http://www.thedailybeast.com/articles/2013/10/25/american-student-slashed-in-london-police-eye-muslims-patrols.html

This extremely unacceptable even if it happens in other places.You can not enforce the religion laws.what was the police doing, they should catch those perpetrators and send them to jail for 5-10years.
I think what jiggy is trying to emphasize is that the extreme element of enforcing such law by individuals must be stopped and no institution other than police intervene in such matters.
I think even our fellas are too much, we never had this form of religion practice in the olden days...all after our brothers went to middle east, the set up got changed.
to some extent I have to agree with jiggy, although I am a muslim.

TAH

traderathome

traderathome
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Redbulls wrote:David Cameron to unveil £200m Sukuk at the World Islamic Economic Forum in London on Tuesday

By Harry Wilson12:01AM GMT 29 Oct 2013

Britain is set to become the first non-Muslim country to sell a bond that can be bought by Islamic investors in a bid to encourage massive new investment into the City.

David Cameron will say in a speech on Tuesday at the World Islamic Economic Forum in London that the Treasury is drawing up plans to issue a £200m Sukuk, a form of debt that complies with Islamic financial law.

The new sharia-compliant gilt will enable Britain to become the first non-Muslim country to tap the growing pool of Islamic investments that is forecast to top £1.3 trillion by next year.

The Prime Minister will say that it would be a “mistake” to miss the opportunity to encourage more Islamic investment in the UK and that the City of London should rival Dubai as a centre for sharia-compliant finance.

“When Islamic finance is growing 50pc faster than traditional banking and when global Islamic investments are set to grow to £1.3 trillion by 2014, we want to make sure a big proportion of that new investment is made here in Britain,” Mr Cameron will tell an audience of senior officials from Islamic countries.

Among those at the meeting are Sultan Hassanal Bolkiah of Brunei, King Abdullah of Jordan, Afghan president Hamid Karzai and Prince Salman bin Hamad Al Khalifa, Crown Prince of Bahrain.

The World Islamic Economic Forum has never been held before in a non-Muslim country and highlights the growing role London is playing in the Islamic finance industry.

The London Stock Exchange is preparing to launch an Islamic Market Index to help the managers of sharia-compliant funds identify new investment opportunities.

The UK’s plans to issue its own Sukuk could lead to billions of pounds of British gilts being sold to Islamic investors, enabling the Treasury to diversify away from its traditional sources of funding.

“For years people have been talking about creating an Islamic bond – or Sukuk – outside the Islamic world, but it’s just never quite happened,” Mr Cameron will say. “Changing that is a question of pragmatism and political will. And here in Britain we’ve got both.

To comply with sharia law, Islamic investors are forbidden to receive interest. Sukuks avoid this problem by ensuring the fixed return investors receive on the debt is linked to the profit generated by an underlying asset.

The value of Sukuks already listed on the London market has reached $34bn (£21bn) over the past five years with nearly 50 bonds quoted by the London Stock Exchange.

Sharia-compliant funds have already been used to fund some of the capital’s largest developments, including the Shard and the Olympic Village.

More than 20 banks currently offer Islamic financial products and services in the UK, more than any other Western country, with the number expected to grow further.

The Government has put securing links with growing financial centres in Islamic countries and fast-growing Asian markets at the heart of its plans for the City.

Earlier this month the Chancellor, George Osborne, announced a deal with China to make London a leading centre for the growing trade in renminbi-denominated assets and to make it easier for Chinese banks to set up investment banking operations.
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10410467/Britain-to-become-first-non-Muslim-country-to-launch-sharia-bond.html
I don't think we can tap this market in srilanka because of BBS and other extremists. What they do not realize is that we are missing opportunity to bring in foreign investment in the form of Islamic bonds. what ever said and done we have to thank LB Finance for having opened the Islamic finance. I am have invested in LFIN, Commercial Bank & LOLC through their Islamic Unit.
It would be good if CBSL can tap this and give a run with Britain to compete.......
Their many whitelist companies in CSE so it would not be a that difficult know....

TAH pirat 

The Alchemist


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
@traderathome wrote:
@Jiggysaurus wrote:
@Rapaport wrote:

Also Islam is growing rapidly in UK, more than 70% in some UK cities over last decade so not surprising...

Excessive growth in extremist cults bring with it problems for normal non-cult peeples.
http://www.thedailybeast.com/articles/2013/10/25/american-student-slashed-in-london-police-eye-muslims-patrols.html

This extremely unacceptable even if it happens in other places.You can not enforce the religion laws.what was the police doing, they should catch those perpetrators and send them to jail for 5-10years.
I think what jiggy is trying to emphasize is that the extreme element of enforcing such law by individuals must be stopped and no institution other than police intervene in such matters.
I think even our fellas are too much, we never had this form of religion practice in the olden days...all after our brothers went to middle east, the set up got changed.
to some extent I have to agree with jiggy, although I am a muslim.

TAH
@TAH - I think you are missing the point entirely. this thread started about islamic bonds in london. what has that to do with radical muslim gangs attacking people in london ? regardless of being a muslim or non muslim, or where it happens, anyone should find this unacceptable, not only you. the point is if two unrelated subjects are manipulated with the intention of creating an ethnic / racial bias, then it reeks of bigotry. perhaps that nuance has been lost on you.
its best to keep your personal views about your religion to yourself. it should not be of anybody's concern.

Jake Sully

Jake Sully
Manager - Equity Analytics
Manager - Equity Analytics
I remember last year KPMG initiated a forum for Islamic finance with the participation of leading Malaysian banks also with the participation of most of the local banks including CB which was kick started in Colombo.
Now even Malaysia is loosing this market to Dubai as Dubai wants to become the world's Islamic finance hub. Even Dubai wants to capture the major portion of the halal market which is worth billions of dollars.

Apart from investing in sukuks, the only problem with the Islamic banks is that they pay peanuts for the customers deposits.
One more thing I need to mention here is that it's not only Muslims who occupy the business. If you happen to walk into a Dubai bank you will see a non Muslim guy heading the Islamic finance unit.

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@glwking wrote:British Census: Islam Fastest-Growing Faith in England; Christians Drop to 59% of Population -
That means we will have to do a correction in the wordings very soon ?
Britain to become first non-Muslim country to launch sharia bond ! Smile 

BTW, when you take Islamic banking in countries like SL, the major problem is that they have to  cope with a different  system established in the country.

Depositors go to other banks where they pay high interest and    managing banks like Amana in a profitable manner is very difficult in non Muslim environment. Due to sharia laws they can't increase the rates while others play as they want balancing margins, overheads and taxes .

smallville

smallville
Associate Director - Equity Analytics
Associate Director - Equity Analytics
I thought, for Muslims - taking interest is haram (prohibited). So how if so banks like Amana comes up?
How Muslims invest in FDs? and stock market as its also giving interests, returns?
Just thinkn whether the original concepts were changed to cater this market too??

scratch 

Zaiban


Senior Equity Analytic
Senior Equity Analytic
there is some sri lankan guy in FB who gives links to stuff on islamic finance and stuff... check it out... maybe it may help... scroll down i saw some stuff on islamic finance on the page...

https://www.facebook.com/noor.consultants

Chinwi

Chinwi
Associate Director - Equity Analytics
Associate Director - Equity Analytics
@smallville wrote:I thought, for Muslims - taking interest is haram (prohibited). So how if so banks like Amana comes up?
How Muslims invest in FDs? and stock market as its also giving interests, returns?
Just thinkn whether the original concepts were changed to cater this market too??

scratch 
They  use profit sharing concept and convert the procedures accordingly.


For eg. If you lease a vehicle using normal banking they pay cash behalf of you and charge installments with interest. 
Amana cannot charge you interest like that . 
Instead , they  buy your selected vehicle for them (to the bank)  and then hire it to you for your use. You pay hire charges monthly to the bank.  Hiring charges includes overheads and profit portion to the bank and to the depositors. At the end of the term they 'gift' the vehicle to you. 


Depositors get pre agreed portions of profit from the business .
 
eg. say for 3 month deposit , Depositor gets 60% and bank get  40 % of the profit. (60:40) 
 1 year deposit  D:B = 70 : 30
3 years D:B = 85 : 15 ........  like that.
 ( above may not actual ratios) 


Profit sharing Ratios change according to time period of the deposit and with other various conditions. 


Hence, the IT people are the ones who fall in deep trouble when they develop and run the systems. Corrections, cross flows and changes are endless. Understanding the system (Sys Ana) is very difficult because there are many flows and components than in normal banking system. Most are hidden and emerge months after launching the system in the real world.

yellow knife


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
I think this is a topic worth discussing continuously to get a good understanding of the Islamic Fianance

Interest is different from profit even though some believe its the same at a glance.

Suppose your mother is sick and you need money to admit her to a private hospital. You dont have money. So you have to borrow it from some one else. Remember you dont make a profit out of this loan. Thus the loan taker has to charge you interest. But according to islamic finance this is not a loan that you can share profit.

Suppose you get a loan to buy mobile phones at rs 30 and sell at rs 90. That creates a profit. So you can share that with the financier.

thus the purpose of loan is important to decide the profit.

Accordingly you cant charge a profit share for a loan of a car that you take for your personal usage. but if the same car is used for hiring out you make profits and that can be shared.


Depositors come to share profit as well as losses. If a financial intermediary is making losses no one will come to bear losses. thus it prevent from financiers to make wrong calculations and take unnecessary risk.

Baharain had conventioanl banks and no Islamic bank. then Islamic Bank of Baharain was incorporated. It made losses. No one wants to deposit their hard earned money and bear losses unless he is a lunatic. So National Bank of Baharain came and bailed out Islamic Bank of Baharain.

This is lesson for our Central Bank as well. Every finance company is trying to put up something in the name of Islamic Fiancne. and if there are no conventional banks Islamic Finance can not survive .

UKboy

UKboy
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Rapaport wrote:Well UK has realised where most money is and heading towards it!
That is very much likely the reason behind this. They would say ok to bonds but not the main course of Sharia law.

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