HM Treasury

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46/07

16 April 2007

Ed Balls, City Minister hosts high level summit on Islamic finance

Ed Balls, City Minister today hosted a summit of Islamic financial services experts and leading members of the Muslim community at No 11 Downing Street.

Speaking after the Islamic Finance meeting, Ed Balls, Economic Secretary said:

"The UK is at the forefront of developments in Islamic Finance. I am keen to capitalise on the momentum gained in Budget 2007 by listening to the industry and ensuring that the Government takes every opportunity to promote innovation and growth in this area. By enhancing the competitiveness of the Financial services sector, through creating a level playing field for Islamic finance products, we are also able to increase choice of, and access to, financial products for Muslims and non-Muslims in the UK."

The summit discussed recent Government Budget measures in this area, and looked at how the business and Islamic community could continue to work with the government to drive Islamic finance forward in the UK.

The Government's aims for Islamic finance are:

HM Treasury, the Financial Services Authority (FSA) and HM Revenue & Customs (HMRC) will together take forward this agenda and continue their strong and beneficial dialogue with the industry and the government.

Government measures introduced to promote Islamic finance in 2007 are:

Notes for editors

1. Sukuk is an asset-backed, Shariah-compliant trust certificate. The closest instrument comparable to them in the conventional financial system would be a bond issued in relation to a securitisation. Musharaka is a partnership agreement. Takaful is an Islamic insurance concept which is grounded in Islamic banking transactions.

2. Innovation in Financial services is what keeps London and the UK at the forefront of the global financial industry, and this same drive has seen the City take a proactive role in the growth of alternative financial services and tailored products. One of the largest sukuk to date issued by Dubai Ports was written out of the London office of Barclays Capital in January. And only last month the first billion dollar sukuk to be listed on the London Stock Exchange raised £2.5 billion.

3. Across the UK as a whole the industry is also are beginning to see more innovation in retail Islamic products as diverse as Child Trust Funds, Shariah compliant business loans, and takaful insurance. The UK's Muslim population is in the region of two million people and fully shariah compliant banks have more than 30,000 customers across the UK.

4. Increased availability of these types of financial products is vital to ensuring the Muslim community in Britain has equal access to business opportunities. Banks such as Lloyds TSB, Royal Bank of Scotland, and HSBC are all offering Shariah compliant products, and London is also the home to a fully Shariah compliant retail bank. Since 2003 the Islamic mortgage market has grown to over half a billion pounds - an increase of about 50 per cent in the last year alone.

5. The Chancellor announced in Budget 2006 a commitment to work with the financial sector to establish High-Level Group, with senior representatives from across the financial sector, to develop and support a new strategy to promote London as the leading international financial centre.

6. At the first High-Level Group to Government announced its intention to continue to work with the Financial Services Authority (FSA) and HMRC to modernise the regulatory and tax framework to ensure that it keeps pace with opportunities in markets of traditional UK strength, such as asset management, along with new and innovative areas such as hedge funds and Islamic finance.

7. This was first meeting on Islamic finance to be held at 11 Downing Street. The meeting was chaired by Ed Balls, Economic Secretary to the Treasury, and was attended by:

Attendees:

8. Media enquiries should be addressed to the Treasury Press Office on 020 7270 5238.

9. Non-media enquiries should be addressed to the Treasury's Correspondence and Enquiry Unit on 020 7270 4558, or by e-mail to public.enquiries@hm-treasury.gov.uk.

10. This press release and other Treasury publications and information are available on the Treasury website. If you would like Treasury press releases to be sent to you automatically by e-mail you can subscribe to this service from the press release site on the website.

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