Cecilia Valente

Cecilia Valente's Profile

UK sovereign sukuk? Yes, no, maybe …

January 21, 2010

Given that a general election looms and parties are out to get as many votes as they can,  I half- expect grand promises to expand the Islamic financial sector, which is still growing despite the crisis.

At an event hosted by law firm Norton Rose, both major British political parties went out of their way yesterday to stress London’s superiority in matters of Islamic finance — but neither was willing to expand on what it lacks most: a sovereign sukuk. 

If the UK issued a sukuk (roughly described as an Islamic bond) it would:

  • Diversify its investor base- not a bad prospect for an indebted country- standing a chance to attract further liquidity.
  • Show it is not complacent and really means business creating a benchmark in Europe, where no significant sukuk issuance occurred, excluding a  100 million euro issuance in 2004 in German region Sachsen-Anhalt. Pre-crisis rumours had it that the UK would issue sukuk worth £2 billion in short term notes making a real statement about its Islamic finance ambitions. 
  • Provide help to the five stand alone Islamic banks, which are required by the market regulator to put in place liquidity buffers, consisting of government bonds or cash.   Because there is no sovereign sukuk, these shining monuments to London’s  superiority in Islamic finance depend on debt issued by the Islamic Development Bank.  
  • Encourage corporate sukuk issuance, which is not too probable without the government leading by example.

The UK may be proud of its sophisticated Islamic finance sector, but neither Labour or the Conservatives could shed light on an issue casting a long shadow on the sector’s long-term prospects.

Exchequer secretary to the Treasury Sarah McCarthy-Fry  said Labour  has not shelved the plan, which seemed almost fait accompli (excuse my French) just before the global credit crunch.  She told a crowd of Islamic finanace bankers and practitioners the intended sukuk was not value for money. Quite why was not terribly clear. 

Mark Hoban,  shadow financial secretary to the treasury, said his party has discussed the issue and understood  “the importance” of the sukuk –  the only thing was; it was  not value for money. 

Pressed by one of the Islamic banks present, who suggested a tete a tete (excuse my French again) to discuss what exactly makes a sukuk not “value for money”, he conceded it was a “legitimate concern.”

Some of the attendees told me later they were relieved to hear the Conservative party would at least not  undo what the Labour Government did.  Inshallah, one would be temped to say…

The panel of experts including bankers, scholars and consultants, who debated after the politicians, said a UK sukuk would have, and could still, attract investments.

They were not too worried though, not because of rock-solid market  arguments, not through their special business acumen or experience, but because they hope to rely cast-iron historical precedent:  the Anglo/French rivalry.

Paris is mounting a challenge to London to get a slice of the lucrative Islamic finance cake  (excuse their French), the panel thought nothing will make any UK government — of any political persuasion — get a move on  more than the threat of the French stealing their thunder, which one panellist ambitiously said was only “seconds away”.

Et voila!

Comments

Very intesering entry

 

I’ve recently started a web site, the info you offer on this website has helped me greatly. Thank you for all of your time & work.

 

I was suggested this website by means of my cousin. I’m now not certain whether this put up is written by means of him as no one else know such exact approximately my difficulty. You’re wonderful! Thanks!

 

hello!,I really like your writing very much! share we keep in touch extra approximately your post on AOL? I require an expert on this area to unravel my problem. May be that is you! Looking forward to peer you.

 

Have you ever thought about creating an ebook or guest authoring on other blogs? I have a blog centered on the same subjects you discuss and would love to have you share some stories/information. I know my subscribers would enjoy your work. If you’re even remotely interested, feel free to send me an e-mail.

 

I value the article.Really thank you! Much obliged.

 

A round of applause for your article.Much thanks again. Fantastic.

 

Enjoyed every bit of your article post.Really looking forward to read more. Awesome.

 

Really informative article.Really looking forward to read more. Cool.

 

Hey, thanks for the article.Really thank you! Much obliged.

 

Thanks so much for the article post.Thanks Again. Awesome.

 

The new Zune browser is surprisingly good, but not as good as the iPod’s. It works well, but isn’t as fast as Safari, and has a clunkier interface. If you occasionally plan on using the web browser that’s not an issue, but if you’re planning to browse the web alot from your PMP then the iPod’s larger screen and better browser may be important.

 

Thank you ever so for you post.Really looking forward to read more. Cool.

 

Very good blog post.

 

Very neat article.Thanks Again. Keep writing.

 

Very informative blog article.Really thank you! Awesome.

 

Great, thanks for sharing this article.Really looking forward to read more. Want more.

 

mais de fois qui. Alors, dormir dehors, des homicides ou, le meilleur et, fringues se nai

 

Fantastic article post.Much thanks again. Really Cool.

 

I appreciate you sharing this article.Really thank you! Keep writing.

 

Hey, thanks for the post.Much thanks again. Great.

 

Major thanks for the post. Keep writing.

 

Really informative article. Awesome.

 

Great blog article.Really thank you! Really Cool.

 

I appreciate you sharing this blog article. Want more.

 

Thanks for the post.Thanks Again. Will read on…

 

Hey, thanks for the blog.Really looking forward to read more.

 

Really enjoyed this blog article.Really thank you! Want more.

 

I cannot thank you enough for the article post.Really thank you! Awesome.

 

Post Your Comment

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
  • About Cecilia

    "In my professional capacity I canvass fund managers, consultants and pension schemes on investments issues and write analytical pieces on investment trends. I also consult investors on M&A matters. My brief includes Islamic finance, especially sukuk issuance and Islam-compliant asset management themes. I joined Reuters News in September 2008 from Thomson Financial News, where I was European pension correspondent."
  • Follow Cecilia