Gatehouse to bolster UK's Islamic sector
By David Oakley in London
Published: April 22 2008 03:00 | Last updated: April 22 2008 03:00
The UK is to gain its fifth Islamic bank today, reaffirming its status as the leading western financial centre for the sector.
Gatehouse Bank becomes the latest Islamic bank to be awarded a licence, demonstrating the resilience of Sharia-compliant finance in spite of the credit squeeze.
David Testa, chief executive at Gatehouse, said Islamic finance had been able to weather the crisis "not least because of its continued growth pattern and heightening profile, stimulated largely by the oil price, which continues to provide the Middle East with its wealth".
Islamic banking has grown impressively in contrast to conventional banking. The sector's assets are estimated at $500bn, up about 20 per cent since the summer credit crunch, according to Moody's, the ratings agency.
The UK is the only country in the European Union to have licensed Islamic banks, as the government has realised the potential of this market for the City as a financial centre.
It has also seen the development of Islamic finance as a way of building bridges with the 2m Muslims in the country.
The UK has stolen a march on New York as a hub for Islamic finance, partly because of its time zone and partly because of the antipathy towards the sector in the US following the September 2001 attacks.
"One of the main reasons why London has become such an important centre for this kind of finance is the legislative changes pushed through by the government over the last five years," Mr Testa said.
"It has brought in new laws to level the playing field with conventional finance and make the City an attractive place to invest in a Sharia-compliant way.
"For London, what with the problems of Northern Rock and the crackdown on non-doms, this really is one area where the City has got it right."
The five Islamic banks in Britain are made up of one retail bank, Islamic Bank of Britain, launched in 2004; European Islamic Investment Bank, given a licence in 2005, Bank of London and the Middle East, launched in July 2007; European Finance House, set up in January this year; and Gatehouse.
To comply with Islamic laws, an investment cannot produce returns by charging interest and cannot support industries condemned by Islam such as alcohol, pornography and firearms.
Copyright The Financial Times Limited 2008