Islamic banking struggling in the UK
Launched in a blaze of glory just a few years ago, Islamic banking in the UK is struggling to survive at this moment in time with the likes of Lloyds bank, the initial main stream provider of Islamic banking in the UK, withdrawing a number of Shariah-based mortgages over the last few months. It seems that a lack of competition and a lack of demand within the UK have impacted short-term growth prospects but what does the future hold?
At the height of the Islamic banking trend in the UK there were 22 different lenders offering a variety of Islamic-based investment products and funding tools. Despite the fact that the UK is potentially the largest Islamic banking sector in Europe, with over $19 billion of Islamic assets held in the UK, the Islamic mortgage market is only £500 million which is around 0.3% of the total mortgage arena. When you also consider that leading Birmingham-based Islamic Bank of Britain saw Islamic loans drop from $12.2 million in 2008 to a paltry $4.6 million in 2009, this perfectly reflects the difficult economic environment and lack of competition. Whether we will see an improvement in the medium term remains to be seen but the disappointing take-up of the products on offer has surprised many.
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