LONDON, Feb 9: Islamic banks have been less affected than many conventional banks by the credit crunch as they are prohibited from activities that have contributed to the world wide banking crisis, such as investment in toxic assets and dependence on wholesale funds, notes the Islamic Finance report released on Monday by International Financial Services London (IFSL).

Still, Sukuk issuance has more than halved and the value of equity funds has fallen due seemingly to contamination from the ills of secular banking system, notes the report further.

The report said London has been consolidating its position as the key western centre for Islamic finance in 2008. The global market for Islamic financial services rose by 37 per cent to $729 billion at end-2007.

Two Islamic banks, Gatehouse Bank and European Finance House, have been granted licences bringing to five the number of fully Sharia-compliant banks in the UK. Principal Insurance became the first Shariah-compliant independent company authorised to offer Takaful to UK residents. In capital markets, four new exchange traded funds and two new equity funds were launched.

IFSL’s report indicates that the UK’s offering includes a total of 22 banks, far more than in any other western country. Professional services are provided by 18 law firms and the Big Four accounting firms.

A cumulative total of 18 Sukuk issues raising $10 billion have been listed on the London Stock Exchange, second only to Dubai. With 55 institutions offering educational and training products in Islamic finance, the UK has more providers than any other country worldwide.

The UK has benefited considerably from supportive government policies intended to put Islamic services on the same footing as conventional services. Evidence of London’s growing role in Islamic finance is shown in the UK being the only western country to feature prominently, 8th with assets of $18 billion, in a global ranking of Sharia-compliant assets by the country.

Sir Andrew Cahn, UK Trade and Investment’s Chief Executive Officer said: “Despite its origins overseas, Islamic finance has found a natural home in the UK. Though no sector is immune to the global financial crisis, Islamic finance has shown great resilience. It is important we continue to work with our Islamic finance partners to maintain our position as the leading western centre for Islamic finance service providers.”

IFSL’s Islamic Finance Working Group is taking a leading role in the promotion of Islamic financial services available from the UK. The group is working closely with private sector and government, particularly UKIT and the City of London Corporation.