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UK remains Western Islamic finance hub despite limited local uptake

ugust 21, 2025 RELATED TOPICS ISLAMIC FINANCE RELATED COMPANIES Nasdaq Dubai Offa Operations Fitch Ratings-Dubai/Jakarta: The UK will continue as the leading Western hub for Islamic finance, supported by the London Stock Exchange (LSE) serving as a key listing venue for global US dollar sukuk, and the use of English law in governing most international sukuk, Fitch Ratings says. Moreover, the London Metal Exchange is accessed by many Islamic banks to facilitate cash financing. The UK’s financial, professional and legal services, and human capital support the global Islamic finance industry, with UK banks being key arrangers and counterparties in sukuk, Islamic interbank and derivatives markets. Gulf Cooperation Council (GCC) investors are major shareholders in all UK Islamic banks. However, the share of Islamic banking in the UK remains low. The LSE provides issuers with access to a deep, diverse international investor base, and is the largest listing venue globally for hard-currency sukuk with over a 40% share as of end-1H25, based on Bloomberg data. It is also the second-largest listing venue for hard-currency ESG sukuk globally after Frankfurt Stock Exchange. Nearly all sukuk listed on the LSE originate from GCC countries. Middle Eastern sukuk and bond issuers raised USD65 billion on the LSE in the first seven months of 2025, ranking second behind UK issuers. However, the LSE faces stiff competition for sukuk listing leadership from Euronext Dublin, Frankfurt Stock Exchange and Nasdaq Dubai. Fitch rates about 80% of hard-currency sukuk listed on the LSE as of end-1H25, with about 85% investment grade and most issuers assigned a Stable Outlook. UK-based Islamic funds are the largest contributors to the domestic Islamic finance industry, with assets under management of over USD12.5 billion as of end-June 2025, up 22.1% year on year, based on IFN Investor data. Most of these funds invest in equities (84%), followed by commodities (10%). UK Islamic banking assets rose by 38% year on year to USD11.4 billion at end-2024. The UK gained an additional Islamic bank in 2024, through the conversion of Ahli United Bank (UK) PLC to Kuwait Finance House PLC. Fitch rates two Islamic banks in the UK, both at 'A' with Stable Outlooks.