U.K. Shariah Banks Hampered by Recession, Lack of Support: Islamic Finance - Bloomberg

Growth in Islamic financing in the U.K. has been hampered by an economic slump and what Moody’s Investors Service describes as a lack of government support.

HSBC Amanah, a unit of Europe’s biggest bank, says Malaysia and the Middle East have better growth prospects. Lloyds Banking Group Plc, the U.K.’s largest mortgage lender, stopped offering home financing that complies with Shariah law because the overseas underwriter withdrew, Emile Abu- Shakra, a spokesman at the bank in London, said in an interview yesterday. The Birmingham-based Islamic Bank of Britain said income from Islamic transactions dropped to 3 million pounds ($4.6 million) last year, from 8 million pounds in 2008.

Growth in the industry in the U.K., Europe’s largest market for products complying with the religion’s ban on interest, has been hurt by a lack of regulations, according to Moody’s. The U.K. Treasury yesterday reiterated the previous government’s 2008 position a sovereign sukuk sale, which would provide a benchmark for issuance, didn’t offer “value for money.”