Originally published in Butterworths Journal of International Banking and Financial Law - April 2012.

This article will draw together four themes: the current state of UK Islamic banks; the possibility of a UK Sovereign Sukuk; UK real estate and its growing importance for Islamic Finance in the country; and the UK’s battle to be the hub for Islamic Finance in Europe.

KEY POINTS

- The past year or so has seen the growth of Islamic funds and Islamic banks providing mezzanine finance – with the mezzanine finance tranche being slotted into the structure in an Islamic compliant way.

- Many commentators say that the European debt crisis has made a Sovereign Sukuk in Europe a more remote possibility.

- With other jurisdictions seeking to attract Islamic finance transactions, the UK will need to support and develop its Islamic banking infrastructure further if the UK is to maintain its competitive advantage in Europe.