However, the PM’s sukuk – a bond paying returns from a specified asset – would have symbolic utility. It would show that the UK is comfortable with financial products that circumvent usury, as well as the kind underpinned by it. The offering could also pave the way for novel securitisations of public sector contracts.
Measures to promote Islamic finance in the City follow a love-in with the Chinese earlier this month. This saw the government promising to distort macroprudential regulation in favour of Chinese banks to lure more of the renminbi trade to these shores.
The challenge for ministers is to create a framework that attracts new customers without disadvantaging old ones. For example, rules protecting Islamic securities from double taxation on the back-to-back purchase and sale of assets need to be carefully drawn to preclude abuse.
A more immediate concern is to create a sukuk everyone will recognise as such. No body of scholars has a monopoly on determining whether a financial product is sharia compliant, as Aston University’s Omneya Abdelsalam points out. Such debates forced Goldman Sachs to postpone the launch of $2bn commodities-backed sukuk in 2011. So tread carefully, Mr C.
The unguarded guardian
How are the mighty fallen. , once an ambitious would-be acquirer, is now the recipient of cheeky break-up bids from private equity investors. Charterhouse offered £1.55bn for its cash solutions division last Tuesday, the security group has tardily disclosed.
It was not entirely coincidental that G4S publicly rejected the bid on Monday even as it denied allegations that prisoners were abused at a South African prison it ran.
Guarding convicts will always generate controversy. But the ability of G4S to control events rather than vice versa has deteriorated since a badly managed £5.2bn bid for Denmark’s ISS fell apart in 2011. The company bungled its Olympic security contract in 2012, issued a profits warning this spring and is embroiled in controversy over offender tagging contracts in the UK.
Some analysts believe G4S is now handicapped in bidding for UK government contracts. But the state now depends on the outsourcing behemoths it has helped to create as much as they depend on the state. Politicians only have themselves to blame. They have created a tendering system whose high costs and preference for the likes of G4S and Serco have discouraged new entrants
G4S is right to term as “opportunistic” Charterhouse’s bid for a division that moves cash around. The price is equivalent to 11.1 times profits before interest, tax and amortisation. That is better than for some comparable companies. But deduct a few hundred million for liabilities Charterhouse would have left with G4S and you need a vivid imagination to spot a control premium.
This bottom-fishing offer will not be the last unless new boss Ashley Almanza can stabilise G4S. The strategic vision he will set out on November 5 will matter less in this respect than avoiding cock-ups of the kind that forced predecessor Nick Buckles to step down.
A very blustery day
A photo of a smartly dressed man climbing over a fallen tree in Islington brought home to Britons the magnitude of the St Jude’s Day storm.
High winds had not just wreaked a trail of destruction across the south. It had subjected members of the metropolitan elite, including national journalists, to travel chaos and lichen-stained apparel.
The Beaufort Scale assigns a number and name to a wind speed range. An “11” is a violent storm with winds of 64-73mph.
The Newsforce Scale used by the London media to measure the news value of weather events partly reflects their impact on, well, the London media.
Rainfall that closes businesses in Gloucester for a week thus only counts as a Category Five Event, if Jeremy Paxman can still get to work without difficulty.
A Category Twelve Event might involve Shetland disappearing below the waves, combined with the pond in John Humphrys’ garden overflowing. Or, self-referentially, Lombard working from home because the staff of Southern Railways have seized the chance for a lie-in.
source: Financial Times