The British government has mandated banks to arrange a five-year 200 million pound sukuk - the world's first Islamic bond to be issued by a Western sovereign.

The bond could be issued in the coming weeks, subject to market conditions, The Treasury said in a statement late on Thursday. This would place the issuance ahead of the Muslim holy month of Ramadan which starts at the end of June.

A sovereign sukuk is the centrepiece of Prime Minister David Cameron's bid to position London as a leading hub for Islamic finance, as competition heats up with financial centres in the Middle East and Asia.

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