www.thenational.ae - BERLIN // Bank Kuveyt Türk, based in Instanbul, plans to set up the
first Islamic bank in Germany next year to tap into a potential market
of more than four million Muslims.
An official at the German branch of Kuveyt Türk, majority-owned by
Kuwait Finance House, said on Monday the bank was preparing its
application for official approval. (source)
"We haven't issued a statement
on that because we're not in a position to while the licence is being
worked on. We will release a statement only when we get the licence,"
said the official.
According to media reports, the bank will file its request to the German financial regulatory authority, BaFin, in October.
The
new bank would be based in Frankfurt, Germany's financial capital, and
it would open further branches in cities with large Muslim populations
such as Berlin, the reports said.
Islamic banking carries out
financial business in accordance with Sharia law, which prohibits
charging interest or providing deposit insurance for clients. In
addition, Islamic banks can not invest in certain types of assets, such
as firms that produce alcohol, process pork or engage in gambling, or
have a large percentage of borrowed capital. The sector is enjoying
rapid growth in the Muslim world but is still in its infancy in much of
Europe. Islamic banking has been available since 2004 in Britain, which
now has five full Islamic banks and more than 20 conventional banks
offering Islamic finance.
Zaid El Mogaddedi, the managing director
of the Institute for Islamic Banking and Finance, based in Frankfurt,
estimates the market potential for new business in Islamic financial
products in Germany amounts to €1.2 billion per year (Dh5.52bn).
Attempts
to offer Islamic financial products in the past have failed due to a
lack of demand. Commerzbank launched a Sharia-compliant investment bank
in 2005 but has since closed it down. An Islamic fund set up in 2010 by
Meridio, an asset management firm, was dissolved prematurely.
Not
even Deutsche Bank, Germany's largest bank, which has its own unit
catering for some 380,000 customers of Turkish origin, has set up
Islamic finance products. "There is virtually no demand for it," the
bank said.
Islamic finance took off in the 1970s in the wake of
the oil price boom that gave Muslim oil producers a windfall of cash to
invest. It has been expanding rapidly in recent years.
The UK
Islamic Finance Secretariat estimates the global market for Islamic
financial services reached US$1.13 trillion (Dh4.15tn) at the end of
2010, 21 per cent up from 2009, and is likely to have grown a further 14
per cent last year.
But that still amounts to just 1 per cent of the global financial market.
The
largest centres remain concentrated in Malaysia and the Middle East,
including countries such as Iran, Saudi Arabia, UAE, Kuwait, Bahrain and
Qatar.
Source: http://www.thenational.ae/thenationalconversation/industry-insights/finance/germany-could-get-first-islamic-bank - Sept 5, 2012
