Germany urges more Islamic finance integration globally

ANKARA: Islamic finance is increasingly important in the global economy and needs to be better integrated into the international financial system, German Finance Minister Wolfgang Schaeuble told a meeting of the Group of 20 leading economies.

“We all have a better understanding of the risks and role of Islamic finance now,” Schaeuble, reporting on the G20’s Investment and Infrastructure Working Group, told G-20 finance ministers and central bankers gathered in Ankara.

The World Bank, Islamic Development Bank and countries including Saudi Arabia and South Africa had shared their practical experiences with asset-backed financing and Islamic finance in particular over the past year, he said.

“Islamic finance is growing in importance for the global economy. It is therefore important that international financial institutions consider questions related to integrating Islamic finance into global finance,” Schaeuble said, according to a text of his speech obtained from the German delegation.

Islamic finance holds systemic importance in countries such as Kuwait and Qatar, and has made wider gains buoyed by support from governments such as Pakistan and Turkey.

The asset-backed nature of Islamic finance should in theory make it ideal to build highway networks, ports and other big projects. 

An estimated $800 billion worth of infrastructure financing will be needed each year in Asia alone over the next decade, according to the Asian Development Bank.

(Arab News / 07 September 2015)

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Germany's first interest-free Islamic bank opens in Frankfurt

Germany has opened its first Islamic bank representing a full range of banking services in accordance with the laws of Sharia. The Frankfurt-based bank, called KT Bank AG, is owned by Kuveyt Turk, the largest Islamic banking institution in Turkey.

KT Bank has also opened its affiliates in Mannheim and Berlin and plans to reach Cologne, Hamburg and Munich in the near future.

The Sharia law Islamic banks prohibit bank from charging interest on loans, as well as to take part in investments, especially those considered haram, like gambling, weapons, prostitution and alcohol.

Thus, Islamic banks do not provide customers with a mortgage; instead they buy a house and resell it at a higher price that already includes interest. Given the fact that the bank pays the tax twice – with the purchase and sale of the house – deals become much more expensive compared to those from conventional banks.

Among 4.5 million Muslims residing in Germany, 21 percent are ready to use the services of an Islamic bank, said the head of Kuveyt Turk Bank Kemal Ozan referring to a poll carried out by his company. However, Kuveyt Turk noted that it focuses not only on the Muslims living in Germany, but expects to approach the entire German market.

In 2010, Kuveyt Turk opened a small office in Mannheim, Baden-Wuerttemberg. In 2012 it appealed to the German authorities for a full banking license.

Istanbul-based Kuveyt Turk is one of the largest banks in Turkey and is part of Kuwait Finance House, which is mostly owned by Kuwaiti investors.

Islamic banks have already proved quite successful in the markets of England and France. UK housesfive Islamic banks and the Islamic Bank of Britain reported a 55 percent increase in deposits of non-Muslims over 2014. The bank associates these figures with the Barclays’ rate rigging scandal.

The UK has also become the first non-Muslim country to issue sukuk – an Islamic bond equivalent similar to a participation certificate. This type of bond is also utilized in Hong Kong, Luxembourg and South Africa.

(RT / 01 July 2015)

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First Islamic bank in Germany to open in July

Germany is to get its first fully operational Islamic bank on July 1. Opened by the Turkish finance group Kuveyt Turk it will provide Sharia compliant banking services.

“This new achievement will open vast areas of business and investment in Europe’s largest economies, as this is the first bank to obtain a full function license to take deposits and offer credit finance facilities in Germany as per Islamic rules and regulations,” Kuwait Finance House said in a statement on Thursday.

The wholly-owned subsidiary of the Turkish lender will be called KT Bank AG with its headquarters based in Frankfurt and branches in Cologne and Berlin. It will serve Germany’s 4 million Muslims but also plans to expand its services throughout Europe.

"Our market research has shown, that 21 percent of Muslims in this country would see an Islamic bank as their natural household bank," Kuveyt Turk’s managing director Kemal Ozan was cited as saying by Deutsche Welle.

The bank will operate under the principles of Islamic Sharia law, under which it can’t participate in speculative ventures or investments, can’t charge interest on loans, based on the Islamic teaching that a Muslim may not benefit from lending money or receiving money from someone else. Islamic banks, however, may still purchase assets and resell them for a profit. Sharia law also forbids investment in industries like gambling, alcohol or pornography. Islamic banks tend to stay away from companies with debts amounting to more than 30 percent of their value.

Islamic banking is growing faster in Britain and France than in many Islamic countries in the Middle East and Asia. Britain remains Europe's main Islamic finance hub with its five Islamic banks. Luxembourg is also planning to launch an Islamic lender of its own. The Islamic Bank of Britain reported a 55 percent rise in applications for its savings accounts by non-Muslims in 2014 after the Barclays rate-fixing scandal.

Britain became the first non-Muslim country to begin trading in sukuks that are the Islamic equivalent of bonds. Hong Kong, Luxembourg and South Africa have also issued sukuks.

In 2010 Kuveyt Turk, the largest Islamic bank in Turkey, which is 62 percent owned by Kuwait Finance House, set up a branch in the southwestern German city Mannheim, but was not fully operational. In 2012 it applied for a full banking license, and plans invest $48.7 million in the planned German unit.

(RT / 24 April 2015)

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First Islamic Bank to Open in Germany

According to the Handelsblatt newspaper, German regulator Bafin, is to grant a full banking license to the Turkish bank, Kuveyt Turk Bank AG. The first branch of the bank is expected to be up and running in June, with branches planned for Frankfurt, Cologne and Berlin. The bank also plans to expand its services throughout Europe, according to a statement, released yesterday.

The bank’s guidelines will conform with sharia law. This means that it will not involve itself in speculative ventures or investments, and it cannot charge interest on loans, based on the Islamic teaching that a Muslim may not benefit from lending money or receiving money from someone else. Islamic banks may still purchase assets and resell them for a profit, however.

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Islamic banks do not put any money into companies that produce alcohol or deal with pornography, gambling or pork and they also tend to stay away from companies with debts amounting to more than 30% of their own value.

According to Kemal Ozan, the managing director of Kuveyt Turk, the banks hopes to be popular with Germany’s four million Muslims - the largestMuslim community in Europe.

"Our market research has shown, that 21% of Muslims in this country would see an Islamic bank as their natural household bank," Ozan said.

Britain remains Europe's main Islamic finance hub, with five fully-fledged Islamic banks, and 20 banks that offers Islamic banking services.

The demand for Islamic banking is now increasing across the rest of Europe, due to the growing Muslim population on the continent. According to the U.S.-based Gatestone Institute, Islamic banking is growing faster in Britain, France and Germany than in many Islamic countries in the Middle East and Asia.

The sector is growing too among non-Muslims. The Islamic Bank of Britain reported a 55% increase in applications for its savings accounts by non-Muslims last year after the Barclays rate-fixing scandal.

Tim Sinclair, senior head of marketing and retail sales at Al Rayan bank, formerly the Islamic bank of Britain, says that over the last two years 83% of customers making fixed-term deposits were non-Muslims. Sinclair believes this is due to the ethical attraction of the bank. “We’re relatively small, and we  tick the ethical box,” he says. “Being Sharia compliant means we’re not investing in bad things, and we’re transparent.”

The number of asylum seekers arriving in Germany, many from the Middle East, jumped to around 200,000 last year - four times as many as in 2012. Last week, German government statistics revealed that the proportion of the population without German citizenship is approaching 8.2 million - nearly 10% of the overall population. The number of foreign nationals living in Germany rose by more than half a million in 2014, the most in a single year since 1991 and 1992.

(News Week / 23 March 2015)

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