Islamic banking expanding in Europe
(19 July 2016 – Europe) Germany and Switzerland are the latest European nations to institutionalise and expand Islamic finance within their banking and insurance system, providing more Shariah-compliant services to their domestic Muslim communities and offering extended Islamic banking services for investors as an alternative to conventional finance.
The German Federal Financial Supervisory Authority has now outlined its plans to set up a regulatory framework for Islamic finance to push growth in the sector, a year after the first full-fledged Islamic bank opened in Germany — KT Bank, owned by the biggest Islamic bank in Turkey, Kuveyt Turk.
Peter Kruschel, director of banking supervision at the supervisory authority, recently said that the German financial industry “is well aware of the potential of the Islamic banking sector”, which highlights a need to start discussions about new regulations and frameworks for the banking and finance sector to support transactions in compliance with Islamic principles.
He added that he thought there was big opportunity for Islamic finance, saying: “there is huge potential for this kind of industry.
“Also because we have a large number of immigrants from Muslim countries at the moment. But we currently have no Islamic banking regulation at all, thus we need to find out what needs to be implemented and changed in order to support this industry in Germany”
KT Bank recently released a study finding that among the 4.5 million Muslims residing in Germany; 21 percent were ready to use the services of an Islamic bank.
“We have established a previously unknown business model in this region,” said Ozan, adding that previously just five percent of Germany’s Muslim population adhered to Islamic banking owing to non-existent services.
This suggests that the Islamic finance and banking can anicipate high growth from retail clients and also from business relationships between Germany and the Gulf region, as well as investment activities, for which Islamic banking can serve as a bridge.
Meanwhile, Switzerland has rekindled a lost its interest in Shariah-compliant finance following an influx of activity post-2008, and subsequent drop off by 2013.
his round however, Swiss financiers are focussed on the Islamic insurance sector. Last week, Zurich Insurance Company, part of the country’s largest insurer Zurich Insurance Group, announced that it bought Malaysia-based MAA Takaful to expand its insurance and takaful business in Malaysia and to generally complement its existing insurance solutions.
Zurich Insurance joins competitor Swiss Re, the world’s second-largest reinsurer, who is also servicing the retakaful market across Asia-Pacific via Kuala Lumpur.
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