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Thursday, 2 July 2015

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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Growing Demand for Islamic Finance Talent

The solid growth of the Islamic financial industry in the past few years has been underpinned by several factors, including improvements in regulatory clarity,
supportive demographic factors and product innovation. Indeed, from a USD0.8bln industry in 20091, assets in Islamic finance grew to nearly USD2tln in 20142 . Of these, 79% of assets are in the Islamic banking sector, while sukuk accounted for a 16% share.

Geographically, the Gulf Cooperation Council  (GCC) countries, the Middle East and North Africa (MENA) region and Asian countries accounted for a bulk of the industry’s assets. These regions have benefitted in part from favourable demographics and preferences for Shariah-compliant financial services.
Notably, non-OIC countries such as the US, Hong Kong and Luxembourg have also shown increased interest in Islamic finance, as these countries has issued debut sukuk in 2014. In addition to industry developments, growth in the past few years have been accompanied by evolving regulations, especially in key
Islamic finance jurisdictions. For example, Malaysia has enacted its Islamic Financial Services Act (IFSA) 2013. IFSA significantly strengthens the legal foundations that support a comprehensive regulatory and supervisory framework for Islamic finance and reflect international standards for effective supervisory systems. Elsewhere, several jurisdictions such as the UAE and Indonesia5 are in the midst of centralising Shariah functions in the industry.

Overall, recent developments in Islamic finance suggest that the industry is headed for deeper and more robust growth. Nevertheless, at the operations level, a key challenge for the Islamic financial institutions (IFIs) is to ensure adequate human capital supply to support various functions such as Shariah expertise and product development, as well as risk management, legal and information technology.

(Islamic Finance.Com / 01 July 2015)
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