Europe’s first fully-functional Islamic bank will soon open its doors in Frankfurt, offering German’s Muslim population the opportunity to use a bank that complies with sharia law for the first time.
The branch, which will operate under the name KT Bank, can only be backed by tangible assets and shall refrain from speculative investments, in accordance with Islamic banking rules. Charging interest on loans is also not permitted, although the bank is allowed to purchase and sell assets for a profit.
[S]ervices will also be available for non-Muslims, including retail and wholesale customers
Additionally, activities that are considered un-Islamic, such as participation in forbidden goods, services and projects, including businesses within the gambling and alcohol industries, are strictly prohibited.
Kuveyt Turk Bank currently has another branch in Mannheim, although it is not fully functional under sharia law.
As well as the four million Muslims living in Germany that form the targeted customer base for the bank, services will also be available for non-Muslims, including retail and wholesale customers.
Islamic bonds, known as sukuk, have become increasingly attractive for both Muslims and non-Muslims in recent years, given their fast rate of growth. According to Gulf News Banking, the global sukuk market has doubled in the last three years – with no signs of slowing down at this point.
Kuwait Finance House, which owns a majority stake in Kuveyt Bank, has remarked on this latest move as confirming its leading position in Islamic banking. “This new achievement shall open vast scopes of business and investment in Europe’s largest economies, thus indicating that the bank is the first bank that obtains a full function license to practice deposits and credit finance facilities in Germany as per Islamic rules and regulations,” read a company press release.
Kuveyt Turk Bank plans to make multiple investments in the coming years in order to expand its portfolio of financial products, as permitted by sharia-banking regulations, as well as to grow its global reach. If the Frankfurt model proves successful, the bank hopes to open more fully functional Islamic branches within Germany, and elsewhere in Europe also.