Islamic finance in Ireland, which although faith-based is not limited to Muslims, was introduced in the Finance Act 2010, and refers to financial transactions which are consistent with the principles of Islamic or Sharia law.
Under Islamic finance, the payment and receipt of interest is forbidden. Speculation is also prohibited, while investment in unethical businesses, products or services is also banned. According to the Revenue Commissioners, under Islamic finance, transactions are typically backed by or based on an identifiable and tangible underlying asset.
Almost a year after we saw the first corporate sukuk out of Turkey, and in line with our expectations in "Sukuk set record in first 9 months" that Turkey might surprise the market with a series of sukuk issues in 4Q 2011, the market welcomed the second issuance by Kuwait Finance House's Turkish subsidiary.
The five-year USD 350 million sukuk, the second by the Turkish bank, was sold in the international markets and listed on London Stock Exchange. It pays 5.875% semi-annually.
Ireland has launched a bid to become the home of Islamic finance in Europe as it seeks to rebuild its once dominant financial services sector.
The taoiseach, Enda Kenny, who was swept to power on a wave of public anger at the taxpayers' €70bn (£62bn) bailout of failed banks, told the Irish Funds Industry Association (IFIA) that he was doing everything he could to "ensure" Dublin became "a centre of excellence for Islamic finances".
A conference on Islamic finance opportunities for Ireland is to be held on Monday 11 April 2011 in the Clarion Hotel, IFSC, Dublin.
The event will discuss both the domestic and global banking and corporate opportunities including the role of the IFSC as a Western hub for wholesale Islamic finance services.
It's a tad ironic, perhaps, that a nation with one of the proportionately largest Roman Catholic populations in the world is turning to Islamic finance for new opportunities. Are Ireland's ambitions realistic, and what jobs are likely to be created if it succeeds?
Any new jobs are still a way off, but the Irish government has recently made some regulatory and tax changes designed to attract more business from Islamic finance institutions. Understandably, considering the small Muslim population, the focus is initially going to be on wholesale rather than retail financial services.
Irish accountancy and law firms will need to divert expertise to Islamic finance if the country is to attract business from this lucrative sector, according to a leading business academic.
Eamonn Walsh, professor of accounting at University College Dublin, said recent changes to legislation and tax rules that paved the way for Islamic finance investors in Ireland had been long overdue. However, he said that professional services firms needed to create a local knowledge base in this area for Ireland to win investments.
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