The European Union’s largest and strongest economy, Germany, is finally edging toward facilitating Islamic finance in its jurisdiction. Germany has a Muslim population of 4.3 million, the second largest Muslim population in the EU after France with 5.5 million. Reports from Germany stress that the country’s banking regulator, the Federal Financial Services Authority (BaFin), has issued a limited banking license to Kuveyt Turk Participation Bank, one of Turkey’s four so-called participation (Islamic) banks. Kuveyt Turk is majority-owned (62 percent) by Kuwait Finance House, one of the largest Islamic banks in the world in terms of capital and assets. The Islamic Development Bank (IDB) also has a 9 percent stake in Kuveyt Turk Participation Bank.
At the same time, Cologne-based Meridio AG has recently launched the Meridio Global Islamic Multi Asset Fund, a Luxembourg-domiciled mutual fund, which the promoters claim is the “first approved, actively managed, international, ethically compliant, balanced mutual fund under European investment laws” and is aimed at retail and institutional investors in Germany and the Euro zone countries initially, and later in the Middle East, Malaysia, Russia, India, Pakistan and East Asia. The investment pool comprises Shariah-compliant equities and sukuk.
These developments come after the first-ever Islamic finance conference held by BaFin in October 2009 in Frankfurt-an-Main, which was addressed inter alia by Jochen Sanio, president of BaFin, Muhammad Al-Jasser, governor of the Saudi Arabian Monetary Agency (SAMA) and Nik Ramlah Mahmood, managing director of the Securities Commission of Malaysia. Kuveyt Turk is arguably the most proactive of Turkey’s four Islamic banks, which also include Turkiye Bankasi, in which Saudi Arabia’s National Commercial Bank (NCB) has a majority stake; Albaraka Turk Participation Bank, which is a subsidiary of the Albaraka Banking Group, which in turn is majority owned by Saudi Arabia’s Dallah Albaraka Group, headed by Saleh Kamel; and Asya Bank.
Kuveyt Turk hitherto had a representative office in Frankfurt-am-Main in Germany, and the new authorization, albeit limited, of Kuveyt Turk Beteiligungsbank is effectively an upgrade of the representative office.
source: Monitoring Report