Accordingly, Swiss banks decided to join the party. Both UBS and Credit Suisse launched investment funds guaranteeing customers they are fully compliant with Sharia (Islamic law).
The main Swiss banks are no longer providing this service on a direct basis. They offer products tailored to interested customers, but most of the time, they prefer to buy from external providers. Asked about this by Le Matin newspaper, Credit Suisse indicated that it sees itself as a provider of niche services in this market, as is UBS.
Stefan Leins, anthropologist and specialist in Islamic Finance, sees two reasons for the disinterest by Swiss banks in such products. First, the financial resources of banks have been affected by the financial crisis, and the money to invest in new fields of activity has been lacking. Second, the expectations for success have simply not been fulfilled. Many banks saw Islamic financial products as a "golden goose" that would allow them to make lots of money quickly, explained Leins. "They may have just missed a little patience," he was quoted as saying.
However, for its part, the private Sarasin bank continues its strong engagement with Muslim clients. Fares Mourad, director of "Islamic Wealth Management" in Sarasin, is certain the industry still has potential for growth. He noted that governments of countries like Tunisia and Egypt have adopted a new legal framework for Islamic finance in the wake of the Arab Spring. "This is a strong signal, which shows that Islamic finance will gain importance in the future,” he explained.
According to Philipp Wackerbeck, from the consulting firm, Booz & Company, the political upheavals in the Arab countries led more wealthy people to invest their money abroad. This has increased the attractiveness of Islamic financial products for Western financial markets.
"Currently, these products offer a great potential for Swiss banks," said Wackerbeck. In fact, the demand was mainly due to high net worth individuals, for whom asset management is traditionally concentrated in Switzerland.
In addition, although the Swiss financial center enjoys an excellent reputation in the Islamic world, few institutions have taken advantage of the opportunities in this market, Wackerbeck lamented. "Swiss banks should better use their competitive advantages.”