Germany opens up to Islamic banking, opportunities for Malaysian institutions

Malaysian banking institutions, closely watching Europe's Islamic banking sector, may feel encouraged by the fact that Germany, has finally opened up to Islamic banking. A permit issued in March to a Turkish bank, Kuveyt Turk Bank AG to launch Islamic banking, heralded a significant departure from Germany's conservative banking sector. It had previously expressed reservations against what was then termed, "exotic banking practices". Though Islamic banking products are offered in Germany, this is the first time that a full-fledged Islamic bank has been opened in the country. The Turkish bank identified a niche market for Islamic banking as Germany's Muslim population began to grow. But, as representatives of "conventional" Turkish banks told Bernama, the Islamic banking institutions will not just cater to the Muslim population. The interest-free business offers advantages, according to German experts, to non-Muslims as well. Malaysia is generally recognised as a pioneer in Islamic banking, having devised products and services that are considered to be modern banking features and, yet, in line with Islamic tenets. Hence, this change in policy will offer Malaysian institutions an opportunity to enter Germany's banking sector. The Kuveyt Turk Bank AG received the first full-banking license for Islamic banking, five years after opening its financial institute in Mannheim, a city in south western Germany for its corporate and private clientele business. According to German sources, some 500 Islamic banking institutions operate in over 70 countries. The worldwide volume of assets managed by them is estimated at around US$2 trillion. For more business news, tune in to AWANI Biz on Astro channel 501.