Euro-Zone’s First #Islamic_Bank - Eurisbank Here’s a bold #banking initiative emanating from the #Gulf: a group comprising of regional businessmen, a local lender and royal families are in the initial stages of setting up what they claim will be the euro-zone’s first #Islamic bank that will compete for #Muslim customers in #Europe. Named #Eurisbank, the new venture has a modest start-up capital of €60 million ($81 million) and plans to open branches in #Paris, #Brussels, the #Netherlands and #Frankfurt. The bank’s backers, which weren’t named, have submitted their application to obtain a banking license in #Luxembourg and aim to launch the new bank during the last quarter of next year. Eurisbank is looking to offer private, corporate and retail banking. There’s no doubt that #Islamic_finance has been on an upward trajectory for the past few years and that financial centers around the world are vying to attract Islamic banks as demand for #Shariah_Compliant products among the #global Muslim community is growing. Ernst & Young in a recent report said the Islamic banking industry grew at around 16% per annum in recent years – outperforming the conventional banking industry – with assets reaching $1.54 trillion in 2012. “A large untapped customer base with more than 20 million Muslims in the EU represent a significant market growth potential for Islamic Finance,” said Ammar Dabbour, managing partner at Excellencia #Investment #Management, an Islamic fund manager that is working alongside consultancy #Deloitte in setting up the new bank. Eurisbank could be competing with mainstream banks such as #HSBC and #BNP_Paribas which already operate Islamic businesses. The choice for setting up in Luxembourg is not unusual either as the country has been active in promoting itself as an Islamic finance center. Despite the seemingly huge growth potential of the Islamic economic industry, Eurisbank will need to avoid some of the pitfalls that have plagued the industry in recent years. Often starting as small niche players, many Islamic banks in the Gulf were unable to achieve sufficient scale and were forced into mergers or went out of business during the financial crisis. In addition, profits have been underperforming the mainstream banking industry. “The rapid growth of Islamic banks over the years has also been costly due to increased operational complexity as the banks transform from operating in a single market to becoming multi-jurisdiction businesses,” according to E&Y, which estimates that profitability among Islamic banks is on average 18% lower than conventional institutions.
Posted on: Tue, 26 Nov 2013 10:50:22 +0000
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