Islamic Finance and the European SMEs

ENVIRONMENT

International Capital markets

Group 22 Boglione, Conte, Felix, Ichim, locatelli

Table of contents
Principles and characteristics (ECB Paper)
Islamic Finance and the global Financial
system (ECB paper)
Banking
Capital Markets
Insurance
A European Overview
SMEs situation
An Italian Perspective (Biancones Paper)
Islamic Leasing is on the rise
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IslamicBanking
Islamicbankingandfinancehavebeenformalized
graduallysincethelate1960s,coincidentwithandin
responsetotremendousoilwealth
IslamicbankshandledaboutUSD1.3trillioninassetsat
theendof2012,andhaveexperiencedagrowthrateof15
20%perannumoverthelastfiveyears.
TurningtoEurope,Islamicfinanceisstilluntapped,buta
numberoffactorswouldtendtosupportitsfurther
development:

governmentincentives
thegrowingMuslimpopulationwithinEuropeanjurisdictions
alternativefinancialsolutionsintheEuropeanfinancialcrisis
attractingliquidityfromemergingmarkets

IslamicFinanceandtheglobalFinancialsystem
IslamicCapitalMarkets:ThegrowthofICMhasbeendrivenbythe
increaseintheearningsofoilexportingcountriesresultingfromarisein
globaloilprices.
Sukukhavebeenafastgrowingsegmentofthemarket.TheseIslamic
financialcertificates,similartobondsinWesternfinance,thatcomplywith
Sharia,Islamicreligiouslawrepresentthesecondlargestassetclasswithin
theIslamicfinanceindustry.
IslamicInsurance:TheIslamic(takaful)
insuranceindustryisanimportantsegment
oftheIslamicfinancialsystem.It
complementstheothersegmentsandacts
asarisksharingchanneltohelpwithstand
financialshocks.

AEuropeanOverview1/2
As mentioned in the previous section, the development of
Islamic finance is still limited in Europe. There are some
notabledifferencebetweencountriesasshownbythecountry
reportspresentedbelow:

France

StrongsupportbyFrenchauthorities
Therearepresentlysix ShariahcompliantfundsinFrance
withtotalassetsundermanagementofUSD147.2million
Inrecentyears,theFrenchregulatoryauthoritieshavetaken
a number of steps to encourage Islamic finance in the
country.
Germany

firstWesterncountrytotaptheIslamiccapitalmarketwhen
thefederalstateofSaxonyAnhaltissuedthecountrysfirst
Islamicbond(sukuk)in2004.
Italy
OneofthemostrapidlydevelopingmarketsinEurope
A number of initiatives have been taken by Italian
authorities to study the issues related to an expanded
presenceofIslamicfinance

AEuropeanOverview2/2
Luxembourg
LuxembourgisoneofthemajorfinancialmarketsinEurope
Luxembourgisthesecondlargestinvestmentfundcentreintheworld
after the US. Islamic funds with USD 1 billion Islamic assets under
management(AuM)
Today, Luxembourg emerges as the leading nonMuslim domicile for
Shariahcompliantinvestmentsfunds.
UnitedKingdom
TheUKhasoneofthemostadvancedIslamicfinancialmarketsinthe
westernworld
becomingakeydestinationforforeignShariahcompliantinstitutions.
Thecountryishometothe westsfirst Shariahcompliantretailbank
andcurrentlyhasfivetrueIslamicbanks
Ireland
Ireland has developed a strong foundation for the Islamic finance
industry, including a comprehensive tax treaty network with Muslim
nationsandaprovisioninitstaxcodespecificallyforIslamicfinancial
instruments
Theindustrymanagedassetsworthmorethan180trillionin2010.Itisa
significant location for Islamic funds, with an estimated 20% of the
IslamicfundsmarketoutsideoftheMiddleEastbeinglocatedinIreland.

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