Islamic Finance industry to continue developing in France, says Salion

 In 2007, oil prices pushed the French government to consider Islamic finance. The Minister of Economy, Christine Lagarde, asked Paris EuroPlus and treasury to assess and develop France's potential to attract Islamic Finance.

In his preview of the Islamic Finance Industry for 2012, Antoine Salion, Islamic Finance Advisor, Paris EuroPlus said in his piece titled, 'France: seeking diversity' that In the coming weeks, Chaabi Bank, the long-established French subsidiary of Moroccan Groupe Banque Populaire will open its Sharia compliant deposit account to small and medium enterprises (SMEs), thus addressing a latent need of small businesses for Islamic banking products. SMEs have voiced an important demand for Islamic products, as French Muslims are known for their entrepreneurship and represent an interesting customer base for Islamic banking.

According to Salion, hopes are now high again that France will develop a sound Islamic finance market, but much remains to be done. First, the French Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI) standards have yet to be distributed and spread.

Second, Chaabi Bank is not yet offering the most complex products, corporate funding and mortgages. Chaabi says it is aiming at a full set of products by the end of 2012, which seems realistic in light of the recent 10-year Murabaha home financing product.

Third, wholesale banking and capital markets are yet to be developed. Chaabi's first French Islamic window should pave the way for international Islamic investment banks willing to penetrate the French market.  In addition, the Sukuk market may also benefit from the current funding difficulties experienced by French international corporations, which could take advantage of the comprehensive French framework for Sukuk issuance and listing. 

Regarding Takaful Insurance, he described it as an immmature topic in France, even though synergies will appear evident with the rise of distribution networks for Islamic banking products.

In his conclusion he emphasized that, among the key 2012 drivers such as the coming presidential and legislative elections in May and June, the industry will keep developing in France thanks to sound foundations and strong potential. Salion believes that the election result only effect will be to influence the pace of the industry's growth.

It is worthy to mention that EuroPlus doesn't only assemble expert bankers, but also industrial enterprises listed in the stock market and key players in the market.

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French high court quashes Islamic finance measure

France's highest constitutional authority on Wednesday struck down a provision of a new law that would have opened up French banking to Islamic finance.

The National Assembly last month adopted the measure to allow Sharia-compliant financing despite opposition from the Socialists who asked the Constitutional Council to rule on its legality.

Opposition deputies had complained that staunchly secular France must not allow principles of Sharia law to be recognized in legislation.

The measure would have provided a legal basis for Islamic "sukuk" bonds, which are asset-based and do not pay interest. Investors receive coupons corresponding to part of the profits earned by the asset underpinning the bond.

Under Sharia law, making money by means such as charging interest is not permitted and investment in companies involved in alcohol, gambling and tobacco is strictly off limits.

The Constitutional Council ruled that the provision should not have been lumped into a broader bill on financing for medium and small businesses as it was a separate issue.

A statement from the Council stressed that the provision was being challenged "not on the grounds of its content but rather over the procedure followed in parliament."

Finance Minister Christine Lagarde has been spearheading a drive to turn Paris into the European capital of Islamic finance, tapping into billions of euros (dollars) from investors, mostly in the Gulf.

A government report last year estimated that France could tap into 120 billion euros (179 billion dollars) in capital from Islamic finance by making adjustments to its tax and banking laws.

Home to Europe's biggest Muslim minority, France is hoping to unseat London as the European hub for Islamic banking, offering products that comply with Sharia law.

Link: http://news.my.msn.com/business/article.aspx?cp-documentid=3639208

France changes its Civil Code to attract Islamic finance

An amendment to article 2011 of the French Civil Code was passed on 17 September 2009 by the French National Assembly (Assemblée Nationale) to help promote the development of Islamic finance in France.

This amendment is intended to assist in the structuring of Shariah-compliant products in France using French trusts (fiducies). The adoption of this amendment first by the French Senate (Sénat) in June and now by the National Assembly shows the determination not only of the French government but also of the French Parliament to adjust French legislation to the requirements of Islamic Finance. Whether this move in the right direction is enough to boost the sukuk market in France remains to be seen but no doubt gives new perspectives to Islamic investors.

Link: http://www.nortonrose.com/knowledge/publications/2009/default23125.aspx

Al Baraka Banking Group to launch Islamic bank in France

French financial authorities demonstrate great interest in Islamic banking products entering their markets, says Al Baraka's CEO.

Al Baraka Banking Group's CEO, Adnan Ahmed Yousif has revealed plans to launch an Islamic bank in France, adding that the group has submitted its financial requirements and accounting standards to the French authorities.

In an interview with CNBC Arabiya in Dubai, Yousif explained that the French financial authorities have demonstrated major interest in having Islamic banking products enter its market, in light of the five million Muslims currently residing in France.

Speaking on the Group's performance, Yousif noted that in the first quarter of 2009, the bank recorded positive growth of four per cent in its budget, in addition to an increase in the number of branches, businesses, as well as credit and securities issuances.

Yousif also added that the number of the Group's offices will increase in 2009 from 280 at present, reaching 330 by the end of the year, and staff numbers will increase by 800 employees.

On the economic downturn's effects on the Group's operations, Yousif said that there were initial concerns about investing in certain markets and that these concerns have now been “eradicated”, especially in markets like Turkey, Algeria, Egypt and Jordan, which performed very well.

Al Baraka Banking Group has also begun introducing new products in the Turkish market including finance leasing, forward sale and manufacturing contracts (Salam and Istisna) and rent-to-own schemes, adding that demand for Islamic financial products has increased, especially in emerging markets and in some European markets.

Link: http://www.cpifinancial.net/v2/News.aspx?v=1&aid=2196&sec=Islamic%20Finance

France may open up to Islamic finance

Turmoil in the financial sector has led various economies to look into the functioning of Islamic finance and the possibility of opening up to it, France being the latest.

The Union of Arab Banks is working with the French administration in this direction, Secretary General Fouad Shaker told Emirates Business yesterday.

"We see there is a vision for Islamic banks, like in the UK that has agreed to have Shariah-compliant banks. France is following the same pathway, and we are working very seriously with their administration on that," he said.

Elaborating on the role of the Union, Shaker said it was providing the French Government with details on Shariah finance. 

"We are widening the scope of their understanding as an advisor so that whether or not to accept it in a neutral environment is their decision. They are studying it from risk perspective," he said.

The present crisis, said Shaker, had shown that Islamic finance stood on a stronger ground. "It is because all its activities are related to real transactions. The problem of traditional banking is derivatives and other instruments, which is financial engineering, that fluctuated highly."

Within a short period, Arab banks, whether Islamic or traditional, had been quick in adopting corporate governance practices.

Link: http://www.business24-7.ae/Articles/2009/4/Pages/20042009/04212009_c2c085ada4274429b0ffc4c4f71143be.aspx