Turkish lender Kuveyt Turk says the German move is part plans for a European wide expansion
Turkish lender Kuveyt Turk said on Sunday it would launch Germany's first full-fledged Islamic bank in July, a first step intended at offering sharia-compliant retail banking services across the continent.
The wholly-owned subsidiary will be called KT Bank AG and use Frankfurt as its base, aiming to tap Europe's second-largest Muslim community, many of whose members are of Turkish descent.
The subsidiary would seek to serve Germany's roughly 4 million Muslims but also target a wider client base, expanding its branch network across the country and later into the rest of Europe, the statement said.
Kuveyt Turk, the largest Islamic bank in Turkey and 62 percent owned by Kuwait Finance House, set up a financial services branch in Mannheim in 2010 and applied for a full banking license in 2012.
At the time, the lender said it would invest initial capital of 45 million euros ($48.7 million) in the planned German unit.
Islamic finance has been slow to gain a foothold in Europe due to a fragmented market and lack of industry-specific regulations.
Britain remains Europe's main Islamic finance hub, with five full-fledged Islamic banks, with a Luxembourg venture also planning to launch an Islamic lender of its own.
In 2004, the German state of Saxony-Anhalt raised 100 million euros via Islamic bonds, with Munich-based FWU Group tapping the market in 2012 and 2013.