* Hopes to apply for full banking licence in October
* Will be headquartered in Frankfurt
* To target non-Muslims as well as Muslims
By Anjuli Davies
LONDON, Sept 11 Turkish bank Kuveyt Turk plans
to launch Germany's first full-fledged Islamic bank, aiming to
tap into demand for ethical finance in the wider population as
well as within Europe's second-largest Muslim community.
The bank, which has had a presence in Mannheim since 2010,
hopes to apply for a full banking licence in October and will be
headquartered in Frankfurt.
It plans to open more offices in Germany and other European
countries in due course, a source at the bank told Reuters on
Monday, declining to be named under briefing rules.
Kuveyt Turk, which is 62 percent owned by Kuwait Finance
House, will seek customers among Germany's roughly 4
million Muslims, many of them of Turkish descent.
But it also sees potential demand among non-Muslim customers
in the wake of the global financial crisis, which has made some
investors and depositors distrustful of conventional finance.
Islamic finance is based on religious principles such as a ban
on interest and pure monetary speculation.
Germany has been slow to tap into Islamic finance. Britain
is Europe's main Islamic finance hub, home to five
sharia-compliant banks and $19 billion in assets. In contrast to
Germany, which has no specific regulatory treatment for Islamic
banking, British financial authorities have introduced a series
of tax and legislative changes to reduce obstacles to the
In 2010, asset manager Meridio launched an Islamic fund in
Germany that has since been liquidated because of insufficient
demand, which was also the fate of one launched by Commerzbank
In May this year, Malaysian asset manager CIMB-Principal
Islamic started marketing a sharia-compliant fund in Germany.
The market potential for Islamic investment products in
Germany is estimated at 1.2 billion euros ($1.5 billion)
annually by the Institute for Islamic Banking and Finance in
But only 2-5 percent of Muslims surveyed by the federation
of savings banks in the German region of Westphalen-Lippe
expressed interest in sharia-compliant finance.
In 2004, the German state of Saxony-Anhalt became the first
and so far only European government body to issue a sukuk
(Islamic bond), with an issue of 100 million euros.
(Additional reporting by Bernardo Vizcaino; Editing by Andrew