Germany's first Islamic bank, a unit of Kuveyt Turk Bank of Turkey, is to open its doors in early 2010 in the southern city of Mannheim, an executive confirmed Tuesday. Under Islamic banking principles, interest on loans is forbidden and money cannot be lent to enterprises that flout Sharia law. Instead, borrowers must offer collateral and lenders receive a share of business profits.
The unit will open by March at the latest in Mannheim, a factory city with a large ethnic Turkish population, Istanbul-based Kuveyt Turk Bank said. It would seek a full local banking licence for Germany later.
An area newspaper, Rhein Neckar Zeitung, broke the news. The bank executive, who asked not to be named, said Kuveyt Turk Bank intended to establish further branches in Germany, then in other European nations.