The report, titled ‘'Islamic Finance in France: Paris Tries To Reduce The Gap With London”, states that France is following Britain by making fiscal and legal adjustments to attract the Islamic finance Industry, which is estimated to maintain double-digit growth rates, Mohamed Damak, Standard & Poor’s Credit Analyst told Business Intelligence Middle East.
By making fiscal and legal adjustments, London has become home to the only five licensed Islamic banks in Europe and has £5.5bn in sukuk listed on its stock exchange.
Paris however lags behind London and surprisingly even though France’s Muslim population is three times bigger than that of the United Kingdom, it has no Islamic financial retail products available yet and only has a small number of banks offering wholesale Islamic services.
But since coming to office last June, Christine Legarde, France’s finance minister, has followed Britain and made similar adjustments to attract the Islamic Finance Industry as part of the French Government plan to rival London as an international financial centre.
Most recently, moves have been made to facilitate sukuk issuance and sharia compliant structured real estate transactions.
Sharia principles forbid interest on the grounds that money should measure rather than create value.
Paris will have to alter certain tax laws to better accommodate the Islamic approach by reforming rules such as double stamp duty which affects Islamic mortgages in order to compete with London which has been adjusting laws since 2003.
Paris has observed how London has made adjustments to attract the Islamic finance industry and has realised there is a lot of money to be made due to high demand from the Middle East.
Damak believes the development of Islamic Banking in France will be slow but sure and that the majority of growth will come from wholesale banking and sukuk.
Attracting Islamic Finance is an important aspect of the governments plan to rival London but France will also have to compete with the rest of Europe and emerging economies that are also keen on attracting the Islamic finance industry, according to Anouar Hassane, Credit Analyst, Moody’s.
