Norton Rose Fulbright has advised KT Bank AG in relation to the establishment, licensing process and product development of the Eurozone’s first Islamic bank, based in Frankfurt. A full banking licence was granted by The Federal Financial Supervisory Authority (BaFin) and enables the bank, in compliance with the principles of Islamic Finance, to provide services such as accept deposits, grant loans and provide investment services.

KT Bank AG is a subsidiary of Kuveyt Türk Bank, a Turkish bank whose majority shareholder is Kuwait Finance House.

The establishment of a new bank does not happen very often. This is particularly true for institutions with non-traditional business structures. KT Bank AG's Islamic financing business will comply with the provisions of the German Banking Act in addition to Islamic ethics and values. This means for example, that the bank is not permitted to charge or pay any interest. Instead, the bank generates income for its customers and shareholders by other means which are more closely focused on the principles of real economy.

Supervisory authorities issued the banking licence following a thorough and detailed process. Ensuring regulatory compliance was particularly complex, given the banking structure had not been used in Germany previously.

Rüdiger Litten, partner at Norton Rose Fulbright comments:

“We are pleased with the outcome of the process. The fact that KT Bank AG has been granted a full banking licence shows that Germany is an active financial centre which is open to pioneering business innovation.”

The Norton Rose Fulbright team was led by partner Rüdiger Litten and included Alexander Schwenk, Christoph Ritzer, Osman Sacarcelik and Susanne Storjohann (all Frankfurt).