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German Bank Offers ‘Islam-Compliant’ Investment

1:44 PM, Feb 7, 2012 • By JOHN ROSENTHAL
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Last month, German bank WestLB rolled out a new “Islam-compliant” investment product named the Islamic Strategy Index Certificate. The value of the certificate is based on the value of the WestLB Islamic Deutschland Index, consisting of shares of ten German firms “whose business activities are consistent with the ethical rules of Islam.” The WestLB product prospectus explains that the Islamic Strategy Index Certificates “are certified by the Central Council of Muslims in Germany as Islam-compliant [Islam konformes] investment.” The Central Council of Muslims in Germany is an umbrella group of twenty-two Muslim organizations.

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The prospectus goes on to explain that “for the selection [of stocks] it is in principle not permitted that the business activity of the chosen firms involve interest-bearing financial services or derivatives, insurance, alcohol, tobacco, pork, armaments, gambling, gold and silver hedging transactions, or the entertainment industry.” The firms making up the Islamic Deutschland Index are some of the biggest names in German industry, including the sporting goods manufacturer Adidas, the engineering group Siemens, the software maker SAP, the chemical giant BASF, the pharmaceutical company Bayer, and the energy companies E.ON and RWE. Deutsche Post, of which the German state remains the principal shareholder, also forms part of the index. In addition to providing postal services in Germany, Deutsche Post is the parent company of the international package sender DHL.

According to Frank Haak, WestLB’s managing director for equity markets, three scholars undertook the certification of the product on behalf of the Central Council of Muslims in Germany. Germany’s Islamische Zeitung – “The Islamic Paper” – names the three scholars as Mufti Abdul Kadir Barkatullah, imam of the Finchley Mosque in London, Sheik Haytham Tamim of the Utrujj Foundation in London, and Michael Saleh Gassner, an Islamic Finance expert from Zürich. Regarding one of the firms in the index, the Islamische Zeitung ironically remarks, “it must have escaped the attention of the financial scholars that ThyssenKrupp, by virtue of its participation in…ThyssenKrupp Marine Systems, counts as one of the most up-to-date producers of maritime military technology.”

The investment also involves a charitable component: whereas 95 percent of yearly dividends are to be reinvested, five percent are to be donated by WestLB to a charitable organization. According to the Islamische Zeitung, citing WestLB’s Haak, the beneficiary is to be chosen by the Central Council of Muslims in Germany.

John Rosenthal writes on European politics and transatlantic security issues. You can follow his work at www.trans-int.com or on Facebook.

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