Paris vies for Islamic finance hub status

The Paris Europlace chief executive says the French capital hopes to become a centre of Islamic finance.

Suez chief executive Gerard Mestrallet delivers his speech during a financial forum organized by Paris Europlace, in Paris, on July 2, 2008.

The head of a group representing major Paris financial players says the French capital hopes to become a centre of Islamic finance. The Paris Europlace chief executive, Arnaud de Bresson, said recent changes in regulation were bringing France into competition with leading Islamic finance markets. "We have pushed regulations from our regulatory authorities, and I think we are nearer and nearer to London, Hong Kong and the large financial centres, in terms of an equilibrium," he said in an interview on Friday, a day after the Paris Europlace World Forum ended.
A major focus of the two-day conference was encouraging co-operation between European and GCC markets, as well as the business climate for sharia-compliant funds. Speakers included representatives of the Abu Dhabi Investment Authority (Adia), Abu Dhabi Securities Exchange and Qatar Investment Authority (QIA). Mr Bresson noted that the AMF, France's regulatory authority, had recently undertaken new initiatives to encourage the issuing of sukuk, or Islamic bonds, on the Paris Stock Exchange.
"The Paris Marketplace is very welcoming of these developments and also encouraging managers to create these tools in the GCC," he said. France lags behind the UK in Islamic finance business, despite having a much larger Muslim population. Christine Lagarde, the French finance minister, who has pushed for more friendly regulation since her appointment a year ago, said at the conference that tax incentives to encourage Islamic banking and insurance were being studied.
The French senate held discussions in May with bankers and religious scholars in an effort to identify possible changes to legal and financial frameworks that would encourage the growth of sharia-compliant products in Paris. In a special comment issued on Wednesday, Moody's Investors Service said existing regulatory frameworks were flexible enough to accommodate new Islamic finance products, but identified social and political resistance as barriers to fully capitalising on the opportunities presented by Islamic products.
France also retains double stamp duty on Islamic mortgages, which was eliminated in Britain by the prime minister, Gordon Brown, during his time as chancellor of the exchequer. There are only five licensed Islamic banks in Europe, all in the UK, although several conventional French banks offer Islamic products. When Qatar Islamic Bank launched its European Finance House, it decided to go with the more established financial centre, a company spokesman said.
But he said the bank saw the London office as a first step, with Paris next on the agenda: "The French companies are looking for financing opportunities. There is a clear liquidity problem in Europe in general. In the GCC, we have an excess of liquidity and can expand on this and offer solutions." As markets falter elsewhere, France has also tried to attract investments from sovereign wealth funds. With Adia and the QIA represented at the conference, the funds were a major topic at the conference, Mr Bresson said.
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