Cypriots seek to set up Shariah finance hub

Financiers in Cyprus, an island divided by war four decades ago, want to set up an Islamic finance hub to spur an economy that hasn’t grown in three years.

The Cyprus Investment Funds Association is calling for the government to sell sukuk to lure investment from the Middle East, CIFSA’s president, Angelos Gregoriades, said in an e-mail interview from the capital Nicosia.

The Cyprus Stock Exchange wants to encourage the listing of Shariah-compliant bonds and sees potential for the nation of 1.2 million to become a “gateway to the European Union” for Islamic investors, CSE CEO Nondas Metaxas said in a September 18 interview.

The island, where Muslims make up 18 percent of the population and Turkey has kept troops since the 1974 conflict, is being asked by the European Union to tackle a bad loan ratio of 45 percent after a joint bailout with the International Monetary Fund in March 2013.

Cyprus would follow a sukuk sale by the UK and a planned offering from Luxembourg, as Ernst & Young LLP forecasts the industry’s global assets will double to $3.4 trillion by 2018.

“Islamic finance is considered as a credible alternative source of funds in light of the credit crunch worldwide,” the stock exchange’s Metaxas said in an interview from Nicosia.

“The CSE’s aim is to develop a new product in its markets but at the same time to help Cyprus overcome the present difficult and challenging economic situation.”

*This excerpt of an article was originally published on on 24 September 2014. Read the original article here.