Opportunities for Omani banks in Germany

Germany is by far the biggest trading partner of Oman within the European Union. This creates new opportunities for the Omani banks to expand their client base in Germany by taking advantage of international trading relationship.

As the European Union moves along with its economic and monetary union, increasing numbers of GCC trading partners are establishing their international operations here to take advantage of huge consumer market and their international trading relationships. Germany as the largest economy within Europe and the fourth largest worldwide becomes very important in this context. The total trading volume between Germany and the Arabian countries was approximately €49bn in 2012, and also for Oman, Germany is by far the biggest trading partner within the European Union. This creates new opportunities for Omani and GCC banks to take advantage of international trading relationship by following the existing corporate client base in Germany and to expand the client base by offering German corporate and private clients banking and financial services from Germany to Oman and the GCC.
A wide range of banking products to German and GCC-based private and corporate clients, including online banking services can also be offered. The other financial services include refinancing the bank’s exposure by collecting deposits from German private clients. In view of that, Germany has the highest savings rate per capita in Europe. Furthermore GCC banks could obtain access to the German Bundesbank’s and the European Central Bank’s windows and facilities, i. e. the European payment system, Repo-facilities, etc.

With this in mind, it is quite astonishing that there is almost no GCC bank in Germany although Germany is by far the biggest trade partner in Europe for the GCC. According to Hassan Sohbi, member of the international Middle East Practice Group of Taylor Wessing, there are a growing number of joint ventures and strategic partnerships between German and GCC companies. Currently, financial markets in Germany that support Islamic financial instruments continue to grow rapidly. Germany has a wide experience of the Islamic finance market that creates opportunities for sharia-compliant structuring of deals. Considering the unique banking environment it is not very surprising that more than 300 banks with foreign background are successfully established and have entered the German banking market with a local presence. Among them are ABC International, Attijariwafa Bank, Bank of Beirut, Misr Bank-Europe, ABN Amro, HSBC, BNY Mellon, JP Morgan, ICBC; State Bank of India, Vietin Bank, Industrial Bank of China.

In today’s integrated global financial markets, Frankfurt Main is considered as a major financial hub and finance centre. Together with many foreign banks the European Central Bank, the German Bundesbank and the German Association of Foreign Banks are also located in Frankfurt Main. Moreover a Turkish bank currently plans to open the first sharia-compliant bank in Germany based in Frankfurt Main.

Time and again, Germany has proven its outstanding economic stability particularly during the last few years, which resulted from its reliable regulatory environment and deposit protection scheme. Stefan Feckl, banking partner of Taylor Wessing points out that the German banking license is a ‘door opener’ to the promising European market and is the gateway to the banking markets of the other EU-members. He further suggests other options to enter the German banking market besides obtaining a new banking licence, such as the acquisition of an existing bank or pass porting an existing license from and to EU-member states. The most suitable approach depends on the individual case; the involvement of legal consultants at an early stage to explore the various possibilities is therefore recommended.

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