Alhuda CIBE - International Islamic Finance by Alberto

International Islamic Finance and
Investment Symposium
Karachi 6th-7th December 2006
www.islamicfinancepakistan.com
A case study: Italy and islamic
finance
From a borderline actor to a land
of opportunities
Alberto G. Brugnoni
CEO
ASSAIF

ASSAIF - Karachi 6th-7th
Italy and islamic financing: some
milestones in a not proactive
environment ...
 Banca di Roma, Conference on Islamic Banking in
Italy, Rome, January 1994: first gathering of major
national players with an alien world
 A. G. Brugnoni, Il Genoardo, Palermo, December
1997: a ground-breaking publication
 Associazione Bancaria Italiana, Conference on
Islamic Banks, Rome, December 2002: a confirmation
of interest
 2005-2006, a number of papers written by top bank’s
research departments: sensing the business?

Italy and islamic finance: … but at the end
a dream comes true ...
 An up-hill struggle with some simple truths:
A. Brugnoni, The Issues of Compatibility Between the
Italian Banking System and Islamic Banking, London,
November 2004
 A number of domestic banks open migrants-
dedicated services with leaflets written in arabic. Arab
banks are opening in Italy to service their nationals
 Just an article or a tournaround?
ASSAIF, Halal home financing, Fondazione Housing
Sociale, Milan, December 2006: a specific product

... a dream that has roots as strong as a
well built house
• The domestic migrant-led real estate demand: a
question of individual rights acknowledged by EU
directives but also a tale of juicy numbers
 The market for foreign investments: trophy buildings
and something else. A huge potential: the expressed
interest of shariah conscious investors moves from
10% to 25% in the next three years (data courtesy of
dr. Ali Parsa)
• Italy is a top trading partner of a number of
mediterranean southern shore countries and has
strong links with the Gulf region

The real estate migrant domestic market
 10% of national real estate turnover is originated by
migrants
 110.000 migrants have bought an house for a total
turnover of € 10,2 billion. This represents 12,6%
 In the provinces of Milan and Rome it reaches 17%
with peaks of 50% where migrants are prevalent
 Average cost of the property is € 110.000: 30% paid
cash and 70% with mortgages for 70%-90% of value
 Who is the buyer?
 No breakdown based on religion but 40% comes from
‘islamic culture’

The business idea
 A not-for-profit association in Milan and its members
 The challenge: to put together the italian civil code
and italian fiscal law with the shariah in all fields of
financing but ...
 ... first things come first: let people own their own
property!
 Our strategy: the network concept and knowing where
to go for the right answer

The results: a shariah compliant product
 First murabaha ever done in italy – two different
transactions: one in October 2006 and one on the 1st
of December 2006
 A number of ijara wa iqtina’ on the pipeline ...
 Vast array of financing vehicles for different needs
 A challenge to the establishment? It will probably be
questioned by the italian fiscal authorities ...
 But also a positive contamination: the notary public
was intrigued and initiates a debate

Our first murabaha: some details
 Followed the published indications of the judge
Muhammad Taqi Uthmani
 “... important contribution to the full exercise of the
right of citizenship ... and taking into account the
prohibition of riba”
 A big deal? A € 290.000 transaction financed with
ASSAIF own funds for the buying of a wharehouse
turned into a cultural center in medievial Pavia (60 km
from Milan)

The nearest future: a pent-up demand
ready to explode?
 Huge spread between expectations and realities:
only 12% of known demand is satisfied. No figures for
unexpressed demand
 134.000 mortgages contracts in favor of migrants.
Total of open mortgages: € 4.900 million with the
average between € 100.000 and € 175.000 for a 20
year period
 History comes back: 2010, the mediterranean free
trade zone. A benefit for both Muslim residents and
foreign islamic investment alike
 European Investment Bank (EIB) and the Bank for the
Development of Mediterranean region

We and the world
 Important event in Milan mid-February 2007
 Already contacted by one major banking institution for
distribution of a halal home financing product
 Consulting services on commercial real estate and on
trophy buildings

Thank You!
ASSAIF
Via Montebello 14, 20121
Milan (Italy)
+390236521705 (switchboard)
+393396174282 (mobile)
www.assaif.org

Alhuda CIBE - International Islamic Finance by Alberto

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