The Islamic finance and markets law review: Netherlands

Dutch banks were among the first banks to become active in the field of Islamic finance: at the beginning of the 20th century, the Netherlands Trading Society was established in Jeddah, Saudi Arabia, to provide interest-free money exchange services to pilgrims from Indonesia.2 Since the emergence of modern-day Islamic finance in the 1990s, however, there has been limited Islamic finance activity in the Netherlands. In 2004, the first European sukuk was issued by the German state of Saxony-Anhalt using a Dutch vehicle (a stichting) as the issuing entity, but the entire structure was initiated by the German state so this was in essence a German Islamic finance transaction. ABN AMRO and the Liechtensteinische Landesbank launched a structured investment product called LLB Top 20 Middle East Total Return Index Certificate in 2007, and Barclays launched three Amsterdam-listed Islamic investment products in 2008. Further, Rabobank studied the potential demand for Islamic banking among households in the Netherlands. In 2007, Minister Wouter Bos (a former Minister of Finance) also announced that the possibilities for Islamic finance in the Netherlands should be studied. Despite several studies that showed there is a potential demand for Islamic finance in the Netherlands,3 the Islamic finance market did not pick up. Hence, there have not been many Islamic finance transactions in the Netherlands and, in general, Islamic finance remains a novel and exotic form of financing for most Dutch financiers and borrowers