To provide a comprehensive analysis about the practicabilityand purpose of combining Islamic finance and ship financingI sub-divided the research question into three constitutive parts: Is it useful to conjoin these two fields with each other? Is Islamic finance even superior to conventional finance when it comes to funding ships? Firstly, I will come to the question whether the German shipping industry needs Islamic finance. In that context, I will point out some rationale why ship financiers could be appealed to the potentials of Islamic finance. In chapter three, the principles and prerequisites of Sharia -compliant financing will be introduced.

Therefore, it is important to know about the constitution of the Sharia and its relevance in everyday life, especially in economic matters.

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Afterwards, the Islamic commercial codex will be analyzed in detail and all possibly relevant Islamic financing modes will be outlined. In the next chapter, I will give an overview of the shipping industry and describe the mechanisms of ship financing while I will pay special attention to the German ship financing industry. I will, furthermore, define special features that distinguish the funding of vessels from other financing ventures. Afterwards, in chapter five, I will bring together my findings of the previous sections to analyze the advantages and drawbacks of Islamic finance in the context of ship financing.

At the end, before drawing a conclusion, I will design Sharia -compliant ship financing schemes based on the results of the preceding chapters. The prevalent ship financing mode in Germany is the so called KG-system. This success story has got some scratches when the financial crisis hit world trade and, consequently, the shipping markets.

In the aftermath of the crisis, various shipping funds had to employ restructuring programs; many of them had to raise additional funds, either from existing shareholder or from new ones.

Ship Financing in Germany: A possible Area of Application for Islamic Finance?

Thus, the German KG-system has been declared dead by some industry commentators and analysts. They believe investors and banks have lost their trust in the system. Others say the system will survive, though some modifications are necessary. One of those modifications may bethat banks will ask for higher equity ratios when financing KG-based shipping companies.

Either way, new vessels have to be financed in the future. The order books of the shipyards indicate massive demand for new tonnage, even though many of these orders are not yet financed. Innovative financing modes might be the key to maintain a leading position in the further expansion of the world fleet.

Roundtable: How Islamic is Islamic finance?

From an International perspective, ship owners are already relying on diverse and sometimes innovating financing modes. Many shipping companies have listings on capital markets, among them the industry giant Maersk. Some ship owners have raised money in the past by issuing bonds. Others rely on innovative leasing structures to extend their fleet.

Indeed, Islamic finance has some favorable features that go well together with ship financing, as this work will show. Furthermore, prominent observers of the growing Islamic finance industry are of the opinion that thedemand for Sharia -compliant investment opportunities is far greater than the current supply.

Sharia law is the canonical law devout Muslims follow. It plays a decisive role not only in religious matters but also in many aspects of everyday life. Inheritance, sanitation, criminal law, commercial activities and many other matters are directly or indirectly regulated by the Sharia. To understand the implications of Sharia law for commercial interaction it is essential to know its constitution and the mechanisms behind it. Islam is not a homogenous belief system. Furthermore, the Sharia is not a single codified body of law but, instead, consists of various sources and is very much open to interpretation.

Hence, within Sunnis and Shias there are various different schools of thought that generally agree on the broad principles of Islam and the Sharia but frequentlydisagree about specific matters. In the Quran the words of god are written down as they were delivered to the Prophet Mohammed. None of the other sources may interfere with or contradict the ideasof the Quran. Second in line is the sunna , which is also considered to be a primary source of law. The sunna is a collection of accounts stating what the Prophet did, said or silently approved. These accounts are called hadith.

They were transmitted not by Mohammed himself but by people that were directly or indirectly in touch with the Prophet. The stronger the line of transmission of a hadith to Mohammed the more followers acknowledge its authenticity. Different schools of thought may weigh the importance of a hadith differently or may even reject its legal validity altogether.

The differences between the schools of thought are even larger when it comes to thesecondary sources of the Sharia. These secondary sources are needed to adjust the teachings of the Quran and sunna to problems that have evolved during the centuries and, thus, are not explicitly mentioned in the primary sources. Ijma describes the consensus of all Muslims within a defined community.

This can be a geographic community, for instance all Muslims within a village, or an academic community, for instance all scholars in a specific organization. Opinions differ if really all Muslims within a community have to agree on a specific topic or if only designated scholars need to find a consensus. Furthermore, it is often difficult to define the boundaries of a certain community. Qiyas describes the process, howrules of the primary sources are applied to questions that are not explicitly answered in the Quran or sunna. Analogy would be an adequate translation for qiyas.

An example of such an analogy would be to rule that the use of synthetic drugs is forbidden because of the prohibition of alcohol, which is laid down in the Quran. Ijtihad represents the independent reasoning of a qualified Islamic jurist that leads to new legal rules.

This third secondary source is particularly controversial. The conservative hanbali school rejects to a large extent all secondary sources believing only in the literal truth of the Quran and the sunna. Ironically, this sometimes leads to liberal views towards present-day phenomena that are not mentioned in the primary sources.

Since using analogies or other reasoning is not allowed in the hanbali school the Islamic axiom, which deems everything that is not prohibited to be allowed, counts. Whenever there is ambiguity over what Sharia law requires from a Muslim in a certain situation, individuals or a court can ask for the issuance of a legal opinion called fatwa. When it comes to commerce, the most basic principle of Islamic Sharia law can be described as the pursuit of justice within the community. Some of these rules are accepted universally throughout the Muslim community, others are controversial due todifferent interpretations.

First and foremost, society as a whole should profit from commercial activities. If one person realizes profits at the expense of another person, there is no added value for society. The deal is seen as a zero-sum game and, therefore, does not qualify for the label Sharia -compliant.

Furthermore, in case a person is in financial distress, this person should be treated generously especially if he or she is a member of the religious community. Penalty clauses to ensure that the counterparty meets its payment obligations on time are, hence, hard to enforce. Charges for delayed payments are not only regarded as unjust, they are usually also interpreted as interest. Interest, however, falls under the Islamic prohibition of riba.

The Sharia , moreover, restricts the use of loans. Generally, any predetermined charges above the principal are forbidden. Commerce and trade should not be financed with excessive debt capital. Profit-sharing arrangements are superior to credit-based financing in terms of Sharia -compliance. The past has shown that the architects of the Islamic finance industry try to create new investment instruments either based on already existing ones or by transforming conventional instruments into Sharia -compliant replicates.

In recent years, however, some financing instruments have been developed that have a close resemblance to interest-bearing loans but are by most scholars still regarded as Sharia -compliant. This financing scheme has to fulfill two preconditions in order to be Sharia -compliant. Firstly, the mark-up has to be a fixed sum and cannot be dependent on other parameters. A floating rate would be considered as interest and is, therefore, prohibited. Secondly, the financier, for example a bank, has to carry some of the risks associated with owning the demanded good.

The bank could buy the good, own it for a certain period of time, [33] and then sell it to the client. The possibility that the client could back out of the deal after the investor has already purchased the good poses another risk to the financier. Such kinds of deals are not regarded as loans but as sales on credit. For a sale on credit it is legitimate to ask for a fee on top of the value of the associated good.

equity and debt capital markets - German translation – Linguee

In addition to possible disagreements whether a certain financing mode is Sharia -compliant or not, many Muslims accept the concept of darura necessity while others do not. The concept indicates that due to economic necessities it might be permissible to employ financial means that are, in fact, not compliant with Islam, if there are no Sharia -compliant instruments available. Vissermentions in that context the example of home financing in Europe and North America.

After having described broad principles of Islamic finance, there are some specific aspects left that should be examined more closely. These aspects are considered in single sub-chapters because they have far-reaching consequences for any Islamic financing scheme and, thus, also for the schemes I will construct later on for ship financing in Germany.

Islamic contract law contains some decisive features that usually do not play a role in conventional business contracts. To ensure limited complexity in Islamic commerce, business contracts are not allowed to cover more than one transaction at a time. Furthermore, contracts that are entailed or directly linked to each other are also prohibited.

Often, of course, it is necessary to execute more than one transaction in order to complete a business deal. If we take the example of murabaha again, then,the financier has to close separate contracts with the third party, from whom he buys the good, and his client, to whom he sells the demanded good. Another example would be, when party A sells a good to party B and, afterwards, buys it back at a higher price. Such a deal is not allowed if both transactions are arranged together and at the same time.

Otherwise, there would be either two transactions within one contract or the first contract would presuppose the second one. Though, there are some hurdles to take, in general, Islamic financial products can be structured as long as there are individual contracts to each transaction and as long as each transaction itself is Sharia -compliant. Moreover, most scholars demand a time lag between each transaction, so that, at least in theory, one contract does not entail another contract. Islamic finance endorses a strong linkage between the real economy and the financial sector.

Being opposed to credit-based financing, Islamic finance advocates financial transactions that are backed by tangible assets. The financing activities of a company, thus, have to be directly linked to underlying assets. The main goal in strictly coupling financing with underlying assets is to restrict speculation. Critics, however, emphasize the downside of these financing techniques, which are namely limited possibilities to hedge against certain risks. Another critique often brought forward is that these financing restrictions can formally, but not in essence, be overcome in a Sharia -compliant way.

Tawarruq is one example of an Islamic financing instrument where Sharia -compliance is formally maintained, although the basic intention of the underlying asset rule is circumvented. The Sharia bans the production, consumption or usage of certain assets and services that are assumed to be contradictoryto Islamic norms.

These assets or services are referred to as haram. Not just direct trading with these goods is forbidden but also, for example, the investment in shares of a company that produces pork or alcoholic beverages. At first sight, it seems easy to avoid investing in these goods. However, it is questionable how ample the relation between the investment and the haram goods can be. For instance, is it permissible to buy shares of a company, which itself owns shares of a company that produces beer?

How far must this line be extended in order to be still haram? A typical example is the investment in a hotel. Usually, in a hotel alcoholic beverages are sold. Opinions differ if such an investment is Sharia -compliant or not. Furthermore, the definitions of pornography and gambling may vary widely. In many Muslim countries a plunging neckline is considered as outright pornography; in other Muslim countries the interpretation of pornography may be more liberal. Besides the above listed goods there are also some assets and services where there is controversy whether they are haram or not.

Conservative Islamic scholars, for example, interpret investments in entertainment such as movies and music as not compliant with the Sharia. One also cannot invest in companies that supposedlyprofit from unethical practices. The debatable question here certainly is: One example could be biotechnology firms that engage in genetic engineering. Since a large part of the profits in the conventional financial service sector derives from interest, investments in this sector do not pass as Sharia -compliant either.

In the Islamic world, the view that riba and interest are two different words for the same thing is prevalent today. Among experts there is still a controversial dispute going on if the prohibition of riba originally covered all forms of interest or just excessive rates that were unjustified and lead to impoverished borrowers. In addition to arguments concerning Sharia -conformity, often, secular arguments are invoked by Muslim scholars to justify the complete ban on riba.

In their opinion, interest boosts the transfer of wealth from the poor to the already rich and turns people away from productive enterprises. Interest, they say, determines profits ex ante irrespective of the outcome of the business venture and, hence, abets the party with the stronger bargaining power without necessarily creating additional wealth forsociety. The ban on riba does not only affect loans and other forms of credit-financing but also covers the purchase of goods and penalties for delayed payments.


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Any accessory charge on top of the principal amount is considered as riba , as long as this accessory charge is not regarded as compensation for an increase in incurred risks or additional services. The share capital may be increased by an amount not exceeding CHF 1,, by issuing up to 10,, fully paid registered shares with a nominal value of CHF 0.

Dabei arbeitet der Bereich Hand in Hand mit den jeweiligen. The main product areas are. Its business activities are based on offering financing solutions tailored to the specific needs of Corporate Banking and Structured Finance customers,. Whe re a s equity markets i n t he U S A and J a pa n have continued to perform well and reflect the surprising strength of the global recovery and the latest welcome surprises with respect to corporate profits, Euro pe a n equity markets a r e currently reacting very sensitively to the problems raised by Greek sover ei g n debt.

The regulatory eq ui t y capital r a ti o of the Group has fallen as a result of the acquisition of DEPFA; this might mean that the provider s o f equity and debt m i gh t expect a higher return on t he i r capital. Turning to portfolio investment, in addition to the elimination of the exchange rate risk, the adoption of the euro. Welcomes in this connection the Ecofin Council's decision to call on the Commission to carry out, before the end of February , a study on globalisation and development, in order to assess the advantages and. However, despite a healthier current account, the balance of payments remains vulnerable, reflecting a weak capital account.

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