Deutsche said the new licence would allow it to provide “a range of products, from simple flow requirements to more tailored structures that fit the individual needs of the bank’s corporate and institutional clients”.

Jamzidi Khalid, chief executive of Deutsche Bank international Islamic banking and head of Islamic structuring for Asia ex-Japan, said: “Making our conventional product platform available to clients in a Sharia-compliant format greatly increases our competitive position, while contributing to the market’s broader development.”

A spokesperson for the bank in Singapore said that before this approval, Deutsche’s Islamic finance business had to be conducted in a separate country. The Malaysian approval will make these services more accessible in Asia.

Malaysia is already an important hub of Sharia-compliant finance. Sharia law prohibits usury or excess interest (called riba), unnecessary uncertainty (gharar) and speculation (maysir). The trading of debt is also prohibited, and the underlying assets for any financing need to be halal, so cannot be based on products such as alcohol, weapons, gambling or pork. Furthermore, firms are forbidden to sell what they do not own. All these factors make Islamic derivatives challenging to structure.

The Deutsche spokesperson accepted the difficulties of offering Sharia-compliant derivatives but highlighted the Malaysian regulatory permission and Deutsche’s own “leading” panel of Islamic scholars who ensure its products’ compliance with Sharia principles as reasons to believe the tide could begin to turn.