A group of private investors from Gulf Arab countries are, reportedly, planning to set up a full-fledged Islamic bank in Luxembourg, which is expected to offer an array of retail, corporate and private banking services.

Named Eurisbank, the new Islamic bank aims to target European customers, following a gradual surge in demand for Shariah-compliant products among the global Muslim community.

With an initial capital of €60m ($81m), the proposed euro zone Islamic bank is likely to be launched during the last quarter of 2014 after receiving a banking license and regulatory approvals expected in January and April respectively.

In order to expand its footprint, Eurisbank aims to open branches in Paris, Brussels, the Netherlands and Frankfurt and may compete with mainstream banks, including HSBC and BNP Paribas.

Excellencia Investment Management managing partner, Ammar Dabbour, was quoted by The Wall Street Journal (WSJ) as saying, "A large untapped customer base with more than 20 million Muslims in the EU represent a significant market growth potential for Islamic Finance."

Citing a recent study by Ernst & Young, WSJ further reported that the Islamic banking industry achieved a growth rate of nearly 16% per annum in recent years, surpassing the conventional banking industry growth- with assets reaching $1.54trn in 2012.