ISTANBUL- Hürriyet Daily News
Participation banks’ presence is growing rapidly in Turkey, the Participation Association data show as the government prepares to supports the sector with sukuks
Fahrettin Yahşi (L), the outgoing chairman of the Participation Banks Association, hands a gift to Deputy PM Babacan, after the speeches at the association’s general assembly.
Participation banks’ assets grew 29 percent to 56.1 billion Turkish Liras last year, Fahrettin Yahşi outgoing chairman of the Participation Banks Association of Turkey (TKBB) said May
25 at the association’s 11th general assembly.
The amount of funds participation banks have collected has grown by 18 percent, to reach 39.9 billion Turkish Liras in 2011, he said, according to a press release issued by the association. The share of participation banks in Turkey’s banking sector in terms of fund size is 5.6 percent he said.
“[Despite] effects of competition [and] falling profit margins, participation banks have increased their profitability by 5.8 percent to 803 million Turkish Liras, while overall banking sector profits dropped by 10 percent in 2011,” Yahşi said.
There are 685participation bank branches employing 13,857 people as of the end of 2011, he said.
Participation banks conduct “interest free” transactions based on Islamic rules.
Kuveyt Türk General Manager Ufuk Uyan was elected to replace Yahşi as the new chairman of
the TKBB.Turkey’s sukuk issuance
Deputy Prime Minister Ali Babacan delivered a speech at the event in which he said that Treasury issued sukuks (Islamic-compliant bonds) will be denominated in liras for the domestic market, but denominated in foreign currency for foreign investors.
There is a substantial demand for Treasury sukuks from abroad he said, adding that the domestic market is already good and ready for growth in this matter.
“We want Turkey to take its part in [the] global Islamic finance market, which has reached a size of $1 trillion dollars,” Babacan said, as reported by Anatolia news agency.
“[Institutions] have lodged applications with the Capital Markets Board (SPK) for a total of $650 million worth of sukuk issuance. This is all by the private sector. Some $350 million of the application process is completed. This field is set to expand further,” he said.