Turkey

Turkiye Finans assigned AA3/Stable/P1 ratings as RAM Ratings' first rated Turkish bank

RAM Ratings has assigned AA3/Stable/P1 financial institution ratings to Turkiye Finans Katilim Bankasi AS (the Group). RAM moreover assigned an AA3/Stable rating to the proposed RM3.0 billion Sukuk Murabahah MTN Programme to be issued by the Group's wholly owned asset leasing subsidiary, TF Varlik Kiralama AS. The assigned ratings reflect a high likelihood of extraordinary support from the Group's major shareholder, The National Commercial Bank (NCB). Turkiye Finans enjoys sound earnings which support its capital position. Although its asset-quality indicators are healthy, they may weaken amid Turkey's more challenging economic and political backdrops. On the other hand, Turkiye Finans' ratings are constrained by its limited domestic franchise and relatively weak funding position.

Turkey: Islamic Finance In Turkey: Some Practical Considerations

With the support of the government to develop Islamic finance in Turkey, Turkish and foreign investors are becoming more and more aware of Islamic financing methods and products in Turkey. The main legislation regulating Islamic banking in Turkey is the Banking Law No. 5411 (the "Banking Law"). Regulated under the same legal framework, participation banks must establish their own financing models approved by shariah scholars, to the extent it is in compliance with Turkish laws. Due to lack of specific regulations on Islamic finance, financing offered by participation banks has its own obstacles. Despite legal and practical issues yet to be resolved, Turkey is determined to increase its standing in the Islamic finance market.

Turkey Wants More Bank Entrants as Acquisition Field Narrows (1)

Turkey’s Finance Minister Mehmet Simsek said the government wants more foreign lenders to apply for operating licenses as the country’s pool of potential bank acquisition targets shrinks. The focus on licenses comes after Industrial & Commercial Bank of China Ltd. announced last month that it was buying Tekstilbank AS and Qatar Islamic Bank said on March 26 that was nearing the end of exclusive talks to buy a stake in Asya Katilim Bankasi AS. (ASYAB). While the acquisition field narrows, Turkey’s regulator said it will look favorably on applications for banking licenses as the government encourages foreign investment.

Albaraka Turk takes up sukuk baton after Turkiye Finans

Albaraka Turk takes up sukuk baton after Turkiye Finans. Albaraka Turk has picked arrangers as it aims to follow participation bank peer Turkiye Finans's recent return to the dollar sukuk market. But one investor warned that Albaraka may find its deal more challenging. Albaraka Turk is looking to issue up to $500m of five year paper and has asked BNP Paribas, Emirates NBD, QInvest and Standard Chartered to manage the sale. Albaraka filed to the Istanbul Bourse, but leads could not confirm the mandate or say if a roadshow will follow.

Iran has its eyes set on Turkish banks

The Banking Regulation and Supervision Agency (BDDK) approved expansion requests from Bank Mellat last month in light of the U.S. and the UN Security Council loosening economic sanctions. Afterwards, applications from the Iranian banks Pasargad and Tejarat to set up shop in Turkey were approved by the Ministry of Foreign Affairs. Bank Mellat has operated in Turkey through its three branches in Izmir, Istanbul and Ankara. Turkey and Iran have reportedly come to an agreement allowing an increase in banking transactions between the two countries. Earlier this year, Turkish Prime Minister Recep Tayyip Erdogan made a visit to Iran aimed at strengthening economic ties between the neighboring countries.

King & Spalding Advises Turkiye Finans on US$500 Million Senior Unsecured Certificates

King & Spalding advised Turkiye Finans Katilim Bankasi A.S. in relation to the issuance of US$500 million senior unsecured certificates due 2019, listed on the Irish Stock Exchange. The certificates are issued through TF Varlik Kiralama A.S., a Turkish incorporated asset leasing company. Rizwan H. Kanji led the team handling the Turkiye Finans issuance. He was assisted by senior associate Lidia Kamleh. The joint lead managers on the transaction were Citigroup Global Markets Limited, EmiratesNBD, HSBC and QInvest. Co-managers Dubai Islamic Bank and Commercial Bank International were advised by Clifford Chance LLP.

Turkiye Finans USD500m 5.375% Apr 19

Turkiye Finans has completed a $500m bond issue. The issue is rated -/-/BBB and its maturity is April 24, 2019. The issue/fixed reoffer price is 100 with a profit rate of 5.375%. The spread at reoffer was 363.4bp over mid-swaps. The bonds were launched on Tuesday April 15, payment date is April 24. Joint bookrunners are Citi, Emirates NBD, HSBC, QInvest.

Turkiye Finans rallies on break after beating guidance

Turkiye Finans navigated challenging markets on Tuesday to price its $500m five year sukuk inside guidance at 5.375%. After what one investor termed a “sluggish” start, the deal achieved a $1.4bn order book and rallied from par on the break to 100.125/100.375. Turkiye launched as tensions mounted again between Russia and Ukraine. The Russia 4.875% ’23 bond has fallen three points since the start of the week and equity markets are down. Despite this, the Turkish participation bank tightened its guidance from 5.5% and almost doubled its book.

GÜLENIST BANK'S SUPPOSED MERGER SCRUTINIZED

Bank Asya, known for its close ties to the controversial Gülen Movement announced last month that it would sign a merger agreement with Qatar Islamic Bank (QIB). After announcing the prospective merger, Bank Asya's share in BIST, Turkey's stock market, rallied and increased by nearly 60 percent in one week. However, officials at the Banking Regulation and Supervision Agency (BDDK) said they have not received any formal merger application from Bank Asya executives. Authorities said that Bank Asya is looking for assurances from the BDDK that the agency will approve the merger, otherwise the Qatari bank may not be willing to sit down at the negotiating table again. Whether or not the merger happens, the speculative news has negatively affected small investors.

Qatar Islamic Bank may buy share in Turkish Islamic lender Bank Asya

Qatar Islamic Bank (QIB) has entered into exclusive discussions to acquire a stake in Turkey’s Bank Asya. QIB is seeking to finalise the transaction within the next few months, subject to obtaining the required regulatory approvals. The Qatari bank did not say what stake it might buy or disclose any other details. Bank Asya had said earlier it had started talks on a strategic partnership with QIB and planned to complete the process soon. It gave no further details. The Islamic bank has been in focus since state-owned companies and institutional depositors have reportedly withdrawn 4 billion lira ($1.8 billion), or some 20 percent of the bank’s total deposits. Bank Asya said it had weathered the mass deposit withdrawals and was not at risk.

Turkey has great potential for Islamic insurance, report says

Turkey has significant potential in the sector of Islamic insurance, according to the Global Islamic Insurance Forecasts Report prepared by Ernst & Young (EY) for the period 2013-2014. The report also stressed that Turkey's high potential for Islamic insurance is based upon its young population, along with ongoing regulatory reforms and a government that is willing to promote financial inclusion through participation banking. However, as only four participation banks currently operate in Turkey, there is a major supply-side constraint, as well as limited legal infrastructure in the Islamic finance sector. Another factor negatively affecting Islamic insurance in Turkey is the problematic pricing of this insurance, which leads prices to remain relatively low in the sector.

Bank Asya Slumps as Turkish Airlines Drops It Amid Gulen Dispute

Asya Katilim Bankasi AS (ASYAB), the Istanbul-based lender caught in a feud between the government and an Islamic movement, fell to its lowest in more than three weeks as Turkish Airlines (THYAO) said it was no longer using the bank. THYAO didn't say where it had transferred its deposits. As a result, Bank Asya’s shares declined 4.1 percent at 12:24 p.m. in Istanbul. The market may be concerned that Turkish Airlines removing deposits may have a negative impact on the funding structure of the bank. However, it was known in the market that THY took out large deposits before, so the market’s probably overreacting at the moment. The bank has lost 41 percent since Dec. 16, and its price-to-book ratio of 0.43 is the lowest in an index of 16 listed Turkish lenders.

Kuveyt Türk Bank to reach 320 branches across Turkey in 2014

Istanbul-based participation bank Kuveyt Türk, which raised its profit by 20 percent to 300 million Turkish Liras last year, announced ambitious plans for 2014. The lender is aiming to reach 320 branches across Turkey, opening a branch in Qatar and establishing a bank in Germany in 2014. In addition to this, it is planning to issue a Malaysian ringgit- or dollar-denominated sukuk in Malaysia, according to Kuveyt Türk CEO Ufuk Uyan. The Istanbul-based bank has applied to Germany’s Federal Financial Supervisory Authority (BaFin) in order to carry out its loan and deposit operations in Germany in October. The bank has opened 47 branches within Turkey, extending the number of its branches operating domestically and abroad to 267.

Turkish Treasury says to issue lira sukuk on Feb 19

The Turkish Treasury said on Monday it will issue a lira-denominated Islamic bond, or sukuk, on Feb 19. In order to diversify the borrowing instruments, broaden the investor base and increase the domestic savings, Turkish lira-denominated Lease Certificates will be issued. The Treasury previously said it would issue a sukuk worth 1.5 billion lira in February.
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INTERVIEW-Bank Asya says weathers withdrawals in Turkey crisis

Turkish Islamic lender Bank Asya said it had weathered mass deposit withdrawals, which the media said were orchestrated by government supporters as part of a backlash against a corruption scandal blamed on an influential cleric. Turkish media say state-owned companies and institutional depositors loyal to Prime Minister Tayyip Erdogan have withdrawn 4 billion lira ($1.79 billion), some 20 percent of the bank's total deposits, over the last month to try to sink the lender. The bank is reportedly not at risk because new deposits worth more than half that amount were placed in the bank by ordinary citizens. The government has declined to comment.

Turkey's Bank Asya plans to issue sukuk worth up to $500 mln

Turkish Islamic lender Bank Asya applied to the regulator, the Capital Markets Board, to issue sukuk worth up to $500 million, the bank said on Friday. The bank made the statement to the Istanbul stock exchange.

Kuveyt Turk to sign last Turkish FI loan of 2013 next week

Kuveyt Turk is planning to sign its murabaha facility next week. The syndicated loan will consist of two tranches — a one year deal paying 205bp all-in and a two year note paying 250bp all-in.

Turkey's Islamic banking sector can expand further if it gets more capital

According to Standard & Poor's' article "Turkey's Growing Islamic Banking Sector Needs Fresh Capital For An Added Push," participation banks in Turkey look set to keep increasing their market shares over the medium term. However, S&P believes sluggish domestic savings and intensifying competition from conventional banks will likely limit the sector's progress without fresh capital and funding. The local authorities' more supportive stance toward the sector contributed significantly to the growth of Islamic banks. However, participation banks' rapid growth and high exposure to the construction sector render their asset quality vulnerable to an economic slowdown. The growth momentum existing participation banks have enjoyed can continue only if their capital bases increase and they achieve some competitive advantage.

Türkiye Finans says it plans more sukuk issues

Turkish lender Türkiye Finans plans to issue both lira and foreign currency-denominated sukuk in 2014, according to Chief Executive Derya Gürerk. The lender, majority owned by Saudi Arabia’s National Commercial Bank, issued a $500 million sukuk earlier this year. The move reflects Turkey’s growing Islamic finance industry as the government promotes a wider range of Islamic finance products. The country now has 50 banks, four of which are Islamic: Al Baraka Turk, Bank Asya, Türkiye Finans and Kuveyt Türk, 62 percent owned by Kuwait Finance House. These banks have seen their assets grow six-fold over the last decade as their combined branch network has more than tripled.

Islamic International Rating Agency (IIRA) upgrades Kuveyt Turk Participation Bank

Islamic International Rating Agency has upgraded the national scale ratings of Kuveyt Turk Participation Bank (Kuwait Finance House–Turkey) on both the short-term and long-term scale to AA-/A-1+ from A+/A-1 previously. Ratings on the international scale have been reaffirmed with local currency ratings at BBB/A-3 and foreign currency assessment at BBB-/A-3. Outlook on the ratings is ‘Stable’. According to IIRA, a significant ratings driver is the fact that the bank stands to benefit from strategic and financial support if needed, both implied and explicit. Additionally, the board and management of the bank have remained stable, with several of the key personnel having been associated with the bank for a number of years.

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