Turkey

Islamic Development Bank #meeting in Jakarta

On May 15 representatives of 56 muslim countries came together at the 41st IDB annual meeting in Jakarta. In 2015, the IDB Group recorded approvals worth $1.83 bn, representing 21% of the total since the bank’s inception. In Turkey Islamic banking comprises 5% of the total banking system, but the government aims to increase this figure to 15% by 2023. IDB's president, Ahmad Mohamed Ali, said the bank also fully supported Turkey’s plans to develop Istanbul as an international financial center.

Banking watchdog finds it hard to sell debt-ridden Bank Asya

The head of the Savings and Deposits Insurance Fund said the deadline for the sale of Bank Asya is May 29. If a buyer cannot be found, the bank will be liquidated. The bank started reporting huge losses throughout 2015, while its shares were suspended from trading in Borsa Istanbul. Later it was taken over by the Savings Deposit Insurance Fund. According to the audit report on Bank Asya the bank's shareholders signed blank transfer contracts and a large number of dubious transactions were carried out.

#Turkey Wants #Islamic #Megabank in Istanbul as Jakarta Talks Loom

Turkey wants to set up a new Islamic megabank. Deputy Prime Minister Mehmet Simsek said the prime shareholders would be Turkey's Treasury and the Islamic Development Bank. Simsek prepares for talks with Indonesia in Jakarta next week on proposals to start a Shariah-compliant megabank that will lend to companies and infrastructure projects. Indonesia and Malaysia have long tried separately to establish a Shariah-compliant lender but faced obstacles until now. Turkey is ready to commit more than $300 mn for the lender as capital.

Bank Asya to be sold or liquidated by the end of the month, banking authority head says

Mehmet Ali Akben, president of the Banking Supervisory and Regulatory Authority (BRSA), said that Bank Asya will either be sold by the end of the month or its license will be canceled. The bank started reporting huge losses throughout 2015, while its shares were suspended from trading in Borsa Istanbul. Later it was taken over by the Savings Deposit Insurance Fund. The BRSA's audit report on Bank Asya said the bank's shareholders signed blank transfer contracts and a large number of dubious transactions were carried out.

The World Bank-IFSB-Turkish Treasury Joint #Conference to be held in May 2016

The World Bank Group, the Islamic Financial Services Board and the Republic of Turkey are jointly organising a conference on "Realising the Value Proposition of Takaful Industry for a Stable and Inclusive Financial System" on May 30-31, 2016 in Istanbul, Turkey. The conference aims to provide a platform for global practitioners and stakeholders in Takaful industry. The current state of the industry will be discussed as well as the evolving nature of the related legal and regulatory requirements in various regions.

$155 million #Murabahah for Ziraat Participation Bank

On 27 April 2016 Ziraat Participation Bank closed its first Syndicated Murabaha Financing Facility. The debut transaction received a strong response from the market. Due to the significant oversubscription, Ziraat Participation Bank increased the facility size to US$155 mn. CEO Osman Arslan said the proceeds from the facility will be used to support the funding requirements of SMEs and the financing of trade related businesses.

Turkiye Finans Looking to Issue Euro Denominated #Sukuk

Turkiye Finans announced plans for a EURO denominated Sukuk. This represents the first Euro denominated Sukuk in Turkey, though a number of US Dollar Sukuk have been issued previously, most recently by Turkish subsidiary of Kuwait Finance House (Kuveyt Turk) which issued a $350 million Sukuk in February 2016. Kuveyt Turk also recently issued an innovative CPI linked Sukuk, which illustrates a maturing market in Turkey.

Ziraat Participation's First #Syndication

On 27 April 2016 Ziraat Participation Bank closed its first Syndicated Murabaha Financing Facility. The debut transaction received a strong response from the market. Due to the significant oversubscription, Ziraat Participation Bank increased the facility size to US$155 mn. CEO Osman Arslan said the proceeds from the facility will be used to support the funding requirements of SMEs and the financing of trade related businesses.

Funding Social Expenditure with Risk-Sharing Sukuk

While the use of risk-sharing instruments for the funding of revenue-generating infrastructure projects is easy to understand, such instruments can also be used for the funding of non-revenue generating infrastructure. The principle of risk-sharing would require that the government's repayment of the obligation created be linked to some proxy or indicator of government revenue. Given today's conundrum with debt and the need to deleverage, GDP-linked securities are being revisited. Replacing the benchmark to LIBOR (London Interbank Offer Rate) with a benchmark to nominal GDP makes eminent sense, especially from a Shariah viewpoint.

Fitch: Turkish banks still resilient to economic shocks

Fitch Ratings expects Turkish banks to have continued resilience to economic shocks as they still retain reasonable capitalization and liquidity. According to Fitch Financial Institutions Director Lindsey Liddell the agency expects their performance to remain reasonable, however the banks will face some challenges given the slower growth environment and margin pressure from competition. There will be further asset quality pressures, particularly considering the sector's high level of foreign currency lending and the sharp devaluation of the local currency in 2015.

Kuveyt Turk Issues Sukuk Linked to Turkish CPI

Sukuk linked to Consumer Price Index (CPI) rate will provide investors protection against rising inflation in Turkey. The short term sukuk, known as rental certificates in Turkey was issued with a maturity of 729 days. The issue was subscribed by means of a private placement at a profit rate of 3.39 % above the CPI rate.

Sukuk takes record share in Q1

According to Fitch Ratings the total new Sukuk issuance (with a maturity of more than 18 months) in the Gulf Cooperation Council, Malaysia, Indonesia, Turkey, Singapore and Pakistan was around US$11.1 billion (RM42.9 billion) in the first quarter of 2016. Fitch said that Sukuk issuance was up 22% from Q4’15 and 21% from a year earlier, while non-Sukuk bond issuance of US$17.1 billion was down 23% quarter-on-quarter and 45% year-on-year. Sukuk represented 39.3% of total bond and Sukuk issuance in these countries during the quarter – the highest proportion in the past eight years.

Turkish central banker is social scientist with roots in Islamic finance

Turkey's cabinet has approved Murat Cetinkaya as the next central bank head, giving some initial relief to investors who had feared a battle between Erdogan, who equates high interest rates with treason, and Prime Minister Ahmet Davutoglu's more orthodox economic team. Despite the initial relief in markets, the 40-year-old Cetinkaya remains something of an unknown quantity, lacking the experience of his predecessor, Erdem Basci, an engineer turned economics Ph.D. whose term as governor expires next week. The new Central bank governor must now convince investors that he can tame inflation while resisting political pressure to cut rates.

QInvest LLC acquires ERGO Portfoy and launches QInvest Portfoy

QInvest L.L.C. has announced the acquisition of ERGO Portfoy, one of the largest and fastest growing asset management companies in Turkey. Following the completion of this acquisition, QInvest Asset Management will have assets under management close to $1 billion. ERGO Portfoy has been rebranded as QInvest Portfoy and is a subsidiary of Qatar’s QInvest. The senior management of QInvest Portfoy will remain with the firm and will be led by Mr. Murat Vanli, the General Manager of ERGO Portfoy, and will continue to operate from Istanbul. The company has been granted its license to operate by The Capital Markets Board of Turkey (CMB) and is licenced to offer portfolio management to both individual and institutional investors.

Call for Papers: Global Donors Forum, Istanbul May 2016, 24-25

Resetting Priorities - Redefining Roles

Five years ago, the Global Donors Forum was convened in Dubai to take on a challenging task: to define the roadmap for Muslim giving into the next decade. As a growing network of philanthropists, grantmaking foundations and socially responsible corporations, the Forum lead a consultative dialogue among the thought leaders from which, it was hoped, a new social compact could emerge.

Half a decade on, with the world having changed dramatically as events in the Middle East would attest, the Global Donors Forum 2016, has a new set of issues to focus upon. Foremost among these is the need to rigorously analyse the past decade in order to ascertain how best to formulate strategies to counter emerging challenges. The GDF 2016 will, therefore, attempt to set new priorities as it looks to redefine the role of philanthropy, with a focus on the Muslim world in a radically changed global landscape.

Indonesia likely to defeat Turkey to host IDB's HQ

Indonesia is likely to defeat Turkey to host the Islamic Development Bank’s (IDB) headquarters, a spokesman of the bank has said. Indonesia's strategic position and role during the Organization of Islamic Cooperation (OIC) summit were two driving factors behind the decision. IDB Indonesia country director Ibrahim Shoukry said the bank had committed to investing US$1.2 billion on projects in Indonesia over five years. Indonesia, he further said, had some advantages over Turkey due to its prospective market in Asia, which is healthier than Turkey's main market, Europe. Indonesia’s market will be broader due to the ASEAN Economic Community.

Ziraat Islamic bank follows parent bank to loans

The Islamic subsidiary of Turkey's Ziraat Bank has launched a bitesize $75m murabaha deal, as the bank itself refinances $1bn of loans. Ziraat Participation (Ziraat Katilim Bankasi), which is wholly owned by Ziraat Bank, launched a $75m dual currency loan earlier this week — its first ever syndicated deal, according to a lead banker. Banks can make commitments in euros and dollars. ABC Islamic Bank is co-ordinator.

BRIEF-Turkey's TMSF says Bank Asya cannot be returned to original shareholders

TMSF fund says Bank Asya will either be sold or merged within this period, or liquidated if that not possible.

UPDATE 1-Turkey to liquidate Bank Asya if sale not agreed within three months

Turkey's Bank Asya will not be returned to its original shareholders after being seized by the government last year, the deposit insurance fund that now owns the bank said, adding that it would pursue liquidation if a buyer is not found within three months. Within the framework of the existing legal situation, the return of the bank to its (shareholders) is not possible, the Deposit Insurance Fund (TMSF) said on Tuesday, adding that it had given the bank a three-month deadline from Feb. 29 to find a buyer or be merged. If this is not possible, its liquidation will come on to the agenda, the TMSF said.

Investment banking arm of Qatar’s Barwa scours Turkey for deals

The First Investor (TFI), the investment banking arm of Qatar’s Barwa Bank, is looking for investments in Turkey, in sectors ranging from real estate to food, its acting chief executive Yousef Al Obaidan said. TFI has not specified a budget for Turkey, although its existing holdings in the Gulf region average around $100-$150 million per investment, Al Obaidan said. Individual investments in Turkey could exceed that, he said. The bank, which is also involved in private equity and asset management, is particularly interested in Turkey’s real estate, healthcare, education and food and beverage industries, Al Obaidan said. TFI is already active in Turkey, where Kiler, a REIT, mandated it in December for the sale of the Istanbul Sapphire shopping center and residence.

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