Turkey

Turkey’s Ziraat Islamic unit applies for 1.5 bln lira sukuk

The Islamic lending arm of Turkey’s state-run Ziraat Bank has applied to sell 1.5 billion lira ($501.9 million) worth of Islamic bonds, according to Turkey’s Capital Markets Board (SPK). The sale would be the first by a state-run Islamic bank, and follows a wider government push to develop the sector in the world’s eighth most populous Muslim nation. No tenor or details of underlying assets were given for the deal, which will be sold to qualified investors. Islamic lender Kuveyt Türk also applied for 1.85 billion lira worth of sukuk. Ziraat Participation Bank started operations in May 2015, with 675 million lira in paid-up capital and plans to have 170 branches and 2,200 staff by the end of 2018.

UPDATE 1-Turkish authorities to sell or liquidate Bank Asya -fund chairman

Turkey plans to sell Islamic lender Bank Asya by the end of May and will liquidate it if a buyer is not found, Sakir Ercan Gul, chairman of the Savings Deposit Insurance Fund (TMSF) that controls the bank said. Gul said that some of the bank's partners have accepted it, some of them have not. The bank will be sold in any case, he added. Last year the government seized the assets of Bank Asya, saying its financial structure and management presented a threat to the financial system, and took over more than 20 companies with ties to Gulen.

Turkish President calls for Islamic banking to reach 25 per cent

Speaking at the launch of the participation banking unit of state-owned Vakibank, President Recep Tayyip Erdogan said that the share of Islamic banking is around five per cent now, but the target was earlier defined to increase this share to 15 per cent by 2025. He stated his opinion that the share should reach 25 per cent instead. In December 2014 Vakifbank’s Board of Directors had authorized the bank to carry out all necessary transactions to obtain financing from Islamic Development Bank (IDB) to pledge capital for the Bank's participation banking project, amounting to $300 million with Turkish Treasury guarantee.

Bank Asya shareholders dismiss fund’s statement on possible sale

A statement from the deposit insurance fund (DIF) that Islamic lender Bank Asya would either be sold or liquidated by the end of May has no legal basis and its shareholders will never agree to such forced maneuvers, Süleyman Ta?ba?, a lawyer for Bank Asya shareholders said. Selling the bank is not legally possible according to banking law, he explained, adding that the bank's equity capital ratio is still strong; it has TL 1.35 billion in equities and another TL 1.4 billion deposited with the central bank. Plus, the shareholders still hold ownership. Ta?ba? criticized DIF's irresponsible statements, adding that all parties should respect the judicial process that is currently under way with regards to the bank's future.

European bank arranges financing for Central Anatolian hospital

The European Bank for Reconstruction and Development (EBRD) has announced it is co-financing the development of a 318 million-euro high-tech hospital in Konya, a city in Turkey’s central Anatolian region. As part of a comprehensive long-term financial package, the EBRD has arranged a 147.5-million-euro-of syndicated loan under its A/B loan structure, with 67.5 million euros for the Bank’s own account and 80 million euros of syndicated to UniCredit Bank Austria AG and Siemens Financial Services. The Black Sea Trade and Development Bank and the Islamic Development Bank are providing parallel financing of 50 million euros and 67.5 million euros respectively.

Turkey could become interest-free financial hub, Al Baraka Banking CEO says

Adnan Ahmed Yousif, the head of Al Baraka Banking Group, said Turkey, and especially Istanbul, had the potential to become a hub for financial services. Yousif, who is the president and CEO of the Bahrain-based group, said Turkish economic administrators were aiming to broaden the services offered to customers, with special focus on participation banks. He also said Turkey's huge potential might facilitate the interest of investors from the Gulf countries as well as create new opportunities for the recently expanding sukuk market in Turkey.Turkey and especially Istanbul, is very close to participation banking markets, such as the GCC and Europe.

QInvest/Crescent Capital complete first mezzanine financing for Turkish alternative energy

There are a growing number of transactions in the Turkish market that are financed by GCC institutions; and the Gulf States are steadily rising investors in Turkey. Among the lastest crop of deals, Qatar’s QInvest has provided a five year $30m murabaha mezzanine finance facility for Turkish private equity firm Crescent Capital to fund its acquisition of a 100% stake in Akocak HPP, an operational 81 MW hydro-electric power plant in Turkey. QInvest has structured and invested in the transaction. The deal also shows that traditional project finance structures are giving way to alternative financing structures, with Islamic finance showing potential for further growth in the funding of capital goods projects.

KFH-Turkey issues capital boosting $350m sukuk

Kuwait Finance House Turkey (KFH-Turkey) issued Tier 2 capital-boosting sukuk worth $350 million to support its capital situation. The bank has set the yield at 7.9 percent for 10-year tenure. The sukuk will be listed on the Irish Stock Exchange for trading. The credit rating agency "Fitch" assigned an expected rating of BBB- to this tier 2 Basel III-complaint issue. The bank targets boosting its capital adequacy ratio so it can grow and enhance its presence in the international markets, said CEO- KFH -Capital Abdulaziz Nasser Al-Marzouq. KFH -Turkey mandated international banks and financial institutions led by KFH -Capital as a global coordinator, manager and syndicator, in addition to other lead managers and syndicators which are HSBC, Dubai Islamic Bank (DIB), Nour Bank, QInvest Investment Bank, Emirates NBD, and KAMCO Investment Company.

Kuwait Finance House says to set up Islamic Turkish funds firm

Kuwait Finance House (KFH) will set up a sharia-compliant asset management unit under its Turkish bank branch, the lender said on Monday. Kuwait Finance House Turk will establish five sharia-compliant investment funds and offer other investment services under KT Portfoy, the new unit, KFH said in a bourse statement. The establishment of the new firm is conditional on approval from Turkey's capital market authority. KFH's chief executive in January said it would issue Islamic bonds to boost capital reserves at its subsidiary bank in Turkey, even as it looks to restructure its global assets.

Fitch: Turkish Islamic Banking Targeted For Growth

Fitch Ratings says it expects Turkish Islamic banks' loan growth to remain above the sector average, supported by new entrants to the market and increasing penetration, despite intense competition from conventional banks. Excluding the troubled Bank Asya, Islamic banks (participation banks) expanded their loan books 34% YoY in1H15, compared with sector's average of 25%. For 2016 Fitch forecasts 15%-20% loan growth for the sector. In a report published today, Fitch says return on equity could increase in 2016, underpinned by loan growth, but will be sensitive to non-performing loan (NPL) growth due to the banks' fairly high credit risk profiles and a volatile operating environment.

Gülen linked Bank Asya fined $5.14 mln for unpaid tax

Bank Asya, which is known for its links to the Gülen Movement, has been fined TL 15 million ($5.14 million) for unpaid taxes. The Finance Ministry's tax authority imposed the fines after examining the bank's accounts for 2010, 2011 and 2012. In May, the BDDK's audit report on Bank Asya revealed that the bank's privileged shareholders signed blank transfer contracts and a large number of shady transactions were carried out. After 63 percent of stakes belonging to the bank's A group shareholders were transferred to the TMSF in February, the BDDK launched an investigation into the bank, finding a number of dubious transactions in investigations. In addition, the international credit rating agency Fitch said in June that Turkey's banking sector would not be significantly affected by the takeover of Bank Asya.

Turkey sets up Islamic finance coordination committee

On December 15, 2015, the Prime Ministry of the Republic of Turkey issued a circular on the formation of an Islamic Finance Coordination Committee (Faizsiz Finans Koordinasyon Kurulu) to accelerate the development of Turkey's Islamic finance markets. The Islamic Finance Coordination Committee will be chaired by the minister responsible for the Undersecretariat of Treasury and will include top financial markets regulators from the Ministry of Development, the Ministry of Finance, the Central Bank, the Banking Regulation and Supervision Authority, the Capital Markets Board, Borsa Istanbul, and the Islamic Banks Association of Turkey. The Islamic Finance Coordination Committee will also consult with non-governmental organizations, academics and professional organizations.

Turkey banking chief sees looser regulations after interest rate hike

Turkey is likely to loosen some regulations on domestic banks to spur lending, Huseyin Aydin, the head of the national banking association said, as the government looks to ease the impact of a widely expected central bank rate increase. The government is determined to pursue growth-oriented economic policies. It is expected that easing in macro-prudential measures will be carried out. Five years ago regulators introduced tighter rules designed to cool lending and close a yawning current account deficit. Those included higher reserve requirements, forcing banks to hold more capital.
Aydin said he expects changes to regulations on reserve requirements and risk weighting of assets, which should help to offset the impact of tighter monetary policy on bank costs.

IIRA reaffirms ratings of Kuveyt Turk Participation Bank

Islamic International Rating Agency (IIRA) has reaffirmed the ratings of Kuveyt Turk Participation Bank (KTPB) at ‘AA(tr)/A1+(tr)’ (Double A / A One Plus) on the national scale. Ratings on the international scale have also been reaffirmed, with foreign currency rating at ‘BBB-/A3’ (Triple B Minus / A Three) and the local currency rating at ‘BBB/A3’ (Triple B / A Three). Outlook on the assigned ratings is ‘Stable’. The assigned ratings take into account KTPB’s sound financial risk profile, against the backdrop of continued business expansion. Overall profitability position is also healthy; however, efficiency indicators have lagged behind larger players.

UPDATE 1-MOVES-Standard Chartered appoints CEO for Islamic banking business

Standard Chartered has appointed Rehan Shaikh as chief executive of its global Islamic banking business, it said in a statement on Wednesday.
Shaikh moves to Standard Chartered Saadiq from Dubai Islamic Bank, where he was senior vice president and business head, private sector and transaction banking. He previously worked for StanChart in Pakistan from 1998 to 2007, the statement said.
He takes over from Sohail Akbar, who was interim chief executive of the Islamic banking operation after the departure of Afaq Khan earlier this year.
StanChart remains committed to the business despite a period of hiatus across other parts of the bank as global chief executive Bill Winters moves to restore profitability. It announced plans this month to reduce costs by $2.9 billion by 2018 and cut 15,000 jobs.
"Islamic finance is an integral part of the business at Standard Chartered and we continue to see growing demand from clients in many of our markets," said Sunil Kaushal, the bank's regional chief executive for Africa and the Middle East.

The world needs the moral and human side of Islamic finance: Turkish minister

Islamic finance is based on growth of assets, not financial engineering, and this organic growth makes it different from Western debt constructs, Justice and Development (AK) Party parliamentarian and economist has said.
Ibrahim Turhan, member of Turkish parliament for AK Party from Izmir, made the remarks in an interview with Anadolu Agency on the sidelines of the Second International Islamic Finance and Economics conference in Istanbul on Thursday.
Turhan, who is also an economist and former chief executive officer of Borsa Istanbul, said: “One of the principal causes of financial crisis of 2008-2009 was the vast market that had grown up for securitized instruments.

Powerhouse partners from across global Islamic financial ecosystem joining World Islamic Banking Conference

More than 1200 distinguished guests from more than 45 countries and 300 organizations participating this December, Bahrain

Key players from the global Islamic finance industry will be participating with the 22nd annual World Islamic Banking Conference (WIBC) 2015, taking place on the 1st, 2nd and 3rd of December at the Gulf Hotel, Bahrain. Focusing on 'New Realities, New Opportunities', WIBC will play host to more than 1200 leaders including Central bank governors, regulators, C-suite bankers & asset managers, policy makers, Fintech entrepreneurs and contemporary thought leaders.
WIBC 2015 will host 5 central bank Governors and deputy governors and feature speeches and discussions by the Governor of the Central Bank of Bahrain, H.E. Rasheed Al Maraj, the Executive President of the Central Bank of Oman, H.E. Hamood Sangour Al Zadjali, Deputy Governor of the State Bank of Pakistan, Riaz Riazuddin and the Deputy Governor of the National Bank of Kazakhstan, Nurlan Kussainov.

Borsa Istanbul's Islamic investment success story

The Borsa Istanbul Private Market, a year-old platform for bringing companies and investors together, is a leading example of Islamic finance, the exchange’s CEO Tuncay Dinc has said.
Speaking at the G20 forum on Islamic finance on Wednesday, Dinc said: “The Islamic finance approach to risk- and profit-sharing makes it an important resource for investors who seek the greater security that this kind of finance affords.”
Islamic finance, which does not involve charging or paying interest, uses a model in which trade is backed by real assets and money is merely a medium of exchange rather than a commodity to be traded.
Under this system, the funds invested are used on a profit-and-loss sharing basis under models known as musharakah – a joint enterprise where risk and rewards are shared rather than interest paid on a loan – and mudarabah, where one party supplies funding and an agent manages a specific trade.

Albaraka Turk gets feedback in 10 % area for capital-boosting sukuk -sources

Turkish Islamic bank Albaraka Turk has received initial pricing feedback in the 10 % area for a potential U.S. dollar-denominated sukuk issue which would bolster its supplementary or Tier 2 capital, sources familiar with the matter told Reuters on Thursday.
The lender has received indications of interest totalling over $250 million, including those from joint lead managers, for the ten-year non-call five sukuk, the sources said. A potential deal is expected early next week subject to market conditions, they said.
Albaraka Turk, a unit of Bahrain-based Al Baraka Banking Group, has chosen Barwa Bank, Dubai Islamic Bank, Emirates NBD, Nomura, Noor Bank, Standard Chartered and QInvest to arrange the sukuk issue.

Kuveyt Turk says mandates banks for sukuk

Turkish Islamic bank Kuveyt Turk has mandated six institutions for a sukuk with a value of up to $400 million with a maturity of 10 years, it said in a statement to the Istanbul stock exchange late on Thursday.
Kuveyt Turk Participation Bank, which is 62 percent owned by Kuwait Finance House, said it had mandated KFH Capital, Dubai Islamic Bank, HSBC, Noor Bank, QInvest and Emirates NBD as joint lead managers. Sources familiar with the matter told Reuters in September that seven banks had been picked to arrange a potential deal.

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