IslamicFinance.de

According to Turkish Deputy Prime Minister Ali Babacan, the number of participation bank branches has reached 869, thier size of assets has increased to 81.5 billion Turkish Liras. Therefore, the participation banks’ share in assets is 5 percent and in funds it’s 6 percent. However, these figures are below expectations, he added. The minister stated that the tax difference between sukuk and bonds has been removed, legislation related to Islamic financing has been completed, and the private pension system has become able to be built on non-interest instruments. Moreover, Turkey has expressed its intention to create a legal basis for Takaful insurance, since Bahrain-based Albaraka is planning to found an Islamic insurance firm. Furthermore, two new participation banks from the Gulf countries had been preparing to enter to the country.

Bahraini lender Al Baraka Bank's Turkish unit is working on the issue of a $200 million sukuk, Al Baraka Turk general manager Fahrettin Yahsi said on Wednesday. Yahsi explained the sukuk would be issued when market conditions allowed and added that the bank would renew its $450 million murabaha syndication with a higher volume at the end of September.

Borsa Istanbul (BIST) aims to become one of the most prominent centers that work in accordance with the principles of participation banking in the Middle East, Europe and Africa. Capital Markets Board (SPK) has prepared a regulation on non-interest financing tools, such as five new types of Islamic bond. The new rules, which were sent to Prime Minister’s office for approval this week, will allow Turkish corporate and banks, as well as the Treasury, to issue the world’s most widely used types of sukuk, giving them access to a wider pool of investors via a global market estimated at more than $100 billion. Turkey has also started an initiative to allow companies from 60 countries, chosen according to BIST’s vision of “Istanbul International Finance Center,” to sell their capital market tools in Istanbul and also to buy and sale of tools which are already sold.

Barwa Bank has acted as joint lead manager on Albaraka Turk Participation Bank's (ABT) $200m Tier 2 sukuk. This transaction represents the first Sukuk Murabaha transaction issued in the international capital markets from Turkey. Barwa Bank has been involved in almost all meaningful sukuk business over the last 12 months, guided by its strategy to become a key player in the Islamic debt capital markets. The ABT sukuk is another milestone for the bank, having been involved with several high profile issuers earlier this year as Co-Lead Manager, notably, the government of Dubai, Emirates Airlines and Dubai Islamic Bank.

KFH-Research issued a report stating that participation banks (Islamic banks) in Turkey form 5.2% of banking assets and will reach 10% by 2018, since those banks surpass the rest of the banking sector and have steady financing growth over 20% per year. The report noted that KFH-Turkey is first in deposits, and that participation banks are highly demanded and offer a wide array of products. There are currently four participation banks in Turkey, which are Albaraka Turk, Kuveyt Turk, Turkiye Finans, and Bank Asya. The low penetration rate of participation banking should ensure that its significant growth will continue over the coming years. Continuous measures and initiatives taken by the Turkish government as well as the large Muslim population will drive the participation banking sector to grow in the longer term.

The Turkish government has announced it will be seeking to tap into the $1 trillion Islamic financial industry. Stronger Islamic banks would enable Turkey to attract more cash from the Gulf and Asia, where the appetite for Sharia-compliant products far outstrips the existing supply. This could potentially make Istanbul a regional financial hub. For now, Europe still accounts for the lion's share of trade with Turkey's financial institutions and wider economy. But with Europe still in the grip of financial woes, the Turkish economy is diversifying and looking at alternative markets in the Middle East or North Africa. The development of Islamic finance could become an increasingly useful instrument in that strategy.

The successful closure and signing of a US$ 230,500,000 and EUR 115,300,000 Syndicated Dual-Currency Murabaha Financing Facility for Asya Kat?l?m Bankas? A.?. (Bank Asya) was announced by its Initial Mandated Lead Arrangers and its Bookrunners. The Facility was signed on 30 April 2013 and a commemorative event was being held to mark the occasion. Launched at US$ 225 Million, the Facility was oversubscribed to close at US$ 382 Million equivalent with participation from 28 banks from across the globe. It carries a profit rate of 125 bppa over the relevant benchmark. Bank Asya will use the proceeds to expand its financing activities in Turkey.

Turkey has begun to give new banking licenses after the 2001 banking crisis, with no exception for interest-free Islamic banks, called participation banks. The format of two participation banks which will be established by the state-run Banks Ziraat Bank and Halkbank, will be clearer in a few months. As of now four banks have operated in the participation banking industry: Bank Asya, Turkiye Finans, Albaraka Turk and Kuveyt Turk. They constitute 5.3 percent of the Turkish banking industry. The aim of the Participation Banks Association of Turkey is to triple the share of Islamic banking assets in Turkey by 2023. Besides, Ziraat Bank has been planning to set up a separate Islamic bank. Moreover, Turkish lender Halkbank appears to be the second bank to start offering sharia-compliant services under a new entity.

Shares in Turkey's Gozde Girisim were up 9.49 pct to 4.50 lira, its upper limit for the session, after it mandated asset manager Unlu to sell its 11.57 percent stake in Turkish Islamic lender Turkiye Finans. Turkiye Finans is majority owned by Saudi Arabia's National Commercial Bank, and Gozde by Turkish conglomerate Ulker.

As part of an initiative backed by the Islamist government, state-run Ziraat Bank is working to set up a Shari’ah-compliant entity. Turkey already has four Islamic banks, known locally as participation banks, of which three are foreign-owned. But Shari’ah-compliant assets account for just 5 percent of total banking assets, far below the average of 25 per cent in the Gulf región. Size is mostly the problem. Islamic banks in Turkey are also lagging in innovation compared to peers elsewhere in the Muslim world. Stronger and larger Islamic banks could strengthen Turkey's financial position. Domestically, they could lure funds that could help fund Turkey's GDP growth. Internationally, stronger Islamic banks would enable Turkey to attract more cash from the Gulf and Asia.

A sukuk deal issued by Asya Sukuk Company Limited is the first Turkish bank sukuk internationally placed where the obligor is a company which is entirely Turkish owned. The sukuk certificates issued are unconditionally and irrevocably guaranteed by Bank Asya. The inaugural issuance is for $250,000,000 and will have an initial yield of 7.5% per annum. The sukuk will be issued in fixed rate resettable Tier 2 certificates which are due in 2023. BNY Mellon has been appointed delegate, principal paying agent, registrar, transfer agent and Irish listing agent on the deal. It will perform fiduciary duties and make profit and principal payments to investors on behalf of Asya Sukuk Company Limited. It will also handle administrative duties related to the issuance of the certificates.

In the past, European arrangers and investors dominated issuance of international bonds from Turkey. But in recent months the Gulf has started to play a major role, for commercial and possibly even political reasons. About $10 billion of last year’s Turkish issuance came in the final four months of the year, and was dominated by banks. The Gulf is central to the current stream of issuance. One reason for the shift is Turkey’s move into Islamic finance. The fact that three of Turkey’s four Islamic banks are affiliates of Gulf banks has also helped steer sukuk issuance to the region. Another factor behind the trend is Turkey’s increasing emphasis on developing political and economic ties with the Gulf. Pricing is also a factor because yields from Turkey are generally higher for similar credit ratings.

In the past, European arrangers and investors dominated issuance of international bonds from Turkey. But in recent months the Gulf has started to play a major role, for commercial and possibly even political reasons. One reason for the shift is Turkey’s move into Islamic finance. The fact that three of Turkey’s four Islamic banks are affiliates of Gulf banks has also helped steer sukuk issuance to the region. Another factor behind the trend is Turkey’s increasing emphasis on developing political and economic ties with the Gulf. Pricing is also a factor. A compression of yields in the Gulf over the past 18 months has reduced the returns from bonds issued within the region.

Turkish Islamic bank Turkiye Finans issued a $500 million dollar-denominated sukuk, at a price of 3.95 percent on Wednesday. The bank, majority owned by Saudi Arabia's National Commercial Bank, had mandated Citigroup, HSBV, NCB Capital and Noor Islamic Bank for the issue last week.

Turkey's Bank Asya is set to complete the general syndication stage of its Shariah-compliant loan imminently.

Bahraini lender Al Baraka Bank's Turkish unit plans to issue a $200 million, 10-year subordinated sukuk by the end of April or early May, the Bahraini bank's chief executive Adnan Ahmed Yousif said yesterday. Al Baraka Turk, which signed a $450m murabaha loan in September, has appointed BNP Paribas, Al Hilal Bank, Barwa Bank, Emirates NBD and Japan's Nomura for the Tier 2 sukuk.

Fitch Ratings has assigned Turkiye Finans Katilim Bankasi A.S.'s (Turkiye Finans) forthcoming Sukuk issue an expected rating of 'BBB(EXP)'. Turkiye Finans as the managing agent will actively manage this portfolio and ensure that profits are in line with the entire expected return on the Sukuk. The sukuk are asset-based not asset-backed. The 'BBB(EXP)' expected rating assigned to the Sukuk is driven solely by Turkiye Finans' Long-term foreign currency Issuer Default Rating (IDR) of BBB' as the Sukuk structure is viewed as an originator-backed/asset-based structure.

Turkiye Finans mandated Citigroup, HSBV, NCB Capital and Noor Islamic Bank for a dollar-denominated sukuk issue. Turkey's Capital Markets Board approved last week the bank's application for a sukuk issue of $500 million and 100 million lira ($55.78 million). ($1 = 1.7929 Turkish liras). Turkiye Finans is majority owned by Saudi Arabia's National Commercial Bank.

The Turkish unit of the Kuwait Finance House, Kuveyt Turk, will raise its capital by TL 960 million in the next three months and another TL 360 million will be added over the following 15 months, according to its General Manager Ufuk Uyan. Moreover, the bank is planning to issue a sukuk worth TL 100 million ($55.40 million) in September or October. Besides, Kuveyt Turk expects to open a new overseas branch in Qatar and Iraq.

Turkey's Bank Asya has raised USD250m through a 10-year non-call five subordinated Islamic bond. The notes priced at par to yield 7.5%, in line with initial price thoughts of mid-seven percent. The issue carries a Ba3 rating by Moody's, one notch lower than Bank Asya's senior unsecured rating of Ba2. Bank of America Merrill Lynch, Emirates NBD, HSBC and National Bank of Abu Dhabi are joint lead managers on the Reg S transaction.