FINANCE - Bank Asya receives over $300 mln in murabaha loan

Bank Asya's general director Çelik (C) at the signature ceremony.

Turkey’s leading participation bank, Bank Asya, has received over $300 million in a “murabaha” syndicated loan from 26 international financial institutions, marking the largest such loan ever extended to a Turkish bank.

Murabaha is an Islamic method of extending loans that involves a particular kind of sale where the seller states the cost of the commodity to be sold and sells it to another person, adding a specified amount of money to the price. Since murabaha is not a loan extended with interest but the sale of a commodity for cash or deferred payment, interest-free banks commonly use it as a financial instrument to earn profits. (full story) Bank Asya’s search was for $150 million in a murabaha loan from international markets; however, it received much higher response -- over twice what was originally intended -- from 26 international financial institutions. It was able to secure a total amount of over $300 million -- $171 million and 94.5 million euros -- from lenders such as the London-based Standard Chartered Bank, Bahraini Arab Banking Corporation’s ABC Islamic Bank, the Dubai-based Noor Islamic Bank and the National Bank of Abu Dhabi, as well as 22 others from the United States, Europe, Turkey, Pakistan and other places across the Middle East and North Africa. The cost was determined to be equal to the London Interbank Offered Rate (LIBOR) and Euro Interbank Offered Rate (EURIBOR) plus 1.5 percent. The loan will be payable in a one-year term. Speaking at the signing ceremony held before the weekend in İstanbul, Bank Asya’s General Director Abdullah Çelik said the loan is a sign of the trust international markets have in the Turkish economy and his bank. This is the third loan Bank Asya has received of this kind. Last year, the bank secured another $255 million in a murabaha syndicated loan from 26 international creditors. Source : http://todayszaman.com/news-240173-bank-asya-receives-over-300-mln-in-murabaha-loan.html - April 5, 2011