| Turkish Association of Participation Banks (TKBB) Chairman and the head of Albaraka Türk Participation Bank Fahrettin Yahşi has said there are investors from the Gulf region that intend to start up participation banks in Turkey. (source) | |
| “We have heard some news. Some participation banks from the Gulf region are in the process of talks to enter the Turkish finance sector by setting up a new participation bank in Turkey. It takes a long time to reach a final decision in the Gulf countries. Besides this, there is also talk in the [participation banking] sector that Adabank could become Turkey’s fifth participation bank,” Yahşi told the Anatolia news agency on Tuesday. Participation banks operating in Turkey as well as around the world are designed for clients who prefer to stay away from conventional banking, mainly due to concerns about interest-bearing accounts and investment tools, as these financial institutions to not pay interest on saving accounts while not charging interest on loans or do not get involved in any kind of investment in companies that sell goods or services considered haram (forbidden) in Islamic teachings. The basic business model of participation banks is a “profit-sharing principle” or becoming a partner in a trading facility and sharing the profits and losses of this activity. For instance, someone basically cannot get an individual loan from a bank as no trade will have occurred during that transaction. More specifically, there should be an underlying asset, so a car or house will be bought by the participation bank and sold to the client with a profit margin. The total profits made from these trades and other banking activities such as investing in projects, commodities, currencies, etc., is shared among the clients of the banks. Participation banks around the world were put under the spotlight during the credit crunch in the US in 2008 as many conventional banks were bankrupted as their balance sheets contained too many risky instruments such as derivatives and exotic products. Taking excessive risk is against the principles of participation banking, so this resulted in little or no effects on participation banks around the world during the credit crunch. Currently there are four participation banks in Turkey, namely, Bank Asya, Kuwait Turkish Participation Bank, Albaraka Türk Participation Bank and Türkiye Finans Participation Bank. The participation banks, like all other banks in Turkey, operate under prevailing Turkish Banking Law, regulated and supervised by the Banking Regulation and Supervision Agency (BDDK). Furthermore, they hold a full foreign exchange license and they are part of the payments system in the country. Yahşi stated that the participation banks represent the 5 percent share of the total Turkish banking sector. Source : http://www.todayszaman.com/news-257418-gulf-participation-banks-looking-for-opportunities-in-turkey.html - Sept 20, 2011 |
