The Turkish "participation banks" (operating according to Islamic principles) usually enter into "syndicated Murabaha facilities" to collect financial means.
Those funds subsequently are channeled through to underlying clients, using Murabaha financing for their assets. In the Murabaha-environment, the bank acquires an asset - as pre-designated by the client - at price X and than sells that down to the client for price X+a (a being the mark up or profit margin).
Murabaha financing dominates the Turkish "Islamic finance scene", together with Ijara (leasing).
Still this year, Bank Asya entered in a 250 million USD facility, and just recently a facility for the same amount was announced by Albaraka Turk (to be signed on Sept 15, 2010).
The way of Murabaha financing - basically imposed by the poor existing regulatory framework - restricts the development of new financial products.
The new Sukuk structures - where Kuveyt Turk could lend adequate know how from it's parent KFH Kuwait Finance House - allow a broader scope of financing products.
Time will tell how inventive the banks can be - within the existing legal framework to develop new products for the Turkish economy.
Big strides might be tempered by non adequate tax structures and a very limited legal and regulatory framework.
The pioneering effort however opens windows to exciting developments.
