Turkey to host Islamic ‘megabank’

ISTANBUL - Anadolu Agency

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Turkey is planning to host a new Islamic “megabank” within the year, Deputy Prime Minister Mehmet Şimşek said on May 11. 

“We have been in contact with the Islamic Development Bank to found a megabank in Turkey. Indonesia has made a similar request,” Şimşek said during his address at an Islamic finance meeting in Istanbul.      
  
He added that Indonesia, Turkey and the Islamic Development Bank – based in Saudi Arabia - decided to set up committees to look into the matter during a visit to Washington in April.        

“Turkey will host a megabank that will serve the region. Indonesia will have one as well. They will either be specialized or territorialized,” Şimşek said, adding that the bank will be based in Istanbul.        

Speaking to the media after his speech, he said the Treasury would be a partner of the bank, as well as the Islamic Development Bank.        

The government has long aimed to turn Istanbul into a finance center, and Şimşek stressed that Islamic finance was of “critical importance” to realizing this goal.        

Islamic finance entails interest-free transactions, in accordance with Islamic law.        

“Islamic finance has potential for growth. But we need to mobilize this potential,” the deputy prime minister said, calling for Islamic banks to offer more products to their customers.        

There are currently six Islamic banks operating in Turkey: Albaraka Türk, Bank Asya, Kuveyt Türk, Türkiye Finans, Ziraat and Vakıf.        

Ziraat and Vakıf are state banks that have recently launched Islamic branches. Halkbank, another state-run conventional bank, is expected to also begin its own Islamic operation.        

At least 16,000 people currently work in Islamic finance in 1,100 branches across Turkey.        

Islamic banking comprises 5 percent of the total banking system in Turkey, which the government says it aims to increase to 15 percent by 2023.        

Development Minister Cevdet Yılmaz has said Islamic finance should expand at a more rapid pace.  
     
During a meeting on sustainable development in Istanbul on May 11, Yılmaz said the size of assets of Islamic finance in Turkey had reached 120 billion Turkish liras ($40 billion).        

“On a global level, the current assets of Islamic finance have been around $2 trillion. In 2020, this volume is expected to reach $4 billion. So there is a serious chance of development in the coming future,” he added.