Turkey partners with Islamic Development Bank to host 'Islamic megabank'
The size of Islamic finance assets in Turkey has reached 120 billion Turkish liras ($40 billion). (Shutterstock)
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Turkish Deputy Prime Minister Mehmet Simsek said on Wednesday that the country will host an Islamic "megabank" within the year.
“We have been in contact with the Islamic Development Bank to found a megabank in Turkey. Indonesia has made a similar request,” Simsek 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 - had 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 this region. Indonesia will have one as well. They will be either specialized or territorialized,” Simsek said, adding that the bank will be based in Istanbul.
Speaking to the media after his address, Simsek said the Treasury would become a partner of the bank. He also stressed that the Islamic Development Bank is expected to be a partner as well.
The government has long aimed to turn Istanbul into a finance center.
During his address, Simsek stressed that Islamic finance was of “critical importance”.
Islamic finance entails interest-free transactions, in accordance with Islamic law.
“Islamic finance has potential for growth. But we need to mobilize this potential,” Simsek said, calling for Islamic banks to offer more products to their customers.
There are currently six Islamic banks operating in Turkey: Albaraka Turk, Bank Asya, Kuveyt Turk, Turkiye Finans, Ziraat and Vakif.
State banks Ziraat and Vakif have recently launched their Islamic branches. Halkbank, another state-run conventional bank, is expected to begin its own Islamic operation.
At least 16,000 people have been working in Islamic finance in 1,100 branches across Turkey.
Islamic banking comprises 5 percent of the total banking system in Turkey. In 2023, the government aims to increase the share to 15 percent.
Turkish Development Minister Cevdet Yilmaz said that Islamic finance should expand at a more accelerated pace.
During a meeting on sustainable development in Istanbul on Wednesday, Yilmaz said that the size of assets of Islamic finance in Turkey had reached 120 billion Turkish liras ($40 billion).
“On a global level, current assets of Islamic finance have been around $2 trillion. In 2020, this volume is expected to reach $4 billion. There is a serious chance of development in coming future,” Yilmaz stated.
By Tuncay Kayaoğlu
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