Turkey

Turkish banks and investors disagree on bad loan talks

Turkish lenders disagreed on almost everything with potential investors when they met for the first round of talks about unloading a pile of bad loans. Investors demanded a 30% discount on the face value of the loans and an ownership stake, but the Turkish banks refused to write-off the loans and wanted to restructure them instead. While the government plans to carve out non-performing energy and real-estate loans, attendees disagreed so that some of the participants questioned whether there would even be more talks. Bank capital ratios are being squeezed after companies requested about $28 billion of debt-restructurings after a 28% plunge in the lira against the dollar last year.

Prominent Turkish bankers, businesspeople see no macroeconomic reason for currency volatility

For Turkey's bankers and businesspeople it has been impossible to explain the high volatility in the exchange rate over the past few weeks. The fundamentals of the Turkish economy are solid and macroeconomic indicators fail to account for the recent slide in the Turkish lira, which dropped by more than 40% since the beginning of this year. These fluctuations are seen as manipulations on the Turkish lira and economy, as part of an economic war waged against Turkey by U.S. President Donald Trump. The U.S. dollar tumbled nearly 5% against the Turkish lira on Tuesday. European shares rebounded Tuesday as the Turkish currency firmed. The Central Bank introduced measures on the Turkish lira and the foreign exchange market (FX) liquidity management. The bank said it would provide all the liquidity needed by banks and closely monitor markets and prices, while raising collateral FX deposit limits for lenders' lira transactions from 7.2 billion euros ($8.2 billion) to 20 billion euros.

#Bahrain's Bank Alkhair sells stake in Turkish investment firm

Bahrain’s Bank Alkhair has sold its majority stake in Turkish investment firm Alkhair Capital, as the lender exits some markets. Bank Alkhair entered the Turkish market a decade ago, acquiring an initial 75% stake in the investment firm. The bank has faced a challenging business environment over the past year and is currently streamlining its business lines. Additionally, the bank sold its stake in Pakistani lender Burj Bank and in 2017 the firm upgraded its business licence in the UAE and expanded its capital markets business in Saudi Arabia in a bid to focus on other markets. Now Bank Alkhair has received approval to transfer its 95.79% stake in Alkhair Capital to Ankara-based A1 Capital. The value of the transaction was not disclosed.

RAM Ratings: #Turkey rating downgrade triggers Kuveyt Turk downgrade

RAM Ratings has downgraded Kuveyt Turk's long-term rating to A1/Stable from AA3/Negative. The rating of KT Kira Sertifikalari Varlik Kiralama’s RM2.0 billion Islamic MTN Programme (2015/2025) has been revised downwards to A1(s)/Stable from AA3(s)/Negative. The Bank’s short-term financial institution rating remains unchanged at P1. The rating actions were triggered by the downgrade of Turkey’s sovereign ratings to gBB2(pi)/Stable/gNP(pi) from gBBB3(pi)/Negative/gP3(pi), due to an erosion of the country’s fiscal discipline. Kuveyt Turk has a relatively favourable funding profile, with a moderate reliance on market-based funding compared to the industry norm. The bank’s customer deposit base is well diversified. The bank’s liquidity profile is robust, with an average liquidity coverage ratio of 230% in fiscal year 2017.

#Turkey holds great potential for Islamic finance

According to Abdelilah Belatik, secretary general of the General Council for Islamic Banks and Financial Institutions (CIBAFI), Turkey's potential for Islamic banks is very big. Turkey has three participation banks, Al Baraka, Kuwait Turk, and Turkiye Finans, which are operating overseas already. Turkey's Banking Regulation and Supervision Agency (BDDK) started developing comprehensive regulations for participation banks. Belatik said countries like Bahrain and Malaysia have developed their entire system of infrastructure for Islamic finance, which is very important for the development of the industry. This year, CIBAFI chose Turkey to host its annual Global Forum. The Forum is focusing on how the industry will fulfill its obligations while remaining competitive and relevant within global financial markets.

Islamic Development Bank finalizing 4-year investment plan with #Turkey

The Islamic Development Bank (IsDB) is working on finalizing a four-year partnership strategy plan with Turkey. Walid Abdelwahab said the IDB aims to invest in various sectors that will fuel growth, such as infrastructure, energy, transportation and education. He said the bank aims to support value chain development in Turkey to enable the country to become more competitive through linking it with global value chains. He added that the bank appreciates Turkey's experience with high-speed railways. IsDB is preparing a documentary on this topic for other member countries of the Group that are interested in this technology.

Al Baraka Turk to exercise call option on $200m #sukuk

Albaraka Türk Participation Bank has sent a notice of redemption to its certificate holders on 06 April 2018 for its US$200,000,000 outstanding sukuk. Albaraka General Manager Meliksah Utku said the early redemption of the sukuk before its maturity in 2023 reflects the bank's partnership-centric approach to sukuk investors. The redemption date of the sukuk will be 07 May 2018 and will be redeemed at the aggregate of the outstanding face amount plus accrued but unpaid periodic distribution. Issued in May 2013 as a Tier 2 subordinated and USD-denominated sukuk al murabaha, the certificates were rated CCC+ by S&P and carried a coupon of 7.75% per annum.

Islamic bank to meet business world in Izmir this month

Turkey's Aegean province of Izmir will host an Islamic Development Bank Group (IDB) event between 26-27 April. The announcement was made by Turk Eximbank CEO Adnan Yildirim, who said that Turkey aims to boost trade relations with the IDB's 57 member countries. He added that Turk Eximbank wants to raise Islamic countries' 10% share of world trade to 20%. Turkey's current trade with IDB member countries is around $45 billion and the bank hopes to raise it to $100 billion within 10 years. Turk Eximbank aims to double its support to companies in IDB member countries. The lender ranks second globally after South Korea's Eximbank in terms of financing exports.

Turkiye Finans gets regulatory nod for $450 mln #sukuk

Turkish Islamic lender Turkiye Finans has been granted regulatory approval to raise $450 million via dollar-denominated sukuk. It previously issued dollar-denominated sukuk in 2013, a $500 million five-year deal that matures in May. The bank has been a frequent issuer of sukuk in the domestic market and has also tapped investors in Malaysia through ringgit-denominated deals.

'#Turkey can play a leading role in Islamic finance'

According to Abdelilah Belatik, secretary-general of the General Council for Islamic Banks and Financial Institutions (CIBAFI), Turkey can play a leading role in Islamic finance. Belatik sees Turkey as a bridge between the Muslim world and the West. He said through Turkey's support Islamic finance was discussed among G20 countries, which was a milestone. Belatik added that Turkey had a key role to play in raising awareness about Islamic finance. CIBAFI expects the volume of the sector to reach $4 trillion by the end of 2020.

#Kuwait Finance House to split shareholding of Turkish asset manager

Kuwait Finance House (KFH) will divide the ownership structure of its Turkish asset management firm between local and Kuwaiti units, as the Islamic lender continues to build on its Turkey franchise. KT Asset Management will transfer 5 million shares representing a 50% stake to KFH Capital. Both Kuveyt Turk and KFH Capital are subsidiaries of KFH. KFH Capital is the main investment arm of KFH, which has restructured activities in recent years to streamline operations and focus on growth markets such as Turkey.

Is bitcoin permissible in Islam? Muslims disregard clerics’ warnings and invest

#Turkey has witnessed a rise in interest in bitcoin and the hundreds of other cryptocurrencies that have been modeled on it. Bitcoin trade here has gone from about 9,000 transactions a month in May 2017 to 42,000 in December 2017. A handful of companies in construction, education and the food industry have begun accepting cryptocurrencies for payment. The value of bitcoin and other cryptocurrencies fluctuates widely, leading some to caution against investment. Diyanet, Turkey’s religious affairs directorate, said in December that bitcoin and Ethereum had no intrinsic value like gold, nor were they backed by a government, so they did not meet the standards of reliability to make them a currency. Another ruling in January said the factors driving the value of cryptocurrencies were too shrouded in secrecy, exposing investors to fraud and use by criminal networks. According to Onur Baran Caglar, a FinTech consultant and lecturer at Istanbul Aydin University, the debate over bitcoin misses the real potential of the underlying technology. That real potential is the blockchain, a digital ledger that keeps track of all bitcoin transactions worldwide.

#Turkey mulls 'national' bitcoin

Turkey's Nationalist Movement Party (MHP) is proposing to develop a national bitcoin called "Turkcoin". According to MHP deputy chair and former Industry Minister Ahmet Kenan Tanrikulu, missing out on blockchain would be a serious mistake. The politician stressed that cryptocurrencies were already in use in Turkey, despite the lack of a legal framework, so there is a clear need for regulation. Tanrikulu's report also proposes the creation of a state-controlled bitcoin bourse. Though the government maintains its stance toward bitcoin and other digital money, the idea for a national cryptocurrency seems to have better prospects. A Turkish company has already invested in a project to create a local cryptocurrency and is reportedly planning to make the money available soon.

Albaraka Turk raises $205 million via Tier 1 #sukuk

#Turkey's Albaraka Turk has raised $205 million via Tier 1 perpetual sukuk. It has a 10% profit rate, is sold as a private placement and issued through an Irish-domiciled special purpose vehicle. Albaraka Turk previously secured a $213 million murabaha-based loan syndication in April of last year. Malek Temsah, assistant general manager of treasury at Albaraka Turk said the latest transaction could serve as an example for other banks, which had previously issued sukuk as Tier 2 capital only. The lender appointed Standard Chartered Bank as global coordinator for the deal with Bank ABC, Emirates NBD, Qinvest and Noor Bank as lead managers.

#Turkey: Lease Certificates As #Sukuk Financing Model In Turkey

Although Turkey had its first sukuk issuance in 2011, Sukuk has not been used as a financing model due to deficiencies in its legal framework. In 2013 new types of lease certificates have been introduced. Lease Certificate is defined as a security which is issued by an asset lease company (ALC) for the purpose of financing all kinds of assets and rights. Lease certificates may be issued by sales through or without public offering or in the form of private placement or sales to qualified investors. The lease certificates may be issued by ALCs, which have to be formed as joint stock companies. Lease certificates, sale of movables, immovable and intangible assets to ALC, sale back of these assets to the originator, all the hypothec transactions, the papers issued due to the lease of such assets are exempted from the stamp tax. Gains from the sale of the asset by Originator to ALC, and later by ALC to Originator, are exempted from corporate tax, regardless of the holding period of the asset.

#Turkey issues #detention warrants for 68 Bank Asya shareholders in post-coup probe: police

Turkish authorities have issued detention warrants for 68 shareholders of Bank Asya. The police operation targeted the network of the cleric accused for orchestrating last year’s failed coup attempt. The targeted shareholders all had voting rights to determine the bank’s administrative board. So far 49 of the 68 suspects had been detained. Bank Asya was founded by followers of the U.S.-based cleric Fethullah Gulen and was seized by the state in 2015. According to the Turkish government, Gulen masterminded the 2016 attempted coup, in which more than 240 people were killed by rogue soldiers. Gulen has denied the charges and condemned the coup. Since the abortive putsch, more than 50,000 people, including civil servants and security personnel, have been jailed pending trial and some 150,000 suspended or dismissed from their jobs.

Islamic #microfinance necessary for poverty eradication

The 7th Global Islamic Microfinance Forum successfully concluded in Istanbul between 24–28 November, 2017. The first two days of the conference focused on topics like Islamic microfinance financial technology, financial inclusion, Micro Takaful, Waqf and Zakat as Supportive Elements for Islamic Microfinance. In the next two days, Islamic Agriculture and Rural Finance, the role of Islamic finance in the rural development and micro takaful came under discussion. While addressing the inaugural ceremony, Khaled Al-Aboodi, CEO of the Islamic Corporation for the Development of the Private Sector (ICD), said that Islamic microfinance was a core element of Islamic financial industry. Dr Amjad Saqib, Founder of Akhuwat Pakistan welcomed the guests and participants. He further announced that the next time such an event would be organised would be in London next year in October.

Halk REIT issues #Turkey's first #sukuk

Halk Real Estate Investment Trust (REIT) has issued Turkey's first sukuk with a nominal value of TL 100 million ($26.12 million) through Halkinvest. The return of the 87-day lease certificate will be realized at 13.25% at the end of the maturity period. Halk REIT General Manager Feyzullah Yetgin said that the widespread use of real estate-based financial products would make a great contribution to the real potential of the sector. Halkinvest General Manager Serdar Sürer said that the lease certificate issuance transaction executed on behalf of Halk REIT was their 60th capital market issuance transaction this year. He also said that they would continue to add value to their business partners with products based on the real economy.

Diyanet against Bitcoin

Diyanet, the Turkish religious authority has ruled that bitcoin is not in accordance with Islam at this point of time.

“Buying and selling virtual currencies is not compatible with religion at this time. Because of the fact that their valuation is open to speculation, they can be easily used in illegal activities like money laundering and they are not under the state’s audit and surveillance,” according to Diyanet, as quoted by local newspapers. Noteworthy it said is also that the digital currencies are not under a central authority or under guarantee of a state or financial institution.

A recently released 55-page research paper by Faraz Adam of Amanah Finance Consultancy on the topic, it was concluded that bitcoin is “not ideal as a long-term investment, and neither should the Islamic finance industry consider its use in exchange, unless there is a specific need, until a regulated and transparent framework is established”.

http://darulfiqh.com/wp-content/uploads/2017/08/Research-Paper-on-Bitcoi...

Public awareness key to boost Islamic finance in #Turkey

According to the General Council for Islamic Banks and Financial Institutions (CIBAFI), Turkey should raise public awareness of Islamic finance to boost the sector's market share. CIBAFI's secretary general, Abdelilah Belatik, called Turkey's target of raising Islamic banks’ share to 20% by 2023 ambitious but achievable. The council’s annual gathering to discuss Islamic finance will be held in Turkey next April. Belatik said that countries like Turkey and Indonesia and regions such as Central Asia and Africa are important as they have a great growth potential in the Islamic finance sector. Belatik said they work with countries which lack the infrastructure and regulation for Islamic finance to show them its role in the economy. He also underlined Islamic finance's significance for financial stability.

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