Islamic Mega Bank

Turkish Deputy Prime Minister Ali Babacan speaking at the Participation Banks Association of Turkey in Istanbul, said Turkey, Indonesia and the Islamic Development Bank have accelerated their efforts to establish a “megabank” with the aim of creating a platform to serve as a “central bank” for the world’s Islamic lenders.

His remarks came after one of Turkey’s largest state-controlled banks, Ziraat Bank, was authorized by the country’s banking regulator to start operations in its Islamic banking division last week. The Banking Regulation and Supervision Agency issued a certificate giving permission to Ziraat Bank to commence operations as an Islamic bank.

Last year, the agency allowed Ziraat and its sister companies – Ziraat Insurance, Ziraat Savings, Ziraat Investment and Ziraat Technology – to establish the new Islamic bank as main shareholders with a capital of $300 million.

Babacan also stated that an insurance system should also be developed using interest-free practice. “We believe this sector will also be developed in the upcoming period. We are ready to give every kind of support to this.”

Al-Rajhi Bank, the world’s largest Islamic bank in terms of assets and balance sheet, though as a illustration all Islamic banks and assets combined do not have a market capitalisation of HSBC.

Turkeys Islamic Lenders

Turkey has four existing private Islamic lenders, Turk, Bank Asya, Turkiye Finans and Kuveyt Turk who jointly have a network of 1,000 branches employing more than 16,000 people. Two state banks, Halkbank and Ziraat Bank plan to launch Islamic windows later this year. A third state run bank Vakifbank will be the third new entrant after the Turkish banking regulator recently approved its application to offer Islamic banking services.