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Turkish-Arab Economic Forum

Turkish-Arab Economic Forum. Panel 6: Potential for Islamic Banking and “ Sukuk ” for Financing Major Projects in Turkey. Hasan Genç Head of Enforcement Department Banking Regulation And Supervision Agency-BDDK. Islamic Banking implementation in Turkey Hasan GENÇ Head of Department

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Turkish-Arab Economic Forum

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  1. Turkish-Arab Economic Forum Panel 6: Potential for Islamic Banking and “Sukuk” for Financing Major Projects in Turkey HasanGenç Head of Enforcement Department Banking Regulation And Supervision Agency-BDDK

  2. Islamic Banking implementation in Turkey Hasan GENÇ Head of Department Banking Regulation and Supervision Agency

  3. Scope • Brief History • Regulatory Framework • Some Key Points • Financials • Sukuk Regulation

  4. History • Decree of the Council of Ministers - (1983) (Special Finance Houses) • The Banks Law –(1999) (Special Finance Houses) • The Banking Law – (2005) (Participation Banks)

  5. History • RegulatoryFramework • SomeKeyPoints • Financials • SukukRegulation

  6. Regulatory Framework • Basically- Same rules • Specific provisions Defining funding & financing methods • Some differences • Provisions • Capital Adequacy

  7. Types of Funding

  8. FinancingMethods • Corporate & Individual FinancingSupport (Murabaha) • Profit & Loss Sharing Investment (Musharakah) • Joint investments (Jointventure -Musharakah) • Financial leasing (Ijarah) • Financing of Documents against Goods

  9. RegulatoryFramework - Provisions • Special and general provision accounts set aside for loans extended from participation accounts are reflected in accounts of expenses and accounts of participation according to the rates of participation in losses. • Participation banks, may set aside a portion of up to %5 of the profit to be distributed to participation accounts as provisions for use to meet the provisions.

  10. Capital Adequacy Ratio • Loans extended from the participation accounts are taken into account 70% of their values in balance sheet in calculation of credit equivalents for calculating the credit risk • In calculation of Tier-II capital general reserves the sums of general provisions reflected by these banks in their expense accounts are taken into consideration.

  11. History • Regulatory Framework • Some Key Points • Financials • SukukRegulation

  12. SomeKeyPoints • Deposit Guarantee Scheme Assurance Fund Savings Deposit Insurance Fund • Shariah Board No regulatory obligation • Islamic window Not allowed

  13. History • Regulatory Framework • Some Key Points • Financials • SukukRegulation

  14. ParticipatiosBanks, as of December 2012 • 4 Participation banks (3 foreign shareholder control) • 38,78 billion USD total assets • 26,48 billion USD loan

  15. Share in Banking Sector (%)

  16. The Growth of Total Assets and Loans

  17. Capital Adequacy Ratio (%)

  18. LoantoDepositRatio (%)

  19. Loan/Total Assets (%)

  20. History • Regulatory Framework • Some Key Points • Financials • SukukRegulation

  21. SukukRegulation • Sukuk Regulation - Capital Market Board – 2010 • A newRegulationDraft • MoreDetailed - 4 Kind of Sukuk • Murabaha Sukuk • MusharakaSukuk • IjaraSukuk • WakalaSukuk • One SPV • Subordinateddebt

  22. Prospects… • More foreign investors • State Banks • Licensing • Sukuk issuance • RetirementFunds • Other…

  23. THANK YOU hgenc@bddk.org.tr www.bddk.org.tr

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