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PARTICIPATION BANKS in TURKEY

PARTICIPATION BANKS in TURKEY

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PARTICIPATION BANKSin TURKEY
PARTICIPATION BANKSin TURKEY

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Published by: lahem88 on Oct 02, 2008
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05/09/2014

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PARTICIPATION BANKS in TURKEY

: An Economic and Social Reality

Presented By: Dr. Adnan Büyükdeniz General Manager / ALBARAKA TURK Participation Bank Inc. Istanbul, 29 August 2006

I. WHY PARTICIPATION BANKS?
• Already an indispensable and complementary element of the financial system in Turkey • A clear expression of “equality of opportunity” in a pluralistically democratic society

II. LEGAL FRAMEWORK FOR PARTICIPATION BANKS
• Operate under the Banking Act • Regulated and supervised by the Banking Regulation and Supervision Agency (BRSA) • A tripartite system

TRIPARTITE SYSTEM

BANKING ACT

Commercial Banks

Investment & Development Banks

Participation Banks

III. ACTIVITIES OF PARTICIPATION BANKS
• Fund Collection
– Special Current Accounts – Profit and Loss Participation Accounts

• Fund Utilisation
– – – – Corporate Finance Financial Leasing Retail Finance Participation in Business Projects

III. ACTIVITIES OF PARTICIPATION BANKS
• Other Activities
– Cheque book services – Money remittances – Letters of guarantee, performance bonds – Credit cards, POS terminals – Foreign currency transactions including foreign trade banking – Alternative distribution channels
• Internet and Telephone Banking, ATM’s

IV. THE PLACE OF PARTICIPATION BANKS IN THE TURKISH BANKING SYSTEM

FUNDS COLLECTED (Equivalent in Thousand US $)
Share in the Banking System 2.20% 2.65% 3.04% 3.33% 3.39%

Growth in YTL terms is 18 %

Year 2002 2003 2004 2005 2006/II

Funds Collected 1,961,000 2,936,000 4,462,768 6,208,572 6,316,677

Growth 47.2% 49.7% 52.0% 39.1% 1.7%

FUNDS COLLECTED (Equivalent in Thousand US $)
7.500.000 6.500.000 5.500.000 4.500.000 3.500.000 2.500.000 1.500.000 500.000 -500.000 2002 2003 2004 2005 2006/II 1.961.000 2.936.000 4.462.768 6.208.572 6.316.677

FUNDS UTILISED (Equivalent in Thousand US $)
Funds Utilised 1,285,109 2,200,595 3,645,390 5,495,177 5.841.726 Share in the Banking System 3.59% 5.88% 5.16% 4.94% 4,52%

Year Growth in YTL terms is 23 % 2002 2003 2004 2005 2006/II

Growth 72.53% 71.24% 65.65% 50.74% 6,31%

UTILISATION RATIOS
(Credit / Deposit)
Commercia l Banks (%) 40 42 47 59 69 Participation Banks (%) 66 75 82 89 92

Year 2002 2003 2004 2005 2006/II

TOTAL ASSETS (Equivalent in Thousand US $)
Share in the Banking System 1.83% 2.01% 2.34% 2.44% ~ 2.50%

Growth in YTL terms is 23 %

Year 2002 2003 2004 2005 2006/II

Total Assets 2,424,000 3,722,000 5,435,764 7,377,916 7.847.925

Growth 47.53% 53.55% 46.00% 35.73% 6.37%

GROWTH

in Branch Network and Workforce
Branch Network 110 188 255 291 310

Year 2000 2003 2004 2005 2006 /II

Workforce 2,182 3,520 4,789 5,732 6,348

V. EXPERIENCE WITH PARTICIPATION BANKS
• Mobilising unproductive funds in the economy • “Profit motive” not to be undermined • Funds availed only to production and investment activities • Successfully going through crises without creating any burden on taxpayers • Potential for further growth • A broader product suite • Participation accounts as a potential capital market instrument • Role of regulatory bodies and international acceptance • Unification of principles and standards

THANK YOU FOR YOUR KIND PATIENCE

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