participation banksin turkey
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PARTICIPATION BANKSin TURKEYTRANSCRIPT
PARTICIPATION BANKSin TURKEY: An Economic and Social Reality
Presented By:Dr. Adnan BüyükdenizGeneral Manager /ALBARAKA TURKParticipation 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 BanksInvestment & Development
BanksParticipation 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
• 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
III. ACTIVITIES OF PARTICIPATION BANKS
IV. THE PLACE OF PARTICIPATION BANKS IN THE TURKISH BANKING SYSTEM
FUNDS COLLECTED(Equivalent in Thousand US $)
YearFunds
Collected Growth
Share in theBankingSystem
2002 1,961,000 47.2% 2.20%
2003 2,936,000 49.7% 2.65%
2004 4,462,768 52.0% 3.04%
2005 6,208,572 39.1% 3.33%
2006/II 6,316,677 1.7% 3.39%
Growth in YTL terms is 18 %
FUNDS COLLECTED(Equivalent in Thousand US $)
1.961.000
2.936.000
6.316.677
4.462.768
6.208.572
-500.000
500.000
1.500.000
2.500.000
3.500.000
4.500.000
5.500.000
6.500.000
7.500.000
2002 2003 2004 2005 2006/II
FUNDS UTILISED(Equivalent in Thousand US $)
YearFunds
Utilised Growth
Share in theBankingSystem
2002 1,285,109 72.53% 3.59%
2003 2,200,595 71.24% 5.88%
2004 3,645,390 65.65% 5.16%
2005 5,495,177 50.74% 4.94%
2006/II 5.841.726 6,31% 4,52%
Growth in YTL terms is 23 %
Year
CommercialBanks
(%)
ParticipationBanks
(%)
2002 40 66
2003 42 75
2004 47 82
2005 59 89
2006/II 69 92
UTILISATION RATIOS(Credit / Deposit)
TOTAL ASSETS(Equivalent in Thousand US $)
YearTotal
Assets Growth
Share in theBankingSystem
2002 2,424,000 47.53% 1.83%
2003 3,722,000 53.55% 2.01%
2004 5,435,764 46.00% 2.34%
2005 7,377,916 35.73% 2.44%
2006/II 7.847.925 6.37% ~ 2.50%
Growth in YTL terms is 23 %
GROWTHin Branch Network and Workforce
YearBranchNetwork Workforce
2000 110 2,182
2003 188 3,520
2004 255 4,789
2005 291 5,732
2006 /II 310 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 YOUFOR YOUR
KIND PATIENCE