The contract has a duration of one year. Murabaha is a form of credit sale that complies with Shariah law. It is similar in structure to a rent-to-own arrangement, whereby the intermediary retains ownership of the property until the loan is paid in full.
Banks in on the deal include Halk Bank-Turkey, the Islamic Development Bank, Citibank, Garanti Bank International-Holland, Gatehouse Bank from the United Kingdom, NBK International and Standard Chartered Bank.
Chairman of Kuveyt Türk Mohammed Al Omar said the loan would be primarily providing funding for small- and medium-size enterprises in Turkey. "This loan is a huge success given the current crisis and downturn in the financial sector and the struggles still faced by the international markets. The ongoing global crisis is a difficult exam for the Turkish banking sector, too."
"We feel excited to be the pioneer of participation banking in Turkey, which is one of the fastest growing finance areas in the world with total assets that reach almost $800 billion. Our aim is to be one of the biggest banks in Turkey and the near region," Al Omar said. The bank’s general manager in Turkey, Ufuk Uyan, said this year the bank aims to grow its total assets by some 30 percent. "Our plan is to open 25 new branches. We are prepared to open seven by July. We also envision growing our profitability by some 50 percent this year," he said. "2009 will be difficult, but after the end of the year, the economic environment will start improving," he said.
Over 2008, the total assets of participation banks in Turkey grew by 33 percent, reaching 25.8 billion liras, while profits grew 23 percent.