PARTICIPATION BANKS in TURKEY

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PARTICIPATION BANKSin TURKEY

• An Economic and Social Reality

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

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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

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TRIPARTITE SYSTEM
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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

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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, ATMs

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IV. THE PLACE OF PARTICIPATION BANKS IN THE
TURKISH BANKING SYSTEM
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FUNDS COLLECTED(Equivalent in Thousand US )
Growth in YTL terms is 18
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FUNDS COLLECTED(Equivalent in Thousand US )
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FUNDS UTILISED(Equivalent in Thousand US )
Growth in YTL terms is 23
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UTILISATION RATIOS(Credit / Deposit)
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TOTAL ASSETS(Equivalent in Thousand US )
Growth in YTL terms is 23
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GROWTHin Branch Network and Workforce
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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

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THANK YOUFOR YOURKIND PATIENCE