Bank Asya: Global crisis contributed to participation banks’ prestige
Bank Asya General Manager Abdullah Çelik
The global financial crisis, which has troubled almost all nations around the world for the past two years, has helped Islamic participation banking gain more prestige worldwide, the top executive of Bank Asya, Turkey’s leading participation bank, said on Thursday.
Speaking at a Cihan TV Network program broadcast on Thursday morning, the bank’s general manager, Abdullah Çelik, noted that this increasing prestige has also translated into growing public interest in participation banks. “For all loans we extend to people, there is a real sale and purchase. If we are financing the purchase of a house, then a house is being sold and bought. No derivatives, no exotic products. We don’t have the kind of products that caused the crisis in the West,” he said, drawing attention to what for most observers was the real reason behind the credit crunch in the US three years ago. “We have real transactions. We have observed that in the West people traded with artificial capital worth 30 times more than what they really possessed through derivative products and other financial instruments. This is not real. But when you examine participation banks, there is an extra prudence there. We never say to people that they can just use the money we give them wherever they wish. We do not have such a thing in our system. There is always a real purchase. This prevents bubbles from emerging in economies,” Çelik explained.
The participation banks, like all other banks in Turkey, operate under the Turkish Banking Law, regulated and supervised by the Banking Regulation and Supervision Agency (BDDK). Furthermore, they hold a full foreign exchange license and are part of the payments system in the country. These Islamic finance institutions have grown considerably over the years as they meet Muslims’ preferences of not paying or being paid interest on loans and of not becoming involved in any kind of investment in companies that sell goods or services considered haram (forbidden) in Islamic teachings.
Turkish participation banks, for example, have grown 10 times on average in the last eight years as their assets have risen from TL 3.9 billion to TL 43.3 billion according to a report that appeared at Turkey’s best-selling newsweekly Aksiyon in its first issue in May. Çelik’s Bank Asya is now leading the participation bank league in Turkey and has managed to place itself in the top 10 list of all banks in the country. In addition to its domestic success, the bank has also found itself recognized on the global stage, ranking number 404 in the BrandFinance Banking-500 index in 2011.