Islamic banking sector instruments are becoming more popular and attractive all over the world since major economies began to struggle as a result of the current financial systems. G20 finance ministers and central bank governors meeting held in Istanbul this week where expanding Islamic banking system became one of the subjects. International Monetary Fund (IMF) announced that they will organize three seminars on Islamic banking this year to introduce its methods and advantages to more people. Deputy Prime Minister Ali Babacan has said that participation banking and lease certificates are real instruments of trade and investment, and that, since they are not based on “making money from money,” they spread the risk in times of crisis and volatility. Babacan also said that various ministers, some of whom are Christian democrat politicians who took the floor during the meetings, also said that Islamic banking and funding methods should be integrated into local economies. Turkey’s first Islamic bank was established by the Kuwait Finance House (KFH) in 1980 in partnership with Turkey and named Kuveyt Türk. This finance giant is not the only first in Turkey it is also the very first Islamic bank in Kuwait as well, which is established, just two years before they began to operate in Turkey, in 1978. KFH is also the second Islamic bank around the world.
Speaking to Daily Sabah, Fahad al-Mukhaizeem, KFH’s Marketing, Public Relations and Strategic Planning Department Manager, stated that Islamic banking sector historically has been growing about 18 percent annually, which is much higher than conventional banking system. “We see higher growth in Islamic banking sector,” Mukhaizeem said, adding that Islamic banking sector’s total activity volume in the world is $2 trillion. KFH is in the top three with an asset size about $52 billion.
Mukhaizeem said that their main focus in Turkey small and medium size businesses which are the driving force of Turkish economy. Kuwaiti banker also stated that Turkish markets’ high performances brings high returns and even conventional banks work to serve Islamic banking instruments. Kuwait Finance serves many products; all Islamic finance instruments, real estate financing and all types of accounts on the liability side so they have deposit account which is a profit sharing. They also have investments like hospitals, aircraft leasing, IT. The bank has 300 branches in Turkey and subsidiaries in Turkey, Malaysia, Bahrain, Saudi Arabia and Kuwait. “There is also our Kuveyt Türk branches expected to open in Gulf Cooperation Council and Europe,” Mukhaizeem said, which is projected to be established in partnership with Turkey.
Originally published on www.dailysabah.com