Turkish Bank To Help Islamic Finance Industry Grow in the Philippines

A Turkish bank is in talks with the Bangko Sentral ng Pilipinas (BSP) to help the bank establish Islamic banks and Islamic banking units (IBUs) in the Philippines. The BSP Deputy Governor Chuchi G. Fonacier informed reporters during the central bank’s yearly reception for the banking community that a Turkish bank was the third institution to approach the regulator to promote Islamic banking in the country. Although the Turkish bank is Islamic, it aims to help establish Islamic banks and IBUs in the Philippines. However, it is still scanning the market and has yet to find a presence in the country.

Ms. Fonacier also stated that the BSP had previously conducted exploratory discussions with two other banks to set up IBUs in the country before the pandemic struck in 2020. However, the two banks did not reconnect with the regulator due to the global crisis. Additionally, a European bank interested in establishing a presence in the Philippines changed its strategic direction due to economic developments in its home country.

Regarding the minimum capital requirement for IBUs, Ms. Fonacier stated that the BSP still receives feedback from potential players, and the capitalization remains unchanged. The BSP had previously announced that it would lower the minimum capital requirement for IBUs to encourage more banks to enter the market. Currently, Al Amanah Islamic Bank is the only Islamic bank operating in the country, and it is under the auspices of the Development Bank of the Philippines.

BSP has not announced the name of the Turkish bank which is offering assistance in establishing Islamic windows in the country. However, this time, the talks between the two sides are expected to help establish a solid ground for establishing Islamic banking units in the Philippines.