Ongoing protests might put a damper on Islamic finance activity in the republic (By IFN)

Ongoing protests might put a damper on Islamic finance activity in the republic

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TURKEY: Protests that have erupted in Turkey since the 1st June which was initially sparked by the government’s decision to redevelop Gezi Park in Istanbul and has escalated into an avalanche of dissatisfaction against the current ruling party’s governing tactics led by prime minister Recep Tayyip Erdogan, could possibly affect the republic’s Sukuk aspirations; a government source told Islamic Finance news. “I can say that this turbulence will definitely cause delays on any planned Sukuk issuance, but I have not heard any news on the postponement of the project to establish two government-backed Islamic windows,” the source said. One of the two projects includes the decision in April by the country’s largest government-backed bank, Ziraat Bankasi, to launch a fully-fledged Islamic banking subsidiary. At the time the announcement was made, the bank was looking for partnerships for the venture, and was in the process of mobilizing expertise for the establishment of the entity. Since the beginning of the year, the republic has been in the spotlight in terms of Islamic capital market activity and has made clear its intentions to grow its participation banking sector. Local construction and real estate conglomerate, Agaoglu Group announced in March that it was looking to issue the first tranche of its US$2 billion Sukuk program for the construction of the Istanbul Financial Center, while the Capital Markets Board of Turkey is also currently working on new regulations to approve a wider range of Sukuk: including Istisnah, Murabahah, Mudarabah, Musharakah and Wakalah. The source also added that the republic’s capital markets have already begun to feel the repercussions of the 12-day protest, with a conventional company listed on the Borsa Istanbul choosing to postpone its IPO amid the unrest in Taksim Square.