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Islamic banking gains ground in Turkey

In a first for Turkey, a state-run bank is poised to enter the Islamic banking sector, and other major state lenders are expected to follow.
A man uses an ATM machine of Bank Asya in Istanbul August 12, 2014. Turkish Islamic lender Bank Asya said its second-quarter net profit fell 81 percent to 10.6 million lira ($4.9 million) as its deposit base shrank and lending wilted under pressure from the government. The lender has seen its profits and capital base collapse since December when it found itself at the centre of a power struggle between Prime Minister Tayyip Erdogan and his political foe Fethullah Gulen, an Islamic cleric whose sympathisers
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Turkey’s government has moved to expand Islamic banking by inviting public banks into the sector. Earlier this month, the largest state-run bank, Ziraat, received approval to establish an Islamic unit, a landmark move in a country where public lenders have so far stayed out of the Islamic finance realm.

There are currently four private Islamic banks operating in Turkey: Albaraka Turk, Bank Asya, Kuveyt Turk and Turkiye Finans.

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