Beruflich Dokumente
Kultur Dokumente
Ahmet ERTÜRK
President of SDIF
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Outline
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1-2 Nov 2007 6th IADI Annual Conference
Share of Participation Banks in the Banking Sector
3,5
0,8% of the %1,05 3,14
3 drop due to İhlas
2,75
Percentage Share
Finans House
2,5 2,44
2,34
2,13
2 2,01
1,87 1,83
1,5
1 1,08
1995
2000
2001
2002
2003
2004
2005
2006
2007/6
Years
As of the end of June 2007 total assets of participation banks rose to USD 12.869 million
while share of participation banks in terms of total assets rose to %3,14.
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1-2 Nov 2007 6th IADI Annual Conference
Levels of deposits at participation banks
Source: Yılmaz, Rasim, Bank Failures and Deposit Insurance in Emerging Market Economies: The
Case of Turkey, 2007
Concerns due to the revoke of the license of İhlas Finans, IFH, caused further withdraw
of funds from participation banks. Introduction of Deposit Insurance Fund, DIF,
stabilized the market and reduced the withdraw of funds.
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1-2 Nov 2007 6th IADI Annual Conference
Percent decline in deposits at participation banks
Yılmaz, Rasim : Bank Failures and Deposit Insurance in Emerging Market Economies: The Case of Turkey, 2007
Concerns due to İhlas Finans caused a decline of 63% in the participation funds in
the period between 31/12/2000-30/6/2001.
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Deposit insurance for participation banks
Membership Compulsory
Co-insurance No
Coverage Special current account and participation account
belonging to real person
Amount 50.000 YTL (38.226 USD)
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1-2 Nov 2007 6th IADI Annual Conference
Growth of participation funds
(Million USD)
12.000
10.000
8.000
İhlas Finans
6.000
4.000
2.000
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007/6
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Deposit classification in Turkey
Participation Deposit
JUNE 2007 Banks Banks
Since customer base of participation banks is broader, SDIF gives more protection to
their customers. 62% of funds in participation banks have less than one month maturity,
whereas maturity of deposits in conventional bank is longer.
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Ratios to total assets
Participation Banks are exposed to much higher credit risk relative to deposit
banks. Their funding is from mostly short term deposits.
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Example of profit sharing
Assumptions:
- Same credit portfolio and similar liability portfolio is hold.
- Under Basel-I, 100% risk weight applied. No collateral.
- Current Capital Adequacy Ratio is %20(=20/100)
- For time deposit in participation banks, 20% of return hold by bank
for management and 80% paid to customer
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Challenges for the supervisory authority
• Since 62% of participation funds have less than one month maturity,
liquidity risk is higher. To give enough confidence to customers,
sound supervision and strong deposit insurance systems are required.
• Participation banks and deposit banks are subject to the same risk based
premium system. However, their assets and liabilities structure and
risks require differentiated risk factors to be identified.
• In case participation banks need public funds due to systemic risk and
liquidity risk, there are no non-interest financing tools.
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Conclusion