A Special Relationship: How Are The Uae And Türkiye Forging The Future Of Islamic Finance

Dubai Islamic Bank (DIB) is a niche industry player and torchbearer that led the evolution and globalisation of Islamic Banking and finance to a mainstream banking choice for all. By capitalising on its geographical reach and expansion plans, DIB has built strong ties with organisations across the Turkish private and public sectors, allowing the bank to harness the two nations’ special relationship and forge a new future for Islamic finance.

Much of that future will be built around the intrinsic synergies between Sharia values and Environmental, Social and Governance (ESG) principles because consumers of all kinds demand responsibility from those they do business with. From farming to mining, food production to plastics and everything in between, every single customer segment has shifted its collective mindset towards responsible business. It is a global mindset that – thanks to digital communications – transcends borders. And it is why in seven world markets, from Turkey to the Far East and multiple countries in between, DIB is transforming and expanding the Islamic financial services landscape. Since entering Turkey in 2005, DIB’s relationships with Turkish bankers, policymakers and investors have been integral to its success – but the importance of these relationships became especially evident in 2021.

COMMITTED TO TURKEY

In June 2021, Turkey’s Ministry of Treasury and Finance sold a $2.5 billion five-year sukuk in the international markets. The DIB-led syndication saw the Islamic bonds draw more than $9.3 billion in orders. Then, in September 2021, DIB was mandated to act as joint lead managers and bookrunners for Kuveyt Türk Katilim Bankasi (KTKB) when it returned to the international Sukuk market with a US$350 million Sustainable Basle-III Compliant Tier II Sukuk. The offering was the first-ever sustainable Tier II Sukuk issued in Turkey and the world’s first regulatory capital Tier II ESG Islamic compliant trust certificates. This work reflects the importance of the Turkish market to DIB and the country’s role as a market maker in Islamic finance. Since opening its representative office in Istanbul in 2005, Turkey is now the country where DIB has the largest cross border exposure on its books through sukuks and Murabahas.

DIB provides Murabaha financing to many Turkish Participation banks and corporates (against SBLC/ Bank Guarantee) and also works with participation & conventional banks on their respective LC and LG business in the UAE. DIB has a significant international presence as a torchbearer in promoting Shari’ah-compliant financial services across a number of markets worldwide, in addition 

to providing banking services to Turkish subsidiaries in the UAE, Pakistan and Kenya. The UAE market is now more open for Turkish banks than ever before. In November 2021, the Turkish Central Bank signed a Memorandum of Understanding with the Central Bank of the UAE. The MoU, which sets out to foster cooperation in the field of central banking, followed the signing of 10 bilateral agreements on energy, the environment, finance and trade. The UAE has also allocated a $10 billion (TL 119.6 billion) fund for direct investment in Turkey.

LEADING FROM THE FRONT

Closer to home, the UAE remains a promising avenue for the growth of Islamic banking and finance, and the sector maintained steady growth throughout 2020 despite the pandemic, with total assets of Islamic banks increasing by circa 7.2% over the previous year according to the Central Bank of the UAE’s data. As the first and leading Islamic bank, DIB is spearheading this growth. Under the visionary leadership of DIB Group Chief Executive Officer Dr. Adnan Chilwan, the bank underwent a radical transformation that converted pioneering Islamic banking into a global powerhouse in Islamic Finance. The Bank’s ultimate goal remains to make Islamic finance the norm rather than an alternative to conventional banking worldwide.

DIB has won a range of accolades that are testament to these efforts across diversified areas, including retail, corporate and investment banking, as well as CSR and consultancy services. DIB has been named the Best Islamic Bank in various prestigious ceremonies and recognised for its outstanding performance amongst the world’s Islamic Banks, marking it a clear indication of the bank’s leadership position in the Islamic finance sector. The raft of awards that DIB receives every year reflects its ability to reinvent, adapt and pivot in real-time – whilst remaining true to its roots. Because, regardless of their spiritual beliefs, the future of Islamic finance is open to anybody who searches for responsibility and sustainability in their financial affairs. The UAE-Turkey special relationship will play a key role in ensuring that it happens.