Participation Banks Will Play An Essential Role In Foreing Trade

Turkey has gained significant momentum in exports for the last 20 years and has succeeded in turning the global crisis and recessions experienced in this period in its favour. Turkish entrepreneurial companies, which swiftly responded to the changing needs, resumed improving their businesses during this period by adapting themselves to the changes in the sector and geography. In parallel with Turkey's export-based sustainable strategy, participation banks will play an essential role in creating solutions that can increase trade with new products in this area, as well as conducting studies focused on minimizing risks in countries where their customers currently do business.

For low-cost and long-term financing instruments in foreign trade transactions, both cash and non-cash financing opportunities can be created and offered to customers through partnerships with Eximbank and similar qualified insurance companies. Export/import volumes between countries can be expanded by utilizing transactions made in local currencies, especially those subject to imports from exported countries. For transactions to be made to risk-intensive countries, customers can access guaranteed financing opportunities by applying to the export insurances of banks or international institutions such as Eximbank and Islamic Development Bank.

In case participation banks open branches/representation offices abroad, transactions can be offered to customers by accelerating the transaction channels between the relevant country and Turkey, by monitoring/detecting the risk on the spot. The financing needs of customers can be met with products such as Deferred Export Financing. Intermediation opportunities for Pre-Shipment Export Credit, which are currently offered through Türk Eximbank, can be offered to participation banks’ customers in larger volumes. In parallel with the growth of participation banking, participation banks in Turkey may increase the frequency of contact with these institutions in various organizations in order to deepen relations with Islamic financial instruments and international investors, banks and other financial institutions offering these instruments. Through the new relationship to be established or the existing relationships to be developed further, access to both new financing models and products and more funding opportunities in terms of volume can be provided. With these opportunities to be offered to customers in the field of Foreign Trade financing, the share of participation banking in the sector can be increased.

Yusuf Okur

Deputy General Director of Emlak Participation Bank