Kuwait Turkish Participation Bank (Kuwait Turk) will launch a $100 million (Dh367.3m) sukuk within the next two to three months, with a roadshow set to focus on the GCC, Emirates Business has learned.
The Islamic bond is currently being finalised. Proceeds will be used to boost the bank's capital and fuel expansion plans, said Rahim Albayrak, Senior Executive Officer of the bank's subsidiary in the DIFC.
"We want to be the first Islamic bank in Turkey to be able to tap the sukuk market. We have good assets and it is really our desire to experience how to launch a sukuk and be a pioneer in this area," Albayrak said on the sidelines of a DIFC workshop.
The sukuk, he said, may be launched by its Bahrain branch with another one slated to be launched next year. "The Bahrain office is more established than us because we've just opened in DIFC in December. But we plan to launch the next deal here in Dubai, hopefully next year."
The bank, whose major shareholder is Kuwait Finance House with a 62 per cent stake, plans to raise the funds from GCC investors and conduct roadshows in Dubai and Saudi Arabia.
"There is not much liquidity in Europe, while cash is sitting here. In addition, we've got branches here, good relationships with banks and corporate firms plus our main shareholders are from here," Albayrak said.
Kuwait Turk's other shareholders are Kuwait Social Security Institution (nine per cent), Islamic Development Bank (nine per cent), and General Directorate of Associations Turkey (18 per cent).
The Istanbul-based bank opened its branch in December, making it the first Islamic finance institution to receive a Category 5 licence, which allows it to provide a comprehensive range of banking services from the financial district.
Despite a number of restrictions inherent from operating in the centre, Kuwait Turk-DIFC was able to raise $50m funds from Abu Dhabi and Sharjah banks in the first five months of its operations. This is only 10 per cent of what the Bahrain branch has managed to raise last year. Albayrak said they expect to ramp up the figures to $100m by the end of this year.
"We have raised $50m from Abu Dhabi and Sharjah banks, which we deployed to corporate firms and banks based in Turkey. Later on, as the market improves, we hope to raise from Dubai, too," he said.
Funds raised in the UAE are better priced than funds raised in Turkey, he said. "What you can get in Turkey at five per cent, you will get it here at 3.5 per cent," he added.
The bank saw a net income of TRY134m (Dh311.32m), a 47 per cent rise from TRY91m a year earlier.
Fitch had placed the bank's long-term foreign currency rating on rating watch positive and noted that in a period of increasing credit risk, Kuwait Turk stayed stable with high profitability, sufficient capital and substantial funds.
It said Kuwait Turk's operational profitability continued despite the shrinkage in the economical environment, adding that its robust deposit volume serves as a basis for its reliable liquidity rate and KFH's support is fundamental to this promising picture.
source : Emirates Business