Erdogan announces the merger of Turkish Islamic banks and praises joint financing | economy

Turkish President Recep Tayyip Erdogan said on Friday that Türkiye’s three state Islamic banks will merge, in an initiative to support their share in the Turkish financial system.

Erdogan added in his speech at the Third World Conference on Islamic Economics in Istanbul that the merger between the three banks “will achieve momentum in this sector,” explaining that a fourth Islamic bank will offer its shares for public subscription for the first time.

Bloomberg reported that Islamic banks, which are based on the principle of participatory financing and comply with the rules of Islamic Sharia, provided about 7.4% of the total commercial loans in Turkey in the first quarter of this year, which is double the loans they provided in 2016, according to data from the Turkish Central Bank.

The assets of Islamic banks currently represent about 9.5% of the total banking assets in Türkiye, compared to 4.9% in 2016, according to the Central Bank of Turkey.

A ‘fairer’ model

The Turkish newspaper “Daily Sabah” quoted Erdogan as saying to participants in the activities of the Islamic Economics Conference in Istanbul that “participatory financing is a fairer and safer model, not only for Muslims, but for the entire world.”

Erdogan added, according to the newspaper, that the unification of the “Ziraat Katilim”, “Vakf Katilim” and “Halk Katilim” banks will create common advantages for them, and will lead to a new era in this sector.

In his speech, Erdogan spoke about a fourth Islamic bank, “Emlak Katilim,” explaining that it “will enable citizens to be partners in development.”

Erdogan said that the market value of companies included in the participation financing index amounted to 36% of the total market value of companies traded on the Istanbul Stock Exchange in the first quarter of 2026.

Global debt crisis

In his speech, Erdogan referred to the huge size of global debt, explaining that it raises doubts about the future of the global economy.

Erdogan said, “Financial crises cannot be prevented without moving to an economic and financial model based on the principles of justice, ethics, production and fair distribution.”

He stressed, “The more we rely on the principles of Islamic economics, the faster we will achieve our goals.”

Erdogan criticized the financing system based on interest rates, saying, “If there is interest, there is no blessing.”

In his speech, Erdogan addressed the war in the Middle East, saying that “its negative impact does not depend on the sister countries in the Gulf, but rather on the entire world.”