Türkiye's planned merger of three state-owned participation banks, announced recently by President Recep Tayyip Erdoğan, could support the competitiveness and growth of this market segment, Fitch Ratings said Wednesday.
The credit impact would depend on merger execution and the new entity’s business strategy and capitalization, the rating agency said in an assessment.
"A successful merger that boosted efficiency and profitability could help to attract new external capital, as could the proposed IPO of a fourth participation bank," it added.
The agency said that Erdoğan's announcement on June 5 of the planned merger "signals the Turkish authorities’ continued commitment to participation banking."
Attending the major Islamic finance forum, the president said that three major state-run participation banks would merge, without providing further details on the planned timeline.
