Turkey Prepares to Form Largest State-Owned Islamic Finance Bank

Turkey's sovereign wealth fund has signed an agreement to buy 100 percent of the shares in the state-owned Ziraat Katılım and Halk Katılım banks. The deal is the first stage of a plan, announced earlier by President Recep Tayyip Erdoğan, to merge three state-owned Islamic finance banks into one.

The share transfer is scheduled to be completed by the end of the year, subject to the necessary approvals. Vakıf Katılım is expected to join the merged bank in the future.

According to the government, creating a single large bank will increase the sector's competitiveness and its share of the country's financial market. Assets of Turkish Islamic banks reached 5.35 trillion lira in August 2026, and their share of the total rose from 8.6 percent at the end of last year to 9.6 percent.