Murabaha is an Islamic method of extending loans and encompasses a particular kind of sale where the seller states the cost of the commodity to be sold and sells it to another person by adding a specified amount of money to the price. Since murabaha is not a loan extended with interest but the sale of a commodity for cash or a deferred price, interest-free banks commonly use it as a financial instrument to earn profits.
The bank authorized Standard Chartered Bank, ABC Islamic Bank and Noor Islamic Bank to find $75 million from international lenders in murabaha loans. These three banks, however, found a much higher demand -- nearly three times larger than what was originally intended -- from the financial institutions that wanted to contribute to the formation of the syndicated loan. The authorized banks were able to secure a total amount of $250 million -- $121.5 million and 99.2 million euros -- from 26 international lenders. The cost was determined to be equal to the London Interbank Offered Rate (LIBOR) plus 2.25 percent. The loan will be payable in a one-year term, during which time a profit margin will be determined twice.
Speaking at the symbolic signing ceremony for the syndicated loan in İstanbul on Friday, Bank Asya General Manager Cemil Özdemir discussed the bank’s performance last year, during which time it grew much more than the sector’s average in terms of asset size, loans and collected funds. The bank is strengthening its position in the banking sector with such a superb performance, he added.
Bank Asya last year undertook the funding of 2.34 percent of exports and 2.46 percent of imports, he mentioned, adding that it aims to increase its activities in this segment of the sector.
