Türkiye Wealth Fund (TWF) signed agreements on Oct. 7 to acquire all shares in two state-owned participation banks, Ziraat Katılım and Halk Katılım, launching the first phase of a plan to combine the country's public-sector Islamic lenders into a single institution.
The purchases will be made through TVF Katılım Finans Yatırımları A.Ş., a wholly owned subsidiary of the sovereign fund. Share transfers are targeted for completion by the end of 2026, subject to legal and regulatory approvals. TWF has not disclosed the financial terms or explained how the two banks will be run once the transfers are complete.
A long-planned consolidation
The move follows an announcement in June by President Recep Tayyip Erdoğan that Ziraat Katılım, Vakıf Katılım and Halk Katılım would be merged to form Türkiye's largest participation bank. Erdoğan has described participation finance as "a strategic component" of the country's economic development and has presented it as a fairer and safer financial model.
Participation banks operate under interest-free principles, offering profit-sharing and trade-based products instead of conventional loans and deposits.
Very different starting points
The two banks in the first stage differ sharply in size. Ziraat Katılım, which has been operating since May 2015, reported total assets of 882.28 billion liras (about $17.9 billion) at the end of 2025, with 3,140 employees and 227 branches, including two abroad, according to Ziraat Bank's annual report.
Halk Katılım, by contrast, had total assets of 12.9 billion liras as of December 2025 and had not yet started operations. It received regulatory approval in May 2025 and was registered in September of that year.
The consolidation comes as the participation segment grows quickly. Data from the Participation Banks Association of Türkiye (TKBB) show the sector's assets reached 5.35 trillion liras in August 2026, up from 3.60 trillion liras at the end of 2025. Its share of total banking assets rose to 9.6% from 8.6% over the same period.
Vakıf Katılım, the third bank named in the merger plan, was not part of the agreements signed this month.
Sources
Photo: Itidal / CC BY 4.0, via Wikimedia Commons
