THE TRANSFORMATION OF GLOBAL TRADE WITH PARTICIPATION FINANCE: TÜRK EXIMBANK

“WE PROVIDED $54.3 BILLION IN SUPPORT FOR OUR COUNTRY’S EXPORTS IN 2025”

In Türkiye’s export journey, some institutions have gone beyond being mere financing structures to become key players in economic transformation. Established in 1987, Türk Eximbank is at the forefront of these institutions. Operating as Türkiye’s official export credit agency, our Bank aims to facilitate exporters’ access to financing, support the sustainable development of foreign trade, and enhance Türkiye’s competitive strength in global markets. With the credit, insurance, and guarantee mechanisms it offers to exporters, Türk Eximbank goes beyond being a mere financing institution and also serves as an important support structure. Through tools such as short-, medium-, and long-term export credits, receivables insurance applications, guarantee systems, and rediscount financing, the export of goods and services is supported, while also contributing to the management of commercial and political risks faced by exporters. These financing and risk management tools encourage companies to enter new markets while also enabling diversification of exports both in terms of products and countries. As Türkiye’s official export support institution, we provided a total of $54.3 billion in support to our country’s exports in 2025, consisting of $26.8 billion in credit and financing and $27.5 billion in insurance and guarantee support. This amount represents an 11% increase over the previous year. Thus, we successfully completed 2025 in line with our goals, reaching the highest volume achieved since our Bank’s establishment. This result clearly demonstrates the role Türk Eximbank plays in Türkiye’s export-oriented growth strategy.

“A NEW WINDOW OPENING ONTO THE PARTICIPATION FINANCE SECTOR”

In recent years, we have seen participation finance practices gaining increasing importance in the global financial system. In Türkiye, too, the need for access to finance among companies sensitive to interest rates has brought the development of alternative financing models within the financial system to the fore. Türk Eximbank’s work in the participation finance sector is also shaped by the goal of making export finance more inclusive. Our bank conducts its participation finance activities within the framework of the powers defined in Article 77 of the Banking Law and the relevant regulations of the Banking Regulation and Supervision Agency. The financing and insurance products developed within this scope create an alternative financing channel for exporters with interest sensitivity while also contributing to the diversification of sources in export financing. One of the key references in our bank’s work in the field of Participation finance is the “Islamic window model,” which has examples in international practices. This model is based on the principle of separating Participation finance activities from conventional banking operations in terms of operations and accounting. Our bank has adopted this approach while developing participation finance products and applications. This has created a transparent, traceable, and participation- principle-compliant corporate framework for activities conducted under the same institutional umbrella. Türk Eximbank began its activities in the field of participation finance in 2020 with funds provided by the Islamic Development Bank. Thanks to this source, new financing and insurance products compliant with participation principles were developed. This led to the introduction of new product alternatives for exporting companies wishing to use financing or insure their receivables in accordance with participation principles. To ensure that participation finance activities are conducted within a robust corporate framework, an Advisory Committee was established within our Bank in 2022. The Committee, consisting of Prof. Dr. Hayrettin Karaman, Prof. Dr. Mürteza Bedir, and Prof. Dr. İsak Emin Aktepe, evaluates the compliance of our Bank’s participation finance products and transactions with participation principles. The evaluations made by the Committee contribute to the execution of our participation finance activities within a framework that is compatible with international practices.

“A TRANSFORMATION PROCESS: THE ISLAMIC WINDOW MODEL”

Participation finance applications are finding an increasingly wider field of application on a global scale. International data also clearly reveals this trend. According to data from the “Islamic Finance Development Report 2025” published by LSEG (London Stock Exchange Group), as of 2024, approximately 48% of Islamic banks worldwide operate under the “Islamic window” model. The share of services offered under this model in total Islamic banking assets has reached approximately 14%, amounting to USD 619.9 billion. Currently, Islamic window applications are operating in 67 countries, with many countries considering this model an important tool for expanding participation finance services. The Islamic Window Model developed by Türk Eximbank not only involves the introduction of new financing instruments, but also represents a comprehensive transformation of the Bank’s corporate infrastructure. This process encompasses a multi-layered transformation ranging from accounting systems to operational structures, international partnerships, and product development activities. We established the participation finance directorate within Türk Eximbank to coordinate this transformation process. Through this unit, we aim to effectively execute participation finance transactions, develop the system infrastructure, and strengthen the corporate framework in this area. In addition, the directorate is responsible for developing participation finance products, securing funds, utilizing the funds provided, and ensuring that all these processes are carried out in accordance with participation finance principles.

“THE ISLAMIC WINDOW MODEL WAS AN IMPORTANT STEP IN OUR CORPORATE TRANSFORMATION”

The Islamic Window model, which we implemented in 2020 as Türk Eximbank, was an important step in our corporate transformation, enabling us to apply Participation finance principles within the traditional banking infrastructure. Globally, the Islamic finance sector has grown to exceed $5 trillion, and many international banks offer Participation finance services through the “Islamic window banking” model. In this context, Türk Eximbank’s implementation of this model is a strategic step in terms of both ensuring compliance with international best practices and strengthening Türkiye’s participation finance ecosystem.

Our primary priority in implementing the model was to conduct participation finance activities within the framework of the principles of operational independence, strong governance, and high transparency. To this end, we established our advisory committee, set up the corporate structure to carry out participation finance activities, and designed all processes, from fund procurement to financing utilization, in accordance with participation principles. Thus, we have established an operational structure that is both compliant with international standards and able to offer our exporters products that comply with participation principles. We started the Islamic window application with the Murabaha product in the first phase. However, in line with the demand from our exporters and market needs, we quickly expanded our product set and have now reached a point where we can offer approximately 10 different participation finance products. Our goal for the coming period is to increase the use of participation finance instruments in export financing, thereby offering alternative financing channels to our exporters and contributing to Türkiye’s institutional capacity in the field of participation finance.

On the portfolio management side, the NACE code-based sector evaluation mechanism plays an important role. Areas of activity that are not directly compatible with participation principles are systematically excluded, while in some sectors, the nature of the activity is evaluated on a transaction- by-transaction basis. This approach ensures strict compliance with participation principles while also enabling the sustainable and robust development of our exporter portfolio.

PARTICIPATION-BASED FUNDING SOURCES
The sustainability of the participation finance system largely depends on the creation of appropriate and stable funding sources for this area. As Türk Eximbank, we prioritize diversifying funding sources and strengthening international financial partnerships to ensure the robust development of our participation finance activities. In this context, partnerships developed with international Islamic financial institutions offer significant funding opportunities. Our work with institutions such as the Islamic Development Bank, the International Islamic Trade Finance Corporation (ITFC), and Kuwait Finance House supports a significant portion of our participation-based financing activities. Within this framework, we have secured a total of $2 billion in participation-based funds since 2020. In addition, we have further expanded our funding capacity by including the resources of the Central Bank of the Republic of Türkiye within the framework of participation principles.

FINANCING REACHING EXPORTERS

Participation-based funds provided by Türk Eximbank are made available to exporting companies through various financing methods that can meet their different needs. Within this structure developed in line with participation principles, both short-term solutions that meet working capital needs and medium- and long-term financing opportunities that support investment projects are offered. In this context, exporting companies can benefit from murabaha, istisna, icare, and isticrar products in line with their needs and demands. These methods also diversify the financing access options for exporting companies.

COOPERATION WITH PARTICIPATION BANKS

Türk Eximbank considers increasing the share of participation banks in Türkiye’s exports to be an area of strategic importance. Products developed in this direction, such as Pre-Shipment Export Financing (SÖİF) and Interest-Free Financial Leasing Financing, are delivered to exporters through participation banks. In addition, funds obtained from the Central Bank of the Republic of Türkiye (TCMB) are also made available to exporters through participation banks.

This established cooperation model facilitates access to finance for exporting companies while also enabling participation finance applications to find a wider field of use in export financing. Thus, while exporters gain access to alternative financing opportunities, they also contribute to the strengthening of the participation finance ecosystem in Türkiye.

TAKAFUL APPROACH IN RISK MANAGEMENT

Risk management is as important as access to financing for exporters. As Türk Eximbank, we protect exporters’ receivables arising from foreign and domestic sales against commercial and/or political risks with our Participation-Based Export Receivables Insurance (KEAS) and Participation-Based Domestic Receivables Insurance (KEYAS) products, which are based on the takaful (participation insurance) model. Through agency agreements signed with participation banks, we ensure that these products reach more exporters.

LOOKING AHEAD: ROADMAP FOR 2026

In our roadmap for 2026, we aim to increase the share of Participation Finance in our Bank’s support to 10%. In addition, developing new products, diversifying treasury operations and fund procurement methods, and further strengthening our infrastructure are among our priorities. In the coming period, we plan to launch products such as participation- based financial leasing, investment agency, term export financing, and participation-based buyer financing for exporters. Furthermore, establishing sukuk infrastructure and developing participation-based liquidity management tools are among the main topics we are working on. With these steps, we aim to contribute to making Participation Finance an integral part of exports and to be a strong institutional representative of an inclusive, sustainable export financing model.

THE IMPACT OF SUKUK AND NEW INSTRUMENTS ON COMPETITIVENESS

At this point, the Islamic window application has created significant institutional capacity that diversifies Türk Eximbank’s export financing toolkit and contributes to the deepening of Participation Finance in Türkiye. In the coming period, we will continue to support the global competitiveness of our exporters by increasing product diversity in this area. Diversifying financing instruments and strengthening access to international capital sources play an important role in Türk Eximbank’s growth strategy. In this context, establishing a sukuk infrastructure and introducing new instruments such as participation- based financial leasing are among the important steps that will both increase the diversity of sources in export financing and support Türkiye’s competitive power in global trade. Sukuk is a powerful tool for directing liquidity towards real sector investments and trade financing. It also enables the expansion of the investor base, increasing access to financing and facilitating the faster and more efficient integration of resources into the economy. As Türk Eximbank, we aim to establish the institutional infrastructure in this area and introduce alternative funding channels for export financing. In this context, we plan to begin our efforts to establish a sukuk infrastructure in the second half of 2026 and, after completing the necessary institutional and operational preparations, to launch the relevant financing instruments in 2027. Similarly, we are working to integrate products such as participation-based financial leasing into our financing architecture in a way that supports our exporters’ investment and production processes. With the introduction of such instruments, we anticipate that Türk Eximbank’s capacity in export financing will be significantly strengthened, not only in terms of volume but also in terms of resource structure and financing diversity. Thus, we aim to both facilitate our exporters’ access to long-term and competitive financing and create a stronger financing ecosystem that supports Türkiye’s position in global trade.