Turkey’s Emlak Bank opens new HQ as it returns as Islamic lender

Emlak Bank, a state-run lender caught in the middle of a financial crisis in the late 1990’s, re-opened on Thursday as an Islamic bank.

The company started operating from its headquarters in istanbul’s Ataşehir district, where it also opened its first branch, Dünya newspaper reported.

Turkish President Recep Tayyip Erdoğan’s government says Emlak Bank will play a key role in lending to the country’s real estate industry, which is in financial turmoil after the economy began contracting last year.

The company plans to open 15 branches in seven regions of Turkey by the end of the year, Dünya said.

Emlak Bank, founded in 1946, was a lynchpin of a Turkish building boom 20 years ago that saw the government and public contractors use it as a cost centre for often ill-conceived and corrupt housing projects. Turkey was forced to close the bank in 2001 and merge its assets into other state-run banks as part of pledges made to the International Monetary Fund. State-run lenders had run up losses totalling about $20 billion when the IMF accord was signed.

Turkish Treasury and Finance Minister Berat Albayrak, Erdoğan’s son-in-law, announced Emlak Bank’s return in August, saying it would constitute part of a new economic model following a currency crisis, along with another state-run investment institution. Emlak Bank would be integrated into a new system aimed at addressing “the absence of sustainability”, Albayrak said.

The construction sector has helped lead economic growth in Turkey through massive infrastructure projects and a housing boom. But the economy has contracted for two-straight quarters, bringing a slump in housing sales and falling prices. The troubles have left many builders with a pile of housing stock that they cannot sell.