International credit rating agency Fitch Ratings has stated that the planned merger of Türkiye’s three state-owned participation banks could enhance the competitiveness and growth prospects of the country’s participation finance sector. According to the agency, the impact of the merger on the combined entity’s credit profile will depend on the implementation process, the future business model, and the capital structure. 

In its latest commentary, Fitch noted that the merger plan, announced by President Recep Tayyip Erdoğan on 5 June 2026, demonstrates the Turkish authorities’ continued strategic support for participation banking. The agency also expects participation banks to continue increasing their market share during the second half of 2026.  

The planned merger would bring together Vakıf Katılım Bankası, Ziraat Katılım Bankası, and Halk Katılım Bankası, which has not yet commenced operations, under a single institution. As of March 2026, these three banks collectively accounted for approximately 3.4% of Türkiye’s overall banking sector and around 36% of the participation banking segment. 

Fitch believes that the merger could strengthen the combined institution’s standalone credit profile by creating economies of scale and a stronger market position, potentially making it the largest participation bank in Türkiye. However, the agency emphasized that no detailed implementation plan has yet been announced regarding the merger timeline, execution method, or any potential capital increase.  

The report also notes that adopting a more performance-oriented business model could intensify competition among participation banks and make the sector more attractive for private capital investment. 

Fitch further highlighted other developments that could support competition within the participation banking sector, including the potential entry of conventional banks or new market participants. In this context, the agency pointed to BİM’s announcement that it intends to establish a participation bank with TRY 10 billion in initial capital, subject to obtaining the necessary regulatory approvals.  

Regarding Türkiye Emlak Katılım Bankası, Fitch stated that the planned initial public offering (IPO) could improve the bank’s access to capital depending on its growth trajectory. Nevertheless, as the government is expected to retain a majority stake, the agency does not anticipate any material change in its assessment of state support.  

Finally, Fitch noted that the ratings of Ziraat Katılım and Vakıf Katılım are aligned with Türkiye’s sovereign rating, reflecting expectations of extraordinary government support. Accordingly, the agency does not expect the planned merger to materially affect its assessment of state support in the near term.  

Source: Fitch Ratings, Turkish Participation Bank Merger Could Boost Segment Competitiveness, 24 June 2026.