United Arab Emirates-based lenders are expanding in Turkey, channeling hundreds of millions of dollars into new corporate loans in a market where political turbulence has driven other foreign investors away.
In the past five months, Emirates NBD Bank PJSC and Dubai Islamic Bank PJSC have extended about $440 million in financing to companies including telecoms operator Turkcell and supermarket chain A101. DIB also arranged an Islamic financing deal for Turkish Airlines.
The loans push highlights how banks have become the main conduit for capital between the two countries, after a $51 billion UAE investment pledge in 2023 was marred by failed deals.
Executives in both markets say this is only the beginning, as Emirati lenders open local offices and hire Turkish bankers to navigate a volatile but lucrative market.
“Gulf banks identify Turkey as a market where they can place their funds at a more favorable rate than they can do internally,” said Kaan Kiziroglu, a managing partner at Istanbul-based advisory firm Servo Capital, noting premiums of up to 250 basis points compared with home markets.
The expansion builds on an earlier UAE push to lend to Turkish banks — traditionally viewed as safer borrowers than corporates — following a comprehensive economic partnership agreement signed in 2023 between the two countries. Since then, Emirates NBD and Abu Dhabi Commercial Bank PJSC have ranked as the second- and third-largest bookrunners in syndicated loans to Turkish banks, according to data compiled by Bloomberg.
Dubai-based Mashreqbank PSC is one of the new movers, opening a representative office in Istanbul in May. “We reached a certain scale that we felt that an on-the-ground presence would be appropriate to lead our further expansion across the sectors,” Executive Vice President Aziz Ata said in an interview. “Now our risk appetite widens to corporates and sovereign entities”
DIB’s representative office plans “large-scale, syndicated, Shariah-compliant financings” for Turkish corporates, sovereigns and government-related entities, said Country Head Baran Isik. More deals will be announced in the coming months, he added.
The local offices expand on the presence UAE-based entities already have in Turkey’s financial sector. Emirates NBD owns DenizBank AS, while DIB holds a 25% stake in TOM Group, which operates a digital bank. Last year, wealth fund ADQ acquired midsize lender Odeabank.
Credit Squeeze
For Turkish borrowers, Gulf money couldn’t come at a better time. The central bank has restricted foreign-currency loans and kept interest rates at around 40% in an effort to curb inflation, making domestic credit scarce and costly.
“Traditionally, Turkish banks were the funders of these blue-chip companies,” said Servo’s Kiziroglu. “Now that there are limits in their loan book growth, there is an opportunity window for foreign lenders.”
The lending push also reflects confidence in Ankara’s return to more orthodox economic policy under Finance and Treasury Minister Mehmet Simsek, who has rebuilt foreign-exchange reserves and reduced perceptions of default risk. That confidence is particularly valuable as a series of court cases against President Recep Tayyip Erdogan’s opponents rekindles investor anxiety.
“There are going to be changes and challenges in the short term in any country, not only Turkiye, but we remain very constructive and positive about the fundamentals of the Turkish economy,” said Mashreq’s Ata.
Lenders such as Emirates NBD and the National Bank of Fujairah have been recruiting bankers from Istanbul to deepen their Turkey business — a trend feeding into a fast-growing Turkish expatriate community in the UAE.
Pandemic-era relocations and a thaw in political relations have lifted the UAE’s Turkish population sixfold to about 60,000 since 2020, according to estimates from the Turkish Business Council Dubai & Northern Emirates, outpacing overall population growth.
Besides tax-free salaries, many Turkish finance professionals are drawn by the UAE’s stability and the relative absence of politics in daily life, said Gunsel Topbas, the council’s finance committee chair.
For banks, Turkish hires bring valuable networks and language skills that can make or break a deal.
“Across the board, wherever you go, they prefer to speak in Turkish,” said Topbas. “Even if they know English, it doesn’t create the same vibes.”
