Turkey’s largest lender İşbank ready for foreign challengers

ISTANBUL - Anatolia News Agency

Adnan Bali believes new banks will raise the competition level. AA photo

More foreign lenders in Turkey will improve the local competition, supporting efforts to make the country a finance hub, according to the chairman of İşbank, largest local lender by assets.

Structurally strengthening capital markets, a decrease in the gray economy and sectoral dynamism have revitalized foreign lenders’ interest in the market, Adnan Bali said in an interview with Anatolia news agency.

“I think that the activities of foreign banks in Turkey will positively affect the local sector and raise the level of competition, while contributing to the perception about Turkey as a finance center in its region,” Bali said.

Turkey’s Banking Regulation and Supervision Agency (BDDK) approved last month The Bank of Tokyo-Mitsubishi UFJ’s application to launch a Turkey branch.

This was the second such approval by the regulator after Lebanese Bank Audi’s Odeabank, which last year became the first new bank in Turkey since the crisis in 2002.

Several Gulf banks have largely made their interest in Turkish lenders public.

Global risks, growth target

Despite the ongoing eurozone risks, Turkey will differ from many economies with more than 4 percent growth, Bali forecasted. Still, the euro crisis will still be the main source of uncertainties for the global economy, with the ongoing problems in Greece, Ireland, Italy, Portugal and Spain, he said.

 “The weak outlook on the global economy poses risks for the Turkish economy as well as any other country and this brings to the agenda expectations on some monetary ease by the leading central banks.”

However the effects on Turkey would be limited, he said.

Another international rating agency may upgrade Turkey to investment level, following Fitch’s move in November, which granted the country its first investment level after 14 years.

Due to the small amount of domestic savings, Turkish banks generate financing with foreign loans and by issuing bonds abroad, the banker noted. “This increases fragility for the Turkish banking sector and the economy in general appears against any shift in the route of international capital flows.”

An increase in the ratio of domestic savings is crucial for sustainable growth in both the banking sector and the country’s overall economy, he noted. “Thus we think that the sector will tend to products that will encourage savings,” he said.

The lender, with assets of 166.8 billion Turkish Liras according to official third-quarter figures for 2012, plans to open 40 to 50 branches this year. The bank aims at to increase its market share and profitability, Bali said.