With improving technology and a fledging consumer banking market, banks in Turkey see healthy prospects. The optimism can be credited to a relatively stable economy, a healthy volume of international trade, and many multinational companies that are drawn by Turkey's strategic location at the crossroads of Europe, the Middle East, and Central Asia.
"Why not benefit from this trend?" asked Izzet Pekarun, the New York-based representative for Yapi ve Kredi Bankasi. "We want to take [our] place in this."
During the 1980's, Turkey began deregulating its economy, encouraging foreign-owned banks to set up Turkish operations. And in 1987, Turkey demonstrated its commitment to westernization by applying for European Community membership.
An Opening to the West
"Turkey itself has been defined as a strategic market," said Belgium-based Leon Dhaene, regional manager of Turkey for EuroCard International. He credits the new attention being paid to Turkey to a fundamental opening of this country toward a more Western economy and financial policy."
Citibank last year wrote in an investment guide to the country: "Turkey is one of the few developing countries that is considered a reasonable investment both from an economic and political viewpoint."
Aside from the Citicorp unit, other U.S.-based players in Turkey include Bank of Boston Corp., Bankers Trust New York Corp., Chase Manhattan Corp., and Chemical Banking Corp. Each has moved into Turkey to tap the growing market for trade finance, investment banking, and foreign exchange.
Of the 71 banks in Turkey at yearend 1991, 22 were foreign-owned, including institutions from the United States, Germany, France, and Japan.
An Inflation Plague
The largest bank in the country is government-owned T.C. Ziraat Bankasi of Ankara -- the Agricultural Bank of the Turkish Republic. Seven other Turkish banks are state-owned, 12 are investment banks, and 29 are private. Most of the latter are closely affiliated with a family or business group.
Because inflation plagues the country -- the annual rate is near 70% -- banks in Turkey tend to make money by investing in government securities or through trade finance. But that is starting to change as Turkish institutions retool technology and test consumer banking.
Local banks are "starting to get much sophisticated," said Kevin Mulvaney, international banking group executive at Bank of Boston. "They're becoming more formidable."
U.S. banks with operations in Turkey credit themselves with recent positive developments in the Turkish banking system.
Influence of Foreign Banks
Foreign-owned banks "have brought technology to the country and fulfilled their role of training Turkish bankers," said Maarten Hulshoff, the senior officer in Turkey for Citibank.
Eyeing an opportunity for foreign exchange and trade finance, Citibank entered Turkey in 1975 with a representative office and has since expanded into a commercial bank with corporate finance, investment banking, and treasury capabilities. Now, the bank is set to expand into consumer lending and credit cards.
"Retail banking took off in the 80s in Turkey," said EuroCard's Mr. Dhaene, who estimated that credits cards and charge cards issued in Turkey totaled almost 600,000 at yearend 1990, up from about 422,000 at the end of 1989.
The number of debit cards in the hands of Turkish consumers grew to 4 million last year, up from 2.4 million a year earlier. Mr. Dhaene estimated that within five years, Turkey's 55 million people would carry 5 million credit cards and 10 million debit cards.
Still, there is some caution.
Mr. Hulshoff of Citibank said, "Consumer credit is not yet a commodity product in this country." That's no surprise, considering that consumer loan interest rates hover around 130% and deposit rates stand at about 75%. In consequence, Mr. Hulshoff said, "there is limited interest in consumer loans at this point in time."
Commercial borrowers pay nearer 115%.Turkey's Top ThreeRanked by assets;dollars in millions Year ending Percent World 12/31/91 12/31/90 change rankTurkiye CumhuriyetiZiraat Bankasi $10,497 $11,170 -6.0% 371Turkiye Is Bankasi 5,508 5,879 -6.3 589Akbank T.A.S. 3,686 3,711 -0.7 786 Source: American Banker