ANKARA: The CEO of HSBC Turkey, Selim Kervanci, has ruled out earlier rumours of a possible exit from the Turkish market. In an interview with Anadolu Agency, Kervancı said: “HSBC has exited 17 to 18 countries and territories. In some countries, [HSBC] no longer provides private banking services. In Turkey, we have been through a restructuring process. We have absolutely no intention of selling the bank or moving out of the country.”
Ruling out rumours that HSBC might consider exiting from Turkey, he said: “We are one of the first foreign banks to have entered the Turkish market. We decided to continue with a new strategy. This involves focusing on areas where we are good at. And we are very good at wholesale banking. In retail banking, we will continue to focus on premium customers.
HSBC has the ability to enable Turkish corporates to reach diversified financial instruments, he said. “One of the most important problems [of Turkey] is the domestic savings gap. To reach a sustainable growth path, Turkey needs a major amount of foreign funding. We are the best bank to provide this,” he said. “There is a major foreign investment potential towards Turkey. To turn this potential into investment, we have assigned ourselves a duty to be an ambassador to draw investment into Turkey. We are explaining the Turkish economy’s strength to everyone.” He said Turkey’s banking sector remained solid, especially with regards to its human capital, offered products, its fundamentals and capital adequacy. But there are also challenges that put pressure on the profitability of the banks, he said.
About the participation banking sector, Kervanci said HSBC had been providing funding to Turkish companies through both murabaha and sukuk instruments for a decade and it will continue to do so. “In the last four to five years, we have provided a funding of $5 to $6 billion, in the form of sukuk and murabaha, to the companies in Turkey. And we will continue to do so in the future.” Kervanci appreciated the reactions of Turkey’s economic administration, especially the Central Bank in wake of the July 15 foiled coup, for introducing measures to enable markets to operate uninterruptedly.
“We should thank the Central Bank and economy administration. The measures taken [in the aftermath of coup bid] established confidence in everyone. And this helped markets to operate properly” he said. “Turkey weathered really tough times recently and during this period Turkish economy resumed from where it was. The wheels are turning,” he added, noting that all macro-economic figures of the Turkish economy continue to be solid despite deterioration in the environment of confidence.
Kervanci also noted that the benefits of the recently-formed sovereign wealth fund, which would help fund Turkey’s mega projects since the capacity of the banks for such projects was nearing its limits. “The establishment of the sovereign wealth fund is very well-directed move,” he said. About Moody’s recent rate cut, Kervanci noted the new rating had not created volatility in the Turkish markets as much as anticipated.
“Turkey needs more foreign direct investment. Foreign investors, who make direct investments, do not only consider the credit rating. The long-term potential of the country is a far more important consideration. And Turkey fulfills all criteria in terms of potential,” Kervanci said. He also highlighted Turkey’s young population, growth potential of its domestic market, new infrastructure investments, health and education sectors. “Today, very few countries have the same potential as Turkey,” he said.
Taking into account all these positive elements, Turkey should now concentrate on improving its investment climate and attract more foreign direct investments, which would in turn create more jobs, he said. “What is important here is to explain Turkey’s story and continue to communicate with the investors. The non-investment grade rating, surely, may have an impact but this is not an issue which would cause a systemic risk and shake the economy,” he said.
On Feb. 22, HSBC Chief Executive Officer Stuart Gulliver said the bank had decided to continue its Turkish operations following offers the bank received were deemed not to be in the best interest of its shareholders. “We have, therefore, decided to retain and restructure our Turkish operations, maintaining our wholesale banking business and refocusing our retail banking network,” Gulliver had said in a statement as the bank released its annual earnings. “This will provide better value for shareholders and continue to allow our clients to capitalize on HSBC’s international footprint.” HSBC became the first British bank to enter the Turkish market in 1990.
