Bridging businesses, developing deals
Published: 22 September 2008
Turkey Global Banking head sees country as future finance hub
Despite the confusion afflicting many international markets these days, Hüseyin Özkaya, Head of HSBC Global Banking Turkey, sees reason for optimism, as his country takes an increasingly important role as a regional financial centre.
And there are good reasons for his outlook – HSBC Turkey has expanded steadily since it entered the market in 1991, and particularly since its acquisition ten years later of Turkish private bank Demirbank TAS. Completing the merger in December of that year expanded HSBC Turkey's local reach with 187 branches, a comprehensive range of personal, commercial and corporate services, and a good foothold in this strategically located emerging market.
"Having operated mainly as a boutique corporate and treasury bank between 1991 and 2001, we started to develop a strong personal banking network following the acquisition of Demirbank in 2001 and subsequently, of Advantage Loyalty Card. We grew this business almost tenfold since 2001," Hüseyin recalls, "from a base of USD1 billion to more than USD10 billion now. Probably, HSBC Turkey is the only example in recent history that attained organic growth through increased product offerings and select acquisition." Now with 315 branches and over three million customers and a global network, HSBC has become one of the bigger and more established players in the Turkish banking industry (see recent awards in table below).
| Euromoney Awards for Excellence -2008 | Best Debt House - Turkey |
| Global Finance, Best Internet Bank Awards - 2008 | Country Award Winner, Best Consumer Internet Bank |
| Euromoney Private Banking Survey 2007 | Turkey - Best Private Banking Services Overall |
Source: HSBC
Given the continued growth of the Turkish economy, there is still room for expansion, and Hüseyin offers a comprehensive strategy for its accomplishment: "develop the profitable commercial sector, which contributed TRY138 million to HSBC Turkey last year, by providing cross-border markets funding, and continue to offer products with smaller sell points to small-and-medium enterprises (SMEs)."
In the commercial sector, the real estate market continues to attract both domestic and foreign investment, said Hüseyin. "With its growing population, Turkey has a lot of potential for both residential and commercial real estate. The consumer side is promising and regarding the commercial side, necessity is driving the investment to malls as retail sales is not yet very organised and needs some structure." A concrete example would be HSBC's role in the recent acquisition of Istanbul Cevahir, one of Europe's biggest shopping malls, by Kuwait-backed St Martin's Property.
Hùseyin Özkaya, Head of Global Banking, HSBC Turkey
The Global Banking business is also a key development area. "From the 2007 USD400 million profit HSBC Turkey generated before tax, USD50 million came from Global Banking. I want this business to grow and differentiate itself by originating products and diversifying our funding base. Given current market conditions where margins are coming down (as a result of increasing cost of funds), this will keep us alive and competitive."
Islamic finance is becoming an increasingly strategic service in the Global Banking product mix. "We arrange USD400-500 million Islamic finance syndications for a wide range of Gulf investors. Given the proximity of our location and the good relationship that we have with HSBC Middle East, the number of syndications we arrange have been increasing every year. We participate in the Islamic finance markets, arrange cross-border financing products and services. We are a prominent and leading provider of institutional Islamic finance services in Turkey."
The newly-established, two-month old private equity business is slated to play a crucial role in the future "as this service helps firms evaluate financing proposals. HSBC Turkey Global Banking identifies new opportunities and clients, and then joins up with the portfolio management business and the HSBC network to get this done."
Hüseyin believes that the greatest potential for HSBC in Turkey is to become more than a bridge for deals but increase its activities in deal origination, such as when HSBC Global Banking Turkey advised Aegon in its purchase of Ankara Emeklilik. "We have an excellent network and can identify potential business at the source. Working the network in the early stages will enable us to capture advisory opportunities, to act early and help our clients even before they go in and make the investment."
HSBC Turkey is the only example in recent history that attained organic growth through increased product offerings and select acquisition.
Engineering Turkey's Global Banking strategy
Hüseyin Özkaya is Head of Global Banking, HSBC Bank Turkey. Mr Özkaya joined HSBC Turkey (then part of Midland Bank) in 1991 as Manager of Marketing and Corporate Finance. After three years he moved to Midland Global Markets in London, as Manager of Sales in Capital Markets. In 1995, Mr Özkaya was appointed as Assistant General Manager for Corporate Banking in HSBC Turkey.
The main point of contact for HSBC Global Banking, he manages the Bank's non-personal and non-treasury business lines, including corporate and commercial relations, corporate finance, institutional banking relations and representation of HSBC Group in Turkey.
His achievements include the acquisition of Demirbank in 2001; establishment of the investment banking business which includes structured finance, corporate finance and financial institutions management; and SME banking. Since its start in January 2006, the business has attracted more than 100,000 new clients; and a number of landmark deals in structured finance and mergers and acquisition.
Mr Özkaya has a degree in Industrial Engineering from Istanbul Technical University and a Masters in Business Administration from University of Wisconsin.
Turkey: the essentials
HSBC Global Research gives a comprehensive review of Turkey's midyear economic performance and a forecast of what to expect for the remaining half of 2008.
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Turkey's stable growth in recent years shows that economic and political reforms, part of its EU commitments, have so far been beneficial. In a series of special reports, we examine the trends that are shaping this emerging economy.
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