Turk Akbank takes lion's share of ING's army business

Akbank Executive Vice President Galip Tozge said in a press meeting on Friday around 60 percent of military members who decided to break their ties with Dutch ING had cut deals with their new banks, a business worth some 3 billion new Turkish liras (YTL) ($2.3 billion).

"We see this as an important opportunity for our bank. We try to get the maximum benefit out of this situation... 60 percent of those military members had cut deals with their new banks. We expect the rest to do the same thing by the end of the year. We got the lion's share from this 60 percent," Tozge added.

Dutch financial services group ING Groep NV bought Turkey's Oyak Bank for $2.67 billion last year from the army pension fund. In late April it was reported Oyak Bank started to lose its business with the military. Oyak Bank had about 1.3 million clients, out of which about 200,000 are military personnel.

The Turkish financial sector has been attractive to foreign institutions since the comprehensive consolidation and new regulations put the banks back on their feet following the financial crisis in 2001.

Akbank CEO Zafer Kurtul said in the press conference they do not expect to be affected by U.S banking giant Citi's decision to sell $400 billions of its assets, adding Citigroup sees its Akbank investment as a strategic one and it is one of the American bank's core businesses. "They recently said Citi's strategic investments will be in emerging markets. So those assets planned to be sold are the ones in developed markets. Citi wants to increase its investments in emerging markets," he added.

Citigroup had bought a 20 percent share of Akbank for $3.1 billion in 2006. Citigroup plans to shed about $400 billion of "legacy assets" over the next two to three years as it tries to recover from the subprime mortgage crisis.

AKBANK'S Q1 RESULTS
Kurtul said Akbank's net profit in the first quarter rose 71 percent compared to the same period in last year to 720 million YTL ($567 million). Total assets of the bank rose to 81.1 billion YTL in the first quarter from 72.1 billion YTL during the same period last year.

He said income from loans grew 11 percent quarter-on-quarter to 44.3 billion YTL, adding loan growth was expected to be 25 percent in 2008.

Kurtul expects the Turkish Central Bank to increase the short term interest rates for 50 basis points in 2008. "We expect the central bank to continue to tighten its monetary policy. So it is hard to say that foreign exchange rates will permanently go up," he added.

He also said the political tension could create short term volatility in the markets but in the mid term they believe in Turkey's economy. "We are a democratic country. In democracies we always find a solution, so we believe in Turkey's potential," he said.

Turkey's chief prosecutor filed a closure case against the ruling AKP in March.

Photo: Hurriyet Archives