Turkey private banking debate: Turkey’s private bankers tap dynamic entrepreneurial culture

By:
Published on:

The country’s entrepreneurs are increasingly drawing on private bankers’ skills as they seek out new sources of income and ways to pass on wealth to younger family members.

Turkey private banking debate participants

EXECUTIVE SUMMARY

• Emerging markets are the growth cores of the future, so private banking has great potential in them

• Turkish clients are seeking new investment products as interest rates keep falling

• Moving wealth from one generation to the next is a key focus

• Technology development is crucial in Turkish private banking

• Large amounts of wealth are being repatriated by Turks abroad

• Pension planning as well as investment in pension funds is of growing importance

• Client profiling and client education is crucial

• Turkey has the potential to develop as a centre for regional finance, including private banking

 

Elliot Wilson, Euromoney How fast is Turkey growing economically, and how is that growth transferring into an ever-larger private banking and wealth management market?

Gülcan Ustay (GU) is office head at Fitch Ratings Turkey.GU, Fitch Turkish banks have taken their lessons from the 2001 banking crisis in Turkey. The Turkish banking system including TEB has performed very well since then despite the post-Lehman Brothers financial crisis. I would also say that BNP Paribas made a very wise and far-sighted decision in 2005 to enter the Turkish market, particularly given the rate of economic and material growth since then. There is still room for newcomers in the market but it will be ever more expensive and more competitive to capture market share.

Murat Üçer (MU) is an adviser at Global Source PartnersMU, Global Source I would like to offer a few observations on the global economy, which seems like the consensus view to me. The world has a growth crisis at the moment, but this is more a developed world problem than an emerging markets problem. Most future global economic growth will inevitably be in emerging markets, and Turkey in particular is well positioned to be one of the drivers of this broader theme. If you don’t have growth, you don’t have wealth generation. So by implication, the future of wealth accumulation must lie in emerging markets as well. Turkey has four great growth fundamentals working in its favour. First, we have the right demographics, with over 40% of the population younger than 25. Second is geography: Turkey is in a great position straddling east and west, and if any one country is going to rise up economically from this region into the list of advanced nations, it’s going to be Turkey. Third, the country has a highly entrepreneurial business environment. Finally, I would add the overlooked issue of balance sheets, which are strong in Turkey, whether in households, corporates, banks or the public sector. This is not to say that Turkey has no weak spots, but these, like the high current account deficit, seem manageable in a highly liquid and rapidly shifting global economy.

EW, Euromoney This is one of the world’s great growth economies, which is translating to growth on the ground. How fast is the private banking sector really growing? And what needs to be done to convince a greater percentage of the populace in Turkey to embrace private banking and wealth management services?

Banu Taskin (BT) is private banking group director at TEB.BT, TEB Just 1% of the individual deposit holders in Turkey control roughly 50% of all deposits, so this is a highly concentrated market. Moreover, it’s a highly deposit-based market. But as interest rates tumble, clients are looking for returns from different products. We are trying to offer them advice that would differentiate their holdings and diversify their portfolios away from deposits. This will help attract new customers to the private banking market in Turkey.

Pierre Ramadier (PR) is head of international retail markets at BNP Paribas Wealth Management.PR, BNPP When we compare mature countries with emerging markets, what do we see? It’s very simple. An emerging market tends to be full of entrepreneurs investing in their businesses or buying other companies. There are people selling their companies, as they can’t grow fast enough. You have mergers and acquisitions and IPOs. You have people investing and people acting. Then, in Turkey, you have a generation of people who created, 25 or even 35 years ago, their own companies, and now there is in Turkey what I would call a generational issue, meaning that these first-generation entrepreneurs are looking either to sell assets or to transfer them to a new generation. This is a great opportunity for wealth managers as we can help these entrepreneurs actually to think about their wealth: how to restructure their wealth, and how they can use the bank’s skills and facilities to, for instance, access capital to buy a new asset. This is typical of modern Turkey: there are so many deals happening out there, and I believe that is a good sign.

Another big trend among our clients is philanthropy. We have been very active in this field. As early as 2008, we created the BNP Paribas Prize for Individual Philanthropy, celebrating philanthropists’ personal commitments. In the 2011 edition, the prize was won by Turkey’s Koç family.