Turkey: Sustaining the unsustainable
Turkey's determinedly weak currency
Korfez changes ahead of tough times
Akbank is one of the few Turkish banks to have disentangled itself from the incestuous cross-holding relationships, which have proved the main weakness of most of the country's financial institutions.
Over a period of four years the bank has sold all but one of its non-financial assets. Nearly $500 million dollars raised from the divestment has been used to reinforce the bank's capital base and increase shareholder value. The only remaining non-financial asset in the portfolio is waiting to be disposed of as soon as market conditions become favourable for the sale.
Akbank has departed from a tradition, to which many top-tier banks are still strongly attached, dating back to the 1940s. An inordinate ratio of Turkish banks' loans and investments are in companies owned by their shareholders.
This phenomenon was initially encouraged by the government at a time when the economy was backward and characterized by a severe capital and foreign-currency shortage. To fill the gap, banks were given the freedom to open unlimited credit lines to selected investments in which they held more than 25% of equity.