Best Bank:
Akbank
Best debt house:
Citigroup/Schroder Salomon Smith Barney
Best equity house:
Global Securities
Best M&A house:
Global Securities
The shakeout following Turkey’s devaluation has finally made clear which banks have sustainable, real banking models and which do not. Banks whose main business was speculating in the government bond markets will see their portfolios thrown into loss by devaluation and inflation. Those whose main business was lending to the industry group that owns them will be hit hardest by bad debts and new regulations. Banks will fail and many of the larger institutions will be forced to merge or be acquired by foreigners.
In this environment the strengths of Akbank are particularly evident. It is much less reliant on its marketable securities book for profits than its rivals. Its net short dollar position is relatively smaller than its largest rivals, though its forward hedges are mostly with Sabanci Group companies. And its NPL ratio is significantly lower than Garanti, Isbank and YKB.
Akbank’s loan portfolio is diversified both sectorally and geographically. Its customer base too is diverse – 3.5 million retail customers with retail deposits of approximately $4.7 billion give the bank a strong and stable funding source (deposits are 77% of total funding); 54,000 middle-market commercial clients provide good-margin business and an exposure to growth sectors; and over 700 large corporate customers utilize the bank’s’ wholesale services.
A strong performance in 2000 has been continued in the first quarter of 2001. IAS 29 results show that Akbank’s assets have grown in real Turkish lira terms by 13.5% through significant growth in loans by 12.8% as well as by 33.2%, compared with year-end 2000.
This was supported by strong growth in deposits of 17% which continue to be a stable and a cheap source of funding for Akbank.
Akbank’s equity in IAS terms only fell by 3.9%. This fall was related to the cash dividend payment of $52.8 million in the period. Therefore, despite the erosion in Turkish lira resulting from the devaluation, the equity of the bank remained $1.2 billion in US dollar terms. Akbank’s BIS ratio for the period in IAS terms was 27%.
Citigroup/Schroder Salomon Smith Barney is a strong contender in every Turkish category, but in debt it is out in front. It is the leader in syndicated loans, structured trade finance and project finance.
SSSB was joint book runner on Turkey’s $1.5 billion 30-year bond issue and co-ordinating arranger in the $1 billion club loan for the Republic in December 2000. It also had a 42% market share in securitization deals distributed in the primary market in 2000.
In equity and M&A, though, the strongest and most innovative house is a local, Global Securities. In equities Global has been the top-ranked secondary market house on the Istanbul Stock Exchange for eight years running. In 2000 it traded $3 billion worth of shares for its foreign institutional clients and had 8.48% overall market share.
The primary market has been essentially closed since October 2000. However, before that the firm took part in several key transactions. Of 11 equity offerings since July 2000, Global lead-managed two offerings and co-managed five.
In M&A, Global concentrates on transactions that make use of Turkey’s role as a gateway to the entire region. For example, it advised on the strategic alliance between Hedef Holding, Turkey’s largest distributor of pharmaceutical and health and beauty products, and Alliance Unichem in a deal that valued Hedef at $250 million. Not only was this the largest deal of the time, it also opened up the Egyptian and Greek markets to the purchaser. Other deals for Koç Holding and Sezginler Gida brought foreign companies into Turkey with the aim of creating regional leaders.
