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Audi launches $300 million Turkish bank

The Turkish banking regulator has awarded its first deposit-taking bank licence in more than a decade to Lebanese banking group Audi.

At $300 million – some 15 times the minimum required capital in Turkey – it represents a substantial investment for Audi, around 12.5% of the group’s consolidated capital. This also gives it the largest capital base of all Audi’s international ventures.

Turkey’s more pro-Palestinian foreign policy and recent economic success has made it something of a model during the Arab Spring. Concrete economic links are growing too.

Trade finance commissions alone would bring Audi revenues from Turkey of around $30 million annually, says Freddie Baz, Audi’s group CFO and strategy director – assuming a 10% market share and 1% commission on the roughly $30 billion of yearly trade between Turkey and the Arab World.

The operation will concentrate on the mid-corporate segment, although it will explore developing retail products. Baz believes the mid-corporate segment is underserved in Turkey.

Syria sell-off

Bigger corporate transactions in Turkey can be covered via offshore lending from Beirut, while the Istanbul staff will help build relationships with bigger corporates. "We have abundant dollar liquidity and we’re willing to deploy part of this in the big corporate segment in Turkey," says Baz. "We will have firepower when Turkish banks are facing credit restrictions."

The authorities in Turkey have implemented drastic steps to curb liquidity, with the central bank removing repo facilities last month, for example.

Bank lending increased 25.5% in the first nine months of the year in Turkey, as the current account deficit rose to more than 10%. However, Baz says that "Turkey is heaven" compared with Syria and Egypt – the bank’s biggest existing international operations by assets, now experiencing intense political turmoil.

Audi’s assets and deposits in Syria both contracted about 30% in the first nine months of the year. Meanwhile, Riyadh-based Banque Saudi Fransi, partly owned by Crédit Agricole, said last month it was selling its 27% stake in Bemo Saudi Fransi Syria.

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