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Foreign banks head for Turkey’s exit door

Are currency depreciation and an uncertain political environment pushing international banks away from Turkish assets? The expected sale of HSBC’s local unit could hold the answer.

When HSBC decided to review its loss-making Turkish operation earlier this year, it sparked a flurry of interest among M&A bankers and across the sector. 

Bulent Sengonul, head of research at local investment bank Is Yatirim

Several foreign banks with strong owners have not achieved the growth they were looking for in Turkey

BuIent Sengonul,
Is Yatirim

If, as expected, the UK group decides to sell all or part of the business, it could provide a valuable indicator of whether international lenders’ appetite for Turkey has survived rising political and economic uncertainty.

Until recently, it seemed as though nothing could dim the allure of the Turkish banking sector for foreign investors. Even after the global financial crisis, as banks’ enthusiasm for overseas expansion waned, Turkey’s combination of strong economic growth, favourable demographics and low banking penetration continued to attract a steady stream of new entrants. 

In 2012 alone, Russia’s Sberbank, Lebanon’s Bank Audi and Kuwait’s Burgan Bank all piled in, while other new arrivals include Commercial Bank of Qatar and Industrial and Commercial Bank of China. Most recently, in November, BBVA doubled up on its original 2010 investment in Garanti Bank, in a deal that gave the Spanish giant effective control of Turkey’s second-largest private sector lender. 

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