Turkey is a country with a history of boom and bust, and its government has spent the last few years doing its best to pursue a more prudent economic model. However, while it has looked to stabilise things, it is also keen to attract higher levels of foreign investment to help bolster its economic growth. In particular, the government has cited the traditionally closed-off banking sector as one suitable for increased competition.
The last year has seen a number of deals where foreign firms have seized stakes in local banks. In May last year, 71 percent of the domestic firm Alternatifbank was acquired by the Commercial Bank of Qatar in a deal worth $460m, after heavy competition from the Commercial Bank of China.
That firm, and many others, is now actively seeking a foothold in Turkey’s burgeoning banking sector. The news of Middle Eastern and Asian companies taking positions in Turkey comes as many Western firms retreat from the region. Towards the end of 2012, Citigroup sold half of its 20 percent stake in Turkey’s largest bank Akbank.
The first foreign bank to obtain a license in the country for more than 15 years was Odeabank, towards the end of 2011. A fully owned subsidiary of Lebanon’s Bank Audi, it was granted its license by the country’s regulator the Banking Regulation and Supervision Agency (BRSA), leading to its incorporation the following March, becoming the 49th player in the Turkish banking sector.
Odeabank: A case study
Creating a brand from scratch presents many challenges to companies in any industry, but with such a competitive banking sector in Turkey, it is especially difficult. According to Odeabank, it achieved this through a combination of strong capital structure, shareholder power, and first-rate employees.
Launching its operations in November 2012, the firm leveraged its natural strengths as an expert in trade and investment flows between Turkey,the Middle East and the North African region. Its aim is to act as a full service bank, providing its technological infrastructure and experienced human resources to the service of the Turkish economy.
Odeabank by numbers
£7bn
Assets
800
Employees
19
Locations
This involves building value-added franchises in areas such as retail banking and in providing a wide range of financial services for medium-sized Turkish firms. By January 2013, Odeabank’s branch network had expanded to six – mostly in major cities like Istanbul, Ankara and Izmir – while the company’s headcount reached 400 employees. Since then, the bank has expanded rapidly and by the end of September (12 months after the launch of its operations) it reached 19 branches and more than 800 employees. It has now built up assets of around $7bn, making it the 14th largest in the country.
Since its establishment, Odeabank has displayed considerable progress in terms of balance sheets within a short period of time. It achieved its aim to be ranked among the top 15 banks in Turkey by the end of the year, not only in terms of asset size, but also loan and deposit size.
Looking at a regional shift
Odeabank’s main shareholder, Lebanon-based Bank Audi, is a regional group with a presence in 11 different countries. With a universal bank profile, Bank Audi covers all segments of banking activities, including corporate, commercial, retail, investment and private banking. As of September 2013, Bank Audi’s consolidated assets reached $34.5bn.
Bank Audi’s group staff headcount exceeds 5,000 employees and its shareholders base encompasses more than 2,500 holders of common shares. Bank Audi ranks first among Lebanese banks and is positioned in the inner circle of top Arab banking groups in the MENA region, and it is listed on the Beirut Stock Exchange.
The government is also keen to transform Istanbul into a financial centre capable of rivalling London, New York and Hong Kong. Istanbul is the perfect meeting point for east and west, giving it a strategic advantage over other cities vying for the region’s new financial hub. Odeabank is well positioned to benefit from a range of synergies created by the international reach of Bank Audi.
Turkey has favourable conditions to underpin the growth of its banking sector
In recent years there has been a very discernible shift in the pattern of Turkey’s trade, with emerging market countries, especially those in the MENA region, becoming progressively more important. Concurrently, the EU’s share in Turkey’s total trade has declined. Imports between MENA and Turkey have increased nine times, while exports have increased by a factor of 12 in the last decade.
Given that Bank Audi has a presence in major MENA countries – including Qatar, the UAE, Jordan and Saudi Arabia – synergies will be easily generated across the group as a whole. Additionally, with its local network and knowledge, Odeabank is well positioned to act as an intermediary between investors in the region keen on increasing their exposure to the Turkish economy.
Turkey has favourable conditions to underpin the growth of its banking sector. No more apparent is this in its successful growth despite the global financial crisis. Relative political stability in Turkey is a rarity in the region, while its young population and its geopolitical location are other features that make Turkey attractive.
While the global economic crisis highlighted the weaknesses in many countries, Turkey’s relative strengths were in the spotlight too. This is in part thanks to the strength of its banking sector, and the improvement in its fiscal indicators means Turkey has been able to bring its chronically high real interest rates down to single digits.
Whether Turkey can continue to keep its real interest rates at comparatively low levels will by-and-large depend on how well these strengths are maintained both economically and politically. A well-capitalised, profitable, closely monitored and regulated banking sector should continue to increase its penetration rate.
Large strides for greater coverage
With the confidence and support of Bank Audi, Odeabank is taking stronger steps towards its target to be among ‘the giants league’ by 2017. It is proud of breaking new grounds in the sector. For example, in April last year, it established an investment platform tailored for the retail-banking segment, a first for the Turkish banking sector.
After analysing 400 mutual funds currently managed in Turkey in terms of 20 different criteria, it collaborated with esteemed portfolio companies, offering funds to its customers. Odeabank has also begun providing branch services within the chain stores. It opened branches in Topkapı and Bostancı, Ankara Sög˘ütözü, Izmir Bornova, Bursa Nilüfer, as well as the Adana stores of Vatan Computer, which is one of the biggest retail stores for electronic devices in Turkey. It expect this chain store service to continue to expand.
[O]deabank uses state-of-the-art touch-operated, wirelessly integrated systems in its infrastructure
In June last year the bank offered its first credit card – the Bank’O Card – to customers through a wide application channel. Being free of credit card fees, the Bank’O Card is an exclusive product that fulfils customers of the bank cash needs and also provides them with many additional services. Launching the Bank’O Card Axess in October, it offers a reward programme as well as instalment facilities within more than 250,000 Akbank Merchants.
Mainly, cardholders can get instant cash back through every purchase they make and redeem them at that moment. They can also get discounts and instalments from the merchants. Mobile banking is another service provided, whether at in-branch self-service banking areas, its internet branch or at Odeabank ATMs. Those customers using mobile banking can also access the OdeaCep mobile branch using their internet banking user information without the need to register again.
The bank has also been developing cutting edge technologies that allow customers to receive a bank card online in an instant, as well as the ability to speak to bank staff through a video call service. It also aims to make life easier for its employees who have access to internal video calls. What’s more, an automated cash counter and acceptance system has proven to increase efficiency by 40 percent.
In order to provide a comfortable working environment for its employees, and to offer a faster and much more efficient service to its customers, Odeabank uses state-of-the-art touch-operated, wirelessly integrated systems in its infrastructure. Its video conference system allows all branches and head office to communicate with each other quickly and effectively, and enables branch staff to complete customers’ business processes in real time.
Offering different services compared to its rivals, Odeabank has touch-screens located in branch windows, which may be used by anyone wanting information on its banking services. It also designs the waiting lounges in its branches with customers in mind, and offers tablet devices and touch-operated tables, through which customers can access a wide range of interactive applications and games, making the time spent in the branch more efficient and enjoyable.
The waiting lounges also have information screens that, as well as displaying sequence number and advertisements, show market data and news on current affairs. Customers performing transactions in the teller area may see details of their transactions, personalised campaigns, send e-receipts or evaluate the quality of the service they receive through Windows 8 tablets placed on the counters.
The firm is also aware of its responsibility to the environment, and so its branches are designed to have a minimal impact on the environment, and are as paper-free as possible. As a whole it has paperless and eco-friendly business processes and, using business intelligence applications, scorecards can be monitored and analyses can be executed over the related data.
In the coming year, Odeabank expects to continue growing, supported by its technological infrastructure, more than 1,000 enthusiastic employees and a branch network that had reached 32 outlets at the end of 2013.
