İş Bankasi Is Not Looking For Fate

İş Bankası General Manager Ersin Özince says that the search for foreign partners in the banking sector do not affect them. “This is not a question of being better or worse. For some reason some people in Turkey talk about banks like a woman,” he  says. He notes that they have no such problem at İş Bankası. “We are a bank with collective capital, we are not waiting for such an appointment. We have no problem with money, market or know how,” he says. He adds that if there are still proposals then they can evaluate them.

İş Bankası has the distinction of being the first bank in the Turkish Republic. For this reason it is always viewed as a state bank. General Manager Ersin Özince says that this results in it being seen as: “The only state institution which is not owned by the state.”

To date İş Bankası has taken participations in 286 companies and, in its main groups of finance, glass, energy, telecommunications, industry and services, it currently has direct participations in 53 companies and indirect ones in 79 others. The basic reason for the decrease in its participations is a change in international rules which has severely restricted banks taking participations outside the financial sector.

Ersin Özince indicates that their efforts in this direction will continue by saying: “In the future we shall use methods such as mergers, sales or -- if necessary -- liquidation for those participations which the group does not require from a strategic perspective.”

Ersin Özince says that the bank closed 2004 with net profits of TL 635 trillion. He notes that the rapid rise in deposits played a major role in this figure. He explains that in 2005 they want to feed the balance sheet from a broad deposit base. He says that, as much as possible, they put these savings the service of the economy, spreading them widely, with a particular emphasis on small ticket credits.

We spoke with İş Bankası General Manager Ersin Özince, who says: “Our target is always to be in the forefront of the sector,” about the current structure of the bank, its targets and sectoral developments.

What are you planning to do in 2005? Are there particular areas on which you will concentrate?

There was increasing interest in İş Bankası in 2004, which began before the lifting of the deposit guarantee and increased afterwards. We saw that people prefer our bank, particularly for deposits. We also took deposits -- I mean small deposit holders -- as our base.

We want to continue with this in 2005. I mean, we want to feed our balance sheet from a broad deposit base in particular. Because we have a broad branch network and we give considerable importance to strong contacts with the market. We shall continue like this in 2005. We prefer to put the savings that we take from society at the service of as broad a section of the economy, particularly through extending small ticket credits.

Within this framework, we have no formula for the composition of our balance sheet. I mean we don’t have a policy in which we say: ‘We shall assign this specific proportion of our resources to loans and this portion to securities.” As a principle, we extend loans as long as there is a need for them and we place the remaining funds in securities. If developments continue as they are now, İş Bankası will continue to grow rapidly in 2005 and we forecast that we shall continue to take the largest share from the concentration of the leading 5-10 banks in Turkey.

So we can say that your rapid balance sheet growth will continue…

We want the bank’s balance sheet to grow rapidly and healthily. Our most important strength in this regard is that we are able to grow without making too great an investment. We have long had the most extensive service network and the most widespread technology. This infrastructure was a little expensive for us during the crisis and while there was the 100 percent guarantee on deposits, but now it now has a positive impact on our productivity commensurate with the burden we put on it. In the last five years İş Bankası has grown by around 300 percent. We managed this without recourse to significant new funds. I mean, we tripled the load through our existing capacity. Most important of all, our equity resources and capital adequacy ratio are strong enough to finance growth.

In 2005, in parallel to your target of rapid growth, can we say that personal loans and credits to SMSEs will form an increasingly important proportion of your placements?

Without a doubt. We are not pursuing zigzag policies in this regard. Not including credit cards, we have long been the leader in personal loans. Yapı Kredi was always the leader in the former. They were the first to make the most of the market and they did so very well.

Apart from this, until recently we were the leader in virtually every area of personal loans. There are now some areas in which we are not the leader, but I would estimate that we are still in the lead in terms of volume.

The corporate, commercial and particularly the small business market is very lively and there is a lot of competition. What is İş Bankasi doing as regards this market?

Above all, we are trying to ensure that we develop our infrastructure so that we can use it more productively and effectively. With this in mind, we want to shift the emphasis to operations based at our headquarters. I mean, we are conducting operational and technical changes that include channeling as much business as possible, apart from over the counter operations, through operational headquarters and ensuring that our branch organization is focused more on the customer.

I mean, we are restructuring our organization to give greater importance to marketing. This means a number of changes from software to the building, people and methodology. We are doing this so that in the future we can compete in international terms with successful foreign rivals. In fact, if one looks, whatever everybody else is doing, we are doing the same. We are trying to establish the same structure as the most efficient and productive bank in the world. We are not, and shall not be, the only Turkish bank to do this…

Economists say that there was very little movement during first two months of the year. How did this affect the credit market?

To be blunt, there is not a lot of movement on the credit market. There is a continuing increase in housing credits. But because this is still very much in its initial stages I do not give a lot of importance to this increase. But when you look at the figures, they have grown to significant levels. This field is growing rapidly.

When we look closely, we see that blue chip companies have begun looking more to foreign sources for their funds. Apart from this, there is not much happening in terms of demand for credits. On the contrary, banks are competing with each other in the same market to offer the customer more attractive terms.

IF THEY WANT A PARTNERSHIP FOREIGNERS SHOULD PUT A BILLION DOLLARS ON THE TABLE

What impact is the increase in foreign banks having on the sector?

At the moment 14 foreign banks are active in Turkey. I do not think that 24, never mind 14, would be a major event. What is important here is quality not quantity. At the moment, foreign banks account for less than 5 percent of the sector. As Turkey becomes more stable, I think foreign shareholders will be more active in channeling capital to Turkey.

I respect those players who get a few hundred million dollars from a foreign bank. But when I look at the financial shallowness of the Turkish financial sector, I do not give this much importance. When I look at it from İş Bankası’s perspective I do not give it any importance at all. Because in order to influence banks like us it is necessary to put billions of dollars on the table. Any foreign investor who does not put this amount on the table does not have a chance. But I still think that an increase in the influence of foreign owned banks in Turkey will bring quality in every kind of competition.

BELGİN BAYIR LEVENT
blevent@capital.com.tr