“We shall grow rapidly in every field in finance”

Rüşdü Saracoğlu is someone who has spent virtually his entire career in the world of finance. At the moment he heads the banking and insurance operations of the Koç Group. In fact, he was the main architect of the merger between Koçbank and Yapı Kredi. He has some ambitious targets for Yapı Kredi which following the merger became the fourth largest privately owned bank. Saracoğlu says: “We shall grow through a strong capital base and a growth-based management philosophy.”

Last year was a very lively one for the banking sector. In addition to the interest shown by foreign investors, the domestic players also came to the fore through the offensives they launched. One of the most talked about operations was the merger of Koçbank and Yapı Kredi. While the repercussions were still continuing from Kocbank’s acquisition of an important bank like Yapı Kredi, there were problems during the process of the two banks’ integration.

Rüşdü Saracoğlu, the head of the Koç Holding Banking and Insurance Group who was one of the architects of the Koçbank and Yapı Kredi merger, confirms that there were difficulties. But he thinks that these still did not create any problems for the customers. “If you look at the facts, we actually realized the merger without major difficulties, thanks to the considerable self-sacrifice of the two banks’ personnel,” he says.

We spoke with Rüşdü Saracoğlu, who was once one of the heads of the economy and who now controls the finances of Koç Holding, which is one of the most powerful holding companies, about Yapı Kredi’s future plans, the merger process, his general views about the economy and the financial sector.

* Koçbank’s acquisition of Yapı Kredi was completed under your management. Why did Koç Holding choose Yapı Kredi?
From our perspective what was particularly important was that Yapı Kredi was a powerful brand, it had a long history and had a well-established banking tradition. In addition to this, we also saw it as an important bank in terms of our ability to expand. As a result of this acquisition we became one of the four biggest banking groups in Turkey. In addition, one of the most important factors behind our decision was that we would become the owners of a very powerful distribution network, a very strong presence, particularly in the 10 largest cities in the country we would be able to create synergy in revenue and costs and be able to bring additional some productivity increases to those which had already been achieved.

* How has the acquisition been reflected in the performance of Koç Financial Services?
In 2006 Yapı Kredi posted profits of YTL 512 million and succeeded in raising its capital adequacy ration from 7.2 percent in 2005 to 12.3 percent. As a result of our conservative risk management philosophy, we were virtually unaffected by the volatility on the financial markets in May and June. In addition, we brought Yapı Kredi to the point where it could borrow again on the international markets.

* Could you provide some information on the size of Yapı Kredi’s assets, and the numbers of its branches, credit cards and ATMs?
At the end of 2006, the merged bank had assets of YTL 48.9 billion. This total ranks us fourth amongst the banks in the sector. Our bank has 6.3 million credit cards, 607 branches and over 1700 ATMs.

* What are the areas on which Yapı Kredi will most focus in the future?
The new Yapı Kredi will have a sustainable value creation and growth-based balance sheet management philosophy, a strong capital base, providing services of global standards to the customer, and a customer-focused strategy
In addition to these, our targets include being a bank which has quality personnel, a risk management philosophy of global standards, and a management philosophy which focuses on operational profitability and costs.

* As Koç Financial Services, what are your 2007 year-end targets for asset size?
We forecast that Koç Financial Services’ assets will grow by about 21 percent in 2007 to YTL 66.3 billion.

What Will Have An Impact On The Economy In 2007?
* What risks do you think that the Turkish economy faces in 2007?

Uncertainty About The Elections Will Affect The Economy
 The most important risk is domestic political risk. The uncertainty surrounding the appointment of the new president in May and the general elections in November have the ability to affect the economy and the financial markets.

Regional Risks Have An Impact On Turkey
 In addition to this, developments in our region and particularly what happens in northern Iraq, may contain significant risks for Turkey. It is also possible to evaluate tension between Iran and the USA within the same framework.

Global Developments Will Also Have An Impact
 In addition to this, developments on the global markets, the possibility of a reduction in the appetite for risk for developing countries may create a problem. Commodity prices, particularly the increases that may occur in oil and gold prices, contain significant risks from Turkey’s perceptive.

The High Current Account Deficit Is A Major Risk
In the macro economic field, the most important risk is our current account deficit. Even if we expect our current account deficit to fall to 7.2 percent of national income in 2007, in periods when the perception of risk is rising on foreign markets, Turkey as a country with such a high current account deficit, may be one of those which will be amongst the first to be affected negatively.

Şeyma Öncel Bayıksel
[email protected]