Financial Services Sector in Turkey
Total Page：16
File Type：pdf, Size：1020Kb
Financial Services Sector in Turkey June 2016 Investment Support and Promotion Agency of Turkey 1 Glossary of Terms Acronym Definition Acronym Definition ATM Automated Teller Machine Insurance Claims Follow-up and HAYMER AUM Assets Under Management Monitoring System BIST Borsa Istanbul IMF International Monetary Fund BKM Interbank Card Center Banking Regulation and Supervision N/D No Data BRSA Agency NPL Non-Performing Loan CAGR Compound Annual Growth Rate O/N Overnight Organization for Economic Cooperation CAR Capital Adequacy Ratio OECD CBRT Central Bank of the Republic of Turkey and Development CEO Chief Executive Officer Q Quarter CMB Capital Markets Board of Turkey ROA Return on Assets ROE Return on Equity CRD Capital Requirements Directive Health Insurance Information and European Bank of Reconstruction and SAGMER EBRD Monitoring Center Development SME Small and Medium Enterprises EGM Pension Monitoring Center TBB Turkish Bank Association EIU Economist Intelligence Unit TL Turkish Lira EU European Union TSRB Insurance Association of Turkey FCI Factors Chain International The Association of Capital Market TSPAKB FDI Foreign Direct Investment Intermediary Institutions of Turkey FİDER Turkish Leasing Agency GDP Gross Domestic Product Life Insurance Information and Monitoring HATMER Center Investment Support and Promotion Agency of Turkey 2 Table of Contents Executive Summary 4 C. Turkey’s Competitive Landscape 54-67 A. Turkish Financial Services 5-48 i. Turkey’s Macroeconomic Outlook i. An Overview of Turkish Financial Industry ii. Favorable Demographics ii. The Banking Sector in Turkey iii. Skilled and Cost-Competitive Labor Force iii. Insurance and Pension Funds in Turkey iv. Investment Environment & Stakeholders iv. Financial Leasing in Turkey v. Geostrategic Location v. Factoring in Turkey vi. Consumer Financing in Turkey B. An Overview of the Turkish Capital Markets 49-53 i. Borsa Istanbul ii. Brokerage Firms Investment Support and Promotion Agency of Turkey 3 Executive Summary The Turkish financial sector proved resilient during the A key driver of the Turkish financial sector has been global financial turmoil in 2009 as well as the ensuing its robust economy with a bright future. Over the economic crisis thanks to the regulatory reforms and past 13 years, Turkish economy has been growing structural overhaul that the government implemented in with an average annual real GDP growth rate of the wake of the country’s own financial meltdown in the approximately 5 per cent and the growth momentum early 2000’s. In fact, the reforms in the sector boosted is expected to continue. Turkey’s sizeable and investor confidence so much that financial services has diversified economy has achieved remarkable growth become the preferred sector for FDI, attracting USD 48 and became 17th largest economy in the world as of billion during the past 14 years. 2015. Banking dominates the Turkish financial sector, Turkey’s economic growth has resulted in income accounting for over 70 percent of overall financial growth and a growing robust middle class with services, while insurance services and other financial increasing purchasing power. activities also show significant growth potential. There As Turkish economy has expanded, it has integrated are 53 banks in Turkey (34 deposit banks, 13 with the global economy with a staggering increase development and investment banks, 6 participation in its volume of international transactions. Such banks). Out 53 banks, 21 hold significant foreign capital developments have further stimulated economic (30% of total assets are held by foreign investors). activity, thus expanded financial activities. An expanding loan base and favorable liquidity conditions Turkey has also set specific economic targets to contribute to the healthy growth of Turkey’s financial achieve by 2023, the centennial of the Republic. One services. The sector enjoys a leading position in the world of these targets is to transform Istanbul into a with an ever-growing asset size and strong equity prominent financial center. Turkey’s large and young structure protecting it against shocks that may arise from population, qualified labor force and rapidly loans or turbulent market conditions. developing markets along with its geo-strategic The Turkish insurance market is still underpenetrated location makes Istanbul an ideal candidate for an (1.4% of GDP) compared to peer countries and will international financial hub. Since, the government provide significant potential as new insurers set up shop launched the project for Istanbul Financial Center, and acquire a share of the relatively untapped Turkish Istanbul has rapidly made progress and is now market. Turkey has seen strong economic growth fueled considered among emerging financial centers in the in part by a young and dynamic population that is world. increasingly in need of financial products and services. Investment Support and Promotion Agency of Turkey 4 A. A Detailed Look at the Financial Services Sector i. Overview of the Turkish Financial Services Sector ii. The Banking Sector in Turkey iii. Insurance and Pension Funds in Turkey iv. Financial Leasing in Turkey v. Factoring in Turkey vi. Consumer Financing in Turkey Investment Support and Promotion Agency of Turkey 5 Major milestones in Financial Services Industry of Turkey Milestones of Turkey’s Financial Services Industry 1982-2000 2001-2006 2007-2012 2013-… Capital Market Law Personal Pension Savings Mortgage Law, Official Restructuring of Istanbul Istanbul Stock Exchange and Investment System Gazette No. 26454 Stock Exchange and (ISE) Market opens Law Implementation of Basel Establishment of Borsa Istanbul A.Ş. Banking Regulation And Banking Act, Law No. 5411 II standards in Turkey Supervision Agency Regulation on Measurement Record profitability of the Implementation of Basel (BRSA) founded and Evaluation of Capital banking sector in Turkey III standards in Turkey Consolidation of the Adequacy of Banks Law No. 6361 regarding State-owned banks Market from 100 Banks Financial Leasing, opened up participation to 49 Banks Factoring and Financial banks Takasbank is Authorized Institutions by CMB as the National Establishment of Numbering Agency of Insurance Information Turkey and Monitoring Center - Start of internet banking TRAMER, SAGMER, services HATMER, HAYMER All local or foreign insurance , reinsurance and pension companies operating in Turkey are members of the Insurance Association of Turkey New Capital Market Law No. 6362 Source: BRSA, CMB Investment Support and Promotion Agency of Turkey 6 Turkish financial sector, led by banking, has been rapidly growing while attracting tremendous amount of foreign direct investment (FDI) Asset Size of Turkey’s Financial Sector (TL Billion) CAGR Share 2008-2015 2015 Banking 3.600 Central Bank Banking 18 65 Insurance and Private Pension CAGR 18% Other Central Bank 22 13 Insurance & Pension 20 3 1.130 Other 15 19 Other includes: BIST capitalization, securities, consumer finance, real estate investments, investment trusts, asset management and venture 2008 2009 2010 2011 2012 2013 2014 2015 capital investment trust assets Source: BRSA, USD/TRY as of 31/12/2015: 2.92 FDI Flows into Turkish Financial Sector (Cumulative Value in $ Billion, 2002-2015) Others* 2,7 TOTAL: $47,9 Billion Banking: Source: CBRT 37,5 *Activities of Holding Companies and Other Activities Auxiliary to Financial Services Investment Support and Promotion Agency of Turkey 7 Turkish financial sector has been a magnet attracting significant amount of FDI.. Greenfield FDI projects in Financial Services M&As by foreign companies in Financial Services Value ($ Billion) Number Value ($ Billion) Number 3,6 74 66 61 19,9 19,3 2,2 62 2004-2009 2010-2015 2004-2009 2010-2015 2004-2009 2010-2015 2004-2009 2010-2015 Source: FDI Market Source: E&Y, Deloitte “Turkey is one of the fastest growing insurance markets “The Turkish banking industry is highly developed and worldwide, supported by a robust economic outlook and a competitive, in our segment in particular. Returns are large, young population. The transaction with Yapı Kredi is important but for us the importance is mainly in its a unique opportunity to move into a market-leading growth potential, the strategic location and export position in one of Europe’s key growth markets which is potential" also an important bridge between Europe and Middle East/Central Asia. This transaction fits perfectly into Allianz’s strategy to use bolt-on acquisitions to strengthen Sipko Schat its position in growth markets.” Executive board member responsible, Commercial banking, Rabobank. Oliver Bäte, Rabobank obtained banking license from Turkish authorities Member of the board of management of Allianz SE. in 2013 with an initial capital investment of $300 million. Allianz acquired 94% of YapıKredi Sigorta’s shares for USD 880 million and 80% of YapıKredi Bank’s pension business, YapıKredi Emeklilik, in March 2013. Investment Support and Promotion Agency of Turkey 8 Turkey’s foreign trade in financial & insurance services has significantly increased in recent years.. Turkey’s Foreign Trade in Financial & Insurance Services ($ Billion) 6 5,6 Export Import 4,8 4,9 5 4,0 3,9 3,9 4 3,2 3,2 3,2 3 2,4 2 1 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Turkey’s Foreign Trade in Insurance & Pension Turkey’s Foreign Trade in Financial Services Services ($ Billion) ($ Billion) 3 2,9 3 Export Import 2,7 2,7 2,4 Export Import 2,4 2,5 2,5 2,2 2,2 2,1 2,2 2,1 1,9 2,0 2 2 1,8 1,8 1,6 1,7 1,5 1,5