Rabobank Groep, the biggest Dutch agricultural lender, will tap the growing market in Turkey by opening as many as four branches for commercial banking after getting regulatory approval last month.
The Dutch bank, formed in 1898 as a cooperative lender serving Dutch farmers, will open the first branch in Istanbul, Sipko Schat, Rabobank board member responsible for commercial banking, said in a telephone interview today. That number may grow to four in the next three to four years, he said, with staff increasing to between 100 and 150 from about 20.
Rabobank, grappling with a contracting economy at home, is focusing on food and agricultural industries in faster-growing markets including Brazil and Turkey as it trims some operations elsewhere. After obtaining approval to establish a bank in Turkey with $300 million in capital last month, it can start trying to expand in a market where banks had a return on equity of 16 percent in the first half of the year.
“The Turkish banking industry is highly developed and competitive, in our segment in particular,” Schat said. “Returns are important but for us the importance is mainly in its growth potential, the strategic location and export potential.”
Rabobank will initially offer trade financing and treasury services in the country, Schat said. The expansion in Turkey fits Rabobank’s strategy of becoming the leading food and agricultural bank globally and to serve Dutch clients abroad, he said.
Turkey’s gross domestic product grew 4.4 percent in the second quarter from a year earlier, boosted by government spending and a pickup in consumption, the statistics office in Ankara said last week. Risks to growth include a plunge in the lira and government bonds, as U.S. plans to start withdrawing stimulus hurt emerging market assets.
“We see the impact of tapering as temporary -- it may last for another year,” Schat said. “Still, in the medium to long term it’s a very interesting country with a prospect of multi-year growth. Also, many of our clients are exporters, they benefit as their costs are in liras and their revenue in dollars.”
Rabobank has had a representative office in Istanbul for 15 years, Schat said. The company was in talks with Turkish regulators to get a license since 2011 after failing in a bid to buy a stake in agricultural lender Sekerbank TAS (SKBNK) in 2006.
Rabobank is also offloading assets. The firm sold its asset-management unit Robeco to Orix Corp. (8591) in July for 1.94 billion euros ($2.6 billion) after disposing of a controlling stake in Swiss private bank Bank Sarasin & Cie. in 2012. A sale of its Indonesian operations was halted in June after local regulators imposed tighter restrictions on overseas bank acquisitions.
The firm is now in talks to sell a minority stake in its Indonesian unit, Schat said. At the same time, it’s trying to win approval to set up a representative office in Nairobi, as a hub for Zambia, Tanzania and surrounding countries, where it also sees growth potential, he said.
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