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Turkey’s Top Aide Seeks Limits to Influence of Foreign Banks

Aug. 12 (Bloomberg) -- Turkey needs to strengthen control of its banks and limit foreign ownership, Prime Minister Recep Tayyip Erdogan’s chief economic adviser said as government ministers jostle for influence in the wake of his election victory.

“The most important thing is to change the structure and weighting of the Turkish banking sector,” Yigit Bulut said in his column in Star newspaper yesterday. The industry “seems to have been abandoned to the control and mercy of both foreigners and ‘foreigners within’,” he said, adding new bank licenses might be granted in pursuit of those goals.

Bulut will remain part of Erdogan’s staff after he is sworn into office, according to HaberTurk newspaper. Erdogan, Turkey’s prime minister for the last 11 years, won the country’s first direct presidential election on Aug. 10.

Bulut said Turkey should develop a cross-border banking alliance with neighbors including Russia, Iran, Syria, Georgia, Azerbaijan and northern Iraq, without giving more details. He also named media, energy and telecommunications as industries that may see “restructuring” alongside banking, finance and capital markets.

The former journalist, who joined Erdogan’s team last year, has “some less than orthodox views,” Timothy Ash, chief economist for emerging markets at Standard Bank Group Ltd. in London, said by e-mail. “I’d expect a pretty negative market reaction if he formally assumes a cabinet or ministerial posting.”

Earlier this year, Turkey’s finance minister said the government wants more foreign lenders to apply for operating licenses, as the pool of potential bank acquisitions shrinks.

New Entrants

“We’re interested in encouraging new entrants,” Mehmet Simsek said at a conference in Istanbul in May. “We will look at new applications because the more competition and innovation, the better for the Turkish corporate sector.”

Turkey’s banks have attracted overseas banks interested in tapping into its economic prospects. Last week, Industrial & Commercial Bank of China Ltd. sought regulatory approval for its purchase of a 76 percent stake in Istanbul-based Tekstilbank AS. Commercial Bank of Qatar agreed to acquire 71 percent of Alternatifbank AS in March 2013, while Turkey’s biggest listed lender, Turkiye Garanti Bankasi AS, is 25 percent owned by Spain’s Banco Bilbao Vizcaya Argentaria SA.

Bulut last week contradicted Deputy Prime Minister Ali Babacan, who said state-owned TC Ziraat Bankasi AS was interested in buying Bank Asya, which had been in exclusive talks with Qatar Islamic Bank SAQ. The state wouldn’t consider buying a bank with 2.8 billion liras of non-performing debt, Bulut said in comments on the Sky360 news channel on Aug. 6.

To contact the reporter on this story: Isobel Finkel in Istanbul at ifinkel1@bloomberg.net

To contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net Cindy Roberts

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