DEAL MAKERS

Turkey 2012 | FINANCE | B2B: TRADE FINANCE

With trade between Turkey and the Middle East on the up, an industry has emerged to help keep the flows moving quickly.

Muzaffer Aksoy
MUZAFFER AKSOY
ABC International Bank
Chief Representative Turkey
Nezih Akalan
NEZIH AKALAN
Chief Representative
Doha Bank

What is the aim of your bank's presence in the Turkish market?

MUZAFFER AKSOY Our main mission is to finance trade between MENA and Europe, and that is why we are in Turkey. We help Turkish and European exporters, importers, and contractors in the region. If we look at it like a triangle with MENA, Europe, and Turkey, the latter should be within this framework as a trade finance hub. On the other side, the market is offering not only trade finance, but project finance and Islamic finance, or “participation banking" opportunities. ABC has a bank called ABC Islamic Bank, which is active in the sphere of Islamic finance, and we are also active in the Turkish market, particularly working with the participation banks.

NEZİH AKALAN It has been almost six years since we inaugurated our representative office in Turkey. We are mainly cooperating with our corresponding Turkish banks in the way that we provide them cash and non-cash financing facilities. On the non-cash side, we confirm their letters of guarantee and letters of credit toward Qatar, the UAE, and Kuwait, which, at the end of the day, reduces the commissions Turkish companies have to pay and enhance their capacity to assume new projects. These transactions currently compose the majority of our business. Doha Bank has become the home bank of all Turkish companies doing business and developing projects in Qatar. We have built up a fruitful relationship over the years of mutual trust. Once Turkish companies opened offices in Qatar, they were able to apply for credit—cash and non-cash—and we rendered them new facilities and services to finance their projects. We signed agreements to pay worker salaries through our branches and internet banking products. Doha Bank is the most advantageous and innovative bank in retail products and in trade finance in Qatar.

What is the nature of your relationship with participation banks in Turkey?

MA We already arrange many syndicated facilities for Turkish banks like Bank Asya, Türkiye Finans, and alBaraka. These are the big syndicated facilities together with a few international banks like Standard Chartered and HSBC. These are the big-ticket sizes—we are talking about $200 million to $400 million. Now we are talking through two deals: one for Türkiye Finans, the other for Bank Asya. Most probably in September 2012 we will do a new one for alBaraka, and then the second option is sukuk facilities. The sukuk is a new instrument for the Turkish market, and the government has changed certain regulations that will help us issue a new sukuk. We are expecting to issue one for a participation bank in September 2012. Although we don't have the mandate as yet, I hope to obtain it soon.

What are the greatest opportunities Turkey offers to foreign investors?

NA Since Turkey does not have many worldwide brands, we have to work on promoting projects from the country to attract investment. Turkey is an industrial country, where all the sectors are represented, and it can provide a lot of opportunities for Qatari companies. For example, we could promote the establishment of Qatari companies on Turkish soil—there should be designated areas, industrial zones with special emigration policies, and taxation policies. Particularly Qatari or other GCC companies can also produce from here, just to cover their needs or to sell to other countries as well. Turkey is a perfect location because it offers the side sectors needed to develop industrial activity. For example, we can see opportunities in the iron and steel, nutrition industries, mining, and agricultural sectors. We can widely enlarge this list, but for this to happen, we need to offer investors a whole package and there has to be some government promotion as well. The options are there, we have the educated people, plenty of production sources, and developed side sectors for diversified industries. However, we have to be proactive and put them on the table. On the other hand, we can play an important role in the energy distribution channels as a natural bridge between the energy producing countries and the consuming countries like Europe due to Turkey's strategic location on the map. Turkey is luckily located in the middle of the main natural gas and petroleum producer countries in the world, particularly the largest natural gas reserves of the world like Russia, Iran, and Qatar.