ONCE IN A LIFETIME

Turkey 2012 | FINANCE | GUEST SPEAKER

Freddie C. Baz, Group CFO & Strategy Director of Bank Audi SAL–Audi Saradar Group, on the Lebanese bank's expansion into Turkey.

Bank Audi's development strategy revolves around pursuing cross-border expansion toward new, promising, and captive markets both in the region and outside it. Within this environment, the group added an important milestone to its expansion overseas by getting a license to establish a banking entity in Turkey on October 27, 2011. The fact that Bank Audi was privileged to be the first entity in 12 years to be granted a license by the Banking Regulation and Supervision Agency (BRSA) is an acknowledgment of its strong financial standing and eligibility. The importance of this development, with what it entails in terms of promising growth prospects, is tied to its expected impact on further consolidating the group's leading regional position and strengthening its competitive standing.

Bank Audi's interest in expanding its banking operations in Turkey is based on the strong historic ties between Turkey and the Arab world, supported by an increasing annual trade turnover, reaching $40 billion in 2011, of which an important share is with countries where Bank Audi is present, offering enticing opportunities for cross-border transactions between the two geographic areas.

The Turkish expansion will particularly drive the bank toward the fast developing middle corporate segment, offering important lending potential. In addition, the group, which enjoys a high level of liquidity, will benefit from the high-quality financing opportunities that large creditworthy Turkish corporations provide, allowing the bank to build a captive market share. In the longer run, the group will explore the possibility of developing targeted retail products for specific segments, which would build a new value-added franchise.

Bank Audi intends to develop commercial banking activities in Turkey along five business segments, consisting mainly of cash and payroll management, treasury services, working capital financing to SMEs and family businesses, and project financing. In addition, the bank will participate in the financing of Turkish international trade, in particular inter-Arab trade through the issuance of letters of credits and letters of guarantee. The bank targets a network of 50-60 branches in a few years' time, mainly in big cities, and this will be critical to capturing such lucrative financing opportunities.

We will adopt a strategy of targeting relationships with a selection of companies as well as the acquisition of related market shares in commercial banking.

Beyond corporate banking, the bank will target the financing of medium-sized enterprises with low turnovers that are in need of financing to accomplish their projects. That segment comprises, essentially, industries of average sizes, regional sub-contractors of large importers, and retail businesses. The development of that type of clientele will mainly depend on the rollout of branches in various Turkish cities. The bank will also target small enterprises to which it will be catering cash management services and short-term working capital financing. At the international level, the subsidiary in Turkey will benefit from the presence of Bank Audi in many countries in the Middle East, North Africa, and Europe, to offer to the companies that are present in the region various services including trade financing and project financing.

Bank Audi has developed important resources in the fields of commercial and corporate banking that will be at the disposal of the Turkish subsidiary.