TBY talks to V. Derya Gürerk, General Manager of Türkiye Finans, on the role of participation banking, new products, and Turkey's economic prospects.

V. Derya Gürerk
V. Derya Gürerk was born in Ankara in 1963 and holds a BSc degree from Gazi University and an MBA from Manchester Business School and the University of Wales. He started his career at Etibank and also spent 10 years at Citibank in Turkey before spending two years with the multinational banking group in New York. He became Assistant General Manager of Kentbank from 1998 to 2000, and then transferred to Türkiye İş Bankası. Before assuming his current position, he was CFO and Vice-President of the Executive Committee at Dedeman Holding.

How would you characterize your current strategy and role in Turkey's financial sector?

We are focusing more on the commercial, SME, and retail sectors as we want to maintain our leading position in the SME and commercial sectors. Türkiye Finans has a 1.5% market share in the commercial sector, and we would like build on this as well as maintain our strong market share in the SME sector. For that reason, we have been investing in a strategy of governance and infrastructure, which was behind the launch of our new retail products in October 2012. This is our main strategy for growth, and our main goal is to increase our market share from 1.5% to 1.8% by 2016. This means that whatever the banking sector's growth rate, Türkiye Finans has to grow 20% over that.

Why are SMEs so important to Türkiye Finans and how do you tailor your products and services to SMEs?

The raison d'être for participation banks is to support trade and production. We finance retail businesses via a different process to commercial banks. It is not enough to simply request a sum of money. In the participation banking system, one has to tie that borrowing to a commodity or service and provide us with the invoice. The banking sector mainly supports production and trade. This is the reason for our existence, and participation banks have really advanced on this front.

What actions is Türkiye Finans taking to increase its share of the retail banking market?

We are launching a new credit card-driven product. It is a pre-credited card. It is not pre-paid, but a pre-credited installment card. The card will have a limit and an expiration date. We decide on the limit, expiration date, and the repayment schedule together with our customers. Upon utilization the customers will be billed throughout the installment period and at a rate agreed upon with the customer. This way, we know the customer spends that money on an invoice. This is a new product, and we have high hopes and hopefully we will be marketing it heavily toward the end of 2012. We are going to invest into our delivery channels, especially on mobile phones. We are now designing our budget for 2013 and are trying to specialize in alternative distribution channels. We are also investing heavily in opening new branches. In 2012, we opened 38 and over 2013 we are going to open 26 branches. Türkiye Finans is also hiring at the moment. Over 2012 we will hire around 1,000 people. Basically, we believe we have a reasonable range and number of products and now it is just the case of transmitting these to our customers.

What factors were behind Türkiye Finans' recent decision to issue a lease certificate?

In order to issue a lease you need assets, and Türkiye Finans spent time building up those assets. One is leasing and the other is real estate. Since 2011, we have been working heavily on our leasing assets. Now, we have about TL250 million worth of leasing assets, up from TL55 million in 2011. Also, we had very little real estate that we could convert to lease certificates. This is why we have been waiting, and now we can continue with the lease certificate program and go forward with this mandate. Right now, we are about to obtain the authority to give this mandate to one of the brokerage houses to issue a lira-denominated lease certificate—it will be the first of its kind. There are a couple of banks in the market trying to do this. A Turkish lira lease certificate is more important for us than one denominated in a foreign currency, and to prosper you need a long-term local currency source in order to lend. This is why the deal is very important and pioneering for the market. However, we are about to obtain a mandate to issue a foreign currency lease certificate by the end of 2012. We believe we are the optimum size needed to perform such a transaction. If everything goes well internally and externally, we expect to close one or two deals by end-2012 or early 2013.