Huseyin Aydin, head of Turkey’s banking association TBB and general manager of the government-run Ziraat Bank—the country’s largest bank by assets—was on February 3 interviewed live on BloombergHT.
Here are some highlights from replies he gave during the interview:
• “Let’s be realistic. There are [sunk] loans that we keep afloat,” Aydin responded to a question on “regulatory forbearance” measures that hide the real situation as regards the Turkish banking industry’s balance sheets.
• “We’re the only banking industry in the world that must simultaneously manage three currencies, namely the lira, the USD and the EUR,” he said on the subject of dollarisation.
• “The lira is an attractive currency to borrow but we should make the lira an attractive currency with which to invest.”
• “If you catch good levels here [on the FX market], you even earn money between sales and purchases. We [the public banks] secured the [FX] supply. This is not too bad a thing,” he said replying to a question on the boom observed last summer in the public banks’ short FX position.
“At what cost does the state borrow [with domestic government bond rates]? At 13-14%. How much does it earn when it invests its money in me [state-owned Ziraat Bank]?”
Ortalama ozkaynak karliligi: Return on average equity, Ortalama DIBS faizi: Average interest on domestic government bonds (risk-free benchmark), ISO-500: Istanbul Chamber of Industry’s (ISO’s) list of the top 500 industrial companies.
• “The domestic government bonds [risk-free benchmark] offers 11%, while banks offer a 11% return [for shareholders]. Why does the man invest in me [Ziraat Bank]? Why would he take on the risk? Why would he deal with tonnes of audit?”
• “A boss who earns a 10% return would not invest in a bank but in a shopping mall.”
• “The Turkish banking industry’s USD-basis total equity has fallen to $80bn from $100bn over the last decade.”