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Jeddah - Yasmine El Tohamy - ANKARA: Britain’s biggest bank HSBC is considering quitting Turkey because of concerns over the country’s volatile currency and economic outlook, according to media reports.
HSBC has been operating in Turkey for three decades.
The bank’s exit, part of broader cost-cutting measures around the world, would be the most high-profile corporate departure from any country in recent years.
HSBC has cut branch numbers and staff significantly in the past seven years, official figures show. Turkey’s volatile lira, which has lost 36 percent of its value against the dollar in the past two years, and the country’s deeply rooted economic problems also hit HSBC’s returns.
In its 2018 annual report, the bank pointed to rising loan losses in Turkey.
According to Nigel Rendell, a senior analyst at Medley Global Advisers LLC in London, HSBC wants to concentrate its efforts in areas where it sees the greatest return.
“Given the bank’s historical links and the rapid rates of growth experienced in the region, Asia seems to be the bank’s natural priority. Hence countries outside of Asia, where HSBC has a much smaller presence, will likely be lower down the priority scale,” he told Arab News.
However, Rendell doesn’t expect other foreign banks to follow HSBC’s lead.
HSBC failed in a bid to sell its business in Turkey five years ago.
The London-based bank is also considering selling or shrinking its business in areas such as Oman, Greece and Armenia.
It is expected to make an official announcement after its annual results and corporate strategy are set on Feb. 18.
Last year HSBC’s Turkey CEO Selim Kervanci was acquitted on charges of insulting Turkish President Recep Tayyip Erdogan by retweeting a “Hitler” video in 2013 during anti-government protests.
Senol Babuscu, a banking analyst from Baskent University in Ankara, said HSBC’s departure from Turkey would be a significant loss.
“I don’t believe that the only reason might be the losses that were incurred during its operations in Turkey. Over the last year, the banking sector has suffered from the systematic intervention of the political authority. These interventions occur sometimes in the form of interest rates by the central bank or deposit rates and credit interests that are determined by the government,” he told Arab News.
In December, Turkey’s central bank reduced the reference values used to determine required reserve ratios for banks in a bid to channel commercial and housing loans.
“The banking sector in Turkey is under pressure to give credit. Such interventions in the free market seriously undermine the banking sector,” Babuscu said.
Murat Cetinkaya, the central bank’s governor, was fired in July by presidential decree amid reports of disagreements with Erdogan over interest rates as the government tries to lower rates to boost economic growth.
Cetinkaya was replaced by his deputy, Murat Uysal, sparking concerns over the bank’s independence.
In December, 2019, the European Bank for Reconstruction and Development also sold its 10 percent stake in the Istanbul exchange allegedly because a former Halkbank executive, Hakan Atilla, who previously was imprisoned in the US over Iran sanctions evasion, was named as the bourse’s new CEO.
The bank has invested in 300 projects in the country in the past decade.
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