Reasons for leaving of the Dutch bank ING Group from Turkey
ING Group is the largest bank in the Netherlands. It was the last financial institution to assess exit options from the Turkish market. The decision is due to the fact that international lenders plan to reduce costs.
Turkey has long been considered a promising segment for global banks that have been acquiring assets in fast-growing economies. However, the incomplete recovery of the market after the 2008 financial crisis and the instability that has been observed in the state for two years have forced the banking giants to reconsider the outlook and prospects of Turkey. Tightening government control has also played a role.
As a result, ING Group started negotiations with a number of advisors regarding the possibility of selling Turkish assets. In addition, last year the bank met with a local institution to evaluate a possible deal. However, ING Group has not yet commented on the situation.
One of the factors behind the departure of major international players was a step by the Turkish government, which decided to strengthen control over the banks. The authorities announced the reduction of transaction fees, as a result of which the creditors had to reduce interest rates on loans. According to some experts, there is pressure on the banking sector in the government’s actions, which began after the presidential elections in 2018. The authorities want financial institutions to increase lending to business and consumers, but on conditions that will improve the economic growth of the state, and this strategy is not quite acceptable for the banking segment.
ING Group is not the only one who wants to leave the Turkish market. Europe’s largest bank, HSBC, is also analysing all the pros and cons and plans to get rid of local assets. This may happen after the currency risks and economic volatility increase.
Another bank, UniCredit, plans to reduce its assets in Turkish Yapı Kredi, which deals with consumer loans and credit card services.
Last month, the Turkish government announced the reduction of commissions, which is charged by banking institutions in order to direct lending opportunities to the economy.
According to the new rules, commission fees for both retail and commercial customers have also been reduced. The central bank has also reduced interest rates from 25% to 10.7%. All this was done in order to achieve an economic growth rate of 5%. At the same time, the inflation rate is 12.4%, which means that this figure will not be achieved at the current rate.
The credit market was also affected by the authorities’ demand to reduce interest expenses to single-digit figures.