Turkey: Sustaining the unsustainable
Turkey's determinedly weak currency
Akbank shakes off the bonds of history
For five consecutive years the small Korfezbank was Turkey's most profitable bank. But most of its profit came from treasury operations a euphemism for buying and selling high-yield treasury bills and doing virtually nothing else. In a country where lending to the government is the biggest industry, this was not all that out of the ordinary. Many banks derived the bulk of their profits by lending to the treasury and even large corporations earned more than half of their profits by investing in government paper.
But Korfez seemed to have gone a bit too far. In 1998 nearly 90% of its profit came from treasury-bill business. Although it had 450 corporations on its client book, the bank the smallest of four owned by business tycoon Ayhan Sahenk was doing business with only 30 of them. None of its five branches had street-level offices.
"The bank had almost withdrawn from the market," says Husnu Akhan, the bank's new managing director. Akhan, a former central banker, came over from Garanti, the largest of the Sahenk banks (the others are Ottoman and the Amsterdam-based United Garanti), where he was in charge of operations and foreign relations.