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Western EuropeFebruary 1 2013

Banks to watch in 2013, Odea Bank

The Banker has identified 13 banks to keep an eye on in the coming year based on a variety of factors. A new entrant to the Turkish market Odea Bank – a subsidiary of Lebanon’s Bank Audi – has set an ambitious target to become one of the top 15 banks in Turkey by the end of 2017, making it one to watch over the next few years.
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In October 2012, Lebanon’s Bank Audi became the first foreign lender to obtain a banking licence in Turkey in 15 years, as the country’s regulators sought to bring in more foreign capital.

Since then, Audi’s Turkish subsidiary, Odea Bank, has opened six branches – four in Istanbul, one in the capital Ankara and one in Izmir. The bank’s CEO, Hüseyin Özkaya, plans to open another 26 branches throughout Turkey’s larger cities in 2013, and then grow to 100 outlets in the next five years.

Odea is aiming to become one of the top 15 banks in Turkey by the end of 2017. It offers retail, commercial and corporate banking and is currently working on its credit card portfolio. Its total assets size stands at Tl3.6bn ($2bn).

Mr Özkaya says part of the reason Turkish regulators are now more open to awarding new banking licences is the country’s low savings environment. He adds that new entrants to the Turkish market are important to introduce more competition and encourage better services to customers.

“In this sense, the process that began with Odea assumes an important responsibility in carrying the Turkish banking sector forward,” says Mr Özkaya.

“The success we have achieved, despite the difficulties in establishing a new bank from scratch, is important not only for our [shareholders], but also to show the potential of the Turkish banking system to licence seekers.”
Indeed, Bank Audi considers Turkey its second most important market after Lebanon, as it seeks to capitalise on the increased trade synergies between Turkey and the Arab world and become a key financial institution in the Middle East.

“Economic relations with neighbouring countries are strengthening day by day and increasing Turkey’s regional importance,” says Mr Özkaya.

Despite a decrease in profit margins in the Turkish banking sector – largely as a result of macroprudential decisions made by the country’s regulators – the market offers relatively high profits still, according to Mr Özkaya, who cites a high potential in real estate loans and commercial loans in particular, when compared with other European countries.

Odea’s focus is on the large urban areas in western Turkey for the time being, eschewing the temptations of the east of the country, where banking penetration is lower and where some lenders are looking to tap the unbanked market.

“The established banks have reached a certain level of saturation in the market. It makes sense for them to move east. As a new bank, we need to establish ourselves in the west first, then we will look more towards eastern Turkey in three to four years’ time,” says Mr Özkaya.

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Read more about:  Regulations , Western Europe , Turkey