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Doing Business with Turkey – a Bank’s
Experience
DAY OF TURKEY
Tomáš Rak
2nd September 2014
Summary
Doing business with Turkey (Komerční banka’s view)
Banking system and currency
International payment system
Documentary payments, Bank guarantees
Letter of credit forfaiting
Trade & Finance OnLine
2
Turkey – Komerční banka’s view
Credit risk country classification (OECD): 4
(scale 0-7, Czech Republic: 0)
Turkey belongs to 12 priority countries specified by the Export
strategy of the Czech Republic (2012 – 2020)
Perspective emerging market with strong GDP growth (4 % in
2013)
Stable growth of the bilateral trade Czech Republic – Turkey
Perspective industrial sectors: technology for conventional and
renewable power industry, heavy industry equipment (e.g. mining),
engineering industry products (machine tools, CNC machines,
etc.), transport engineering products (e.g. rail vehicles),
environmental technology (waste, water treatment, etc.)
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Turkey Financial system
Banking system and currency
Consolidated system (app. 40 banks)
Broad range of products and services
Fully convertible currency – Turkish lira (TRY)
Banks
State-owned banks (3)
Privately-owned banks dominate (11)
Foreign banks founded in Turkey (12)
10 largest banks: 7800 offices, 140 000 employees
Société Générale Istanbul (branch of Société Générale SA)
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Turkey Largest banks
TOP 10
Türkiye Is Bankasi AS
Türkiye Cumhuriyeti Ziraat Bankasi AS
Türkiye Garanti Bankasi AS
Akbank TAS
Yapi ve Kredi Bankasi AS
Türkiye Vakiflar Bankasi TAO
Türkiye Halk Bankasi AS
Finansbank AS
Denizbank AS
Türk Ekonomi Bankasi AS
5
State-owned banks
Privately-owned banks
Banks with majority foreign
owneership
Turkey Société Générale Istanbul
6
Worldwide Banking Group
Société Générale Istanbul
• branch since 1989
• one of the first foreign
banks in Turkey
Turkey International payment system
7
International payments
Mostly in EUR
TRY as an option
FX operations
CZK/TRY: spots a forwards
EUR/TRY a USD/TRY: spots, forwards a options
Turkey Documentary payments
Bank guarantees
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Documentary payments
Export / import
Export letter of credits often with confirmation
Documentary collection (suitable for import)
Mostly in USD or EUR
Bank guarantees
Power engineering industry and engineering industry in general
Bid bonds, advance payment guarantees, performance bonds
Guarantees from local (Turkish) banks required for public tenders
(counter-guarantees to local banks)
Financing
Forfaiting of letter of credits with deferred payment
Very competitive price-sensitive environment
Turkey Documentary payments
Letter of Credit Forfaiting
Seller: Czech exporter
Issuing bank: Turkish bank
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Turkey Documentary payments
Letter of credit forfaiting - example
10
Deferred payment letter of credit
Amount: EUR 250,000.00
Issuing bank: TURKISH BANK
Advising bank: KB
Deferred payment: 120 days from CMR date
Discount rate: EURIBOR + 1,50% p.a. (straight discount 365/360)
Grace days: 3
Calculation Disbursement date: 15. 8. 2014
Due date: 19.11. 2014
Number of days till maturity
incl. 3 grace days: 99
Discount rate: 1.827 % p.a.
Discount: EUR 1,256,06
Discounted proceeds: EUR 248.743,94
Turkey Documentary payments
Letter of credit forfaiting - advantages
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Obtaining liquid funds
Transfer of all risks related to the payment of the assigned receivables to
the bank
Opportunity to offer deferred payment terms to the buyer
Fixed discounting rate throughout the receivable's lifetime
Financing of 100% of the receivable's face value
Off-balance way of financing
Financing without recourse to the LC beneficiary
= Transfer of the payment risk to the bank
Trade and Finance OnLine
Simple and quick on-line
communication with the bank
Bank guarantees
Letter of credits
Documentary collections
Short-term and revolving loans
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Thank you for your
attention!
Tomáš Rak
Trade finance specialist
Komerční banka, a. s.
Na Příkopě 969/33
114 07 Praha 1
Tel: +420 955 532 287
mobil: +420 602 285 876
e-mail: [email protected]
