The impressive growth of the Turkish economy during the past
decade has been paralleled by the country's banking sector. As
of June 2013, Turkey has a diversified banking base with 49
different banks operating in the country employing around 208,000
people across 11,445 branches. The annual rate of branching in the
sector is 6.8% and the growth of employment in the Turkish banking
sector is 5.3%.
Across the sector, 45.7% of branches are owned by private banks,
27.8% by public banks and 18.3% by banks with foreign capital. Of
the workforce employed in the Turkish banking sector, 44.6% work in
private banks, 25.3% work in public banks and 19.7% work in banks
with foreign capital.
Growth in banking sector
The total assets controlled by the banking sector grew by 11.5%
during the first six months of 2013 and reached $1.528 billion.
Despite global and Turkish economic fluctuations, the banking
sector grew by 4.2% during the first quarter of 2013 and by 7%
during the second quarter. The total credits issued by banks
operating in Turkey grew by 4.9% in the first quarter of 2013 and
by 10.5% during the second quarter.
In real terms, the credit issued by the banking sector has grown
by TRY126.4 billion since the end of 2012 and reached TRY921.2
billion as of June 2013. The total volume of securities held by the
sector stands at approximately TRY274 billion, as of June 2013, and
the level of deposits has grown by 62.4%, amounting to TRY837.7
billon. As of June 2013, the net profit of the sector grew by 19.7%
compared to the same period in 2012 and reached TRY13.859
As the numbers demonstrate, the Turkish banking sector is
healthy, with a stable outlook. The regulatory framework to which
the sector is subjected has played a prominent part in this
Following the 2008 global economic meltdown and the financial
risks that later emerged, Basel II has increasingly been perceived
as inadequate for dealing with such situations of financial
collapse. Basel III has therefore come to the fore in order to
buttress the previous Basel II agreement. The most critical change
that Basel III has introduced is a new understanding for dealing
with banks' capital adequacy. In this regard, Turkey's past
experiences of extreme economic fluctuations have proved useful.
After the 2001 economic crisis in Turkey, a new regulation was
adopted to reorganise the banking system along more stable lines.
Reorganisation has disciplined the Turkish banking system to such
an extent that it has emerged as the sole banking industry among
Organisation for Economic Cooperation and Development countries
that did not require public financial support after the 2008 global
economic crisis. Moreover, through the regulations issued following
the 2001 economic crisis in Turkey, the banking sector has managed
to establish better internal auditing and controlling mechanisms.
It has also attained high levels of liquidity, as well as a low
leverage ratio and high levels of deposits. Given the
transformation which the Turkish banking industry has already
undergone, Turkey's compliance with Basel III is expected to be
The Capital Adequacy Regulation was made compliant with the
requirements of Basel II in 2007 and Basel II itself was adopted in
Turkey in July 2012. As of March 2013, the capital adequacy ratio
of banks operating in the Turkish market is 17.4% (ie, above the
minimum level required by Basel III). The implementation of Basel
III has already started and the deadline for the report period in
relation to the Basel III leverage ratio has been set as January
The implementation of Basel III is expected to further
strengthen macroeconomic stability in Turkey, contributing to the
transparency of the country's banking sector and clamping down
on the grey economy.
Originally published in ILO October 18 2013.
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