Suzan Sabanci Dincer Proves Turkeys Answer to Customers Man
By Ben Holland
Feb. 26 (Bloomberg) — Suzan Sabanci Dincer was an 8-year-
old schoolgirl when she began visiting the main office of her
familys bank, Akbank TAS, during summer vacations. In the
1970s, she befriended Medeni Berk, Akbanks chief executive
officer at the time.
“He would tell me that a good banker has to know very good
mathematics and would give me all these math questions,
Sabanci Dincer says. “Id carry his files and do the homework
he gave me, and hed reward me with chocolates.
The prize today for Sabanci Dincer, 42, is leadership of
Turkeys $200 billion commercial and consumer lending market,
which grew 25 percent last year. Shes now the managing director
of Akbank, Turkeys biggest financial institution by market
value, and is being groomed to succeed her father, Chairman Erol
Sabanci, 69.
The Sabancis have steered the bank through a series of
national financial crises, turning it into Turkeys most
profitable company, with net income in 2007 of 2 billion liras
($1.7 billion) on revenue of 8.8 billion liras, according to the
Istanbul Stock Exchange. The banks management won a vote of
confidence from New York-based Citigroup Inc., which paid $3.1
billion for a 20 percent stake in October 2006.
The latest challenge for the father-daughter team is to
overcome the global fallout from the U.S. subprime mortgage
crisis, which has sent shares of emerging-market companies
tumbling. The MSCI Emerging Markets Index, which tracks more
than 900 stocks from South Korea to Brazil, has fallen 7 percent
this year.
Turkey Shares Hit
Turkey has been even worse hit. Akbank shares fell 22
percent in the same period, tracking a 19 percent decline in the
benchmark Istanbul ISE 100 Index. The ISE rose 42 percent in
2007.
“It will be an interesting year, a challenging year, the
British- and U.S.-educated Sabanci Dincer says. “There might be
less appetite for investment and lending, and this will make
emerging-market banks more conservative. Well have to look at
the terms of our lending policy very carefully. But if Turkey
doesnt mess up in terms of the economy, theres still a
tremendous potential.
Turkeys economy grew an average of about 7 percent a year
from 2002 through 2007, and that was good news for Sabanci
enterprises. The family company, Haci Omer Sabanci Holding AS, named
after Sabanci Dincers grandfather, had estimated sales of $14
billion last year, accounting for 3 percent of Turkeys gross
domestic product. Sabanci Holding controls 70 companies with
57,000 employees and operations in 18 countries. In addition to
banking and insurance, it has stakes in energy, retail,
plastics, tobacco, auto sales and cement.
Wal-Mart Connection
One division, headed by Sabanci Dincers husband, Haluk
Dincer, 46, operates a joint venture with Paris-based Carrefour
SA, the worlds biggest hypermarket operator after Wal-Mart. The
Sabanci conglomerate is building coal-fired and hydroelectric
power stations. It also sells cars for Tokyo-based Toyota Motor
Corp. and makes tires with Tokyo-based Bridgestone Corp.
Istanbul-based Akbank is the groups crown jewel,
contributing about 80 percent of Sabanci Holdings operating
profit. The global downturn shouldnt hurt earnings at Akbank
and other Turkish banks, says Patrick Lemmens, who helps manage
more than $3 billion of stocks at ABN Amro Asset Management in
Amsterdam, including shares in Akbanks listed insurance unit
Aksigorta AS.
“Theres still good lending growth going on in Turkey,
Lemmens says. “It translates into earnings growth of 15 or 20
percent a year. Globally, there arent many banks that can get
that — and that are trading at eight or nine times earnings.
The longer-term opportunity is there.
Growth Slows
Akbank increased profit last year even after loan growth
slowed in the third quarter and the cost of deposits rose. The
lender is better equipped than most of its peers to maintain
high growth rates, says Idil Dagdelen, an Istanbul-based analyst
at Deutsche Bank AG.
“They have the capital, and theyre not short of equity to
fund a growing loan book, she says. “In a couple of years,
well probably be talking about the need for capital injections
in the sector, but not at Akbank.
Lehman Brothers October report says that Turkish bank
lending will grow by 35 percent in 2008 and 31 percent the
following year, as the economy grows and borrowing costs decline
along with interest rates. To maintain that pace, Turkey will
have to avoid a repeat of the kind of economic meltdown that has
disrupted its economy five times in the past two decades.
2001 Crisis
The most recent crisis started in 2001, when the lira lost
more than half of its value against the dollar, inflation rose
to 73 percent and banks fell deeply into the red. From 1999 to
2003, the government nationalized 21 failing banks. Akbank,
which posted the only net loss in its history in 2001, was
spared.
Since then, the government of Prime Minister Recep Tayyip
Erdogan, who took office in 2003, has transformed Turkeys
economy. He has reined in spending, cutting the budget deficit
to less than 3 percent of economic output last year from 16.5
percent in 2001.
Erdogan has reduced expenditures on money-losing state-
owned companies by selling off $22 billion of such firms. With
budget deficits under control, inflation, which averaged 70
percent per year in the 1990s, fell to 8.2 percent at the end of
January, close to a three-decade low.
Lower interest rates have spurred a boom in consumer
borrowing by Turkeys burgeoning middle class. Home loans surged
more than 10-fold in the past three years, to 32.2 billion liras
from 3.15 billion liras, and overall bank lending rose 25
percent last year to 229.5 billion liras.
`Attractive Market
“Its always been a very attractive market, with the size
of the population and growth rates, says Shirish Apte,
Citigroups head of corporate and investment banking for central
and eastern Europe, who negotiated the purchase of the U.S.
banks 20 percent Akbank stake. “We always knew that at some
stage Turkey would get it right, and this government has done
all the right things.
Citigroup isnt the only international bank looking for
profits in Turkeys financial system. Paris-based BNP Paribas
SA, Amsterdam-based ING Groep NV and Milan-based UniCredit SpA
have all bought stakes in Turkish banks, betting that the
countrys young population and progress toward European Union
membership will bolster incomes.
Even after the boom of the past five years, which has seen
per-capita income grow to almost $7,000 from $2,160 in 2001,
Turks still earn less than one-third of the EU average. Only
about half of Turks who buy homes take bank loans — the rest
use cash — and a third of Turkeys autos are purchased with
cash.
Consumer Boycott
Given the turmoil in the economy during most of Turkeys
postwar history, its no surprise that both borrowers and
lenders shunned consumer loans, Sabanci Dincer says.
“We had high inflation, high real interest rates, unstable
governments and no proper consumer finance, she says. “Nobody
wanted to lend to individuals at those high rates because it
would be very difficult for them to repay the loans. The big
banks were just collecting deposits and giving them to the
government, which was the main borrower.
The job of the banker in the era of high inflation was to
call the direction of bond markets, something Erol Sabanci was very
good at, says Elif Bilgi Zapparoli, CEO of EFG Istanbul Securities and
a classmate of Sabanci Dincers when she was a student in the
Master of Business Administration program at Boston University
in the early 1990s. Consumer loans, she says, werent a
priority.
Tamed Interest Rates
“Interest rates were just too high for the consumer,
says Ozen Goksel, 69, a 45-year Akbank veteran who served as CEO
from 1994 to 2000 and now sits on the banks board. “Whod take
out a loan at 3 or 4 percent a month? So we wouldnt lend people
money to buy a car or a house. Wed lend money to the companies
that sell the cars or build the houses, and theyd carry the
risk. Now the banks are carrying it.
Turkish banks held just 2.31 billion liras in consumer
loans at the start of 2002; on Feb. 15 the figure was 68 billion
liras. Loans of all kinds made up a quarter of Akbanks assets
in 2002, with government bonds accounting for much of the rest.
At the end of 2007, the banks loan book had risen to 40 billion
liras, more than half of its assets.
“Ten years ago, Akbank was basically a big bond
portfolio, Deutsche Banks Dagdelen says. “Theyve done a
great job transforming the bank into a proper retail bank. They
used that period after the 2001 crisis, when not even a leaf
moved in the market, to invest in technology, train their people
and transform the bank, and it worked.
Father-Daughter Contrast
Sabanci Dincer is the executive in charge of that
transformation. Shes the right person for the job, says Ilter
Turan, a professor of political science at Bilgi University in
Istanbul who went to school with Erol Sabanci and advises Suzan on
speeches. “The father is a very quiet, very private person,
Turan says. “Suzan is extremely outgoing, very communicative,
warm.
Sabanci Dincer says its now important for bankers to get
close to their customers. “Its more of a relations business,
she says. “We have to be more consumer-oriented, catch the
trends, understand the clients. To do that, she visits at
least a dozen Akbank branches every month.
Her branch managers are telling her that borrowers dont
entirely trust their bankers and prefer to do business with them
quickly and from a distance. So Akbank has begun taking loan
applications by mobile phone, with approval or rejection
promised within 20 minutes.
“In Turkey, unlike in Europe, its a new thing that people
get consumer loans from banks to buy whatever theyre going to
buy, Sabanci Dincer says. “Turks were scared to come into a
banks branch and ask for a loan; they were scared of getting
rejected. With a mobile phone, its very private.
British Educated
Sabanci Dincer learned her social skills at the Heathfield
School for Girls in north London, where she attended high
school. Heathfield also taught her discipline and independence,
she says, and she will likely send her son, Haluk, 11, and
daughter, Ceyda, 9, to an institution that teaches similar
skills.
“Its really important nowadays that people learn to stand
on their own two feet, without their parents, she says. “It
stretches the character.
Sabanci Dincer got a finance degree from Londons Richmond
University and then earned a masters degree in finance from
Boston University before joining Akbanks joint venture with
Dresdner Bank AG and BNP Paribas. In 1994, she moved to Akbank
central. Shes been on the banks board since 1997.
“She has lots of ideas, she forms good relations with
everyone around her and shell always consult as many people as
possible, at all levels, before making a decision, former
Akbank CEO Goksel says.
Money in a Jar
Bank loans of any kind were virtually unknown in most of
Turkey when Haci Omer Sabanci was born, around 1906, in the
village of Akcakaya in Kayseri province, on the rocky plateau
that stretches across the central part of the country. Turks
kept their savings “in a jar buried at the foot of a fig
tree, according to “Haci Omer, a biography of Sabanci
Dincers grandfather by Turkish journalist Sadun Tanju.
While still a teenager, Haci Omer set off on foot to seek
work in the cotton-growing province of Adana on Turkeys
southern coast. His first job there was trampling cotton to
compress it for packaging, which involved jumping up and down on
the cotton as it fell from machinery above that separated it
from its seeds.
Within a few years, Haci Omer became a labor broker –
searching out others to do the jumping — and then a broker of
the cotton itself. By the 1940s, he had bought three cotton oil
and yarn factories in Adana and the neighboring province of
Mersin.
Akbank Founded
In 1948, Sabanci and 82 partners put together $2 million
and founded Akbank. Haci Omer was both the founder and one of the
first borrowers: He took out a loan of 285,000 liras to expand
his business, according to a 1998 history of the lender by Zafer
Toprak, a professor at Bogazici University in Istanbul. Over the
next decade, Sabanci steadily bought out his partners, becoming
the majority shareholder in both Akbank and Bossa TAS, a textile
company that now exports to more than 50 countries. Its denim is
used by designers at Gap, Tommy Hilfiger and Versace.
Today, the Sabanci family presides over a corporate empire
with an unusual distinction: the large number of women in its
executive ranks. In addition to managing director Suzan Sabanci
Dincer, three deputies to Akbank CEO Zafer Kurtul are women. The
chairwoman of Sabanci Holding is Guler Sabanci, daughter of
Erols oldest brother, Ihsan. Two more of Erols nieces are also
on the holding company board.
Guler has been an outspoken advocate of keeping Turkey
secular. Opposition political parties have accused Erdogans
government, which has roots in a banned Islamist party, of
seeking to expand the role of Islam in public life.
The Headscarf Issue
The government has, for example, eased a ban on the wearing
of Islamic-style head scarves at Turkeys universities. The
wives of both Erdogan and President Abdullah Gul wear scarves.
Neither Suzan nor Guler Sabanci do. Guler points to her own
career as an example of the strength of Turkeys secular system.
“I and working women like me are the product of an 83-
year-old republic, and secularism and democracy are instilled in
our DNA, she told Bloomberg Television in August.
Gulers cousin Suzan says the fact that shes a woman in a
society that is increasingly embracing Islamic tradition has not
affected her rise.
“I never felt for a moment in the family that there was a
boy-girl separation, she says. “As children, we were all
brought up with business; it was in the air. What her father
emphasized, she says, was that there would be no sinecures for
family members.
“This was not accepted in the family, she says. “My
father said, Suzan, you dont need to work, you have
everything. But if you are going to work, you have to work with
discipline.
Credit Crunch Impact
Sabanci Dincers challenge for the year ahead is to
minimize the impact of the global credit crisis, which is making
it harder for emerging-market banks to raise capital abroad and
may slow growth.
“Now the big boys are having trouble, and when they start
coughing, everyone catches a cold, Sabanci Dincer says.
Once Akbank recovers from its cold, Sabanci Dincer and her
colleagues must make some strategic decisions concerning where
to take the bank next. Foreign acquisitions are one possibility.
“Id give the example of the Spanish banks, like Banco
Santander, she says. Santander has grown sixfold in size over
the past 10 years through overseas acquisitions.
“Theyve been an incredible success story, fast moving and
dynamic, first in Spain and then in the Latin market, and also
in Europe.
If she can get the math right — and she has been doing
that since she was 8 — Sabanci Dincer would like nothing better
than to make Akbank the bank to beat in eastern Europe, central
Asia and beyond.
To contact the reporter on this story:
Ben Holland in Istanbul at
