A Chronicle of Turkish Banking 2013 - 2016

How State Policies Shaped the Trends and Altered the Composition of Balance Sheets - Gülnur Üçok 
The experience of Turkish banking presents an exemplary case on the role and importance of the operating environment in the analysis of a particular sector. In many ways it offers a story that could be used as a case study on the relevance of the operating environment. At least we, rating analysts, are strong believers in the significance of the political and economic background of the country in assessing the dynamics of any sector.

Projects Gained Priority
Turkey has successfully completed several impressive projects in a span of a few years. Totaling a highly remarkable cost volume in USD terms, these projects were funded in large part by Turkish banks. Despite a few delays in the financing closures, these projects progressed as planned and major ones were completed on their previously targeted deadlines. In addition to the monumental infrastructure projects, like the two bridges and the Bosphorus tunnel, an extraordinary volume of construction and energy projects materialized. Additionally, 19 PPP city hospital projects, privatizations and overseas acquisitions were funded by Turkish banks. Since these projects were successfully completed, one can surmise that these projects were to a large extent unaffected from the turbulent international, regional and local events that took place during those years.

This paper summarizes the turbulent period beginning mid 2013 ending in 2016. We view year 2013 as a key turning point in terms of macro-economic indicators and shall begin our analysis with what changed that year. Our observations reveal that in the very same period these mega projects were obtaining funds, some segments of the corporate world in Turkey were deeply affected by international, regional and local events. Once again Turkish banks have unquestionably demonstrated their resilience to external shocks of all kinds in that period.

Defining Events of 2011 and 2012
It is important to note that back in November 2011, the AK Party government had won the elections for the third time and already relations with the EU were no longer as warm as in 2005. The Arab Spring that began in January 2011 in Tunisia had spread to Syria by April 2011. At the end of 2012 Turkey was hosting 240,000 refugees. Turkey's exports to Iraq were US$10.8 billion in 2013 (US$7.6 million in 2016).