ISTANBUL: It’s now little more than a dusty patch of land in the modern suburb of Atasehir on the Asian side of Istanbul. Within three years, if all goes according to plan, highrise office buildings will dominate the site, forming an upstart Wall Street on the Sea of Marmara: the Istanbul International Financial Centre.
Like a lot of Prime Minister Recep Tayyip Erdogan’s ideas, such as his push for mostly-Muslim Turkey to start membership talks with the European Union, the square-mile International Financial Centre is bold.
Erdogan, whose Justice and Development Party won re- election last year, envisions Turkey as a burgeoning economic as well as political power in the Middle East and southeast Europe.
IFC-Istanbul, as it is known, would be the steel, glass and concrete embodiment of Erdogan’s vision, says Kubilay Cinemre, who stepped down as chief executive officer of Merrill Lynch’s Istanbul office in 2010 to establish his own fund management company, Fokus Yatirim Holding. With the IFC up and running, Environment and Urbanisation Minister Erdogan Bayraktar told reporters earlier this year, “Istanbul will assume its historical role as a global centre of commerce.”
By some measures, Istanbul, straddling Europe and Asia, with 13 million people, is on its way there already. The financial industry has grown along with the world’s 16th-largest economy. Mizuho Financial Group and Mitsubishi Corp of Japan, Sberbank of Russia and Kuwait’s Burgan Bank bought Turkish firms or opened offices in the city this year, joining such powerhouses as Citigroup and HSBC Holdings.
The assets of all banks licenced in Turkey grew six-fold to 1.27 trillion liras ($710bn) from 2002 to 2012, according to Turkey’s Banking Regulation and Supervision Agency. The country’s relatively strong banks have shielded it from some of the economic instability plaguing Europe. In June, according to the banking agency, Turkish banks had on average a capital-to- risk-assets ratio of 17 percent, more than double the legally required 8 percent.
The Istanbul Stock Exchange’s main ISE National 100 Index, just a quarter-century old, has become one of the top emerging- markets exchanges in the world. Foreign direct investment is also on the rise: During the first two months of 2012, it was 25 percent higher than during the same period a year earlier.
The prosperity that comes with that kind of growth is transforming Istanbul. New construction — apartment blocks, villas, hotels — is evident across the city, along with upscale kebab joints and restaurants. The IFC is an instrument in Erdogan’s campaign to exploit political and trade links, some dating from the Ottoman Empire, across the Balkans, the Gulf states and North Africa.
Istanbul’s potential is not as well-known as it should be, Martin Spurling, chief executive of HSBC Bank in Turkey, said at a finance conference on June 13 in Istanbul. “I had no idea how big Istanbul was until I was appointed here,” he said. “I was shocked. In terms of its location, history, culture, human potential and hospitality, Istanbul’s a great candidate to be an international finance centre. We have to explain it to the world a little better.”
In the past, Erdogan has devised several grandiose projects that have stalled. A highway between Istanbul and Turkey’s third-biggest city of Izmir is still incomplete.
Erdogan’s plan for the $30bn Istanbul Canal remains on the drawing board more than 18 months after he announced it. Similar hitches have hit the government’s sales of state-owned gas pipelines and operating rights for toll roads.
Three years after Erdogan announced his plans for the IFC, Turkey’s political and business leaders are lined up behind the $2.6bn project, which the government says will employ 50,000 people and provide a new home for the Istanbul Stock Exchange.
Turkiye Halk Bankasi and Turkiye Vakiflar Bankasi, both government banks, have purchased land on the site, and other public financial institutions have said they will join the march to Atasehir: the Banking Regulation and Supervision Agency, the Capital Markets Board and the Banks Association of Turkey.
Haci Omer Sabanci Holding, Turkey’s second-biggest industrial and financial group, is among the companies backing the plan and is organising conferences and roadshows to promote it.
Citigroup, UBS, the Institute of International Finance and The CityUK, which represents the British financial services industry, are advising the Turkish government on the project.
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