Global Business Reports on behalf of bne -
Turkey is by far the biggest market in its region and a natural financial hub for the fast growing countries of the Balkans and the Caucasus. So the Turkish government has launched a programme to transform Istanbul into an international financial centre (IFC).
A long-term project, the plan is to first turn the city into a regional centre for finance and then an international one. And Istanbul has a lot going for it: an expanding international presence, an ideal location between east and west, and a fast growing and extremely capable financial industry staffed by local professionals.
While EFG Securities Chief Economist Baturalp Candemir is very supportive, he feels time is of the essence: "Turkey and Istanbul has a golden opportunity to become a regional and international financial centre. New instruments must be created and the legislative framework must be defined and implemented immediately. It has to be done during these next three years, otherwise we could miss the opportunity."
Kare Yatirim CEO Ãmit Kumcuoglu is cautiously optimistic: "Turkey has quite an unpredictable tax regime, which is perceived as a big risk for capital. If we look at how England became a financial centre, Turkey's savings rate is still too low to support a major money centre. The banking infrastructure in Turkey is very strong and Istanbul is still regaining its cultural appeal. The growth of the domestic savings rate in Turkey on one hand will affect the success, alongside the perceived tax regime stability and the safety of Turkey as a liberal democratic country."
While there is significant competition from neighbours in the region and the country still needs to reach a critical mass of savings and ensure the current stability continues, the potential is real. Already one of the world's great cultural cities, it would be a natural step for Istanbul to become one of world's financial centres too.
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