Two years ago, Turkey witnessed a coup attempt on its democracy, the will of its nation, its economy and its reputation in the international arena. Following the bid, which failed due to the resolution of the Turkish nation, the rightful actions of the government and the strong financial infrastructure of the country, many reforms were realized through the initiatives of the country's economic administration and ministries.
In an exclusive interview with Daily Sabah, the CEO of Turkey's state-run Halkbank, one of the largest banks in the country, Osman Arslan, elaborated on the night of coup attempt and the important steps that have been taken to keep Turkey on its way and the way the banking sector reacted to the coup attempt operationally.
Arslan noted that the country's banking sector played a key role in the implementation of necessary reforms.
"As the sector, we carried out studies to minimize the impact of the coup attempt on the economy through regulations supporting the real sector and encouraging exports. We served to protect the national interests of our country by raising our resource and customer productivity," he said.
The Turkish government claims that the Gülenist Terror Group (FETÖ) and its U.S.-based leader Fetullah Gülen orchestrated the defeated coup on July 15, 2016, which left 250 people dead and nearly 2,200 injured.
Ankara also accuses FETÖ of being behind a long-running campaign to overthrow the state through the infiltration of Turkish institutions, particularly the military, police, and judiciary.
Arlsan indicated that Halkbank immediately realized all kinds of liquidity measures against the risk of unusual cash outflows on July 15 and the following days and that subsequently, they responded promptly to the government's calls for incentive and support, contributing to the atmosphere of confidence and stability in the markets.
"We supported the healthy formation of price developments in the market by keeping our brokerage services away from commercial interests and concerns against worn-out fluctuations and speculative attacks in currency markets. We continued to contribute to the protection of the overall cash flow balance of our country in a strong coordination with the relevant institutions in the economic administration," he said.
Arlsan stressed that they managed to protect their upright stance against the announcements of credit rating agencies with political motives.
"In this period, where we played a leading role in supporting small and medium-sized enterprises and industrialists in particular, we continued to contribute to our country's economy," he said.
When asked about what the banking sector and the bank do to contribute to democracy and economy after the failed coup attempt, the Halkbank CEO said the banking sector has always been one of the most important components of economic growth and stability.
"As the banking sector, particularly through the projects carried out in cooperation with all the actors of the economy, we did our best to rule out the sense of insecurity being built on the Turkish economy," he continued.
By acting in an organized manner as the banking sector, Halkbank realized Breath Loans and Credit Guarantee Fund (CGF) backed credits to support the real sector and stimulate the economy.
"Our bank, which ranked first by providing a Treasury-backed loan of TL 20.6 billion ($4.24 billion) last year within the scope of the CGF guarantee, maintained its leadership in the second slice program, which was commissioned this year and amounted to TL 55 billion, with TL 4.6 billion in Treasury-backed loan. Finally, the loan disbursements under the third loan package protocol, which we have recently signed with a total loan package of TL 35 billion, continue at a rapid pace. Meanwhile, in the direction of the Breath Loans Protocol we signed with the [Union of Chambers and Commodity Exchanges of Turkey] TOBB as six banks at the end of March, in exchange for a TL 125 million loan deposited by the TOBB, we provided a total of TL 2 billion to 12,865 companies with the Treasury-backed [Credit Guarantee Fund] CGF loan package. We increased our cash loans from TL 139 billion in June 2016, right before the coup attempt, to TL 216 billion in March 2018 with an increase of 55 percent," Arslan explained.
GOVERNMENT'S ACTION BOOSTED ECONOMIC RECOVERYIn the meantime, according to Arslan, the bank stood by its customers in the field with its entire team and developed new innovative products that their customers needed on a sectoral basis. For example, the bank put many products into service such as the Defense Industry Support Loan, the Energy Efficiency Conversion Loan, the Small and Medium-sized Enterprises Upgrading Loan, the Green Energy Loan, the Housing Isolation Support Loan and the Employment Support Loan for small and medium-sized enterprises. Finally, the bank released its "Paraf Esnaf" credit card, which will allow its small and medium-sized enterprises (SMEs) to better plan their cash flows and increase their efficiency.
Speaking of the effects of the coup attempt on the country's economy, the Halkbank CEO remarked that Turkey succeeded in minimizing the impact of the coup attempt with its strong economic structure and stable management. He noted that even though the growth performance of 4.9 percent in the beginning of 2016 shrank after July 15, the country maintained its growth trend thanks to the strong stance put forward by all the components of the financial sector.
"Employment-oriented policies were realized in order to ensure the economic participation of the young people, the safeguards of our future. The government's 'Employment Mobilization' campaign was reciprocated in the real sector. In 2017, more than 1.5 million citizens were provided with jobs, while our bank hired approximately 3,000 of young graduates from related departments of universities," Arslan added.
The export rates, which had dropped following the coup attempt, rose thanks to the reforms supporting the real sector, contributing to the recovery of the economy, he said, adding that the investments, the most important supporters of economic development, also gained momentum with the provision of an environment of confidence and stability.
"Yavuz Sultan Selim Bridge connecting the two sides of Istanbul and the Osman Gazi Bridge bearing the name of Osman Gazi, the founder of our country, were completed and put into use, while works have accelerated in Istanbul New Airport, which will take its place among the biggest airports in the world when completed," he said.
Turkey's economy has quickly recovered thanks to the economic mobilization initiated by the statements of the government and the country's central bank, as well as the common sense of the Turkish people, according to Arslan, who said when looking at the indicators for 2017, the Turkish economy grew by 7.4 percent, proving its power in the global competition.
FISCAL POLICIES RESTORED ECONOMIC STABILITY When asked about what measures were taken for markets and operations against the attempt, Halkbank CEO said the central bank's regulatory policies on liquidity controlled the cash outflows, creating a positive perception in the markets, and that a cautious stance was also provided with credible explanations that the government would maintain fiscal stability and continue reforms.
"The upright stance of our people and our corporations against currency speculation allowed Turkish lira to protect itself against foreign currencies. Participation in the workforce increased with the contributions of the private sector to the employment mobilization, and economic indicators remained positive in this regard," he noted.
Arslan also underscored that the economic stability was restored by fiscal policies that supported production, exports, investment and employment, while national credit rating agencies began to work against credit rating agencies' biased attitudes that did not reflect the economy's truth.
Elaborating on the reasons behind the economy being targeted in the process that started with the Gezi protests in May 2013 in particular, Arslan said, "At the heart of the source of welfare of the citizens and at the same time having a say in its geography lays the strong economy. Given the fact that economy is one of the most important infrastructure components of international reputation and the power of a country, it is an expected situation that the actions to tackle the country in such times of tensions and conflicts are aimed at the economy."
On May 31, 2013, Turkish police intervened in what began as a peaceful protest against the redevelopment of the titular park adjacent to Taksim Square at the heart of Istanbul. What followed were nationwide riots that led to the torching of cars, public property and a lot of injuries in a matter of a few days. The riots were the work of the PKK and the Revolutionary People's Liberation Party-Front (DHKP-C) terrorist groups along with fringe factions linked to them.
Portrayed as Arab Spring-style riots in the Western media, protesters garnered support even among moderate critics of the government despite their utter violence.
The fate of Gezi Park, where officials had plans to re-build an Ottoman-era building which were thwarted when red tape caused delays in redevelopment plans, was in limbo. However, for rioters, the protests were a show of force for terrorist groups.
New investigations launched afterward pointed to the Gülenist Terror Group (FETÖ), which the Turkish government says is responsible for the July 15 coup attempt, for fueling the tensions that turned peaceful protests over Gezi Park into violent riots.
The city's police chief was detained during the riots amid concerns that the aggressive use of force in the Gezi protests may have been the product of a plot by Gülenists to foment chaos. The police's role in the protests in Istanbul and other cities was criticized for their use of excessive force. The latest inquiries reveal that FETÖ-linked police officers held key posts during the unrest and contributed to the escalation of violence.
The Halkbank CEO said that the consistent management approach that the country achieved in 2002 brought with it a strong economy. While the softest belly of the country was the economy and external debt until that period, Arslan noted, the economic discipline has been achieved with decisive steps taken since 2002 and the Turkish banking sector has raised the capital adequacy ratio well above European banks. In this respect, it has managed to maintain its stability against all kinds of targets and to remain firm.
MARKETS GRADUALLY STABILIZED WITH JUNE 24 ELECTIONSHe also elaborated on the reason behind Turkey's continuous growth despite all the attacks, pointing out that stability, trust and consistency are the three basic elements behind this.
He noted that stable economic policies, the atmosphere of confidence and financial support provided for domestic and foreign investors, and the consistent attitude displayed in domestic and foreign policies are the main sources of Turkey's current reputation, stressing that economic growth also comes with reputation.
"Turkey continues to grow with the support of the private sector and foreign investors through policies realized in the economy," Arslan continued. "Our country, which continues on its way by taking manufacturing, export and employment as the basis of its economic strategies, reinforces its global power by supporting the real sector with value-added tax (VAT) reductions, manufacturing and export incentive packages. With its medium-term program, employment mobilization campaign and effective resource utilization policies, our country maintains its competitive position with strong banking system, financial structure and private sector support. The projects implemented by the economy administration in cooperation with the public and private sectors ensure that the markets are kept alive. Breath Loans and CGF-secured credits are two important examples of this."
Elaborating on how the new process, starting with the June 24 elections, will be reflected on the economy, Arslan said that after the first six months of this year, which they left behind with fluctuations in exchange rates and increase in global pricing, they see that the markets have gradually stabilized with the elections.
"In this environment where the government has refreshed confidence and stability, I think that investments will increase rapidly. The government system, which can make decisions even faster in the new period, will have a positive effect on economic indicators. We are entering a period in which realistic and sustainable reforms have been paved, our economy is growing rapidly, and our international competitiveness is increasing. In this period, I expect that the digitization will speed up with the comprehensive policies and that the productivity of our young people will increase. With the new government system, Turkey will move toward its 2023 targets with sure steps," he concluded
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