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Regional rival Turkey offers diplomatic support and hope for Greek financial institutions.
ISTANBUL, Turkey — Greece, embroiled in its worst economic crisis in living memory, has received an offer of support from an unexpected source.
While the headlines are filled with strikes and violent riots in Athens, as the country staggers under $400 billion in debt, increasingly expensive repayments and a junk status credit rating, Turkey is reaching out diplomatically and — the Greeks hope — soon financially.
Turkey's rise as a powerful regional actor stands in contrast to the trajectory of its age-old rival across the Aegean.
The Turkish economy is on fire. Growing at an average yearly rate of 6 percent between 2002 and 2008, this year Turkey is set to grow faster than any country in the European Union — which has thus far refused to admit Turkey to the club, in part because of Greek opposition.
Turkish Prime Minister Recep Tayyip Erdogan last week led a 300-strong delegation of Turkish officials and businessmen to Greece for a visit aimed at a soothing the often antagonistic ties between the neighbors and helping Greece out of its debt crisis.
"Those who write history will write that two ancient civilizations, two important actors are now embarking on a path towards peace and friendship," said Erdogan at a joint press conference with Greek Prime Minister George Papandreou.
Even just a few years back it would have been difficult for most Turks to imagine their prime minister extending a helping hand to this longstanding rival.
The two neighbors share deep ties, but an even deeper sense of rivalry. Since Greece won independence from the Ottoman Empire in 1832, the two sides have fought four major wars. While the relationship has become more cordial over the last decade, territorial disputes over the Aegean Sea remain a thorn in the side of these two NATO allies. Looming even more heavily is the ongoing issue of Cyprus, whose Turkish and Greek peoples remain divided.
Meantime, Greece’s biggest bank is relying on Turkey to pull it through the economic crisis. With an eye toward benefiting from Turkish economic growth the National Bank of Greece SA plans to open 75 branches across Turkey this year.
The reasons for the expansion are clear — even last year, before the full weight of crisis hit, the National Bank earned more at its Istanbul-based Finansbank AS unit than it did in Greece. And it’s not just the National Bank. While Greece’s four largest banks saw their combined profit drop 41 percent last year, Turkish banks increased profit by almost 50 percent.
“The purchase of Finansbank by the National Bank of Greece was better than a good investment, it was excellent,” said Devrim Baykent, Vice President of Bank Relations at Finansbank.
Finansbank is the brainchild of renowned Turkish finance guru Husnu Ozyegin. In 2006 Ozyegin finally cashed in on his prize investment — which he had built up from a single branch in the late 1980s to what is now the 5th largest private bank in Turkey — selling 46 percent of the shares of the Turkish branch of Finansbank to the National Bank.
With a notoriously volatile economy throughout the 1990s, Turkey has its own tales of banking blues. Since the economic crisis of 2001, however, the banks have recapitalized, reduced inflation, cut state debt and greatly increased transparency.
“The beginning of the decade was tough for us,” Baykent said. “But afterwards we sat down and did our homework. Now look at us.”