Turkish Banking Sector Dominated by Commercial Banks

Overview

A recent study has revealed that commercial banks in Turkey dominate the banking sector by total assets, with participation banks, which are Islamic banks, holding a small percentage of the market share.

According to data from the Turkish Banking Association, as of December 2017, the top 15 banks by total assets were all commercial banks. The breakdown is as follows:

State-owned and privately-owned banks: majority
Foreign-owned banks: smaller proportion
Development and investment banks: tiny fraction
Participation banks (Islamic banks): 5% (as of June 2015)

Concentration

The study found that the Turkish banking sector is highly concentrated, with a small number of large banks holding a significant proportion of total assets. The largest state-owned bank, Ziraat Bank, was considered representative of the other two remaining state-ownned banks.

Sample Selection and Interviews

The study included nine banks in its sample:

One state-owned bank (Ziraat Bank)
Three privately-owned banks (T. Is Bank, Yapi Kredi Bank, and Akbank)
Five foreign-owned banks (ING, TEB, Denizbank, Finansbank, and HSBC)

Bankers were selected based on seniority and position in the department, with two interviews conducted at T. Is Bank due to the presence of a former head of the Banks’ Association of Turkey.

Quotes from Senior Bankers

“The Turkish banking sector is dominated by privately-owed banks and state-owned banks. Although foreign banks have increased in number since 2000, they have not led to a higher level of penetration in terms of total assets and market share.” - Senior banker interviewed for the study

Conclusion

Overall, the study provides valuable insights into the structure and composition of the Turkish banking sector, highlighting the dominance of commercial banks and the limited representation of participation banks.