ITFA MERC at BAFT MENA, June 2022

By ITFA’s Middle East Regional Committee (MERC)  

ITFA MERC participated at the BAFT MENA Bank to Bank Forum on May 24-25, 2022 and continues to be at the forefront of discussions related to regional & global events impacting trade. This BAFT Forum was a unique opportunity to discuss pressing industry issues with a regional focus, share insights, and network with industry leaders within the wider Middle East and North Africa region.

In an in-depth discussion ‘An Eye on Turkey’ Semih Ozkan, Director, Structured & TF Sales Head ME, SMBC & Advisor & Board Member of ITFA Middle East Regional Committee led a discussion with fellow panelists: Natasha Condon, Managing Director & Global Head of Core Trade, J.P. Morgan; Fatma Nilgün Emrem, President Turkish Business Council, Dubai and Northern Emirates; Eren Omacan, Senior Vice President & Regional Head, Group Financial Institutions, Habib Bank AG Zurich.

Turkey is at the forefront for new supply chains hubs, yet the country is struggling with an exchange rate crisis and a recovery from the Covid-19 pandemic along with every economy dealing with the same headwinds. It was discussed that even prior to the onset of covid global trade actually dropped in Q4 2019 because of protectionism policies coming into place. Now with the developing Russia- Ukraine crisis along with re-emergence of Covid and resulting lock down measures implemented in China which is expected to lead to a supply shock; there will be a demand shock globally. Economies that do not produce their own food or energy will suffer.

It was discussed that although Turkey is an importer of food, it has proven to be surprisingly resilient as the private sector and banking sector are very strong backed by a mature institutional system.  Since 2 decades Turkish banks are regularly in market for wholesale borrowing with the scale of appetite and pricing indicative of credit appetite in Turkey. Turkish banks are also regular issuers of debt since 2011 with any shortfalls in investor appetite being partially compensated from trade related funding. Turkey have always been very sophisticated in how they use traditional trade finance products and are able to face these headwinds using resources.  It was discussed that there is an increase of export, institutional and development financing being made available to Turkey as well.

With respect to the role of Turkey in trade finance there is a lot of discussion of supply chains shifting away from Russian & Ukraine supplies hence there is more benefit to come. Turkey is in a very good position to be a supplier to Europe as part of NATO. 13 cooperation agreements have been signed between the UAE and Turkey recently with new trade corridors being established and existing enhanced. Turkey is an export-oriented economy so when lira depreciates there is opportunity in exports becoming more competitive.

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