Establishment and Initial Strategy
GarantiBank International N.V. ("GBI") was established in the Netherlands in late 1990. Having its sole shareholder as Garanti Bank Turkey (a member of Dogus Group), GBI had initially aimed to provide trade finance services built on trade flows between Turkey and Europe.
Why Netherlands as home base?
The Netherlands was chosen as the home base as the Dutch financial system has been quite sound and competent, and has geared towards hosting international businesses. Next to this, and perhaps more importantly nowadays, the operating costs in the Netherlands are comparatively lower than other forthcoming European financial centers.
While main funding source shifts to European retail deposits...
Until 1995, GBI had made extensive use of lines provided from other prime European, US, Japanese banks to fund its trade finance activity. Later on, the Bank has then started tapping the Dutch and German retail deposit markets as an alternative funding source. Today, the main source of funding is European based retail deposits, being totally unrelated to Turkey or Turkish risk.
... trade finance volume grows!
Since the inception, GBI's trade finance business has been on an up trend. For many years, GBI has already been recognized as a prominent “market-maker” of trade related Turkish assets and labelled as “Turkey specialist”. Nevertheless, the strategic factors fuelling such growth since 2001 are further beyond taking Turkish risk!
Time for Evolution!
It was May 2001 that GBI made an important strategic decision: Within the framework of trade finance, we had already done everything that could be done for Turkish risk. After shifting the source of funding to European retail deposit base, it was then the time for diversification on the asset side for further and sustainable growth. Thus, GBI then chose to hinge its Diversification Strategy around the following focal points:
- Cover selected countries whose rating potentials are better than that of Turkey.
- and build on commodity and product expertise
Deeds, not Words!
Since 2001, GBI has been covering Black Sea, Caspian and Mediterranean basin countries' trade flows and is recognized as a "regional expert" rather than "Turkey specialist".
Non-Turkish risk transactions' share in annual trade finance volume has been 28%, 39%, 53%, 56%, 53% and %60 in the years 2001, 2002, 2003, 2004, 2005 and 2006 respectively, while the trade finance volume and related revenues have been increasing with sustainable growth prospects. Although GBI shall continue to be a prominent market maker in trade related Turkish risk, the Bank's trade finance activities and growth prospects have not been limited with Turkey and thus have included Black Sea, Caspian and Mediterranean countries trade-flows since 2001.
While covering global trade flows, GBI has also embarked upon its commodity and product expertise. Global trade in bulk commodities and various finished and semi finished merchandise have been covered under our Trade & Commodity Finance departments. Whereas, trade related and general lending facilities in bilateral or syndicated forms have been delivered with added value to our bank counterparts in other developed and emerging countries through primary or secondary market activity.
Which eggs and which baskets?
On the tactical level, we should mention here that Diversification Strategy based growth of GBI's trade finance activity is of organic nature. GBI has not been looking for adding unrelated business activities to the ”basket”, collection of which might still result diversification in mathematical terms. But instead, we find, create and foster meaningful synergies among the “eggs”. For instance: next to a certain commodity that we do with a client, we start doing other commodities traded by the same known client. The relationships with forwarders, agents or other service providers have spin-off effects in generating supplier or trader relations. Distribution channels used to forfait one country's risk are used to originate other countries' risk, etc.
What's next?
GarantiBank International N.V. has been delivering added-value through boutique solutions in global trade finance. Synergy opportunities stemming from our origination and distribution capabilities shall continue bringing holistic added-value to our clients and counterparts.
The Diversification Strategy has brought out the true spirit of GBI. With this spirit, sustainable growth, which may last for decades, has been enabled and so far enjoyed.
By pursuing "organic diversification" as its base strategy, by building on its trade finance expertise and by initiating and expanding on relationships based on "reliable partnership", GBI shall irrevocably be "your global boutique".
