After more than a year of work, Kuveyt Türk started offering
gold from the ATM at its Turkish headquarters on March 22. AA photo
Seizing a chance provided by Turks’ fondness for gold, participation bank Kuveyt Türk has left banking giants of the booming Turkish economy behind, gaining an admirable position in “gold banking.”
The bank, which is majority owned by the Kuwait Finance House, opened its first automated teller machine on March 22 offering gold in addition to banknotes for its customers. The first such ATM, situated at the bank’s headquarters in Şişli, Istanbul, will be joined by dozens more at Kuveyt Türk branches in time.
“The bank achieved a market share of 19 percent in gold banking as of the end of 2010. The ratio means Kuveyt Türk is Turkey’s third-largest lender in this area,” Ufuk Uyan, the Kuveyt Türk general manager, told the Hürriyet Daily News & Economic Review.
The bank has nearly $300 million in gold deposits. In asset size, Kuveyt Türk represents less than 1 percent of Turkish banking – a fact that makes its success in gold banking remarkable.
The interest stems from Turkish citizens’ love of gold. Despite the stability of the Turkish economy in recent years, even the young generation remembers at least one crippling financial crisis that has melted savings in banks. That’s why more stable assets such as gold and property are popular as investment tools.
Taking gold from “under the pillow” and putting it into the financial system has been the dream of many past governments, which sought an easy way out of threatening current account deficits. According to one estimate, Turkish people have about 5,000 tons of gold “hoarded” at home, to be used in times of dire need.
“We basically filled the void and people were warm toward us,” Uyan told the Daily News. “When other banks saw that our model was successful, they also focused more on this area.”
Two different choices
Middle-aged Turks prefer to “invest physically,” while younger customers choose to invest through a bank account, according to Uyan. “We are the only bank that appeals to both. Every bank has an area of expertise, and ours is in gold,” he said.
Kuveyt Türk also offers a “profit-sharing” model for gold-based deposits. “Currently, a majority of our gold deposits is in the gold participation account,” Uyan said. “Our customers earn when gold appreciates, while also earning a share in profits.”
Kuveyt Türk in 2010 increased its profits 25.6 percent to 159.6 million Turkish Liras. It currently has 141 branches and 2,837 employees.
The recent “gold from ATMs” service flourished from research that showed people did not want not to be bound by time and space constraints when buying gold – a desire that conflicted with gold being sold mainly by jewelers in Turkey.
Kuveyt Türk took the first step in selling gold through its branches in 2009. “Then, we started looking for an alternative method,” Uyan said. “We were trying to find out how we could sell gold 24/7 to our customers. Naturally, an ATM was the first channel that came to mind.”
The lender started talking with the company it uses to provide its ATMs and the company that produces the gold sold in Kuveyt Türk branches. After more than a year of work, the bank started offering gold from the ATM at its headquarters on March 22.
Source : http://www.hurriyetdailynews.com/n.php?n=kuveyt-turk-benefits-from-turks8217-love-of-gold-2011-04-11 - April 11, 2011
