ARIF – EIB VP says they’re interested in trustworthy partners, in reply to Halkbank query

EIB VP says they’re interested in trustworthy partners, in reply to Halkbank queryThe deputy director of the European Investment Bank (EIB), after being asked about the future of the EIBand#39s partnership with Turkeyand#39s mainly state-owned lender Halkbank since its involvement in a major graft investigation that went public in Dec. 2013, on Thursday said that the EIB remains interested in trustworthy partners.

Pim van Ballekom, vice-president responsible for finance at EIB — which lent 21 billion euros in 2014 — was asked at a roundtable meeting with journalists at Ankaraand#39s Sheraton Hotel if the European lendersand#39 partnership with Halkbank would continue even after the bank was the subject of controversy for being center-stage in the graft investigation that involved former Cabinet members and prominent businessmen, bureaucrats and members of then-Prime Minister Recep Tayyip ErdoIanand#39s family. In response, Ballekom replied: andldquoWe do remain interested in trustworthy counterparts.

Sometimes, there are problems that goes without saying.andrdquoandldquoWe had in the European Union quite a few problems with Rabobank, the main bank in the Netherlandand#39s, the country I know best, because they had the LIBOR affair Do we as a bank then say, andlsquoWe are not reliable anymore?and#39andrdquo he questioned.

In 2013, American and European regulators fined Dutch lender Rabobank $1 billion for rigging benchmark interest rates in a scandal that enhanced the eroding faith in the banking and finance industry. Rabobank said in a statement on its website that it had entered into settlement agreements to a pay a total of approximately 774 million euros to the American, British and Dutch regulators after 30 staff members were involved in inappropriate conduct in a scam to manipulate the London Interbank Offered Rate (LIBOR) and its Euribor cousin — benchmarks for more than $300 trillion worth of financial assets.

The chairman of Rabobankand#39s executive board, Piet Moerland, also announced his resignation.Ballekom continued: andldquoWe have a very good team in the bank.

Weand#39re looking constantly at the reliability of our partners. If there are problems we try to sort them out.

If that is not possible anymore, then we have to find out solutions.andrdquoHalkbank was the subject of an inquiry after several members of the US Congress told Secretary of State John Kerry and secretary of the US Treasury, Jack Lew, in April 2013 — eight months before the investigation — that Turkey was evading the sanctions in place against Iran via Halkbank.

The letter said, andldquoRecent statements by Turkeyand#39s Economy Minister Zafer aIlayan that andlsquoTurkish state-owned Halkbank will continue its existing transactions with Iranand#39 pose reason for concern that Halkbank may be assisting Iran with its illicit nuclear programandrdquoReplying to a question about whether Turkeyand#39s economic outlook looked promising enough to invest in the country, particularly after the constant meddling of politicians, namely President ErdoIan, with the policies of Turkeyand#39s Central Bank (TCMB) and criticism of its head, Erdem BaII, and the deputy prime minister in charge of the economy, Ali Babacan, over decreasing the interest rates, Ballekom said: andldquoThat certain politicians mingle in the economy, happens everywhere. The financial data in Turkey remains sound.

The investment climate remains sound.andrdquoThe vice-president of EIB said that Turkey is the most important market for EIB outside of the EU, accounting for 25 percent of its non-EU lending and that the EIB would be going on with planned lending to Turkish institutions via financial intermediaries such as the Denizbank, Akbank, Turkiye II BankasI and Halkbank, among others.

andldquoThere were times in Turkey when there were turbulences, not only in Turkey but economically in the world, where the economy reacted forcefully. Although there were problems, I admire the Turkish government in dealing with those problems,andrdquo explained BallekomComparing Turkeyand#39s economic growth with that of the EU, which is still in the midst of a crippling sovereign debt crisis, Ballekom continued: andldquoThe Turkish economy did well over the last years.

So that is very confidence building. There is not a sharp reaction in terms of GDP growth despite all these problems.

andrdquoThe EIB has been lending to Turkey since the mid-1960s, with an overall lending volume exceeding 21 billion euros from 2004 to 2014, and the current yearly lending standing at roughly 2 billion euros per year However, Turkeyand#39s sluggish growth recently and constant pressure from ErdoIan and his associates from within the Justice and Development Party (AK Party) towards the TCMB has resulted in a 20 percent appreciation of the dollar against the Turkish lira and an outflow of foreign direct investment since his inauguration last August.Prime Minister Ahmet DavutoIlu, Ali Babacan and Finance Minister Mehmet IimIek, are in the US, doing damage control by reassuring top investors from US mortgage lenders and hedge funds that Turkeyand#39s economic climate is steady — despite ErdoIanand#39s outbursts against the central bank helping to send the lira to record lows.

DavutoIlu, Babacan and IimIek are due to meet Goldman Sachs, Citi, Bank of America Merrill Lynch and various portfolio investors and fund managers in New York over the next two days, according to officials in the Prime Ministry.

SOURCE: Today’s Zaman