“Turks are born optimists”
Interview with Mr. Gerlach Jacobs, vice chairman and executive board member of ING Bank Turkey
on: website of Dutch Business Association Turkey
Photos: Slawomira Kozieniec
Control over his own career was one of the main incentives for Mr. Gerlach Jacobs not to continue working for the Foreign Service and going into banking instead. After he graduated from Erasmus University Rotterdam in 1987 with a Master in Economics the Foreign Service in the Netherlands offered him a two year assignment to help them develop a salary system for their diplomats and other staff.
“During that time I was lucky enough to visit several embassies in North and South America. I must say that I admire people in the Foreign Service. They need to be very flexible and can be sent for a posting in a small country in Africa or difficult locations like Afghanistan. Four years in embassies in those kind of places was not appealing to me. I wanted to have a bit more control over my own destination and therefore decided to join a bank, the Nederlandsche Middenstands Bank (NMB), a bank for small and middle size businesses (SME’s) and the predecessor of ING.”
“Because it was a fairly small bank with a limited number of international offices and they had a dedicated international program. I had a couple of options and I chose to move to Hong Kong as my first assignment. A big city, exactly what I wanted.”
Still, sometimes, banking and diplomacy cross in Jacobs’s career. Like last year when he was chef de mission in India with a Dutch trade mission of Minister Ploumen (Foreign Trade).
“I enthusiastically said ‘yes’ when I was asked to do that. I enjoyed it. We had more than 40 companies, SME’s and corporate, and everything in between. I enjoyed being a kind of broker between politics and business. I got things on the political agenda that were important for the entrepreneurs.”
Interested in other cultures
After Hong Kong his career brought him to Los Angeles, Mexico City, New York, London and Amsterdam. Like a diplomat Jacobs has an international focus and is interested in other cultures. On the differences and similarities in the life of a banker and a diplomat Jacobs says: “The similarity is that you need a lot of flexibility. Not only yourself but your family as well has to move around the globe wherever the company thinks you are needed. Generally you never stay very long at the same place. On average my assignments have been slightly under three years. Diplomats as well never stay longer than three or four years. As far as the differences are concerned, I think in diplomacy you are more of a generalist. In business you can move into a more specialist area. I have become a specialist in commercial banking.”
What he enjoys most in his international assignments is ‘working with local people’. “We have a very limited number of expatriates in ING Bank Turkey. The vast majority of my colleagues are Turkish. Business wise and privately I find them amazingly friendly and helpful. They are very proud, even more so than in other countries where I worked. In general they have a very positive outlook on the future despite all the political and economic issues the country has to deal with. In my view they are born optimists.”
Younger generation is more pro active
“On the other hand they rely a lot on the opinion of their leaders or managers. It is more hierarchy structured. The boss is the boss. But the younger generation is becoming more pro active. My management style is to delegate many things to my staff and empower them to take their own decisions. I stimulate the members in my teams to challenge me and to be more vocal, to speak up in meetings. I’m new to Turkey, to this market and to the business in Turkey, so frankly the people in my team know many things better than I do. I respect and adapt to the Turkish culture while introducing some good elements from the Dutch culture. Some of the Dutch characteristics I don’t want and I’m not even proud of. Like we Dutch can be very blunt. That will not work here.”
Since February 2014 Gerlach Jacobs is Head Commercial Banking of ING Bank Turkey. Actually he has two ‘hats’ in the organization in Turkey. He is also vice-chairman of the board. So he is involved in the overall management of ING Turkey. His day to day job is head of commercial banking in Turkey.
“That is basically all business in Turkey we do with larger corporations and financial institutions. The SME and mid corporate segments are covered by others in our organization.”
ING bought the Turkish Oyak bank in 2007. At the press conference to present the plans of the new acquired bank Eli Leenaars said the ambition of the bank in Turkey was an annual growth of 30%, increase its market share from 3% to 6% at the end of 2012, and increase the number of offices in Turkey from 363 to more than 600. These targets could not be realized, because right after the acquisition the global financial crisis started. Like other banks in Europe and in the US, ING as well needed financial assistance from the government.
“That meant that we had to change course and chose different priorities. We had to postpone the investments we wanted to make. Now we have almost completed the full repayment of the Dutch government support and have announced to pay the last tranche back ahead of plan in 2014. We have earmarked Turkey in our category ‘growth countries’ together with countries like Poland and Romania. That means we are still ambitious to increase our market share here.”
Not enough for a sustainable growth
In 2009 Turkish GDP contracted 4.8%. In 2010 GDP grew 9.2%. On average growth was around 5.2% between 2002 and 2012. In the last couple of years the economic performance has slowed down to an average of 3.8%. That makes Turkey still the fastest growing economy in Europe, but is not enough for a sustainable growth or to reach its ambitious goals for the year 2023. It is obvious however that Turkey is not the boom-bust economy of old anymore.
One of the strong points of the Turkish economy is the healthy banking system, says Jacobs.
“In 2001 the Turkish banking system collapsed. A couple of good things happened after this crisis. Banking regulations and supervision were reorganized. That is an important reason why none of the Turkish banks needed government assistance during the 2007-08 global financial crisis. My experience in the first nine months in Turkey is that the regulations are tough and that is good. Turkish banks are very well capitalized and supervised. The fiscal policy has become more stable. The budget deficits of the government are very narrow every year, even below the Maastricht Treaty criteria of 3 percent of gross domestic product (GDP).”
The current account deficit is the weakest link of the Turkish economy. Jacobs underlines that it is very difficult for the authorities to get that into a surplus.
Structural savings problem
Number one: they have a structural savings problem. Turkish households have only a savings ratio of 14 percent to the GDP; very low compared to international standards. Number two: Turkey has to import most of its energy and a lot of equipment. Consumers spend a lot on imported goods. In the mid-term Turkey has to continue to control and further decrease its current account deficit. Inflation is an issue. Inflation is flaring up this year in excess of the government’s target of 5 percent. In our view Turkey struggles to get inflation below 8 percent this year.”
Jacobs is happy to see that the Turkish authorities are focusing on expanding education for all and trying to increase the quality of teachers and schools.
“One of the strengths of the Turkish economy is its young population. They are eager, hard working, and their educational levels will go up. I also see Turkey becoming a bit more international. In my segment we are working with a lot of corporations that are expanding internationally, are acquiring well known companies abroad. I see a lot of Turkish students, who continued their higher education abroad, returning to Turkey. So, this country has great potential. I hope that after the next general election in 2015 we will have a more quiet and more stable political environment, because investors don’t like volatility. They want to have a reliable, stable business environment. Turkey is surrounded by countries like Syria and Iraq with a lot of issues beyond Turkey’s control.”
One of the areas ING Bank Turkey wants to make a difference, next to its expanding number of digital products, is actively promoting savings. According to the latest “Turkey’s Saving Tendencies Survey” by ING Bank, savings as part of gross domestic product (GDP) has declined in the third quarter of this year to 12.4%.
“We are actively promoting savings, also via our commercials. We want to make the Turkish public aware that savings are important as an investment in their future. I noticed that the bank regulator and the Ministry of Finance are also very well aware of it. It has become more difficult for financial institutions to make money on credit cards and consumer finance.”