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August 1, 2009updated 12 Apr 2017 4:34pm

Country reports – Turkey

New business at countrys biggest lessor, Garanti Leasing, down 40% because of economic downturn Figures recently published by FiDER, the Turkish leasing association, reveal new business fell by 74 percent in the first six months of 2009

By Antonio Fabrizio

New business at country’s
biggest lessor, Garanti Leasing, down 40% because of economic
downturn

The Turkish leasing industry is
experiencing one of the most dramatic declines in its turbulent
history.

Figures recently published by FiDER, the
Turkish leasing association, reveal new business fell by 74 percent
in the first six months of 2009. In the first quarter of 2009
alone, the leasing of manufacturing machinery – the country’s
biggest sector by market share – fell from $402 million (€283
million) to $165 million.

In the same period, construction machinery
leasing plummeted from $246 million to $64 million, while vehicle
leasing declined from $139 million to $12 million.

Is Leasing, one of Turkey’s largest lessors,
transacted $32 million during the first quarter of 2009 in new
business and $86 million in the first half of this year, compared
with $360 million during the whole of 2008, according to Onan
Keles, the company’s finance director.

But not everyone expects the market to totally
collapse.

Turkey’s biggest lessor, Garanti Leasing –
which has a receivable portfolio of $1.2 billion – expects to see
an overall decline in new business in 2009 of 40 percent
year-on-year.

“Although it is clear investments have
collapsed, some forecasts are way too pessimistic,” said Cem
Surmen, the company’s head of treasury.

However, he added that Garanti might perform
better than many Turkish lessors because of its diversified
portfolio which enables it to distribute risks. Its largest sector,
construction equipment leasing, represents just 12 percent of the
total portfolio.

Views differ as to cause of
crisis

For FiDER chairman Bülent Tasar, the
decline was only partly due to the global crisis. He believes the
VAT increase on lease transactions from 1 percent to 18 percent –
introduced late last year – dealt a far heavier blow.

“The VAT increase has had a detrimental impact
on leasing volumes and current estimates are that 50 percent of the
decrease in volumes is attributable to the VAT effect,” Tasar
said.

Surmen, however, disagrees. He said that the
dip took place “last year and affected the market for no more than
one quarter”. After this period customers began to lease again, he
said.

Despite the negative mood in the Turkish
leasing sector, Tasar, Surmen and Keles all expect things to
improve once draft legislation in introduced which will pave the
way for the launch of operational leasing, sale-and-leaseback
transaction and software leasing.

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