Lack of finance hampers trade15 September 2003
With the doubleface season running late in Türkiye, expectations are high and a vein of optimism runs through the sector. It helps that Türkiye's economy is settling into a comparatively stable pattern. Despite advantages, tanneries are still hampered by lack of finance and short-term credit. Two Izmir-based hide and skin agents required no prompting to identify this problem. A get-tough banking watch-dog has closed Türkiye's most opaque banks. 'Bad' loans may have paralysed the financial system but high interest rates also kept away most 'good' loans. Additionally, in the Aegean region, three or four small, non-profitable banks have closed their doors. Even with interest rates dropping steadily, this has not encouraged lending, as one might expect. Local banks do not offer the comprehensive financial packages that global banks do. Tanners must dig into their own pockets and current accounts to pay for raw materials this season. However, one Izmir agent predicts that tanners will soon look to foreign banks such as Citibank and HSBC Holdings, both of whom have successfully redefined retail and corporate banking in Türkiye and who offer the full range of investment, lending and financial packages. This will give the leather sector financial options to match their current expectations.