Recent Developments in Insurance

In recent years, significant developments have been recorded in Turkish insurance, especially in individual products. In this article, we will focus on this development by focusing on private pension and unemployment insurance.

Current Situation in Private Pension

In economies with a shortage of savings, policy makers are developing various solutions to deal with this problem. The solution having the awareness of Turkey as well as the development of economic policies related to this issue and unlike the typical public pension system was. Official institutions define this system as follows:

The private pension system has been established as a supplement to the existing public social security system. Its main purpose is to ensure that the regular savings they make throughout their working life are directed to investment, and that the level of welfare they have during their savings continues during the retirement period with the accumulation that will occur. The system is based on voluntary participation.

According to the Pension Surveillance Center, which is the official data provider at BES, as of March 13, 2015, the total fund amount of those participating in the system has exceeded 35 billion TL and the number of participants is 5.3 million. Since the number of people participating in the system has increased by 200 thousand since the beginning of the year, the total amount of funds has increased to TL 1.25 billion.With 13 March 2015 , Garanti Pension , which has managed to become the most preferred insurance company for private pension , offers you the standard of living today. offers you a comfortable and happy retirement period that you can sustain, away from economic concerns.

Unemployment Insurance

Unemployment insurance ; While working in a workplace, it is an insurance branch that operates with an insurance technique, preventing them and their family members from falling into a difficult situation by partially covering the income losses they suffer, even if they have the desire, ability, health and competence to work. Thanks to this insurance, employees can continue your working life without experiencing the stress of losing their job, which has become the inevitable concern of our age, and ensure that your payments are covered until you find a new job if they are unemployed.

In a sense, Turkish users have an important demand for this type of insurance, which can be understood as income insurance insurance. Users can avoid the various payment risks when they lose their jobs with different products offered by insurance companies. These insurances include assurances such as providing income insurance, credit card debt and credit payments. Turkey Insurance, Reinsurance and Pension Companies According to the Association monthly benefit close to 100 thousand people from this type of insurance.

Credit Card Usage in Turkey

European leadership in a country with a walk to the use of credit card data with Turkey. As of the end of January 2015, the total number of credit cards used has exceeded 57 million. The first European country in this field is the United Kingdom (end of 2014) with 57.9 million credit cards. In the field of total debit card, we have also passed England. With our debit card exceeding 105 million and 57 million credit card, we shop like crazy from POS devices, the number of which is close to 2.4 million.

Turning back to credit card statistics, Turkish consumers made a total of 231 million transactions with their domestic credit cards in January 2015. The economic equivalent of these transactions is 40.6 billion TL. Considering that the average number of transactions made with credit cards in January of the last 5 years is 186 million and the amount of these transactions is 26.4 billion TL, it is possible to say that the expenditures made with credit cards have increased rapidly. When we look at the annual figures, the total expenditures made with credit cards were 465 billion in 2014. This amount is over 11.75% of the total amount of 416 billion TL in 2013. Again, considering that the total number of credit cards increased by only 0.3% in 2014, the limit increase of credit card users It turns out that it caused a significant increase in consumption with such methods.

Although there is a general revenge perception in our country regarding credit cards, the data we have are saying the opposite of the facts. Demographic structure and the integration of the world economy lagged be realized as credit card usage in Turkey should not be surprised to be so widespread and intense. It will be a waste of word to say that the transactions and shopping amounts with credit cards, which have become an indispensable part of our economic life, will continue to increase rapidly thanks to the convenience of payment.

In addition to the ease of payment, credit cards can emerge in different aspects. For example; Garanti Bonus as a result of having the world’s threatened by global warming, Turkey’s first environmentally friendly credit cards ( Green Bonus ) began to market in 2007. The main contributions of this card to the environment are:

  • It contributes to donate some of the money it earns to the Nature Conservation efforts of the Wildlife Conservation Foundation.
  • It uses recycled paper in all printed materials with which it communicates with card-sending letters, envelopes, and the cardholder.
  • It has reduced the PVC ratio, which is more resistant to natural conditions than other plastics, to the minimum possible level in its raw material content. Thus, it disappears faster in nature than other plastic cards.
  • It saves paper by emailing the bank statement, and in return makes a donation to the Wildlife Conservation Foundation.

As can be seen (as it should be) carefully used credit cards can benefit not only the owners but also all living creatures around the world.

Far East Markets

There are many elements that make up the spiritual structure of people. One of these items is hope. One always hopes. Sometimes he is so hopeful that the risk drive driven by this tendency to hope causes the universe of thought to expand beyond rational limits. The end of this story is full of sorrow and sorrow.

The reflection of the chain of concepts I tried to explain above but probably failed is realized as balloons in our economic life. You’ve all heard of the tulip balloon. Probably balloons have been in history before. There was a bubble in the US stock market in the early 2000s. Except for known examples such as Amazon, Yahoo, Worldcom, Infospace at that time, companies that had a simple three-page web site, all of which were simply coded, and companies with easy-to-understand business models formed on this website were able to reach millions of dollars of market values. After 2006, we experienced a similar bubble in the housing market and other related markets.

The balloons have a nature like this: They are not understood by the vast majority until they emerge. These balloons appear as a result of the sudden notice that the prices of assets in the market are very swollen. Here, I want to make you feel like I am one of the minority masses who have mastered the events and have great predictions: “It might be a balloon in the Chinese Stock Exchange.”

3M Science Makes Life Easier

Science affects the world around us more and more every day. Science plays an important role in every stage of our daily life, at work, at home, on the road, and in every moment of life.

3M , which has 100,000 separate patents, is among the companies that use science to improve daily life and business life . “ 3M Science. The new corporate brand identity, presented under the title. ™ ”in every moment of life , emphasizes 3M’s strategy based on science and creativity in its wide range of activities, covering many sectors.

Drawing attention to the importance of science in human life and aiming to improve daily life, 3M brings together ideas and insights, people and products, reshaping daily life and business life, combining 3M science and innovation, making every moment of life better and improving the quality of life of people. offers impressive solutions.

Developing products and solutions for many sectors , 3M makes business life much safer with its creative products focused on science and innovation. For example, the 3M Aura Dust Mask 9300+ , one of the most outstanding products of 3M science , allows workers who work under difficult conditions and need to wear a dust mask to breathe more comfortably and safely . The 3M Aura Dust Mask 9300+ not only ensures comfortable breathing during work, but also makes everyday life better quality.

Electrostatic charges on the fibers help filter the air by attracting harmful particles in the 3M Aura Dust Mask made of ultra fine fibers . Electrostatic charged fibers capture harmful particles so well that those working in difficult conditions under dust and particles can breathe much more easily even with a thin mask. The top panel of the product, developed thanks to 3M science, which contributes to the comfort of employees in difficult conditions, also offers comfortable viewing. The worker breathing comfortably and seeing better can work longer and faster without removing his mask, which increases productivity. Most importantly, it gives the opportunity to work more safely.

3M Aura Dust Mask 9300+ , which relaxes the head and face of the person using the materials used in its design and production , easily adapts to many different face shapes and sizes , and the nose can be easily adjusted and safely attached. The product, which has 3 levels of protective options: Ffp 1-2-3, has both valve and non-valve.

After Greece

We are now approaching the end of the Greek story. The size of the society is about 300 billion dollars, and this economy has been on the agenda of global finance for various reasons. Turkey survived the 2001 crisis, the IMF program with the basics of history’s great economic leap by more than 6.5% of non-interest management to dispose of Greece 1.5% primary surplus target fiscal policy could not say yes. Problems lasting more than 5 years is completely governance incompetence. As I have stated, this story, which has grown too long, will probably end with a bankruptcy .

At this point, it is useful to take a look back at the articles we have mentioned about Greece and the EU countries that had a public debt crisis.

June 16, 2011 – The End of the Hellenic Tale

July 5, 2011 – Greece and the Tax Issue

July 11, 2011 – Egg Shell Syndrome

July 24, 2011 – Salvation Recipe: Brady Bonds?

September 9, 2011 – Towards the End of the Euro

November 5, 2011 – Embraces China, Who Had the Euro Crisis (they tried to establish a similar relationship with Russia, you see).

November 21, 2011 – Time to Confront Europe

January 9, 2012 – Current Status in the Euro Area

January 20, 2012 – Last Greece Notes

January 29, 2012 – 145 Billion Euros

11 February 2012 – Competitiveness of Greece

15 March 2012 – Banks Invited to the Greek Party

23 March 2012 – How are the New Greek Bonds?

15 May 2012 – European Markets Outlook

Why is May 31, 2012 – June 17 important?

24 July 2012 – Fire Continues in Europe

March 18, 2013 – Who Will Save the Euro?

15 March 2014 – Greece: A New Crisis? (You know the answer)

February 25, 2012 – Why Greece Matters

What was the most talked about topic after Greece? The words in the texts in the news tell us that the new agenda will be contagion .

Back to the Truth in GOP

The period of 10-15 years we left behind is bonanza years for emerging economieswill be referred to as. If it is necessary to define this period by inspiring from our own history, it is possible to use the term “Tulip Age”. As the level of development in that production engine in the world are no longer alone in China in a difference stage, Brazil, Russia, Turkey, by making projections containing very high growth rates for countries such as India suggests that this group of countries is the new engine of the world economy. At the point reached today, we witness that the stagnation has started in almost all of this country group. In particular, Brazil, Turkey and Russia took place in the economic success stories of corruption scandals and political uncertainty. It is possible to make financial reading of this in the currencies of countries that rapidly lose value.

When it is necessary to carry out an economic philosophy on a typical emerging economy model in this period, it is possible to say that these countries do not have such important growth stories. The high growth rates recorded were not due to increases in productivity, but due to an increase in commodity prices or domestic demand supported by the increasing public debt of the public / private sector.

In this process, it would not be equitable to draw a dark picture for all developing countries. At this point, it is useful to mention especially China and other East Asian countries. These countries have become an important power with the global firms they have issued and their middle classes. But these countries still have not been able to implement some vital transformations for their economies. For example, India has a considerable workforce, especially in the field of information technology, but the education level of most of the country is still low, leading to reduced productivity. In China, the one-party regime is ongoing, and it is obvious that the country will take steps to become a developed country with this political architecture. The uncertainties brought by this regime at the same time are too large to be ignored.

The effects of the difficulties that developing countries will have to face are quite evident in the financial markets. Capital flows have turned negative since 2013. Likewise, valuations in the stock markets are significantly below when they encounter those in developed countries emerging from the global crisis.

Banking: Before QE, After QE

In the previous article , he talked about the complications caused by the monetary policies of the developed country central banks after facing the global economic crisis and how the distribution of assets should be on the basis of the sector in terms of new portfolios and classical portfolio management. Today, we will examine its effects on banking in the classical sense.

The best thing you can do to save them in a crisis in 2008 when the crisis is in the financial sector and when your banks need to face the crisis is to keep their balance sheets liquid. From this point of view, the era of monetary expansion, which we can define as the strange part of economic history, was successful and kept the banks liquid. On the other hand, contrary to what is expected, its effect on the economy was limited. When the main purpose was to provide liquidity, banks and other financial institutions were encouraged to buy government bonds, not lending, which is their main activity.

While banks increased their weight in the balance sheets of liquid assets from good to good, interest continued to decrease. As interest rates fell, the gap between the average return of banks’ assets (loans, bonds) and the costs of their liabilities (deposits, borrowings) narrowed, and banks had to work with very low margins. The chart below shows how US banks’ net interest margins declined.

Another phenomenon that this situation revealed in the banking sector was to compensate for losses on the interest side with commission income. In a sense, this resulted in the fact that almost everyone who makes financial transactions is taxed.

Meanwhile, monetary expansion packages were announced one after another, which led both individuals and institutions to become more pessimistic. The central bank, trying to save billions of dollars and save the economy by increasing investments and consumption, decides to spill billions of dollars again when it fails to reach its targets, and this is repeated every two years. Indeed, how can you be optimistic about the economy?

Another step taken by the central banks for the banking sector was to increase the capital adequacy ratios. This led to a further decrease in the capital available to banks. However, banks lend to businesses and individuals with lower risk weighting, which basically include economic units that need the least amount of credit. Therefore, the move to develop the economy over the financial system was again interrupted. On top of that, we have seen that banks have started to focus solely on collateral rather than the bases of the borrower in their decision-making processes. Under normal circumstances, a credit analyst needs to test the repayment capability of the loan company, but only collateral valuation was performed. If the project in question fails, you cannot expect that collateral to recover, you have not already run a valuation process for the project itself. We can say that the loans extended to the sector in the USA, especially due to the declining energy commodity prices, led to a tendency to deteriorate an asset quality, even if it is not major in the banking system.

Is it that banks’ risk appetite is so low for the financial system? It’s not really like it. Because we see many innovative ideas emerging, such as peer-to-peer lending, crowdfunding. There is an example of LendingClub in the US today, though it faces serious corporate problems. Again, we see that many initiatives have emerged in Europe and the digital banking area has achieved significant growth momentum. Time will show whether the “creative destruction” that we mentioned in the previous article and which we see as the emancipation of the economy will also occur here and cause a radical change in banking.

Does the Fed Increase Interest in the Election Year?

The US, which has managed to stay at the top of its economic agenda for years with what the central bank has done and will do, is being discussed more intensely with one item this year: Elections. The US voter will elect one of Clinton and Trump as president on November 8. Another issue that is spoken in the markets is whether an interest rate increase will be made during the election period, and when this question is asked, an answer appears in the minds that such a thing will not be done before the election.

Is that so? If we look since 1980, 60 percent of the interest rate increase decisions have been made in the election years. In fact, the Fed seems to be very happy to raise interest rates during the election years. The Fed will have three meetings for this year: September, November and December. Many people argue that the Fed will not support the idea of ​​an interest rate hike when the elections are so close. The fact that we put the middle two sentences ago proves that this idea is not consistent. The Fed will decide entirely on data, not election.

Voters, of course, care about the economy. The results of scientific research also support this and underline that voters are “myopic” in this regard. While even the economist class in societies can lead to realizations in their predictions, we cannot of course expect ordinary people to make great economic predictions. People’s preferences are to choose the managers in charge if the economy and markets are going well in the short term.

Below is an infographic prepared by Wells Fargo analysts that summarizes Fed actions in election years.

Will Public Expenditures Save Economies?

The history of economic thought has affected the world economy and even many political events. Just as the Keynesian view, which was the major driver of public power for the economy, led to important changes, Friedman’s market-based perspective influenced economies and, by providing the necessary political transformations, has brought the world economy more integrated and indisputably provided an increase in global peace and prosperity.

Except for continental Europe and Japan, which have an important place in public spending and indebtedness economies, there are still those who see public spending as medicine, even though developed countries have largely recovered from the crisis. For example, Krugman, who said that the internet could be as effective as fax when one of them first came out, is one of the most important keynesian economists.

Now, let’s show with a graph compiled from the data of the US economy that the discussion does not have much of an exacerbation.

The periods when public spending is a solution in the US economy are long periods of slowdown. On the other hand, we see how the view that sees it as a problem affects the trend in growth. Of course, some historical processes can be accepted to be effective here, and the numbers are clear enough to prevent this from having an official effect. Can other situations apply in different economies? Of course, we can argue that, after the Industrial Revolution, those fates are and will not be able to hold stitches.

Who Earns How Much in M&A?

In one of the previous articles (see Monetary Frenzy Period ), we talked about how the lowering of the borrowing costs of the central banks of developed countries is a motivation tool for mergers and acquisitions for companies. Therefore, we see that these financial transactions, one of the most strategic moves for companies, have increased recently. This increase also creates many job opportunities in areas such as investment banking and legal counseling, which has long been on the agenda of how much money banks make from these jobs. So who really earns how much in this business? Let’s try to answer this question by going through an extremely large example.

Our sample; alcoholic beverages are a manufacturer of Anheuser-Busch InBev ‘s SABMiller ‘ s $ 107 billion to purchase. This is the fourth largest deal of the century we’re dealing in (no one that passed AOL’s acquisition of Time Warner for $ 164 billion in 2000). Although I think that it will be a good example with this aspect, I think it would be appropriate to develop a suitable perspective for the sector while examining the expenses made during the agreement.

First of all, let us note that a $ 75 billion loan was used by AB InBev, which is the largest commercial loan in history. The banks that gave this loan are; Banco Santander, Bank of America., Bank of Tokyo-Mitsubishi, Barclays, BNP Paribas and Deutsche Bank .

As a result, returning to the spending made during the purchase, we see a total of $ 202 million spent for the purchased SABMiller. Its,

  • 113 million dollars for financial consultancy,
  • 76 million dollars for legal counseling,
  • $ 9 million for public relations consultancy,
  • $ 2 million for accounting consulting
  • and $ 2 million was spent on other expenses.

For AB InBev, who made the purchase, the expenditures are larger, and we see that a total cost of $ 1.73 billion has been reported. Its

  • In the process of financing $ 725 million,
  • For taxes and other expenses of $ 475 million,
  • $ 185 million for legal advice,
  • For professional services including 180 million dollars management consultancy, actuaries, private asset valuations,
  • 135 million dollars for financial consultancy,
  • 20 million dollars for public relations consultancy,
  • $ 15 million was spent on accounting consulting.

Considering the sector, we see that public relations expenditures are at the forefront, and the expenditures made for this are even above the accounting consultancy expenditures including a process such as due diligence. The importance of financial consultancy should have emerged in creating valuation for the purchased party, which is an important part of SABMiller expenditures. Tax expenditures are not to be underestimated.

With all this, low interest rates are likely to buy and indirectly support investment banking.