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May 25, 2022

Coface study: The impact of the Turkish coup on Romanian companies

Radical measures implemented by the Turkish government that followed the attempted coup fuelled uncertainty of international investors, a Coface study released on Wednesday informs. In addition, portfolio investment holdings of non-resident equity investors fell by almost 20% in less than a week from USD 46 MLD to 38 MLD on July 15th USD on July 22th.

The same study maintains that Turkey has lost approximately 12B UDS from equity investments held by non-resident investors in the last three months, these capitals outflows fuelling pressure on the Turkish lira depreciation and stock market decline. In this context, a few weeks later after the attempted coup, the Turkish lira depreciated about 6% against the USD, while the index of the Stock Exchange of Turkey (XU100) dropped with 12% in the same period.


  The effect on the trade relations with Romania


The failure of the coup launched on July 15th in a few major cities in Turkey was followed by a series of enhanced measures against political opponents of the regime led by President Recep Tayyip Erdogan, among them are: closing of more than 100 companies and media organizations, of more than 1,000 high schools, private hostels for students and private foundations, as well as some universities that have links with FETA network (terrorist organization Fethullah Gulen), writes Agerpres.

These reprisals have been extended to the financial sector by some analysts’ dismissal and revocation of operating licenses related to brokerage houses by the supervisory authority, following the issuing of reports which tend to create negative expectations on the situation in Turkey.

The economic uncertainty in Turkey can have an indirect effect on trade relations held with Romania, while the bilateral trade between the two countries is significant. Turkey occupies the 5th place as a destination for Romanian exports and the 1st place among non-EU countries, and 11th place for imports.

After joining the EU, Romania maintained a positive trade balance with Turkey, on the 5th place in the trade balance. Despite bilateral trade relations, the contribution from Turkey investments in local capital flow is moderate.

In a top of accumulated foreign direct investment for 2008-2015, Turkey ranks 18th, with a contribution to total FDI of only 0.5%, while the five main investors (Austria, Germany, Italy, France and Switzerland) together generated almost 72% of total FDI in the analyzed period. According to National Institute of Statistics, regarding the social capital, Turkey ranks 14 in the top of countries with investors from companies with foreign participation.

This reflects the relatively small number of local companies with Turkish capital. Specifically, according to the Trade Register, 1,007 companies with social headquarters in Romania registered shareholders with domicile / social headquarters in Turkey. According to financial statements submitted to the Ministry of Finance for 2015, these companies generated a total turnover of 4.8 B RON and a total of about 15,000 employees.


Indicator              2008       2009       2010       2011       2012       2013       2014       2015

Number of companies   576         614         678         708         784         846         897         1007

Average turnover

(M RON)              4.2          4.6          4.6          4.71        4.85        4.41        4.75        4.80

Total turnover

(M RON)              2,419     2,824     3,119     3,335     3,802     3,731     4,261     4,834

Average Annual Turnover YoY                    10%        0%          2%          3%          -9%        8%          1%

Average Annual Turnover (2008=100)                     10%        10%        12%        15%        5%          13%        14%

Average Annual Turnover – Romania (M RON)    1,888     1,814     1,902     2,162     2,253     2,342     2,485     2,607

Average Annual Turnover- Romania (2008=100)                                -4%        1%          15%        19%        24%        32%        38%

Net result            -2.2%     -5.2%     -3.3%     -2.3%     -3.8%     -4.1%     -1.6%     0.1%

Indebtedness    62%        65%        66%        68%        70%        75%        77%        77%

Number of employees  13           12,503   12,557   13,371   14,113   14,431   14,019   14,694


The evolution of the local companies with shareholders residing in Turkey


Analyzing the local companies held by shareholders with social headquarters/ residence in Turkey, we note the following:

  • The steady growth companies’ number, from 576 in 2008 to 1007 in 2015. The number of the local companies owned by shareholders resident/ registered office in Turkey has doubled in the last eight years, reaching 1,007 companies in 2015. However, these companies generate less than 1% of turnover at national level and a high degree of regional concentration (9 of 10 are located in Bucharest, in South, South – East) and sectorial (half of the revenues recorded in consumer-oriented sectors, namely distribution and food & beverage). Only 2 out of 10 local companies owned by Turkey shareholders registered profit in 2015 and shows a low level of debt (below 70%) for them, being indeed the risk of the repatriation of some dividends to the parent companies, amid reduced local taxes and accelerated capital need in the Turkey business environment.
  • The constant increase in turnover, from 4.2 M RON in 2008 to 4.8 M RON in 2015. Despite this, the advance of approximately 14% in the analyzed period is due almost entirely by the nominal effect of rising prices. Moreover, the average increased of income registered by the local companies with Turkish capital was significantly lower than the average registered nationally, of 38%.
  • The turnover generated by local companies owned by shareholders from Turkey has doubled in the last 8 years, increasing from 2.4 B RON in 2008 to 4.8 B RON in 2015. This dynamic, along with the increasing number of employees by 10% in the analyzed period and the profit of these companies, helped to increase tax revenue by over 500 M RON in the analyzed period.



Regional distribution 2015            Number               Number %            Turnover (M RON)              Turnover %

South    280         28%        1,960     41%

Bucharest            421         42%        1,430     30%

South – East       179         18%        925         19%

Noth – East         23           2%          341         7%

South -West       20           2%          57           1%

Centre  39           4%          56           1%

West     28           3%          38           1%

North – West      17           2%          28           1%

Total      1007       100%     4,834     100%


Industry               Number               Number %            Turnover (M RON)              Turnover%


Wholesale and distribution          379         38%        1.837     38%

Food and beverage         43           4%          763         16%

Manufacture of machinery and equipment         18           2%          350         7%

Retail     94           9%          308         6%

Manufacture of chemicals and chemical products             30           3%          293         6%

Metallurgical industry    17           2%          228         5%

Manufacture of wood and wood products           25           2%          180         4%

Transports          78           8%          174         4%

Constructions    105         10%        174         4%

Manufacture of textiles, clothing and footwear 14           1%          119         2%

Others  204         20%        408         8%

Total      1,007     100%     4,834     100%


The dynamics of the income of the local companies owned by shareholders from Turkey is due in particular to the extremely high concentration of them in terms of regional distribution and business sector. Specifically, 87% of these companies are located in South, South – East and Bucharest, while 54% of the revenues registered by these companies are concentrated in two sectors: wholesale & distribution and food & beverage. The very high concentration of the local companies owned by shareholders in Turkey in consumer-oriented sectors, correlated with Romania’s economic growth model heavily dependent on this factor explains the increasing number of these companies after 2008.

„Attempted coup in Turkey, and the radical measures that preceded it, have fueled a lot of uncertainty in the capital market. In less than a week, the Turkish Lira depreciated by almost 6% against the American Dollar, the index of capital market in Turkey has lost 12%, and the capital investment in Turkey by non-residents fell by 8 B USD. Those turbulence will be reflected on the only commercially Romania by Romanian exports slowdown oriented Turkey, given that this is the main country of destination for local exports of non-EU countries. Those turbulences reflected only commercially, by slowdown the Romanian exports oriented to Turkey, the main destination for local exports of non-EU countries.

The impact on the Romanian business environment is very limited, amid reduced footprint in the national economy of Turkish capital-owned companies”, stated Iancu Guda, Services Director  Coface Romania CMS.





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