ANKARA (AFP) – A marked rise of foreign interest in Turkey’s once-ailing financial sector has raised hopes that the country’s EU bid and spectacular economic recovery may end years of failed efforts to lure overseas investments. The Dutch-Belgian banking group Fortis made the headlines this week when it said it would pay a total of $1.3 billion for a 89.3 percent stake in the medium-sized Disbank and make a public offer for the remaining shares. Fortis became the second foreign bank to enter Turkey since Ankara got the go-ahead for accession talks with the European Union in December, following France’s BNP Paribas, which paid $217 million in February for a stake in TEB bank. Deutsche Bank, meanwhile, announced it would acquire the remaining 60 percent of Bender Securities to become the sole owner of the leading Istanbul brokerage. Financial pundits expect several other sales, among them deals involving Italy’s Unicredito and the Dutch Rabobank, to be finalized in the next few months. «As long as there is political and economic stability (in Turkey), the interest of foreign banks will continue,» said Tevfik Bilgin, the head of the country’s banking regulatory board. «We estimate that the foreign share in the sector, which is today 5.8 percent, will be from 15 to 20 percent by the end of the year.» The Turkish financial system has undergone a painful overhaul since 1999, when turmoil in the banking system spiraled into a full-fledged economic crisis two years later, plunging the country into one of its worst recessions. The ensuing reforms, backed by multibillion-dollar IMF loans, stabilized the sector, with the authorities seizing about 20 troubled banks that were either dissolved or rehabilitated and sold off, at an estimated cost of some $50 billion. The Turkish economy has bounced back since, recording 9.9 percent growth in 2004 – one of the fastest rates in the world and about four times higher than the average of the 25 EU-member countries. Analysts pointed out that the expanding economy and decreasing borrowing costs have fueled consumer and company demand for loans, boosting bank profits. Demand has soared particularly for housing loans in a country with a population of 70 million predominantly young people. Experts say rising foreign interest in the Turkish banking sector is similar to the trend seen in the Eastern European countries that joined the EU last May, but point out that Turkey offers some extra advantages. «Turkey’s regulatory and supervision legislation is very close to that of the EU, even better than those of some of the new members,» Mehmet Simsek, an emerging markets analyst at Merrill Lynch in London, told AFP. The economic recovery may also offer new opportunities for foreign investors in the insurance sector, which amounts to only about 1.3 percent of the gross domestic product, while its potential is estimated at about 5.0 percent. With the banking sector at the forefront, other markets such as energy and telecommunications are also bracing for large foreign investments, provided Ankara sticks to the path of reform and successfully opens accession talks with the EU on October 3 as scheduled, a report by Raymond James Securities said. «Turkey has the potential to lure $12 billion worth of foreign direct investment in 2005 compared to the official projection of $3.7 billion,» it said.