BBVA’s Turkish unit to sell gold on mobile app as inflation soars

November 6, 2020.
Two horse-pulled chariot sculptures are seen on top of the BBVA bank in Madrid. (AP Photo/Paul White)

Two horse-pulled chariot sculptures are seen on top of the BBVA bank in Madrid. (AP Photo/Paul White)

BBVA’s Turkish unit is rolling out several new mobile banking features including a gold investment function, the nation's second-largest private bank said on Friday, as customers seek to protect their savings from rising inflation. 

Garanti BBVA’s new gold investment function allows customers to automatically purchase gold each month, charging their bank account or credit card to buy gold in quarter-coin, half-coin or full-coin increments. 

Turks have flocked to gold in an effort to protect their savings as inflation has surged in Turkey and the lira has traded progressively lower against the U.S. dollar.

Garanti BBVA, which is minority-owned by Spain’s , is rolling out the mobile gold-buying function in an effort to retain its 18 million customers even as some flee the lira. 

The bank, which oversees TRY 487 billion ($57 billion) in assets, also added several other mobile app features on Friday. 

The app’s cost-saving feature gives customers tools to balance credit card spending and saving, while a new invoice payment function lets customers set up automatic payments for recurring expenses. 

“We know that financial transactions are essential, but that doesn’t mean they need to be complicated,” said Garanti BBVA executive vice president Işıl Akdemir Evlioğlu. “Our cost saving, gold investment, automatic transfer and invoice payment functionalities have attracted a lot of interest from our customers and are becoming very popular.” 

Even as Garanti BBVA seeks to capitalize on Turkey’s gold rush, some observers say depreciation in the lira has put the bank -- and the broader Turkish financial system -- at risk.

In September, credit ratings firm Moody’s downgraded the ratings of Garanti BBVA and a dozen other large Turkish banks, citing a balance of payments crisis the agency said could lead to capital controls and restrictions on foreign currency outflows. The decision came just days after Moody’s cut Turkey’s sovereign debt rating to “B2” -- the country’s lowest rating ever. 

BBVA Garanti’s namesake and co-owner, Madrid and Bilbao-based BBVA, reported a better-than-expected profit of EUR 1.14 billion ($1.35 billion) in the third quarter, due largely to improvements in loan repayment rates. The bank is pursuing cost-cutting measures including thousands of layoffs while seeking to grow in its most profitable markets in North and Latin America.