The purchase, which took place in April, thereby making the bank the owner of its headquarters located in Istanbul’s most expensive commercial district was a step that sealed Denizbank’s high position.
However, hardly had they concluded on buying the imposing tower with 34 floors than this very institution started seeking another office building somewhere else secretly. It was not because of any fundamental shift in business operations but due to the possibility of seismic activities below it though.
Istanbul is a city that might get hit by an earth quake at anytime as no one knows when and where an earthquake would occur. Following last year’s devastation in the southeastern region of the country and allegations that authorities were ill prepared, banks are now preparing for worst-case scenarios like setting up parallel offices in Ankara so as to ensure continuity after disasters strike.
Denizbank owned by Emirates NBD of Dubai, BBVA’s Turkish unit Garanti, Qatari-owned QNB Finansbank and TSKB are among those companies who have come up with plans B.
In anticipation therefore, Turkish central bank has begun calling back all officials from various departments to Ankara despite a new office tower being built on the Asian side of Istanbul which is one out of many such buildings that have been sprouting in recent times underpinning its financial hub status. This person familiar with the strategy said it was done so that if there will be an earthquake it will still continue operating adding spokesman ribbed off comments.
While North Anatolian Fault separates between two parts of Turkey running straight through Istanbul lies south eastern districts; there are major fault lines located close to Ankara city area thus further away from dangerous zones.
The Industry and Technology Ministry reports indicate Istanbul metropolitan area comprises about 40% industrial facilities including petrochemical plants, car manufacturing sites or textile works within Turkey.
Besides having almost 16 million people living in it, this city is surrounded by provinces which make it part of global supply chains. During the war in Ukraine, the Bosphorus Strait separating Europe and Asia at Istanbul is the only way through which oil or grain loaded ships from the Black Sea countries can pass.
“Given Istanbul’s critical role in Turkey’s industry, it’s essential to assess the potential losses in the event of an earthquake and to implement industrial earthquake risk management plans at national, local, and enterprise levels without delay,” said Nurcan Meral Ozel, a professor at the Kandilli Observatory and Earthquake Research Institute in Istanbul.
According to various calculations based on historical events conducted by researchers from this institute, they expect that a magnitude 7.33 earthquake will occur one day. At present, The Disaster and Emergency Management Presidency (AFAD) is getting ready for a quake of magnitude 7.5 which is marginally less than those that struck parts of southeastern Anatolia including Tunceli city last year during February.
According to someone who familiar with Denizbank’s strategy, every unit based in Istanbul has been asked by its managementto move into Ankara while another insider said it may have resulted into encouraging workers who wanted to be repositioned to relocate there.
The bank stated that it was working towards creating a smaller building after its new headquarters at Istanbul. “To ensure that our banking services continue uninterruptedly after a possible earthquake that may affect Istanbul”, as explained by bank representative when she replied questions
QNB Finansbank stated that it was providing support to its HQ teams in Ankara, and also ensuring that all branches and bank buildings are built to withstand earthquake. TSKB has transferred some of its staff into an office space it rented in Ankara. The bank refused to comment. Garanti BBVA is relocating its data center and parts of his head office, according to a source familiar with the plans. In a statement, the bank said that some “vendors, facilities and human resources” were backed up outside the earthquake zone. Sometimes these precautions have tended to focus on what is not done as much as they highlight what is being done.
Erdal Bahcivan, president of the Istanbul Chamber of Industry believes that other businesses and industries should be more prepared. This means assessing the structures of various industrial companies within this city to ensure their resilience against earthquakes as he added.
Bahcivan said about 80% of the factories in major districts in Istanbul were built before 1999 when building regulations were revised after last year’s events took place in eastern Turkey.
In 2021, Tusiad which is Turkey’s largest business group published a report saying insufficient coordination between industries and weak awareness and insurance coverage for micro-enterprises (MEs) stood out.
“Therefore, we must minimize this risk accordingly since Istanbul significantly affects our national economy when considering possible earthquake scenarios,” writes Bahcivan whose organization has around 25k members. “If we don’t take measures against such a situation, then unfortunately everyone will pay for it as a nation.”
Of course, this would cause havoc. Insurers’ estimates suggest this could cost $300bn- equal to 27% GDP says an industry insider; three times higher than previous predictions made in 2017. However approximately $25bn-$30bn will then pass onto insurers claimed anonymous person due to sensitivity regarding earthquakes. Istanbul has always been prone to earthquakes. Records show that in the summer of 1509, soon after the city was taken by the Ottomans, an earthquake hit it hard. Historic accounts reveal how thousands died when their homes collapsed on them. Another strong earthquake took place nearly 250 years later, in 1766; this time it destroyed minarets of the Blue Mosque.
Almost a quarter century ago, a devastating earthquake occurred in Izmit, which is situated less than 100 km away from Istanbul and took more than 17k lives within the area. This caused a financial crisis in Turkey in 2001 leading to Recep Tayyip Erdogan’s accession to power.
The risks do not differ much from other areas prone to earthquakes. In Japan where there appeared to be good preparation for an incident like Tohoku Earthquake (2011), over 10 thousand people were killed due to tsunami caused by that quake and also its consequent nuclear meltdown. It is not surprising that Los Angeles, San Francisco and San Diego are located dangerously close to one another along a portion of San Andreas Fault often referred as “The Big One” since many experts predict that it will happen sooner or later,
Another proof that action must be taken immediately came last year as two massive quakes rocked Turkish southern cities killing over fifty thousand people. Critics also accused the government of negligence towards housing infrastructure’s failure to withstand earthquakes.
Rather than renovating its stock of ageing buildings, Turkey has chosen to invest in new projects due to Erdogan’s enthusiasm for construction.
According to Minister Murat Kurum who is the Environment and Urbanization Minister, Government is aware of the danger. This includes the retrofitting of buildings with earthquake preparedness being the most immediate priority for Istanbul according to him last week in the city.
“We are expecting a potential earthquake in Istanbul, but we won’t wait for it. And We cannot wait” he said. “We will not shy away from this reality as others might”
Istanbul Mayor Ekrem Imamoglu, who defeated Kurum in mayoral elections, estimates that it would cost $20 billion to make fragile structures resilient. The World Bank’s broader estimate for Turkey puts it at $465bn to retrofit or rebuild 6.7 million housing units
It’s not all about money though. Due to population density and multiple ownerships on one apartment building, Istanbul finds it difficult to reach consensus on revitalizing buildings besides the high cost of doing so during periods of economic hardship and rapid inflation.
Unstable grounds like riverbeds have over 500,000 people living on them. Pre-1999 constructions are at highest risk as many were built with substandard materials.
The Kandilli Institute says some 40k more buildings could face heavy damages during next Istanbul earthquake. It added that around 12 percent of all buildings in Istanbul could suffer serious casualties
“Let’s be honest: today it is very difficult to say that either Turkey or İstanbul ready for what scientists call ‘Great İstanbul Earthquake’”, said Bahcivan, chairman of chamber of industry. “If we live in this geography, we have to consider this issue as ‘the most basic and important potential problem’”.
