After securing a 3rd decade in office after last month’s elections, President Erdoğan has been implementing a major restructuring in key government positions. One of the most notable of which has been the appointment of the new Central Bank governor Hafize Gaye Erkan. Erkan will serve as the 26th governor and the 4th appointee in just two years.
Last month, President Erdoğan secured a narrow victory against his opponent Kemal Kılıçdaroğlu, who for a time, looked like a shoe-in amidst Turkey’s crippled economy. Under Erdoğan Turkey’s economy has suffered tremendously, yielding historically high inflation and a massive devaluation of the Lira, following Erdoğan’s “unorthodox economic policies.” Following the COVID-19 pandemic, President Erdoğan insisted that the Central Bank lower its policy rate from then 20% to the current 8.5%. While the Central Bank is an independent body on paper, President Erdoğan has the authority to appoint and dismiss its Governor; a power he has frequently used when the Governor refused to carry out his agenda.
The latest Governor on the chopping block was Şahap Kavcıoğlu, who served a total of 26 months. Kavcıoğlu had taken the post from the shortest serving Governor Naci Ağbal, who held the seat for a total of 4 months before being fired by Erdoğan. Erkan will not only serve as the first female head of the Central Bank but will also be the 4th governor in the last 2 years. As she has not previously held a position in the Central Bank, there is no track record to indicate which direction Erkan will take in regards to the policy rate.
However, if the recent hiring of Mehmet Şimşek as economy czar is any indication, there is a chance that Erdoğan has changed his mind about his economic policies. Recent post-election appointment of Mehmet Şimşek as Minister of Treasury and Finance signaled to many as the end of President Eroğan’s “unorthodox economic policies” in light of Turkey’s devastated economy and depreciating currency.
Who is Hafize Gaye Erkan?
Hafize Gaye Erkan graduated from Istanbul Erkek Lisesi and completed her studies at Boğaziçi University’s Industrial Engineering department in 2001. Continuing her education in the United States, Erkan obtained a doctoral degree in operations research and financial engineering from Princeton University in 2005. Erkan also completed two educational programs on management sciences at Harvard Business School and leadership at Stanford University. Starting her career at Goldman Sachs in 2005, Erkan provided consulting services on balance sheet management, stress testing and capital planning, risk management, mergers and acquisitions to the boards of directors and senior management teams of major banks and insurance companies in the United States during her nine-year tenure. Joining First Republic Bank in 2014, Hafize Gaye Erkan served as Co-CEO, President, Board Member, Investment Director, Deposit Director, and Risk Co-Director during her approximately 8-year tenure. As a board member of the jewelry company Tiffany & Co., based in the United States, Erkan joined the board of directors of Marsh McLennan, a global financial consultancy firm listed in the Fortune 500, in 2022. According to the 2018 survey by the San Francisco Business Times, Erkan was the only woman under the age of 40 holding the title of President or CEO among the top 100 banks in America. In the same year, she was included in the “40 Under 40 List” by the San Francisco Business Times and the “40 Under 40 List” by Crain New York Business. In 2019, Erkan was also included in Crain’s “Women to Watch in Banking and Finance” list and American Banker’s “Most Powerful Women in Banking” list. With expertise in banking, investment, risk management, technology, and digital innovation, Erkan also served on the Advisory Council of Princeton University’s Department of Operations Research and Financial Engineering.
Class action suit filed against Erkan
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There is currently a class action lawsuit filed against Erkan for her time as co-CEO of the now defunct First Republic bank alleging violations of banking regulations and making false or misleading statements.
Hürriyet’s US representative, Razi Canikligil, released the complaint filed against Erkan, on his Twitter account. The complaint alleges that as the co-CEO of the First Republic Bank, Erkan made false and misleading statements about the health of the bank that unceremoniously failed 18 months later.
According to the documents, during the investors call on October 13, 2021, Erkan stated that the bank was “very well positioned to help and manage client needs across different macro environments, as well as its net interest income had increased 26.7%, or $1.1 billion, year-over-year.
