According to the news of Daily Sabah, in a global context with struggling markets and plunging economic growth, international investors have so far invested $9.2 billion in 10 Turkish banks, including state and public lenders, this year.

The ability of Turkish banks to collect resources from international markets is construed as a sign that domestic financial institutions still remain a safe haven in the eyes of investors despite the economic turbulence Turkey experienced in 2018, implications of which Turkey has been exposed to so far this year.

Among the reasons why the Turkish banks are still attractive to foreign investors for lending money is trust in the financially robust structure of the domestic banking sector and its ability to pay back the syndicated loans. The stabilized currency, high interest rates in the first half of the year and a series of reformative steps taken by the government have also helped the restoration of investor confidence in the Turkish financial market.

Moreover, decreasing costs of raising debt in the international market have also played a significant role in strengthening Turkish banks’ ability to draw funds from international investors.

According to the data of the Banking Regulation and Supervision Agency (BDDK), the Turkish banking sector’s net profit totaled TL 32.8 billion ($5.65 billion) in January-August 2019. Banks’ short-term external debt stock posted an increase of 0.1% to $57.2 billion and other sectors’ short-term external debt stock rose by 11% to $57.1 billion by the end of August, central bank data showed. The ratio of non-performing loans to total cash loans — the lower the better — was 4.64% in the same period, versus 2.85% a year ago.

The U.S. dollar/Turkish lira (USD/TRY) exchange rate was around 5.81 at the end of August this year, versus 6.42 at the end of the same month in 2018.

Coupled with the gradual improvement in financial operations, as seen in the falling credit default swaps (CDS), the lira’s recovery from last year’s turbulence has cut interest rates on syndicated loans as much as 10%. The fall in interest rates came despite ratings by Moody’s Fitch Ratings and S&P Global Ratings.

Turkey’s 5-year CDS was calculated at 320.74 points. CDS value fell 15.97% during last week, 7.14% last month, and 13.58% last year. On Sept. 4, 2018, 5-year sovereign CDS reached a maximum value of 566.38.

On every possible occasion, President Recep Tayyip Erdoğan and Treasury and Finance Minister Berat Albayrak call upon private lenders to turn the taps on lending and insist on keeping interest rates lower to lift the economic activity in the country. The Central Bank of the Republic of Turkey (CBRT) cut the benchmark interest rate, the one-week repo, by 1,000 basis points since July to 14%.

The latest report by the International Monetary Fund (IMF) revealed last month that the Turkish economy may see a growth of 0.25%, reversing previous forecasts of 2.5% contraction.

One of Turkey’s five largest lenders, İş Bank, signed a syndicated loan agreement in the amount of 644.9 million euros (some $722 million) and $323.5 million with a maturity of 367 days. State lenders Ziraat Bank and Vakıfbank also raised $1.4 billion and $1.1 billion in syndicated loans from international investors. According to the estimations, the banks offer a 185 basis-point margin on the dollar tranches and 170 basis-point on the euro tranches, which were as high as 190 basis points and 200 basis points last year.

Another private lender Yapı Kredi, which is partly owned by Italian lender Unicredit, has so far raised nearly $2 billion in syndicated loans. In two rounds, Akbank also signed $1.5 billion with investors from the global markets. Fully owned by Spanish lender BBVA except for the shares traded on the stock market, Garanti Bank signed an oversubscribed syndicated loan facility with demand from foreign banks reaching above $1 billion. Turkish Industrial Development bank signed a $177 million syndicated loan agreement with 12 banks. ING Turkey and TürkEximbank are also among the other lenders that inked syndicated loan agreements with global investors.

Borsa Istanbul’s 13-bank sector index XBank gained 32% this year after declining 31% last year.

Source: Daily Sabah
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Relation with CPMI (CPSS)
CPMI (CPSS) is one of the committees within the Bank for International Settlements (BIS) and serves as a forum for central banks to follow the developments in both domestic and cross-border payment and settlement systems. Moreover, the CPMI (CPSS) cooperates with countries to prepare Redbook reports comprising assessments of the payment systems infrastructure in order to develop the payment systems infrastructure globally.

The CBRT became a member of the Committee on November 13, 2009. Three descriptive Redbooks, two of which were before the membership, has been prepared in cooperation with CPSS(CPMI) regarding the payment and securities settlement systems in Turkey in 2002, 2007 and 2012. Since the initiation of membership, Statistical Redbook reports are prepared every year regarding the last five years. Moreover, the CBRT is actively involved in several working groups of the CPMI (CPSS) and contributes to preparation of reports published by CPMI (CPSS).

Payment Systems Workshop
Further to these works, the Central Bank and the CPMI (CPSS) jointly hold Regional Payment Systems Workshops. The workshop aims to provide a platform for the central banks of the region to exchange views on the payment system reform process in their individual countries, on the role of the respective central banks in managing change in payment systems and on how developments in the region link with broader global trends.

The workshop has been organized annually since 2001 and delegates from about 20 central banks attend the workshop every year. The region of participating countries covers the Balkans, East Europe, North Africa, Middle East, and Central Asia.

Training and Technical Cooperation Activities
Various training programs are provided and technical cooperation activities are carried out by the CBRT regarding the payment systems area via both Istanbul School of Central Banking and bilateral links with other countries’ central banks

Date: 13 March 2017

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.

Jeroen Dijsselbloem claimed that some of Athens debt will have to be written off for its public finances to become sustainable.

On the other hand, the International Monetary Fund had insisted it would only take part in the emergency loan programme if there were debt relief.

Source: Euronews

Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither MuhasebeNews nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.