This week, Turkey’s financial watchdog, the Banking Regulation and Supervision Agency, told the nation’s lenders to write off 46 billion liras ($8.1 billion) in bad loans by the end of the year to hasten a recovery in the banking sector.
The move comes more than a year after a currency crisis devalued the Turkish currency 30% against the US dollar, leaving banks with large foreign debts unable to repay obligations that have since strained the nation’s lending market. While analysts say the directive could help revive the Turkish banking sector, the delayed initiative may prove to be “too little, too late” to stimulate the nation’s lukewarm loan market.
“The move highlights, once again, that credit growth rather than a comprehensive package of structural reforms remains the government’s preferred approach to support Turkey’s ailing economy,” Wolf Piccoli, co-president and political risk analyst at Teneo Intelligence, wrote in a memo shared with Al-Monitor.
He added, “Sustained political interference in the banking sector — including pressure from the government to dismiss and/or sideline executives who are not perceived as “cooperative” — will continue to cloud the outlook for the banks for the foreseeable future.”
Read the full story on Al Monitor: https://www.al-monitor.com/pulse/originals/2019/09/turkey-regulator-banking-sector-recovery-loan-market-weak.html#ixzz600dG0wdQ