ECB Concerned About European Banks' Turkey Exposure, FT Reports

(Bloomberg) -- The European Central Bank has grown concerned about the exposure of some euro zone banks to Turkey following the lira’s plunge, the Financial Times reported.

Banco Bilbao Vizcaya Argentaria SA, UniCredit SpA and BNP Paribas SA are particularly exposed after the Turkish currency lost more than a third of its value this year, the newspaper reported, citing unidentified people familiar with the matter.

The ECB’s Single Supervisory Mechanism has begun over the past couple of months to look more closely at European banks’ ties to the country, the FT said, adding that the watchdog doesn’t see the situation as critical yet. The risk is that Turkish borrowers may not be hedged against the lira’s weakness and could start to default on foreign-currency loans, the newspaper said.

Read about the banks most exposed to lira turmoil

The lira sank more than 3 percent to a record low against the dollar Friday, as concern about souring relations with the U.S. and runaway inflation overshadowed the nation’s plans to stem a market rout.

BBVA, UniCredit and BNP Paribas all declined to comment on the central bank’s concerns, along with the ECB, the FT said.

To contact the reporter on this story: Russell Ward in Tokyo at rward16@bloomberg.net

To contact the editors responsible for this story: Marcus Wright at mwright115@bloomberg.net, Russell Ward, Colin Keatinge

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