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Turkish Banks Push Back Over Fee Cuts That May Hurt Profit

Turkish Banks Push Back Over Fee Cuts That May Hurt Profit

(Bloomberg) -- Turkish lenders called on the banking association to raise their concerns to the government over recent fee cuts, saying the measures will hurt profitability and financing.

Senior executives from several banks met late on Monday to express their concerns to Huseyin Aydin, who heads the Banks Association of Turkey and the country’s largest state-run lender Ziraat Bankasi AS, according to people with direct knowledge of the matter.

Officials met just hours after Turkey unveiled measures to press lenders to focus on expanding credit by lowering and even eliminating fees earned on customer transactions, the people said, asking not to be named because the meeting was private.

A spokesperson for the Banks Association declined to comment.

The changes, which will leave banks with only a handful of commissions they can charge commercial clients, come just two months after the government banned private lenders from collecting taxes and ordered state banks to act as sole tax collectors. Banks say that both measures will lower revenue and ultimately hit profitability, the people said.

The regulator has also made it more difficult for foreign investors to bet against the lira by further restricting their access to liquidity. However, the limitations also may hurt banks as they use the market to raise lira funding to finance domestic lending.

Another source of worry among bankers was a draft law that will stiffen punishments for insider trading and market manipulation as part of a broad overhaul of the industry and capital markets. The proposal was submitted to parliament by President Recep Tayyip Erdogan’s AK Party on Feb. 6, without consulting industry officials.

Berkant Ulgen, the legal adviser of the Banks Association, told a parliament commission on Tuesday that they received the draft banking law a day after it was submitted to the parliament.

The 12-member Borsa Istanbul Banks Sector Index fell 0.4% by 10:22 a.m. in Istanbul, while Turkey’s benchmark equity index was down 0.1%.

--With assistance from Firat Kozok.

To contact the reporters on this story: Kerim Karakaya in Istanbul at kkarakaya2@bloomberg.net;Asli Kandemir in Istanbul at akandemir@bloomberg.net

To contact the editors responsible for this story: Onur Ant at oant@bloomberg.net, ;Benjamin Harvey at bharvey11@bloomberg.net, Vernon Wessels, James Hertling

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