Turkish Banks Demand Authorities Delay Measures to Boost Lending

(Bloomberg) -- Turkish banks are demanding a delay to plans by authorities to push them to step up lending, purchase government bonds and engage in swap transactions with the central bank, according to people with knowledge of the matter.

The Turkish Banks Association submitted its request to the banking regulator, known as the BDDK, after a meeting last week, the people said, asking not to be identified because the matter isn’t public. Lenders are also asking the BDDK to amend some of the measures, and to add non-performing loans to the calculations, the people said. The watchdog is considering their demands, they said.

The BDDK last week announced new regulations for banks to maintain a new asset ratio of at least 100% from May 1, saying the rules aim to get lenders to use their resources more effectively during the economic slowdown brought on by the coronavirus pandemic. Banks that fail to maintain the ratio face paying an administrative fee.

Representatives for the banking association and regulator declined to comment.

The new measures are “moderately credit negative” for banks, Fitch Ratings said last week. Some banks would rather cut deposit rates to reduce their deposit holdings instead of lending under the plan, Mahfi Egilmez, a former treasury undersecretary, said on his blog.

President Recep Tayyip Erdogan and Treasury and Finance Minister Berat Albayrak have repeatedly slammed private banks for failing to support companies even before the coronavirus outbreak paralyzed economic activity and curtailed the movement of people.

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