Page 43 - TURKRptJul19

8.1.2 Loans
12 Turkish banks to channel TRY25bn in Treasury-backed loans to companies. Twelve Turkish banks are to offer companies a total of Turkish lira (TRY) 25bn ($4.31bn) as part of a Treasury-backed loan package, banking association TBB said on June 12. Ankara is using such packages to boost Turkey’s enfeebled economy, brought low by last summer’s currency crisis. The TBB said companies would be entitled to draw up to TRY50mn depending on their revenue. There would be 36-month loans pegged to an interest rate of CPI+4 and 48-month loans attached to a rate of CPI+4.5. There have been criticisms that rather than bite the bullet in facing up to its economic woes, the Erdogan administration is using short-term medicine, such as loans that enable zombie companies to survive. The lira crisis raised the cost of servicing foreign debt for companies who for years enjoyed cheap credit. Bad loans are building up in Turkey’s banks. It is not surprising that the package comes ahead of the re-run of Istanbul mayoral elections on June 23, Piotr Matys, emerging markets forex strategist at Rabobank, was quoted as saying by Reuters. "Such policies might work only over the short-term and will not provide sustainable growth unless fundamental reforms are announced... to rebalance the economy in a sustainable way," he said. Finance Minister Berat Albayrak has announced two $4.9bn packages in the past two months. One is to support state banks. The other is to help bail out some exporting sectors. Other packages announced by Albayrak earlier this year offer targeted assistance for small and medium sized businesses. State banks' loans grew more than 11% in the first four months of 2019, while those of the whole banking sector grew 7%, data from the BDDK banking watchdog showed. Ziraat Bank, Is Bank , Halkbank , Garanti Bank , Yapi Kredi Bank, Vakifbank , Akbank , QNB Finansbank, Denizbank, TEB, Sekerbank and Eximbank will participate in the new loan package, the TBB said.
43 TURKEY Country Report July 2019 www.intellinews.com