Page 51 - TURKRptJul19

our targets, we will re-launch talks,” the statement added, without saying what those targets were. Shares in Marka Holding dropped some 1.5% on the news. The holding company is active in the retail, finance, real estate and services industries. Shares of Marka Holding have been traded on the stock exchange since 2017. Marka Holding in 2017 expressed interest in buying the bank from the SDIF. It even hired a consulting firm to advise on the possible acquisition. Turk Ticaret Bankası, also known as Turkbank, was founded in 1913. In 1997, 84.5% of the bank was transferred to the SDIF. In 1998, the bank was sold to a businessman in a tender which was cancelled shortly thereafter. In 2001, Turkbank’s banking licence was revoked. Since then the bank has been under SDIF control. It is not collecting deposits or engaged in any financial activities.
Recently, Turkey's banking watchdog BDDK approved the establishment of a new investment and development bank named Golden Global Yatirim Bankasi. Including Golden Global, there are a total of 54 banks in Turkey. Given the state of the Turkish economy and the headwinds local banks are facing, Marka Holding's decision to put its plans to buy Turkbank on hold come as no suprise.
Turkish banks may still be profitable but they are operating in an increasingly challenging environment. For instance, interest income collected from consumer loans by the banks rose only 13% on an annual basis in January-April. The rate of increase is less than the annual inflation rate. In April, official inflation was running at 19.5%.
The broader macroeconomic outlook is equally discouraging. The Turkish economy is expected to shink this year which means unemployment will remain high. Thus, people will be less willing to take out loans, the main source of revenue for the banks.
8.2 Central Bank policy rate
INSIGHT: Rate-setters decide this is no time to cut. Turkey’s central bank on June 12 announced that a meeting of its monetary policy committee (MPC) has opted to keep its policy rate (the one-week repo auction rate) at 24%, where it’s been for nine months. “Recently released data show that the rebalancing trend in the economy has continued. External demand maintains its relative strength while economic activity displays a slow pace, partly due to tight financial conditions. The current account balance is expected to maintain its improving trend,” the MPC said in a statement. “Developments in domestic demand conditions and the tight monetary policy support disinflation. In order to contain the risks to pricing behaviour and to reinforce the disinflation process, the Committee has decided to maintain the tight monetary policy stance,” it added. The MPC’s decision was in line with market
51 TURKEY Country Report July 2019 www.intellinews.com