Page 14 - Turkey Outlook 2022

Queues in front of the municipalities’ discount bread kiosks are the new norm.
It is thought there are around 30mn people in Turkey (population 84mn, not
including millions of refugees) who are going hungry.

4.2 Banks

‘Goldollarisation’ to continue apace

The share of FX-linked deposits in total deposits placed with Turkish banks
has leapt to record highs.

The previous record levels of such deposits were registered as far back as
2001, the year that brought the greatest economic crisis experienced by
Turkey in recent history.

Indicators on the current economic turmoil are exceeding the historic financial
tumult suffered in 2001. They are now comparable with what was seen at the
end of the 1970s, when a-several-years-long great depression in Turkey ended
with the military coup in 1980 that led to a junta ruling for three years.

NPLs
Outlook Turkey 2021: “Since 2016, many essentially bankrupt companies in
Turkey have been kept afloat with cheap loans. Problem loans currently make
up around 15% of Turkish banks’ loan books and the figure is expected to
extend into the 20%s in 2021.”

Shame on us, we had underestimated the range of the Erdogan regime’s hand
when it comes to releasing dodgy data. Problem loans still hover around 15%.
Outlook Turkey 2021 continued: “Ongoing ‘regulatory forbearance’ and the
restructuring of loans hide the real picture, but the banks’ balance sheets,
weighed down by non-performing loans (NPLs), are in fact among Turkey’s
most serious headaches.

“Turkey is [now always] in the midst of a growing… wave of high stakes debt
restructurings. Its banking industry has been subject to non-stop loan
restructuring cycles since 2016.

“More industries join the restructuring queue with each economic crisis, and
the restructuring efforts in effect now take place amid interwoven crisis cycles.
“A contrived advantage for the Turkish banking industry is that its financial
statements are unaffected by the situation and it can go on releasing huge
profits—this is because of the generous ‘regulatory forbearance’ exercised by
the Erdogan administration.”

One correction: as things stand, the public banks are not even able to release
some baseless figures on growing profitability.
Outlook Turkey 2021 added: “The contractors behind giant infrastructure black
holes along with energy, construction, tourism, airline and retail companies,
along with a great number of small and medium sized enterprises (SMEs) in
Turkey, are all found within the debt restructuring spiral.”

14 Turkey Outlook 2022 www.intellinews.com