Page 49 - TURKRptJul20

In December 2019, Bloomberg quoted unnamed bankers as saying that the government pressed on senior private sector bankers to approve “ridiculous” debt restructuring demands made by pro-government businessmen.
8.1.4 ​Banks news
8.2 ​Central Bank policy rate
A social media storm blew up in Turkey after the country’s fourth-largest lender, VakifBank, ​appointed​ to its board a former Olympic wrestling star who serves as an adviser to President Recep Tayyip Erdogan and as a deputy minister for youth and sports.
For the first time in 10 monetary policy committee (MPC) meetings, Turkey’s central bank rate-setters on June 25 ​held​ off from cutting the benchmark interest rate, surprising the markets.
Ahead of the decision to leave the one-week repo rate at 8.25%, 18 out of 20 analysts polled by Bloomberg predicted more easing, with 12 pencilling in a 25bp reduction and five others a 50bp cut.
Turkey’s national lender has been lending at below its policy rate. As of June 24, the weighted average cost of central bank funding stood at 7.54%.
The Turkish lira (TRY) has looked increasingly vulnerable to a global selloff, with the central bank having delivered 1,575bp of easing in nine consecutive steps since President Recep Tayyip Erdogan in July last year fired its governor for being too slow in bringing in cuts. The aggressive easing cycle left Turkey’s inflation-adjusted rates among the lowest in the world. The lira is one of this year’s five worst performers in emerging markets with a loss of about 13% against the dollar. The lira hardly budged from around 6.85 to the USD throughout June 25.
Turkish lenders ​borrowed​ a record Turkish lira 197.9bn ($29.5bn) from the central bank on May 29​, while this year through April the monetary authority injected the equivalent of $35.5bn—or roughly 240 billion lira—into the banking system through currency swaps. It has also purchased back TRY55.8bn worth of government bonds from the secondary market since the beginning of the year, taking its securities portfolio to TRY71.9bn as of June 1. The stockpile is now equivalent to about 10% of its total assets, the biggest share since 2010, according to Bloomberg calculations.
49​ TURKEY Country Report​ July 2020 ​ ​www.intellinews.com