Page 55 - TURKRptJul20

There was concern that the Erdogan administration would eventually find itself having to pay hyper borrowing rates by killing its domestic borrowing market. On some days, not even a single transaction occurs in benchmark bonds.
However, no one expected that the government would venture into a big crackdown on private lenders and unflinchingly ordering the central bank to conduct unprecedented quantitative easing.
Ultimately, after the BDDK on April 17 announced an initial asset ratio applying to the banks, the 2-year benchmark yield fell to 9.5% on April 18 at the market close from 12.1% the day before, BloombergHT ​noted​.
And let’s say, for the sake of comparisons, inflation in Turkey is genuinely only hovering above 10% (and that’s a big “let’s say” as this week has seen former ally and economy czar of President Recep Tayyip Erdogan, the famously cautious Ali Babacan, become the last person on the planet to publicly question the reliability of the data put out by official statistical institute TUIK).
As of June 10 (Investing.com)
Meanwhile, the Turkish banking industry’s combined securities portfolio rose by 17% to TRY909bn as of June 6 from TRY777bn as of April 17.
The highest growth was observed in the foreign-controlled lenders’ securities holdings, with 33% growth to TRY210bn from TRY158bn. Such banks have so far not succumbed to extending loans to financial “zombie” companies and Turks despite all the government pressure.
It should be noted that the government still knows its limits; it is still “kindly” only imposing regulations or sending warnings to the banking sector rather than raiding headquarters in the way it does when it comes to ordinary people.
Intent on bypassing the already booked negative yields on fixed income bonds with shorter maturities, the lenders have rushed into CPI-indexed papers, according to BloombergHT.
55​ TURKEY Country Report​ July 2020 ​ ​www.intellinews.com