Page 36 - TURKRptMay20
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The formula for the new ratio is:
Assets Ratio (AR) = (Loans + (Securities x 0.75) + (Central Bank Swaps x 0.5)) / (Turkish lira (TRY) deposits + (FX Deposits x 1.25)).
Government-run Halkbank (HALKB) and Vakifbank (VAKBN) boast 117% and 120%, respectively, thanks to the higher weight of state institutions’ TRY deposits in their deposit bases, according to Seker Invest’s calculations.
Among the private deposit banks, Yapi Kredi Bank (YKBNK) stands out with 106% vs. the private banks’ average of 101% thanks to its rather greater percentage of TRY deposits in total deposits.
Akbank (AKBNK) comes out less favourably due to the FX weight in its total deposits, according to Seker.
A Turkish banking analyst told Reuters that the asset ratio was hard to assess because banks do not disclose their swap volumes. “Only banks know this and they will report to the banking watchdog from now on,” the analyst said.
“This is a worrying development for institutions holding stocks and one of the reasons I've been very circumspect on the bank sector for a while. TRY can only head in one direction, especially with another hugely inappropriate rate cut looming [on Wednesday April 22] when 50bp will be added to Turkey's negative real return,” Julian Rimmer of Investec said on April 20 in a note to investors.
Some unnamed people with knowledge of the matter told Bloomberg on April 20 that the government would inject money into state banks. When and how much were not clear, they said.
The government last year injected some money into the state banks from the unemployment fund.
“The primary duty of the banks is to transfer deposits collected from our citizens and companies to the real economy by giving credit. However, we have seen that some banks prefer to direct their resources to money markets and foreign derivatives markets instead of performing this basic function,” BDDK chairman Mehmet Ali Akben said.
Akben was also cited as saying that, although the BDDK in April told lenders to ensure demands for loans were met and restrictions on credit were eased, “in the past three weeks we found that there were banks that did not comply with this recommendation”.
36 TURKEY Country Report May 2020 www.intellinews.com
