Page 16 - TURKRptOct19

Around half of $8.1bn of loans Turkish officials want reclassifying as NPLs ‘come from energy, construction sectors’. The head of Turkey’s banking association on September 18 disclosed that around half of the Turkish lira (TRY) 46bn ($8.1bn) of loans that officials have instructed lenders to reclassify as non-performing come from the energy and construction sectors.
Huseyin Aydin said during an interview with broadcaster NTV that banks would need to provision TRY 12bn for the new non-performing loans, or NPLs.
Most of the loans to be categorised as NPLs were in foreign currencies and they did not include debt belonging to state-run firms, he added.
Aydin also noted that in a worst case scenario up to 20% of banks’ Tier 2 loans would be reclassified as NPLs.
Turkey’s top banks have reportedly been in talks on creating an asset management company (AMC) to which they would transfer their higher- quality NPLs.
The move is seen as one possible solution to the country’s bad debt problem which has soared since the lira crisis of summer 2018.
Both state and private banks have discussed the possible AMC in recent weeks, according to two people familiar with discussions quoted by Reuters on September 19. The sources referred to by the news agency—a senior banker and a bank adviser who both requested anonymity—said talks were ongoing.
The AMC is a possible alternative to an effort to establish a fund-of-funds that would house tens of billions of dollars of bad construction and energy sector debt, they said.
Turkey’s Bereket Enerji Uretim has ‘mandated banks including Goldman Sachs for renewable energy unit IPO’. Istanbul-based power-grid operator Bereket Enerji Uretim has mandated banks including Goldman Sachs Group to help sell shares in its renewable energy unit, Bloomberg cited two people with knowledge of the matter as saying on September 25.
JPMorgan Chase & Co. and Citigroup have also been hired to advise on the group’s initial public offering (IPO), the sources added, with one person saying the IPO may value the business at $1bn.
Bereket apparently plans to sell shares in the first half of 2020 if appetite for Turkish assets is strong. Listings in Turkey have been very few and far between over the past year with the country experiencing a currency crisis, recession and climbing interest rates, although an upturn is now in evidence.
Turkey’s economic woes have also forced Turkish companies to try and restructure debt. Bereket Enerji is one of these countries, with the group having agreed with lenders to extend maturities on about $5bn of loans. It is one of the largest restructurings the country has seen.
As Turkey’s economy recovers, more IPOs on the Istanbul stock exchange can be expected. The Turkish subsidiary of Azerbaijani state oil and gas company Socar and Istanbul-based power plant company Karpowership have already lined up bourse debuts.
Bereket Enerji’s renewable business has 28 power plants with a total capacity of 1,106 megawatts, around half the group’s total power capacity, according to its website. Bereket also has two electricity distribution networks in western Turkey serving nearly 5mn people.
The business has around $200mn of Ebitda as its power sales are guaranteed under a government incentive plan that boosts renewable power, the people
16 TURKEY Country Report October 2019 www.intellinews.com