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of 2019, with European banks accounting for the lion’s share, according to data​ from the Bank for International Settlements.
The shares of Spain’s Banco Bilbao Vizcaya Argentaria (BBVA), which owns an almost 50% stake in Turkiye Garanti Bankasi, Turkey’s second-largest private bank, are down more than 50% in the year so far.
Shares in BNP Paribas, another European bank with a Turkish unit, have also been under pressure.
6.1.4 ​Banks news
6.2 ​Central Bank policy rate
The combined assets of Turkey’s all six Islamic banks, namely Kuveyt Turk, Albaraka, Turkiye Finans, Ziraat Katilim, Vakif Katilim and Emlak Katilim, ​rose by 52% y/y to reach TRY364bn at end-June.
Turkey’s central bank ​confounded​ the markets on September 24 by hiking its main policy rate (one-week repo) by 200bp to 10.25% in an unexpected move.
The move also pushed up the overnight lending rate and late liquidity lending rate within the national lender’s “corridor policy” by 200bp to 11.75% and 13.25%, respectively. Official annual inflation stands at 11.7%.
“Two policy reversals by #Turkey in 2 days: monetary policy and maritime boundaries [Turkey has toned down the aggression in its dispute with Greece and Cyprus over gas exploration zones]. Shows the extreme risks entailed by outlandish economic concepts and disruptive foreign policy. Let’s see the next steps,” Marc Pierini of Carnegie Europe wrote on Twitter.
Yes, we can add the rate hike to the long list of famous U-turns made by Turkish President Recep Tayyip Erdogan, but it is in actuality not a rate hike.
“More of a ‘catch-up’ rather than taking the initiative to start with a clean sheet,” Emre Akcakmak of EastCapital tweeted.
As of September 23, the central bank’s weighted average cost of funding (WACF) was at 10.65%, 40bp above the new benchmark policy rate. Overall funding stock, excluding USD-TRY swaps, stood at TRY262bn while TRY195bn, or 74%, was provided through traditional repo auctions.
36​ TURKEY Country Report​ October 2020 ​ ​www.intellinews.com