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as FX deposits were up by $3bn and lenders retained access to foreign funding markets. External debt numbers for end-June will only be available in late August. In another observation, Fitch said it believed last week’s firing of the central bank governor by presidential decree on July 6 could jeopardise the inflow of foreign capital needed to meet Turkey's large external financing requirement and make it more challenging for banks to refinance maturing facilities.
Emirates NBD, Dubai’s largest lender, on July 31 announced the completion of its acquisition of 99.85% of Turkey’s Denizbank from Russia’s Sberbank. In May 2018, Emirates NBD agreed to buy the Turkish lender for $3.2bn, making the deal Turkey’s biggest banking takeover since 2012. In April this year, Emirates NBD signed an adjusted deal to acquire Sberbank’s wholly-owned Turkish unit. The changed deal was set to save it as much as $700mn. The revised price tag of Turkish lira (TRY) 15.48bn ($2.7bn) was agreed to take into account the severe depreciation of the lira last year during the currency crisis that hit Turkey. On a related note, Emirates NBD Group CEO Shayne Nelson said on July 31 that the bank would support Denizbank if it needed a capital increase. With its TRY147bn of assets, Denizbank is the 10th largest lender in the Turkish banking system. It had 710 branches and more than 12,000 employees as of end-March. Turkey’s banking sector has become less profitable over the past year.
8.2 Central Bank policy rate
Turkish President Recep Tayyip Erdogan has sacked the central bank governor Murat Cetinkaya and at the same time appointed the deputy governor of the central bank Murat Uysal as the new governor. The new governor Uysal served as Treasury head at state-owned lender Halkbank from 2011 to 2016 and he was appointed as deputy central bank governor in 2016, according to a statement by the central bank.
An unprecedented move. Erdogan has actually no legal power to sack the central bank governor and his reference to some articles of his own presidential decrees received criticism. However, there is currently no legal ground or any other kind of power in Turkey to prevent Erdogan's decrees. It was the first time in Turkish history that a central bank governor was sacked by the government, Ugur Gurses, a former central bank official, wrote in an op-ed for DW Turkish. Back in January 1981, central bank governor Ismail Hakki Aydogdu was compelled to resign from his post by political pressure, a few months after the September 12, 1980 military coup d'etat, but dismissal of a central bank governor directly by the government has never been observed before Cetinkaya. Although Cetinkaya was thought to be in harmony with the government, some unnamed government officials told Reuters that Erdogan
47 TURKEY Country Report August 2019 www.intellinews.com