Page 34 - bne magazine September 2020 russia melting

34 I Southeast Europe bne September 2020
TURKEY INSIGHT:
Hobbling banks introduce fees on physical FX withdrawals
Akin Nazli in Belgrade
August 13 proved to be another day during which the Turkish
lira lurched towards the record low set at the end of last week as market players looked out for any telling market signs that could deliver the straw that breaks the camel's back.
Reuters reported that Turkish banks have started charging fees on FX cash withdrawals since the central bank permitted such commissions just over a week ago.
Government-run Ziraat Bank charges
a 0.03% commission for such withdrawals above $3,000 while private lender Garanti BBVA now requires
a 0.015% fee for those above $20,000.
Banks lobbied the central bank for three to four months to allow withdrawal commissions on physical FX, citing
hard currency shortages, BloombergHT reported.
www.bne.eu
Banks’ physical FX costs have risen due to shrinking tourism receipts and contracted border trade amid the coronavirus (COVID-19) crisis, with lenders having to apply to the central bank at home or foreign banks such as Bank of America and Credit Suisse to meet their foreign exchange cash needs, high-ranking bankers told the publication.
FX deposits at Turkish banks rose by $6.5bn w/w to a fresh record of $244bn as of August 7 from $237bn as of July 30. Residents’ FX deposits also rose by $6.6bn w/w to $220bn as of August 7. Portfolio outflows also continued, with a net $708mn finding the exit in the week ending August 7.
Turks pay a 1% Tobin Tax when they buy FX or gold via the banking system, while they also face a one-day settlement delay on individual purchases of more than $100,000 in FX.
The Tobin Tax was scrapped for foreign financial institutions.
Meanwhile, the Turkish banking industry’s growing infamy is showing through in debt markets abroad. Turkish corporate bonds worth $2.2bn were trading at distressed levels, with yields on debt sold by leading Turkish private lenders Isbank, Garanti BBVA and Akbank now more than 1,000bp above US Treasuries, Bloomberg reported on August 12 in a story entitled “Turkish Bank Bonds Trading in Distress Defy Erdogan’s Optimism”.
When securities of company debt with a spread above 800bp spread are added, the figure rises to $5.3bn, Bloomberg noted.
On August 4, Moody’s Investors Service said that it has affirmed Lebanon-based the long-term deposit ratings of Bank Audi’s Turkish unit, Odeabank, at Caa1 with a negative outlook.