Agency welcomes capital increase by Denizbank

ISTANBUL

Moody’s rating agency has welcomed a plan by Denizbank, the Turkish arm of Russia’s Sberbank, to increase its capital by 1.1 billion Turkish Liras to 1.82 billion liras, due to a board decision on July 9.

“The plan is credit positive for Denizbank because once completed, which the bank expects in the third quarter, the increase will enhance its Tier 1 capital ratio by 80 basis points from 7.84 percent as of the end of the first-quarter 2015, increasing its risk absorption capacity,” Moody’s said on July 16. 

Turkey’s system-wide capital ratios have declined - with average capital adequacy at 15.3 percent on May 31, 2015, down from 16.3 percent at year-end 2014 - mainly because of the lira’s depreciation, loan books growing faster than internal capital generation and increased regulatory risk weights. 

The bank is set to raise 550 million liras from its capital reserves, as it expects another 550 million from a rights issue. 

The move requires the regulator’s approval.