Bank owners may sell stakes in Turkey

Bloomberg

refid:10956725 ilişkili resim dosyası

The businessmen should study the profitability of their companies and settle on a plan to maximize revenues "as soon as possible," Tevfik Bilgin, chief of the Banking Regulation and Supervision Agency, or BDDK, said Thursday.

"They should dismiss the idea that they can wait, thinking that the value of their banks may increase," he said.

"Business plans should be implemented right away. If they dither, then their situation could get worse."

Bilgin said the watchdog is keeping a close eye on banks’ activities. He declined to say which lenders, if any, might need to be sold. Turkey spent billions of dollars seizing lenders hit by a financial crisis in 2001 after owners used their capital to fund other businesses. The government is negotiating a new loan accord with the International Monetary Fund, or IMF, to help strengthen the economy and free up lending by banks.

Non-performing loans in the Turkish banking industry rose to 3.7 percent of total lending at the end of January from 3.4 percent last year, Bilgin said.

"The most significant risk items we’re monitoring this year are non-performing loans," Bilgin said. "We expect the proportion to increase, but it’s really not clear how big that increase will be."

Bad loans on credit cards were 7 percent of total credit card debt, he said.

Turkish banks have strengthened their balance sheets over the past seven years, posting record profits as the economy grew for 27 straight quarters. All of Turkey’s lenders are adequately capitalized, Bilgin added.

Profits in the banking industry fell about 10 percent last year from 15 billion Turkish Liras ($9.1 billion) in 2007 and are expected to decline further this year, he said.