Turkish banking authority reiterates call for flexibility

ISTANBUL

Turkish state-owned lenders have created an extra credit volume of 27.5 billion Turkish Liras (about $4 billion) in the last 10 days, the head of the country’s banking watchdog has said, criticizing the private banks for the contraction of their credit pool some 5 billion liras ($737.2 million) in the same period.

“Important responsibilities have fallen on our banks to minimize the impacts of the period we are going through on production and employment,” said Mehmet Ali Akben, chair of the Banking Regulation and Supervision Agency, referring to the measures of limiting social interactivity to counter the spread of coronavirus pandemic.

“We can see that public banks have successfully been carrying out credit support programs for individuals, shop owners, artisans, small-and-medium enterprises and corporations, creating a loan volume of 27.5 billion Turkish Liras in the past 10 days,” he told Anadolu Agency on April 13.

“I believe that these opportunities provided to customers in temporary liquidity needs will lower the economic and social costs of the pandemic, and also increase collection capability rate of the banks in the post-pandemic period,” he said.

“We have witnessed that the total loan volume of the private banks contracted nearly 5 billion liras in the same period. I’m inviting all the banks to act customer-oriented, keep the credit channels open and abide by the decisions taken by our agency and the sectoral associations,” he added.

Last month, Turkish state lenders - Ziraat, VakıfBank and Halkbank - announced packages to support economic activities in Turkey, following the recommendations of the Turkish Banking Association (TBB).

Three banks said that they would postpone loan repayments of individuals and firms, and also provide flexibility to their customers.

Since then, they have been providing long-term repayment deferments of up to 12 months for some sectors which were affected by the outbreak the most, particularly tourism and public transportation.

They have also opened a special credit line for the next three months to continue paying personnel salaries on the condition that these firms do not drop the number of employed staff.

Some private banks, including İşbank, vowed to follow suit in the last week of March.

The average capital adequacy ratio of the Turkish banks is 17.7 percent, well above the international standard of 8 percent and the national target of 12 percent, according to Akben.

Call from finance minister

Meanwhile, the Turkish finance minister on April 12 called on private banks to do more to help customers hurt by the economic impact of the coronavirus.

“While our state banks are standing by our citizens with all the resources they have, we are utterly saddened by the attitude of the privately held banks,” Berat Albayrak said in a video he posted on Twitter.

State-owned Ziraat Bank, Halkbank and VakifBank had allowed customers to delay payments of loan and credit card debt worth more than 60 billion liras ($9 billion), Albayrak said.

“I, once again, invite private banks to be a part of our unity and solidarity during these times with their attitude,” he said.

The Turkish government has introduced financial support for families with low income, launched a donation campaign, and offered state-guaranteed loans for companies and small businesses.