Fitch downgrades four Turkish banks over increased risks

LONDON

Fitch has downgraded its assessment of four Turkish banks on Sept. 11 due to increased risks to the banks’ performance following the recent market volatility and higher chances of a “hard landing” for the Turkish economy.

Fitch downgraded Anadolubank and Fibabanka to B+ from BB-, Şekerbank to B from B+ and Odeabank (Odea) to B from BB-.

“The downgrades reflect increased risks to the banks’ performance, asset quality, capitalization, liquidity and funding profiles following the recent period of market volatility and take into account the increased risk of a hard landing for the economy and deterioration in investor sentiment. Risks to financial stability remain significant given unpredictability in the policy framework and Turkey’s large external financing requirements,” Fitch said in a statement on Tuesday.

The banks’ long-term IDRs have also been removed from Rating Watch Negative (RWN) and have been assigned negative outlooks.

This reflects “the potential for further deterioration in the operating environment, which could place greater pressure on the banks’ financial metrics,” according to the statement.

The move comes after ratings agency Moody’s downgraded its credit rating last month on 20 Turkish financial institutions over the increased risk of a “downside funding scenario.”