Turkish banking regulator says sector not vulnerable to loss in lira’s value

ANKARA - Anadolu Agency

The head of Turkey’s banking watchdog, the Banking Regulation and Supervision Agency (BDDK), said on Aug. 19 the Turkish banking sector was solid.

Speaking to Anadolu Agency’s Finance Desk in Ankara, BDDK President Mehmet Ali Akben said Turkish banks were not vulnerable to the effects of the depreciation of the Turkish Lira, which hit a historic low of about 2.91 against the dollar on Aug. 19.

On the contrary, the Turkish banking market was expanding, Akben pointed out.

“Some small banks in Turkey want to grow by making domestic acquisitions,” he said.

“Meanwhile, banks from some countries that have not yet entered our market are working on this and some seriously want to enter. When they meet the conditions, we are ready to open our market to them,” Akben said.

“Turkey is one of the rare countries in the world which is not recapitalizing its banks. In many countries, governments are forced to recapitalize banks, but Turkey does not have this problem,” he said, adding, “We do not expect that to happen.”

“Deposits in Turkish banks were at $63 billion during the banking crisis in 2001. Currently, we’re talking about 1.2 trillion Turkish liras [$415 billion] deposits in banks,” he added.

Akben also said his agency’s decision to seize Islamic lender Bank Asya on May 29 was within the framework of the law.

“This was carried out within the framework of the law. The same practice can be applied to any bank in the sector. The requested documentation has still not been supplied,” he said.

Akben added the current market share of participation banks (Islamic banking) in Turkey was 5 to 6 percent. 

“It is not sufficient for Turkey. Participation banks aim to reach a 20 percent market share,” he said.