A Turkish regulator on Tuesday told banks to write off 46 billion lira ($8.1 bil...
ISTANBUL - A Turkish regulator on Tuesday told banks to write off 46 billion lira of loans by year end and set aside loss reserves, one of Ankara’s most aggressive moves to clean up the worst remnants of last year’s currency crisis.
The regulation is aimed mostly at loans made to the hard-hit energy and construction sectors, and is expected to raise banks’ non-performing loan ratio to 6.3% from 4.6%, the BDDK banking watchdog said. The Turkish lira shed nearly 30% against the dollar last year and is down another 7.8% this year, even as prices and monetary policy have begun to ease.
A person familiar with the Treasury ministry’s plans said the government has since grown impatient with the lack of progress on bad debt, clogged credit channels, and an unwillingness by banks to write off loans.The BDDK on Tuesday said Turkish banks’ capital adequacy ratio, or CAR, would slip by 50 basis points to a still high 17.7%, due in part to the dictate on non-performing loans, according to what it called a “prudent” analysis based on July data.
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