Can Turkish banks avoid economic reality?
As average prices of Turkish banks linger close to book value, only the desperate would sell off stakes in them. Foreign financial institutions spent roughly $15 billion on Turkish bank holdings during the years running up to the sub-prime crisis. They paid up to five times book value. But desperation is no longer uncommon, even among western banks.
Marriages between Turkish and foreign lenders have become less convenient. For the Turkish side, some of the foreigners’ know-how has been gained and, one year after the collapse of Lehman Brothers, the weaker foreign partners might seem a liability. The credit crunch has disappointed hopes that foreign partnerships would mean extra capital inflows and relief to the overly short maturity of much of Turkey’s...
