The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2022 Euromoney, a part of the Euromoney Institutional Investor PLC.
BANKING

Lira rout sharpens Turkish bank risks

Banks and corporates have continued to ratchet up foreign-currency borrowing over the past two years. The big lira sell off this summer amid a local political crisis highlights how much higher funding costs could bring trouble for Turkish banks.

RTX1FJ5X 600px

Supporters of the pro-Kurdish Peoples' Democratic Party (HDP) light flares as they celebrate along a street after the parliamentary election in Diyarbakir, Turkey

With the Justice and Development Party (AKP) in turmoil, and a flare-up in violence in the Kurdish southeast, Turkey increasingly looks like a country in crisis. But another election, after president Recep Tayyip Erdogan’s party fell short of a majority in elections this June, and the prospect of continued political instability, is just one of a confluence of difficulties for local banks and borrowers.

“It’s a very challenging environment,” says Serhat Gurleyen, research director at Is Yatirim, the investment arm of Turkey’s biggest private bank by assets, speaking in late August. “There are worries about the normalization of US monetary policy. Europe is struggling with secular stagnation. You have Isis in Iraq, our second biggest export market. To the north, Russia is in recession. And as if all that was not enough, we don’t have a government.”

Lower oil prices, as Gurleyen says, should alleviate external imbalances. But some of Turkey’s biggest fonts of trade, tourism and investment – the Gulf, and Russia – are oil exporters.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree