Turkey’s BDDK banking regulator said on Saturday it was setting a minimum level for banks’ loan ratios to promote lending and protect the economy from the fallout of the novel coronavirus pandemic.
From next month, the sum of a bank’s loans, 75% of its securities portfolio, and 50% of its central bank swap balances must exceed the sum of its Turkish lira deposits and 125% of foreign currency deposits, according to the new regulation.
For banks that follow Islamic banking regulations, known in Turkey as participation banks, the loans, securities, and swaps should equal at least 80% of the deposits.
BDDK chairman Mehmet Ali Akben said the move would address difficulties which he told the real sector faced accessing credit as the economy is hit by the impact of shutdowns aimed at curbing the spread of the coronavirus.
“The primary duty of the banks is to transfer deposits collected from our citizens and companies to the real economy by giving credit,” Akben told state-owned Anadolu news agency.
“However, we have seen that some banks prefer to direct their resources to money markets and foreign derivatives markets instead of performing this basic function.”
Akben said the regulator had told banks last month to make sure demands for loans were met, and restrictions on credit were eased. “In the past three weeks, we found that there were banks that did not comply with this recommendation,” he said.
He did not identify the banks in question, but Finance Minister Berat Albayrak has said private banks should do more to help customers hurt by the coronavirus outbreak.
A Turkish banking analyst said the asset ratio was hard to assess because banks do not disclose their swap volumes. “Only banks know this, and they will report to the banking watchdog from now on,” the analyst said.