Turkey

Turkey’s finance minister said on Monday that steps taken by the government would give banks a “clean slate” to begin lending again, but bankers and analysts said Ankara needed to do more to understand the extent of the mess and to finally clear it up, Reuters reported. Two senior bankers said that big lenders may not completely abide Ankara’s most aggressive move so far: a directive two weeks ago for banks to reclassify as non-performing loans (NPLs) some 46 billion lira ($8.2 billion) in debt.

The IMF sharply increased its forecast for Turkey’s economic growth this year but warned the prospects of a sustainable recovery from last year’s currency crisis have dimmed, the Financial Times reported. In a concluding statement on Monday published after an annual visit by IMF staff, the fund revised its forecast for full-year GDP growth in 2019 from -2.5 per cent to 0.25 per cent. “Growth has rebounded, aided by policy stimulus and favourable market conditions, following the sharp lira depreciation and associated recession in late-2018,” it said.

Turkey forced banks to take losses on $8 billion in bad loans this week to kick-start lending and boost its economic recovery after losing patience with them, bankers, senior government officials and industry advisers told Reuters. Ankara’s most aggressive move yet to cure a hangover from Turkey’s 2018 currency crisis has left banks scrambling to meet a year-end deadline to restructure loans or ready them for sale, Reuters reported.

A group of Turkish banks hired Morgan Stanley as financial adviser to sell their 55% stake in the country’s largest phone company, Turk Telekomunikasyon AS, Bloomberg News reported. The carrier’s shares rose more than 4%. The three banks -- Turkiye Is Bankasi AS, Akbank TAS and Turkiye Garanti Bankasi AS -- took control of Turk Telekom in December, setting it up for a likely sale after previous owner Otas defaulted on a multi-billion-dollar loan.

Turkey took its boldest step yet to clean up the growing pile of bad debt held by banks, Bloomberg News reported. The Banking Regulation and Supervision Agency, or BDDK, told lenders for the first time to reclassify 46 billion liras ($8.1 billion) of loans as non-performing by the end of the year and set aside enough provisions to cover them, it said in a statement late Tuesday. The reclassification of the loans, mostly to construction and energy firms, will bring the industry’s non-performing loan ratio to 6.3% this year, slightly higher than the watchdog’s December prediction of 6%.

The Turkish Aeronautical Association (THK) said on Friday that its bank debt amounting to 1.4 billion lira ($245.36 million) is being restructured upon instructions from President Tayyip Erdogan, Reuters reported. THK Chairman Bertan Nogaylaroglu said on the association’s website that its debt owed to state lender Vakifbank was restructured on Friday and the rest of the 1.4 billion lira debt would be restructured within a week.

Turkey may have the wrong cure for what really ails its economy. President Recep Tayyip Erdogan’s government has rolled out measures to break credit bottlenecks still holding back growth after recession, in the hope of generating the kind of spark that produced double-digit economic leaps only a few years ago. But this time is proving to be different, Bloomberg News reported. Lending remains subdued as banks fearing for their asset quality tread carefully after last year’s currency shock.

Turkish billionaire Ferit Sahenk is ready to sell more of his assets as part of an ongoing effort to satisfy a debt-restructuring deal struck with banks earlier this year, Bloomberg News reported. Sahenk’s Dogus Holding AS could dispose of investments worth as much as 800 million euros ($890 million), he said in an interview in Istanbul late on Monday.

The chronically lossmaking Scunthorpe steelworks, which three years ago renamed itself British Steel, is to get a new, Turkish, owner, The Times reported. The UK government, which marshalled British Steel into insolvency earlier this summer, the latest failure of the hapless Meyohas brothers who run Greybull Capital, has named Ataer Holding as the preferred bidder for the sprawling Scunthorpe plant. Ataer is an arm of Oyak, Turkey’s military pension fund, and also owns nearly about 49 per cent of Turkey’s biggest steel group, Erdemir.

A rescue deal for British Steel is in sight after a Turkish investment group owned by the country’s military pension fund reached a provisional agreement for a takeover of the stricken company, The Irish Times reported. Under the terms of the agreement announced on Friday, Ataer Holding was named as the preferred bidder for Britain’s second-largest steelmaker. It now has two months to conduct due diligence and complete the paperwork.