BCN-15 Fitch downgrades 4 Turkish banks over increased risks

ZCZC

BCN-15

TURKEY-ECONOMY-FOREX-BANKING

Fitch downgrades 4 Turkish banks over increased risks

ANKARA, Sept 12, 2018 (BSS/AFP) – The Fitch ratings agency on Tuesday
downgraded its assessment of four Turkish banks due to increased risks after
the lira’s slump and higher chances of a “hard landing” for the Turkish
economy.

Fitch said the downgrade affected Anadolubank, Fibabanka (Fiba), Sekerbank
and Odeabank.

The move comes after ratings agency Moody’s last month downgraded its
credit rating on 20 Turkish financial institutions over the increased risk of
a “downside funding scenario”.

Fitch said its downgrades reflected the “increased risks to the banks’
performance, asset quality, capitalisation, liquidity and funding profiles
following the recent period of market volatility”.

The downgrades take into account “the increased risk of a hard landing”,
Fitch added.

The agency said the move took into account the “deterioration” in investor
sentiment, noting risks to financial stability that “remain significant given
unpredictability in the policy framework and Turkey’s large external
financing requirements”.

Fitch downgraded Anadolubank and Fibabanka to B+ from BB-, Sekerbank to B
from B+ and Odeabank (Odea) to B from BB-.

Moody’s, along with fellow ratings agency Standard and Poor’s, had cut the
debt rating of the Turkish government deeper into junk on similar concerns
last month.

Turkey’s economy growth slowed to 5.2 percent in the three months through
June, official data showed on Monday, down from 7.3 percent growth in the
first quarter.

Concerns remain over the health of the Turkish economy and the direction
of monetary policy under President Recep Tayyip Erdogan.

US sanctions against two Turkish ministers last month after a bitter spat
between the NATO allies as well as fears over Erdogan’s choice of his son-in-
law as finance minister led to a drastic fall in the lira against the US
dollar.

Despite the currency crisis and high inflation, the nominally independent
central bank has not raised interest rates with analysts accusing Erdogan of
exerting pressure.

Erdogan has previously said interest rates are “the mother and father of
all evil”, and he has gone against economic orthodoxy arguing that high rates
cause high inflation.

But the bank said last week it would make an adjustment at the next
meeting of the monetary policy committee on Thursday.

BSS/AFP/HR/0940