Turkey to tackle bad loan problem
According to Bloomberg, the Turkish government is determinded to assist banks to tackle their bad loan problem which was caused by the lira’s plunge and soaring interest rates. The regime considers capital injections and even the establishment of a bad bank. The measures could be announced this Thursday, according to sources in Turkey.
“The creation of a so-called bad bank to absorb all of the debts, which are bound to start non-performing, may dilute some of the risks associated with the Turkish banking sector,” commented Julian Rimmer, a trader at Investec Bank Plc in London. “But the subsequent lack of transparency will concern bond investors and there is no way of avoiding a general decline in Turkey’s overall creditworthiness, no matter where you park the NPLs.” Bloomberg