Turkey Tells Its Banks to Fix Their $36 Billion-Debt Problem
Turkey Tells Its Banks to Fix Their $36 Billion-Debt Problem
(Bloomberg) -- Turkey is leaving banks to sort out the restructuring of debt by themselves.
With half of 400 billion lira ($72 billion) of troubled loans in the country already reorganized, the government won’t cover any losses incurred from bad loans, Treasury and Finance Minister Berat Albayrak told reporters in the capital, Ankara. The economy will be better off once the balance has been dealt with, he said.
“The level of success depends on them,” the minister said. “Some say ‘government should cover losses’ -- that won’t happen. The banking sector should not take the easy way.”
The comments come as the government works on legislation to facilitate restructuring negotiations between lenders and borrowers and as the economy struggles to gain momentum after a recession. President Recep Tayyip Erdogan’s administration is seeking to stoke lending even as non-performing loans increase and profit across the industry declines.
The construction industry, which suffers from a large number of unsold homes as consumption stalls, isn’t posing a “systemic” risk to banks, Albayrak said. The government has no plans to rescue businesses in the building or real estate industries, but is “closely monitoring them,” he said.
To contact the reporters on this story: Cagan Koc in Istanbul at ckoc2@bloomberg.net;Ercan Ersoy in Istanbul at eersoy@bloomberg.net
To contact the editors responsible for this story: Stefania Bianchi at sbianchi10@bloomberg.net, ;Onur Ant at oant@bloomberg.net, Vernon Wessels, Paul Abelsky
©2019 Bloomberg L.P.
