Turkish banks eager to sell bad debts have willing buyers

Turkish banks that want to unload a growing collection of bad debts are likely to find willing buyers at the European Bank for Reconstruction and Development and at the International Finance Corporation. Banks recorded the largest increase in almost three months as the lira rose.

According to institutional officials, the EBRD and IFC, as the name of the private sector investment arm of the World Bank Group, would be willing to make these investments as part of their overall strategy to support banks. in the countries in which they operate.

The fall of the lira in the second half of 2018 and the recession of the largest economy in the Middle East prevent companies from repaying their debts, especially in foreign currency, which leads to a deterioration in the quality of banks' badets. The Turkish banking regulatory body estimates that the ratio of non-performing loans / total loans could reach 6% this year, against 4.1% at the end of February.

"The EBRD is interested in deepening its work on the NPL space in Turkey," said Arvid Tuerkner, general director of the institution for Turkey, in an e-mail response to questions. "We have not yet offered to invest in an NPL vehicle or special vehicle, but we would consider it and be ready to commit if the structure meets our commercial and healthy banking requirements."

& # 39; Positive impact & # 39;

The 13-member Borsa Istanbul Banks Index expanded towards the end of the day to close 6% higher, the largest increase in a day since 16 January. The lira extended gains after a two-day defeat, strengthening 0.9% against the dollar at 5.5762 at 18.53 local time. Enver Erkan, an badyst at GCM Securities, said that these gains were a result of "the positive impact of the news flow" of the EBRD's and IFC's willingness to intervene.

Turkish lenders are likely to sell about 10 billion lira ($ 1.8 billion) in bad debt portfolios this year, a 33 percent increase from 2018, said Hilmi Guvenal, managing director of Hayat Varlik Yonetimi AS. in which the EBRD holds a 12% stake. . Banks could receive up to 500 million lire this year through the sale of PNP to badet managers such as Hayat Varlik, he said in an interview on February 26. There are 19 troubled home loan buyers in Turkey.

"Supporting an orderly restructuring of problem loans by the financial sector is part of IFC's strategy in Turkey," said Arnaud Dupoizat, head of Turkey in the country. "Private sector fundraising to resolve NPLs helps to increase banks' liquidity, frees up capital for new loans, and supports the entire economy, especially small and medium-sized businesses."

The London-based EBRD, which launched in 2017 a 300 million euros ($ 337 million) aid program aimed at reducing borrowing risks, has up to now financed a total of 63.3 million euros in equity and debt securities for the purchase of sound receivables by badet managers in Greece, Turkey and the country. Bulgaria, according to a statement sent by email. IFC, which has committed $ 5.4 billion in troubled badets around the world, has invested in a restructuring fund for Central and Eastern Europe and has acquired non-performing loan portfolios, particularly in Bulgaria, Montenegro, Romania and Greece.

(Udpates with the course of action, read in the first paragraph, the commentary of the fifth badyst.)