Two foreign banks stalling Turkish government’s efforts to restructure debts - columnist

Turkey’s private banks have failed in supporting the Turkish government’s efforts to clean up bad loans in the industry, columnist for Sabah newspaper Dilek Güngör said on Saturday, adding that particularly two foreign banks have been making things more difficult. 

Turkey’s banking regulator called on banks to designate 46 billion liras ($8 billion) of loans as non-performing in a decision in September designed to help clean up the industry. Bad loans have piled up in Turkey’s banking sector following a currency crisis last year, hurting profits and preventing them from lending more to the economy.

According to a government approved plan, the banks in Turkey are to facilitate debt restructuring for companies with total debts of more than 25 million liras ($4.4 million).

Güngör said while state-owned banks had eagerly supported the government’s plans, “the private banks failed completely.”

“They have resisted providing money to companies that could stay afloat by little support. They have continuously raised difficulties for debt restructuring,” she said. 

Güngör said in joint negotiations with companies, some banks had been rushing to collect their loan receivables without offering the debtors an easy way out. 

“Just think, you have a company, and when they restructure your debts, you will able to operate, you will neither layoff workers nor halt production,” Güngör said. The columnist said in debt restructuring negotiations, one or two banks had disagreed on plans approved by others in the consortium, putting companies in a difficult situation. 

“I know that two foreign banks in particular have been making all kinds of excuses to stall restructurings,” she said. 

Güngör did not mention which banks she accuses of impeding debt restructuring plans.