Moody's downgrades 13 Turkish banks, maintains negative outlook

Credit rating agency Moody's on Tuesday downgraded the ratings of 13 banks in Turkey in a move that follows its unscheduled cutting of Turkey's sovereign rating to B2 on Sept. 11.

The agency downgraded the foreign currency long-term deposit ratings of 12 banks, the long-term counterparty risk ratings (CRR) and the long-term counterparty risk assessments (CRA) of six banks, and the long-term senior unsecured rating of one bank by one notch and the long-term foreign currency CRR of three banks by two notches, it said.

The 13 banks are: Akbank T.A.S., Alternatifbank A.S., Denizbank A.S., HSBC Bank A.S. (Turkey), QNB Finansbank A.S.,T.C. Ziraat Bankasi A.S., Turk Ekonomi Bankasi A.S., Turkiye Garanti Bankasi A.S., Turkiye Halk Bankasi A.S., Turkiye Is Bankasi A.S., Turkiye Vakiflar Bankasi T.A.O. and Yapi ve Kredi Bankasi A.S. and Export Credit Bank of Turkey A.S.

"The rating action follows Moody's downgrade of the Government of Turkey's bond rating, which also resulted in the lowering of the ceilings for foreign currency deposits to Caa1 from B3, for foreign currency bonds to B2 from B1 and, for eight banks, a lower rating uplift from government support,’’ the agency said.

Moody’s last week downgraded Turkey’s debt rating to B2, citing higher external vulnerabilities and eroding fiscal buffers in the country.

Turkey has suffered from a historically high current account deficit, which requires financing through income such as tourism revenue and inward investment, both of which have slumped this year. Meanwhile, government efforts to stimulate economic growth with cheap loans from state-run banks and tax amnesties have spurred demand for imports.