Concerns rising about Turkish financial system credibility, S&P says

Concerns are intensifying about the credibility of Turkey financial system because banks are being affected by recent market volatility, Standard & Poor’s said, according to Dünya newspaper.  

Political uncertainty is also concerning investors, as are the limited policy steps taken by the government to right the economy, S&P said in a report, Dünya said.

Turkey’s banking system is being weighed down by rising bad loans and requests by companies to restructure tens of billions of dollars in foreign currency debt. The borrowing has become more difficult to repay after a currency crisis last year led to losses of 28 percent for the lira against the dollar. The currency has weakened more than 10 percent this year.

The asset quality of banks is deteriorating quickly because of an economic recession, the ratings agency said. And banks’ ability to access capital markets will continue to be limited, meaning they will only be able to partially roll over short term loans due in the coming quarters, it said, according to Dünya.