Mar 13 2019

Turkish banking stocks gain after measure to bolster deposits

Turkish banking stocks rose in Istanbul after the capital markets regulator ordered money-market funds to invest at least half their holdings in local deposit accounts.

The main index of banking shares climbed 1.3 percent to 136.154,38 points at 3:43 p.m. in Istanbul. The BIST-100, which includes a wider spectrum of Turkey’s biggest firms, fell 0.2 percent to 101,552 points.

Money market funds were previously required to keep a maximum of 10 percent of their holdings in deposit accounts. But a rush to invest in the instruments, spurred on by rampant inflation that is eating into earnings from savings accounts, prompted the regulator to act late on Tuesday.

Turkish banks have become a focus of investor concern after a currency crisis ripped through the economy last year, forcing many businesses into bankruptcy and causing others to default on their borrowing, or restructure their debt. Some analysts say the government should announce a plan to recapitalise the nation’s banks, perhaps with the help of the International Monetary Fund, despite local regulators giving them a clean bill of health.

The size of money-market funds has more than doubled to 28.5 billion liras ($5.2 billion) since January, Bloomberg reported on Wednesday citing data from the Istanbul Clearing, Settlement and Custody Bank Inc. The funds return about 21 percent compared with an average of 19 percent from one-month deposit accounts, the news wire said.

https://www.bloomberg.com/news/articles/2019-03-13/turkey-muffles-money-market-funds-as-yield-chase-chokes-deposits