Turkish deposit rates skyrocket as banks compete for funding
Turkey’s largest banks are offering their customers returns of more than 25 percent annually on deposits as they seek to fund loans and protect clients from surging inflation.
In a new campaign to atract clients, Turkish bank Garanti, owned by Spain’s BBVA, is offering customers 26.5 percent per year to place at least 500,000 liras in a timed deposit account for between 366 and 370 days. Yapi Kredi, owned by Italian bank UniCredit, says it will pay between 23.25 percent and 26 percent in interest on deposits from 1,000 liras to 3,000,000 liras locked in for between 32 and 730 days.
Akbank, controlled by Turkish conglomerate Sabanci Holding, is offering 23 percent interest on deposits of 1,000 liras or more.
Turkish banks are seeing growth in lira deposits stagnate or decline in recent weeks after the currency lost 40 percent against the dollar this year and inflation climbed to 17.9 percent, eroding spending power. Price rises are set to accelerate further in September and October. The government estimates that the rate will be 20.8 percent by the end of the year.
Banks in Turkey are also having to contend with a jump in troubled loans brought on by the lira's collapse in an economy that's entering a period of negative growth.