Credit rating agency Fitch downgrades 20 Turkish banks

Credit rating agency Fitch downgraded 20 Turkish banks and warned against soaring risks it said the country’s banking sector faces due to the recent currency crisis, the Financial Times reported.  

Turkey’s lenders are more likely to face pressure on their performance, asset quality, capitalisation and liquidity and funding profiles, Fitch said, citing the depreciation of the lira by almost 40 percent since the start of the year, a recent spike in the interest rates and an expected slowdown in growth. 

In addition to downgrading the long-term foreign-currency issuer default ratings of 20 Turkish banks, Fitch also lowered 12 banks’ viability rating, which measures a bank’s “intrinsic creditworthiness”. The viability rating was lowered from BB- to B+ for all 12 banks, including state-owned Vakıfbank, Halkbank and Ziraat Bankası and major players like Akbank, İş Bankası, Garanti and Yapı Kredi. 

“Risks to financial stability remain significant, given potential unpredictability in the policy framework and Turkey’s large external financing requirements,” Fitch said.

Turkey’s new economic programme announced last month promises a full assessment of banks’ balance sheets and financial help for lenders in need.