Turkey's authorities are working on possible relief measures for banks caught between a currency crash and existing capital requirements, including a potential capital injection for state banks, according to three sources familiar with discussions.
The moves are meant to stabilise banks and position state lenders especially to boost lending in line with a series of unorthodox interest-rate cuts by the central bank that triggered the currency sell-off.
The lira has lost 55% of its value against the dollar this year, including nearly 40% in the last month alone. The sharp depreciation has sent the lira-equivalent value of foreign currency loans soaring, putting pressure on CARs, which are measured in local currency.Analysts have warned that strains have grown in the banking sector, in which state players have become more dominant in recent years.
"When we start to consider the impact of the lira depreciation and the impact of the asset deterioration the ratio looks much weaker than what it looks like initially," she said in a webcast on Thursday. BDDK data from before the sell-off gained steam in October shows the sector's CAR was 17%, and 15% for deposit-taking public banks.
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