Turkey moves to ward off financial crisis

By BLOOMBERG

ANKARA • Turkey took its boldest steps yet to try to ward off a financial crisis by making it harder for traders to bet against the battered lira and easing rules on restructuring troubled loans that have already topped US$20 billion (RM82.09 billion).

As President Recep Tayyip Erdogan (picture) intensified a diplomatic feud with his US counterpart Donald Trump with a spate of new import tariffs, the nation’s banking regulator published new rules that have so far succeeded at lifting the lira off record lows. Investors continued to demand higher interest rates.

The nation’s banking regulator issued back-to-back statements starting late on Tuesday to try to ward off a crisis. The steps spurred a 3% gain in the lira to 6.1648 per dollar by 1:56pm yesterday in Istanbul, after an 8.4% advance on Tuesday.

The regulator gave banks more flexibility in dealing with Turkish companies and individuals who aren’t able to make debt payments. Banks can extend the maturities, refinance loans, extend new debt to help troubled companies and seek new collateral.

They can also demand debtors sell assets to repay loans. Overdue loans can now be restructured within two years from the day a framework agreement is signed.

The regulator said until markets “normalise”, it would temporarily stop applying the effect of day-to-day losses on the securities held by banks to their capital adequacy ratios.

It limited the amount of currency swap transactions banks can participate in by half to 25% of shareholder equity, after imposing a 50% limit on Monday from none earlier.