Turkey experienced a very serious Banking crisis in 2000. In response to the crisis and to prevent further crises, the government established the Banking Regulation and Supervision Agency. They have regulated and supervised the banks very effectively since then.
We have 83 banks in Turkey. A few of them are public banks, and the rest are private. Although public banks are few, they have a combined market share of approximately 50%. Private Banks are generally smaller but managed well, because almost 50% of their shareholders are foreigners and they transfer a lot of know-how in addition to equity. Combined with the close supervision of the Banking Regulation and Supervision Agency, the high Average Capital Adequacy ratio of the entire banking system makes our Banking system very sound. Our Banking industry has a much higher Capital Adequacy ratio of 16% than recommended in Basel 3 as 9% or required by BRSA as 11%.
Our banking system is very sound even after the coup attempt. Our banks were open for business, thanks to the high liquidity. They could roll over their long term loans from the international capital market very easily, even after the coup attempt on July 15th.
The Central Bank regulates the Banking industry using monetary policy. The Central Bank convenes the Monetary Policy Meeting every month to regulate the industry. The Central Bank decreased the interest rates in their last three of the four meetings to provide more liquidity to the Banking industry and to support the credit expansion further. However, they didn’t decrease the interest rates last month.
Also our budget deficit is very low. Because of that we cannot say that there is a crowding out effect in our money market. So our Banking industry is capable of increasing their loans to the companies.
The BRSA is monitoring the banking industry but has not detected any problems so far.
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