Turk banking system hit

ISTANBUL (Reuters) – The total assets of Turkey’s banking sector fell 22 percent in dollar terms to $121.278 billion in the first six months of 2001, as a financial crisis took its toll, a Turkish Bankers Association report showed. The crisis hit Turkey’s banking system in February, sending interest rates soaring and forcing the Turkish government to issue some 42,152 trillion lira ($29.5 billion) in debt to lumbering state banks and private banks it had seized. The association said in a report issued on Monday that the bailout, equivalent to more than 30 percent of 2000 gross national product (GNP), had contributed to a fall in the share of total assets and deposits held by Turkey’s top five banks, headed by state agricultural concern Ziraat Bankasi. The decline in the share of the first five largest banks both in total assets and total deposits resulted mainly from the restructuring efforts of state-owned banks, the report said. The assets of state banks fell to 26 percent of the sector’s total assets in the first half of 2000, down from 34 percent at the end of 2000. Those banks include the heavily-weighted Ziraat Bankasi, Turkey’s largest commercial bank, and Halk Bankasi, Turkey’s second largest in December but now lying fifth. On the other hand, Turkey’s biggest private banks are expanding their market stake as the crisis sparks a flight to quality and industry officials expect a healthy consolidation to continue with the entrance of foreign banks. According to figures released by the Turkish Bankers’ Association, the deposit market share of the big four private banks – Isbank, Yapi Kredi, Akbank and Garanti – rose to 29.5 percent at end-June from 25 percent at the end of last year. In the past four months, a total fresh deposit of $1.2 billion has flowed into our bank. This is the biggest market share change we have experienced in the past 10 years, Isbank general manager Ersin Ozince told Reuters in an interview. The report said the first-half net losses of Turkey’s banks increased nearly tenfold to $3.9 billion as of the end of June 2001. Failed banks seized by Turkey’s Savings and Deposits Insurance Fund (SDIF) were responsible for 91 percent of that loss, it said. Non-performing loans of those seized banks rose sharply to 145.1 percent of total loans from 70.6 percent in 2000. Not only have the original loans gone bad but the interest on them has gone bad too… Other assets shown by these banks are also shown as non-performing loans, said Farid Khan, banking analyst at Credit Lyonnais. The non-performing loans of private banks fell to 4.8 percent of total loans from 6.2 percent at the end of 2000 but those of public banks rose to 23.8 percent of total loans from 12.5 percent in the same period. Foreign currency assets held by Turkish banks totaled 43 percent of total assets in June 2001 compared to 37 percent in June 2000 as they sought shelter from a volatile lira. That was expected, there has been a massive shift to dollar deposits from Turkish lira deposits, Khan said.

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