Turkish bank employees compelled to boost lira-defence scheme -sources

Turkiye Vakiflar Bankasi TAO

18/01/2022 13:48

By Ebru Tuncay and Orhan Coskun
    ISTANBUL, Jan 18 (Reuters) - Turkey's big state banks have
set employee performance targets as they urge clients to convert
foreign currencies into lira under a deposit-protection plan
introduced last month to stem a currency crisis, according to
people familiar with the effort. 
    More than half a dozen bankers, customers and others
familiar with the matter interviewed by Reuters describe a
concerted push to boost the uptake of the scheme, which
President Tayyip Erdogan unveiled when the lira tumbled to a
record low in mid-December. 
    "The conversion from forex to lira was added as an employee
performance criteria," said one banker, who added that they were
shown statistics from rival banks to encourage competition. 
    "We are being called numerous times every day and asked how
much we converted," the banker said, requesting anonymity as did
the others given they were not authorised to speak publicly.
    A second person familiar with the matter said bank general
managers were calling clients with at least $5 million in
foreign deposits to pitch the new programme, while others
approached those with smaller holdings. 
    The government has tweaked the programme a few times over
the last month to accelerate it and is considering shortening,
from three months now, the minimum duration for deposits to
qualify, that person said.
    Under the scheme, the Treasury and central bank guarantee
deposits with a three to 12 month duration against foreign
exchange-related losses in an effort to halt a flight to the
dollar amid soaring inflation.  urn:newsml:reuters.com:*:nL8N2TU1DT  urn:newsml:reuters.com:*:nS8N2R9081 
    Along with currency interventions last month, the scheme
helped spark a sharp lira rally. Still, the currency ended the
year down 44%, the worst performer in emerging markets. 
    The Treasury, which administers the program and oversees the
state banks, did not immediately comment on employee targets nor
on possibly shorter minimum deposit durations. 
    
    CALLING CLIENTS
    While both private and public banks have incentives to
promote the plan, it is the country's big three state banks
which could hold the key to its success.
    Out of those, Ziraat Bank declined to comment, while Vakif
Bank  VAKBN.IS  and Halk Bank  HALKB.IS  did not respond to
requests sent on Friday. 
    Turkey's rules prohibit banks from pushing specific products
to clients and one person familiar with the matter described the
targets as "unofficial" but bankers' and client accounts showed
employees were expected to do their best to bolster the scheme. 
    One private export sector told Reuters bankers who visited
him tried hard to sell the programme even though he explained it
was not a right fit for a business that pays for raw materials
and earns income in foreign currencies.
    "A lot of effort was made to try and convince me," he said.
    Finance Minister Nureddin Nebati said 131 billion worth of
lira ($9.7 billion) had been deposited into the protected
accounts at the end of last week. Most, however, has come from
existing lira accounts, not from dollars or euros, Reuters has
reported.  urn:newsml:reuters.com:*:nL8N2TM1QF  urn:newsml:reuters.com:*:nL8N2TS2B2
    In order to boost uptake, the government added corporate
currency accounts to the scheme last week. 
    
    CARROTS AND STICKS
    The currency crisis was sparked by a series of unorthodox
interest rate cuts urged by Erdogan under a new economic policy
that stresses exports, credit and investment. 
    Lira's weakness in turn sent inflation soaring above 36%
last month, depleting Turks' savings and upending budgets of
households and companies. 
    Fitch Ratings analyst Erich Arispe said the plan gave the
lira some relief, slowed dollarisation and reduced risks to bank
funding, but failed to address the core problem of policy
uncertainty and deeply negative real rates.
    To support the scheme, the government has also waived an
interest cap on lira deposits converted from hard currencies and
allowed those converted from unprotected lira accounts to carry
an extra 3% on top of the central bank's 14% policy rate.   
    The central bank also offers higher interest on part of
required lira reserves converted from foreign exchange, and will
charge a 1.5% fee on dollar and euro deposits if they miss a 10%
conversion threshold by April 15.  urn:newsml:reuters.com:*:nL8N2TU59Z 
    To woo clients, state banks were offering up to 19% and
private banks up to 26% on protected lira accounts converted
from foreign currencies, according to one of the bankers.
   But while that might help smaller banks meet the conversion
threshold deadline, big banks may still need more client
incentives to accomplish that, another senior banker said.

($1 = 13.5099 liras)

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Turkey's new finance minister in the eye of a storm    
 urn:newsml:reuters.com:*:nL8N2TS2B2
Erdogan's scheme to halt crisis attracts little FX conversion-
sources      urn:newsml:reuters.com:*:nL8N2TM1QF 
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 (Additional reporting by Nevzat Devranoglu in Ankara; Writing
by Ali Kucukgocmen; Editing by Jonathan Spicer and Tomasz
Janowski)
 ((ali.kucukgocmen@thomsonreuters.com , @alikucukgocmen;
+905319306206; Reuters Messaging: Reuters Messaging:
ali.kucukgocmen.thomsonreuters.com@reuters.net))