Turkish state banks in talks on pre-election capital boost - sources

Turkiye Vakiflar Bankasi TAO

22/12/2022 09:18

By Ebru Tuncay and Orhan Coskun
       ISTANBUL, Dec 22 (Reuters) - Turkish state-owned banks
are in talks with the Treasury and the country's sovereign
wealth fund to secure more capital that would allow them to
boost lending ahead of elections next year, two banking sources
and one government official said. 
    The Treasury is working on a plan, the two sources told
Reuters, requesting anonymity. "The total capital increase may
be over 50 billion lira  ($2.7 billion)," one banking source
said.
    The last capital increase for state banks happened in March,
when the Turkish Wealth Fund, their main shareholder, injected
51.5 billion lira ($2.78 billion) into them. Turkey has boosted
state lenders' capital four times since 2018.
    The share of loans issued by state banks has risen to an
all-time high of nearly 50% as they supported the economy in
recent years through cheap financing and the state's Credit
Guarantee Fund (KGF) loans. The rise in loans have led to
increased need for capital for state banks.
    State lenders would also need capital to extend loans before
the elections under the KGF scheme, which guarantees loans to
small- and medium-sized firms, another source told Reuters. 
    The Treasury, the wealth fund and the three state banks did
not immediately respond to requests for comment.
    The government's economic programme includes extending more
selective loans via the KGF to support production and exports.
It is expected to stick with the policy at least through the
presidential and parliamentary elections set for May or June.  
    "There is a need for a capital increase in state banks. This
is also necessary for the use of the KGF (loans). But a step
needs to be taken rapidly," the government official said.
($1 = 18.5530 liras)
 (Reporting by Ebru Tuncay and Orhan Coskun; Editing by Daren
Butler and Arun Koyyur)
 ((Ebru.Tuncay@thomsonreuters.com; +90 212 350 7069; Reuters
Messaging: ebru.tuncay.reuters.com@reuters.net))