Banking Regulation and Supervision Agency (BRSA) Chairman Mehmet Ali Akben underlined that banks have important duties in reducing the negative impact of the new type of coronavirus (Covid-19) epidemic on production and employment to the minimum possible level.
For this reason, banks are instructed to quickly meet the liquidity and cash needs of companies with credit limits and to avoid restrictions on the use of credit limits, to carefully avoid practices such as recalling loans, not allowing the use of existing credit limits, increasing prices, making collateral conditions more difficult, and not restructuring with reasonable interest rates. Reminding that they have given their decision, Akben said, “We are closely monitoring the implementation of the instructions we have conveyed to the banks. I invite all our banks to act customer-oriented, keep credit channels open, and comply with the decisions taken by our institution and sector associations.” he said.
Support for financial stability from BRSA
Mehmet Ali Akben gave the following answers to AA correspondent’s questions about the steps taken within the scope of Covid-19, recent credit developments, whether the instructions given to banks were implemented or not, and what kind of a picture the banking sector will draw in the second half of the year:
“As part of the steps taken to reduce the effects of fluctuations in the financial markets due to the Covid-19 epidemic and to protect financial stability, we have rearranged the maturity and amount restrictions applied to the derivative transactions carried out by banks with non-residents. In the form of receiving TL from non-residents and giving foreign currency with maturities of up to 1 week.” We have determined the limit of 10 percent of the equity capital of the bank making the transaction, which we apply in swap transactions, as 1 percent for 1 week, 2 percent for 30 days, and 10 percent for a year. Our main aim is to reduce the possible risk of transactions accumulated in certain periods and maturities in the financial markets. is to eliminate the distorting effect. We think it is right for banks to carry out such transactions on a longer term and spread over time, without accumulation in certain maturities. A bank that wishes will be able to make a TL purchase swap of 50 percent of its equity capital by distributing it over the next 5 years. If it wishes, it will be able to make a TL purchase swap of 50 percent of its equity capital by spreading it over 10 years. It will be possible to make purchase swaps of up to 100 TL. I would also like to point out that the decisions taken in this context are related to an extraordinary period experienced on a global scale, and if necessary, we can take different steps according to changing conditions. In addition, the Central Bank of the Republic of Turkey (CBRT) announced that it increased swap facilities within the scope of Economic Stability Shield measures. In this context, it is possible for banks to provide swap opportunities under market conditions through the CBRT. We do not have any restrictions on swaps to be made within the country.
Another new practice of ours is to reduce the limit of 10 percent of shareholders’ equity to 1 percent in swap transactions of exchanging TL and receiving foreign currency with foreign financial institutions. Our banks have been avoiding such swap transactions for a long time. At this stage, TL will be necessary and useful mostly domestically. Individual customers, tradesmen, SMEs and other businesses in need need the support of banks more than ever during this period. While making these regulations, we did not take a prohibitive stance regarding any type of transaction that our banks would carry out with non-residents. In this context, there is no change in the transaction set of banks. Hundreds of types of transactions with foreign banks will continue to be carried out. On the other hand, with this application, we aim to direct the resources of our financial institutions to those in need. “We will meticulously carry out our duty as the regulatory and supervisory authority for financial institutions to fulfill their intermediary functions.”
While loans increased in public banks, they decreased in private banks
“There have been many complaints about private banks lately. It is stated that they are far behind the performance of public banks within the scope of the Economic Stability Shield. Minister of Treasury and Finance Mr. Berat Albayrak also draws attention to this separation between bank managements and states that private banks should also take responsibility. Turkish “As the head of banking regulation, how do you evaluate the recent credit developments?”
“Our banks have important duties in terms of minimizing the negative impact of the process we are experiencing on production and employment to the minimum level possible. For this reason, we must quickly meet the liquidity and cash needs of companies with credit limits and not impose restrictions on the use of credit limits, recall loans, or not allow the use of existing credit limits.” We have instructed banks to carefully avoid practices such as increasing prices, making collateral conditions more difficult, not restructuring with reasonable interest rates, etc. In addition, we have instructed banks to provide additional financial support to companies and real persons whose cash flow has deteriorated due to being affected by the measures related to the Covid-19 epidemic, and to ensure that the loans extended to them are made in line with the demands of the customers. We requested that the necessary facilities be provided, including postponing the loan principal and interest payments for a minimum of 3 months, and that the practice of updating the collateral value by re-evaluating the collaterals by the banks after the loans are disbursed, be suspended for 3 months from the date of this instruction letter. In our said instruction, we also emphasized that maximum effort should be made to comply with the recommendations taken by the associations of organizations in this context and that this issue should be considered a national duty. At this point, we are closely monitoring the implementation of the instructions we have sent to the banks. We see that our public banks have successfully carried out credit support programs for individuals, tradesmen and craftsmen, SMEs and corporate enterprises, and have created an additional loan volume of 27.5 billion TL in the last 10 days. I believe that these opportunities provided to customers experiencing temporary liquidity shortages due to the epidemic will both reduce the economic and social costs of the epidemic and increase the collection ability of our banks in the post-epidemic period. In the same period, we witnessed that the total loan volume of our private banks decreased by approximately 5 billion TL. “I invite all our banks to act customer-oriented, keep credit channels open, and comply with the decisions taken by our Institution and sector associations.”
“We are following up to resolve customer complaints”
“As part of the fight against the epidemic, public and private banks announced a series of support packages for citizens and the real sector. Which way should citizens follow to complain? How many citizens have complained so far?”
“Starting from March 26, we have created a structure that will be able to receive all requests of our citizens, whether commercial or individual, via the internet and our call center on a 24-hour basis, 7 days a week and 24 hours a day, and forward them to the banks, within just a few days. In this process, as BRSA, we have established a coordination system in which we receive the complaint requests and transfer them to the banks. We operate the system. When the request is received, we forward it to the relevant bank via a platform and, looking at the transaction density in the bank and the quality and quantity of the incoming requests, we ask the banks to conclude the request in accordance with the relevant legislation, the recommendations of the associations of institutions and the commitments announced by the banks to the public, and to inform us about the result. Within the framework of the information received, as BRSA, we call our citizens on a transaction basis and get information about the latest situation. In this structure, requests to BDDK are made via https://ebulten.bddk.org.tr/esikayet/ for the internet and 0850 222 23 35 for the call center. and it is possible to submit complaints. “We are following up to resolve customer complaints.”
“Our proactive approach pays dividends”
“The global economy is expected to have a weak first half of the year in the fight against the epidemic. What kind of situation do you foresee in the banking sector for the rest of the year after the epidemic is over?”
“Our banking sector has entered this process strongly in terms of both capital structure and resource and asset quality. Our capital adequacy ratio of 17.7 percent is above the international standard of 8 percent, our cautiously high target rate of 12 percent, and many other It has a level above similar country rates. Our institution has been implementing the necessary measures since the first day the effects of the epidemic began to be seen in order to maintain confidence and stability in the financial markets. The flexibility and ability to act quickly provided by carrying out the process with a proactive regulatory approach will help limit the risks on our financial system and “We think it is of critical importance in reducing the risk. No one should have any doubt that all necessary precautions and precautions will be taken depending on the developments.”
