TURKISH BANKS ARE ONE STEP AWAY FROM BANKRUPTCY

The banking sector of Turkey is shaken by the financial convulsions – such a conclusion was made by the experts from Greece, analyzing the costs of maintaining the military campaign. Their position could have been explained by tensions between the countries and a general concern about the state of affairs, but the facts speak for themselves.

Last week, the Turkish financial regulator made it impossible to conduct the transactions with the national currency for the several units of a number of international financial organizations at once. The list includes Citigroup, UBS and BNP Paribas. The official grounds for this were their failure to fulfill the obligations, related to the Turkish lira. Given that the mentioned banking institutions are serious players in the foreign exchange markets, and that shortly before it the lira fell to a minimum, having been depreciated by 20% since the beginning of the year, the real matter of accusing international companies with offices in London was the speculations against the Turkish national currency.

According to Greek experts, the probability of bankruptcy of the Turkish financial system is very high.

Commercial banks in Turkey, as the experts note, are devastated and do not have sufficient reserves of the foreign currency to carry out import-export operations. Three largest banks (Garanti, Akbank and İşbank, founded by Mustafa Kemal Ataturk) cannot cope with the financial burden. The reason for this is the militaristic policy of the Turkish authorities against the Greek islands, the Kurdish minority and the international military campaigns in Libya, Syria and Iraq.

According to the report on the global military spending, released by the Stockholm International Peace Research Institute (SIPRI), Turkey’s military spending increased by 27% for the period from 2009 to 2019. Over the past year, the expenditures increased by 6%, reaching $ 20.8 billion - 7.8% of the total government spending. According to the experts, this situation means that the state allocates about $ 245 per capita for military needs.

The financial regulator of Turkey had almost no reserves in foreign currency, which forced it to turn to the United States with a proposal to create a swap line.

However, the experts doubt that the United States will agree on it, given the limited trade between countries and the lack of reserves in Turkey. The state’s attempt to resist the spread of COVID-19 is an additional factor, due to which the Central Bank rate was reduced almost three times - from 24% to 8.75%. Thus, the attractiveness of the national Turkish currency for the potential investors has fallen even more. Whether Turkey will eventually be able to pay off its $ 79 billion debts by next February is not clear yet.