We have reached the key point of the reform package. Our topic is: What will be the banks’ bad loan portfolio?
It is given in the reform brochure as follows:
3.1: The quality of the banking sector’s assets will be increased.
3.1.a. The Loan Life Cycle Project will be implemented
3.1.b. Operational restructuring and signature rehabilitation functions will be established in the banking sector for loans under close supervision.
3.1.c. Efforts will be made to establish Venture Capital Funds for the rehabilitation of those that have the potential to generate added value and create employment among problem loans.
3.1.d. The necessary incentive and precautionary mechanisms will be established to exclude non-performing non-viable loans from the balance sheet through methods such as sale to Asset Management Companies and the cancellation of assets.
3.1.e. NPLs and NPLs will be transferred off balance sheet through a legislative amendment for securitization.
Before what is meant in these paragraphs, let’s talk about two new features:
04/03/2021 Erdoğan Suzer / Spokesperson: When foreign creditors do not trust and do not lend to companies that will undertake Treasury-guaranteed build-operate-transfer (BOT) projects known as Deli Dumrul projects, the burden will be placed back in the hands of the public. AKP MPs, despite last year’s pandemic, More than 50 billion lire The companies that are awarded the road and rail tenders can obtain their credit debts abroad. Commitment of the Treasury, that is, the public prepared a new bill for the Turkish Parliament and submitted it to the Grand National Assembly of Turkey.
02/28/2021: Responding to questions about the agenda in Turkey BloombergHT Business Bank General Manager Adnan Bali, non-performing loans in the banking sector that the figure of 152 billion, 382 billion TL closely related to the follow-up Loans in arrears and closely monitored total 534 billion Said it indicates a Turkish lira size.
There were two main sensations in the rumors that occurred before the reform package was announced:
1- There was no attempt to raise money from the Nation with the compensation fund, a new fundraising fund or form will be sought
2- A solution will be sought for bad loans and banks will be relieved.
Let us now look at the method of relieving bank assets described in section 3.1 above.
The key point here is: Companies worth saving… Companies with the potential to generate added value and create jobs… But who will decide for these companies?
In the Istanbul Approach applied in the 2001 crisis, 1-BRSA, 2-Banks with creditors and 3-Independent auditors only analyzed the economic data of the companies to be rescued. Who will make the decision now? Will companies be determined to bail out without political influence?
And in the continuation of the article it says, …Establishment of venture capital funds … But who will put money in this fund? Will the new PPS funds from the reform package be used? Or the Treasury and / or the Central Bank?
What does it say in point 3.1.e?: Close monitoring and securitization of bad loans. But how will these securities be sold? Who will receive them? If the nation doesn’t, will the state accept it?
Continuation of the article here.