Credit wave is on its way: Public banks are getting ready

Public banks are negotiating with the Ministry of the Treasury to meet the resources they need in terms of loan disbursement and other issues through capital increase.

Public banks are preparing for the credit wave. (AA)

According to the information given to the Reuters agency by three sources close to the subject, while negotiations are continuing between Ziraat Bank, Vakıflar Bank, Halkbank and the Treasury regarding the total amount of capital to be transferred, there is no clarity on when and how the new source will be created.

According to AA, Turkey Wealth Fund (TVFIt has been learned that Ziraat Bank, VakıfBank and Halkbank will increase their capital by more than 20 billion liras each.

may exceed 50 billion liras

Sources pointed out that there is a need for capital to support the economy before the election and to use the expected Credit Guarantee Fund (KGF).

A banking resource “It is planned to increase capital in different amounts to other banks. It may exceed 50 billion TL in total.” said.

While public banks have been supporting the economy with cheap financing and KGF loans for the last four or five years, they also increase the capital need in these banks. The share of the public in the loan market has reached historical peaks, approaching 50 percent with these supports.

Noting that there is a need for capital increase in public banks, an economy official stated that the capital requirement is not less than 50 billion liras. “It is currently being evaluated. This is also required for the use of KGF. However, quick action will be required.” said.

Banks are complaining

Although banks announced record profits in an inflationary environment at the peak of 24 years, private banks complain that profits are below inflation in real terms and that their balance sheets are suppressed by the regulations made by the economy management.

While the last two capital increases in public banks were made by the TVF, the TVF provided the public banks. in March 2022 It provided 51.5 billion liras of capital support in May 2020, and 21 billion liras in May 2020.

Before that, in September 2018, Vakıfbank received 5 billion liras of capital support from the Unemployment Fund, and Halkbank 3 billion liras through the bond issuance method. They issued subordinated bonds totaling 3 billion euros in April 2019.