Bad loans:  193.5 billion lira loan restructuring from banks

According to the Dünya Newspaper, the amount of loan debt, which is deferred by restructuring within the banking system, is 193.5 billion TL. Adding approximately 400-500 billion TL as non-performing loans on top of this figure points to an enormous bad loan asset of 90 billion dollars in total.

 

The Banks Association announces the loans restructured under Framework Agreements since last year. This amount was 24.1 billion lira by November. However, when the questions about why the restructured loans remained insufficient were raised, the Banks Association also announced the restructured loans made by banks one by one or by coming together. A restructure was introduced with the regulation in 2018 for companies that have loans to banks and financial institutions. However, when the regulation was not sufficient enough, legal regulations were made in 2019 for financial restructuring.

 

The Banks Association announced the start of the restructuring process for loans above 25 million on October 14, 2019, and the small-scale restructuring process to begin on November 8. The restructure made under the Framework Agreements is explained in a report by the Banks Association.

 

Data included  footnote

 

A footnote was included in the report for November. It was stated that the data included in the study consisted of only the data transmitted by the creditor institutions that signed Framework Agreements within the scope of large-scale and small-scale applications in the Financial Restructuring Framework Agreement (FYYÇA). Emphasizing in the footnote that the banks do not include loans structured by their initiative apart from the aforementioned regulations, it was stated that “According to the September 2020 annual financial statement data of the Banks Association of Turkey (TBB) member banks, the total amount of the loans that were restructured or connected to a new redemption plan is 193.5 billion TL.

 

Experts stated that there were numerous questions about why the restructuring announced with the Framework Agreement remained low and that the Banks Association included the information about the restructuring made by banks themselves with the compilation of the annual financial statement. Explaining that since 2018, banks’ debts of some large groups have been restructured individually or several banks have come together without being bound by the framework agreement, experts emphasized that the restructuring procedures are not always notified to TBB.

 

Configuration in November 4.3 billion lira

 

According to the Framework Agreements announced regularly by the Banks Association, 4.3 billion lira was restructured in November. Since October 2019, the size of the loans restructured under the Financial Restructuring Framework Agreement has reached 24.1 billion lira. 23.8 billion lira of this belongs to large-scale companies. Loans of 119 large-scale companies were restructured. In November, a 2.8 billion lira loan of 3 large-scale manufacturing industry companies was restructured. 350 million lira loan of 3 construction companies, 734 million lira loan of a company operating in the fields of transportation, storage, and communication, and a loan of 25 million lira from a company operating in the health and social services were restructured.

 

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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.