FITCH CUTS TURKEY 2018 GDP GROWTH FORECAST TO 3.9%
London-based Fitch Ratings revised down Turkey’s 2018 GDP growth forecast from an earlier forecast of 4.1% to 3.9% on Nov. 23. Fitch said investigations by US authorities into a group of Turkish traders and bankers accused of helping Iran to evade sanctions could put Turkish banks’ ratings under further pressure if the situation escalates. “Given the noise around the US investigations, if there was a case of reputational damage resulting in diminished access to market or a large fine that wasn’t offset by state support, it could result in negative rating pressure,” said Lindsey Liddell, Fitch’s director of financial institutions. US prosecutors have charged Reza Zarrab with engaging in hundreds of millions of dollars of transactions on behalf of Iran’s government and other Iranian entities, which were barred by US sanctions. Zarrab also allegedly laundered the proceeds and defrauded several financial institutions by concealing the true nature of his illegal transactions, according to US authorities. Turkey’s former Economy Minister Zafer Caglayan, who is also the former general manager of stateowned Halkbank, Suleyman Aslan and two others have also been charged for conspiring to evade US sanctions on Iran. Liddell added that capital buffers in the Turkish banking sector were currently “sufficient to absorb moderate shocks. However, risks to bank capitalization remain in the event of further lira devaluation or higher than expected non-performing loan growth.”
Ankara rebuffs claims Halkbank to be replaced
A top Turkish official on Nov. 20 rebuffed claims that the functions of Turkey’s Halkbank would be transferred to another state-owned bank, Emlakbank. “There is no such thing. Turkey’s banking watchdog will make the necessary explanation,” Deputy Prime Minister Mehmet Simsek told reporters in Ankara, referring to the Banking Regulation and Supervision Agency (BDDK). The claims come amid US probes into Halkbank over alleged violations of sanctions on Iran.