ISTANBUL/ANKARA — Turkey forced banks to take losses on $8 billion in bad loans this week to kick-start lending and boost its economic recovery after losing patience with them, bankers, senior government officials and industry advisers told Reuters.
Ankara’s most aggressive move yet to cure a hangover from Turkey’s 2018 currency crisis has left banks scrambling to meet a year-end deadline to restructure loans or ready them for sale.
Turkey’s bank watchdog had been calling bank executives in recent weeks, after three months of talks failed to deliver action, to tell them what portion of loans they should reclassify as non-performing https://tmsnrt.rs/2Oa8lll and to make provisions, two sources said.
On Tuesday, a year on from the darkest moments of the currency crisis, the BDDK watchdog went public with its requirement for banks to write off loans totalling 46 billion lira ($8.1 billion) as non-performing loans (NPLs).
The move was driven by the government’s desire for banks, especially more cautious private ones, to extend more credit and help meet President Tayyip Erdogan’s goal of 5% economic growth next year, five sources said.